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Income Taxes
 12 Months Ended
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

%