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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The current and deferred components of income tax expense (benefit) were as follows:
For the years ended December 31, | 2024 |  | 2023 |  | 2022
Federal income tax |  |  |  |  |
Current | $ | 4,986,000 |  |  | $ | 7,011,000 |  |  | $ | 7,912,000 |
Deferred | 20,000 |  |  | (1,360,000) |  |  | (127,000) |
| 5,006,000 |  |  | 5,651,000 |  |  | 7,785,000 |
State franchise tax | 533,000 |  |  | 533,000 |  |  | 611,000 |
| $ | 5,539,000 |  |  | $ | 6,184,000 |  |  | $ | 8,396,000 |
The actual tax expense differs from the expected tax expense (computed by applying the applicable U.S. Federal corporate income tax rate to income before income taxes) as follows:
For the years ended December 31, | 2024 |  | 2023 |  | 2022
Expected tax expense | $ | 6,843,000 |  |  | $ | 7,498,000 |  |  | $ | 9,951,000 |
Non-taxable income | (1,399,000) |  |  | (1,481,000) |  |  | (1,756,000) |
State franchise tax, net of federal tax benefit | 421,000 |  |  | 421,000 |  |  | 483,000 |
Equity compensation | (35,000) |  |  | (27,000) |  |  | (54,000) |
Tax credits, net of amortization | (253,000) |  |  | (201,000) |  |  | (203,000) |
Other | (38,000) |  |  | (26,000) |  |  | (25,000) |
| $ | 5,539,000 |  |  | $ | 6,184,000 |  |  | $ | 8,396,000 |
Deferred tax assets and liabilities are classified in other assets and other liabilities in the consolidated balance sheets. No valuation allowance is deemed necessary for the deferred tax asset. Items that give rise to the deferred income tax assets and liabilities and the tax effect of each at December 31, 2024 and 2023 are as follows:
| 2024 |  | 2023
Allowance for credit losses | $ | 5,414,000 |  |  | $ | 5,380,000 |
OREO | 7,000 |  |  | — |
Accrued pension and post-retirement | 718,000 |  |  | 752,000 |
Unrealized loss on securities available for sale | 11,343,000 |  |  | 10,520,000 |
Unrealized loss on derivative instruments | 1,020,000 |  |  | 913,000 |
Unrealized loss on securities transferred from available for sale to held to maturity | 12,000 |  |  | 15,000 |
Restricted stock grants | 367,000 |  |  | 323,000 |
Core deposit intangible | 25,000 |  |  | 29,000 |
Investment in flow through entities | 141,000 |  |  | 99,000 |
Other assets | 26,000 |  |  | 24,000 |
Total deferred tax asset | 19,073,000 |  |  | 18,055,000 |
Net deferred loan costs | (2,826,000) |  |  | (2,599,000) |
Depreciation | (2,253,000) |  |  | (2,383,000) |
Goodwill | (371,000) |  |  | (319,000) |
Mortgage servicing rights | (398,000) |  |  | (457,000) |
Unrealized gain on derivative instruments | (1,062,000) |  |  | (993,000) |
Prepaid expense | (292,000) |  |  | (276,000) |
Total deferred tax liability | (7,202,000) |  |  | (7,027,000) |
Net deferred tax asset | $ | 11,871,000 |  |  | $ | 11,028,000 |
The Company invests in low income housing and historical tax credit structures. At December 31, 2024 and 2023, the carrying value of these investments was $2,069,000 and $1,453,000, respectively, and is recorded in other assets. Total unfunded commitments related to the investments in tax credit structures totaled $2,826,000 and $670,000 at December 31, 2024 and 2023, respectively. The company expects to fulfill these commitments during 2025 and 2026. Amortization of the investments in these entities totaled $1,029,000 and $303,000 for the years ended December 31, 2024 and 2023, respectively, and is recognized as a component of income tax expense in the consolidated statements of income and shown as amortization of investments in tax credit structures on the consolidated statements of cash flows. The tax credits from the investments are estimated at $1,228,000 and $466,000 for the years ended December 31, 2024 and 2023, respectively, and are recorded as a reduction of income tax expense. FASB ASC Topic 740, "Income Taxes," defines the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company's financial statements. Topic 740 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements. The Company is currently open to audit under the statute of limitations by the IRS for the years ended December 31, 2021 through 2024.

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