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Federal Income Taxes
 12 Months Ended
Dec. 31, 2022
Federal Income Taxes [Abstract]  
Federal Income Taxes Note 14. Federal Income Taxes

The temporary differences which give rise to significant portions of deferred tax assets and liabilities at December 31 are as follows:

(Dollars in thousands)

Deferred Tax Assets

2022

2021

Allowance for loan losses

$

3,021

$

3,197

Deferred compensation

916

908

Purchase accounting

19

18

Other than temporary impairment of investments

—

58

Accumulated other comprehensive loss

13,633

145

Lease liabilities

1,309

1,030

Other

280

354

19,178

5,710

Valuation allowance

—

(58)

Total gross deferred tax assets

19,178

5,652

Deferred Tax Liabilities

Depreciation

1,079

102

Right-of-use asset

1,281

1,010

Joint ventures and partnerships

45

51

Pension

711

901

Deferred loan fees and costs, net

432

274

Total gross deferred tax liabilities

3,548

2,338

Net deferred tax asset

$

15,630

$

3,314

In assessing the realizability of deferred tax assets, Management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, Management believes it is more likely than not that the Bank will realize the benefits of these deferred tax assets other than those for which a valuation allowance has been recorded.

The components of the provision for Federal income taxes attributable to income from operations were as follows:

For the Years Ended December 31

(Dollars in thousands)

2022

2021

Current tax expense (benefit)

$

1,385

$

3,308

Deferred tax (benefit) expense

1,172

90

Income tax provision

$

2,557

$

3,398

For the years ended December 31, 2022 and 2021, the income tax provisions are different from the tax expense which would be computed by applying the Federal statutory rate to pretax operating earnings. The Federal statutory rate was 21% for 2022 and 2021. A reconciliation between the tax provision at the statutory rate and the tax provision at the effective tax rate is as follows:

For the Years Ended December 31

(Dollars in thousands)

2022

2021

Tax provision at statutory rate

$

3,674

$

4,833

Income on tax-exempt loans and securities

(1,113)

(1,190)

Investment in solar tax credit

—

(162)

Nondeductible interest expense relating to carrying tax-exempt obligations

47

26

Income from bank owned life insurance

(86)

(146)

Stock option compensation

5

5

Other, net

30

32

Income tax provision

$

2,557

$

3,398

Effective income tax rate

14.6%

14.8%

The Corporation recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense for all periods presented. No penalties or interest were recognized in 2022 or 2021. The Corporation had no uncertain tax positions at December 31, 2022. The Corporation is no longer subject to U.S. Federal examinations by tax authorities for the years before 2019.