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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Taxes [Abstract] |
Income Taxes | Note 16 - Income Taxes The components of income tax expense are summarized as follows:
| Years Ended December 31,
|  | 2023 |  |  | 2022 |  |  | 2021
| (In Thousands)
Current income tax expense: |  |  |  |  |  |  |  |
Federal | $ | 8,917 |  | $ | 12,323 |  | $ | 8,736
State |  | 5,592 |  |  | 6,215 |  |  | 6,257
|  | 14,509 |  |  | 18,538 |  |  | 14,993
Deferred income tax benefit: |  |  |  |  |  |  |  |
Federal |  | (1,634) |  |  | (967) |  |  | (571)
State |  | (903) |  |  | (40) |  |  | (404)
|  | (2,537) |  |  | (1,007) |  |  | (975)
Total Income Tax Expense | $ | 11,972 |  | $ | 17,531 |  | $ | 14,018
The tax effects of existing temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities are as follows:
| December 31,
|  | 2023 |  |  | 2022
Deferred income tax assets: | (In Thousands)
Allowance for credit losses | $ | 9,805 |  | $ | 9,253
Other real estate owned expenses |  | - |  |  | 2
Non-accrual interest |  | 176 |  |  | 279
Benefit plan-accumulated other comprehensive loss |  | 166 |  |  | 159
Purchase accounting adjustment on loans receivable acquired |  | - |  |  | 752
Net operating loss carry forwards |  | 1,166 |  |  | 1,263
Lease liability |  | 3,806 |  |  | 3,961
Unrealized loss on securities |  | 2,860 |  |  | 2,974
Capital loss carryover |  | 477 |  |  | 66
Deferred fees and costs |  | 1,168 |  |  | 1,348
Other |  | 3,002 |  |  | 1,369
|  | 22,626 |  |  | 21,426
Deferred income tax liabilities: |  |  |  |  |
Purchase accounting adjustment on premises and equipment acquired |  | 71 |  |  | 74
Right-of-use assets |  | 3,697 |  |  | 3,865
SBA servicing asset |  | 319 |  |  | 368
Borrowing modification |  | 282 |  |  | 440
Benefit plans |  | 44 |  |  | 217
|  | 4,413 |  |  | 4,964
Net Deferred Tax Asset | $ | 18,213 |  | $ | 16,462
Note 16 - Income Taxes (continued) A summary of the change in the net deferred tax asset is as follows:
| Years Ended December 31,
|  | 2023 |  |  | 2022
| (In Thousands)
Balance at beginning of year: | $ | 16,462 |  | $ | 12,959
Effect of adopting ASU No. 2016-13 ("CECL") |  | (1,148) |  |  | -
Deferred tax benefit |  | 2,537 |  |  | 1,007
Other comprehensive income |  |  |  |  |
Available-for-sale securities |  | 355 |  |  | 2,560
Benefit plan |  | 7 |  |  | (64)
Balance at end of year | $ | 18,213 |  | $ | 16,462
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. In making this assessment, management has considered the profitability of current core operations, future market growth, forecasted earnings, future taxable income, and ongoing, feasible and permissible tax planning strategies. If the Company was to determine that it would not be able to realize a portion of its net deferred tax asset in the future for which there is currently no valuation allowance, an adjustment to the net deferred tax asset would be charged to earnings in the period such determination was made. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and capital gains during the periods in which temporary differences are deductible and carry forwards are available. The Company believes it will generate sufficient future taxable income and taxable gains to realize the tax benefits related to the remaining net deferred tax assets in our consolidated balance sheet. In conjunction with the Company’s acquisition of IA Bancorp in 2018, the Company acquired a federal net operating loss carry forward of $8.7 million. This carry forward is available for use through 2035; however, in accordance with Internal Revenue Code Section 382, usage of the carry forward is limited to $459,000 annually on a cumulative basis (portions of the $459,000 not used in a particular year may be added to subsequent usage). At December 31, 2023 and 2022, the Company had approximately $5.6 million and $6.0 million remaining of this federal net operating loss carry forward available to offset future taxable income for federal tax reporting purposes. The following table presents a reconciliation between the reported income tax expense and the income tax expense which would be computed by applying the normal federal income tax rate of 21.0 percent to income before income tax expense.
| Years Ended December 31,
|  | 2023 |  |  |  | 2022 |  |  |  | 2021 |
| (In Thousands)
Federal income tax expense at statutory rate | $ | 8,706 |  |  | $ | 13,253 |  |  | $ | 10,134 |
Increases in income taxes resulting from: |  |  |  |  |  |  |  |  |  |  |
State income tax , net of federal income tax effect |  | 3,704 |  |  |  | 4,878 |  |  |  | 4,684 |
Tax-exempt income |  | (30) |  |  |  | (63) |  |  |  | (45) |
Bank-owned life insurance earnings |  | (368) |  |  |  | (561) |  |  |  | (620) |
Other items, net |  | (40) |  |  |  | 24 |  |  |  | (135) |
Effective Income Tax Expense | $ | 11,972 |  |  | $ | 17,531 |  |  | $ | 14,018 |
Effective Income Tax Rate |  | 28.9 | % |  |  | 27.8 | % |  |  | 29.0 | %

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