INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2026

Income tax expense for the nine months ended September 30, 2026 consisted of the following:


(dollars in thousands)	2026
Current federal	$	17,927
Deferred federal	426
Current state	181
Deferred state	628
Total income tax expense	$	19,162

Schedule of Differences Between Financial Statement Tax Expense and Amounts Computed by Applying Statutory Federal Income Tax Rate

Differences between financial statement tax expense and amounts computed by applying the statutory federal income tax rate of 21% to income before income taxes for the nine months ended September 30, 2026 were as follows:


(dollars in thousands)	2026
Federal statutory rate	$	21,617	21.0	%
Effect of:
State and local income taxes, net of federal benefits	639		0.6
Tax credits, net of amortization and losses	45		0.0
Nontaxable or nondeductible items:
Tax exempt income	(2,616)		(2.5)
Bank owned life insurance	(808)		(0.8)
Long-term incentive plan and deferred compensation	0		0.0
Nondeductible compensation expense	100		0.1
Other nondeductible expenses	228		0.2
Other	(43)		0.0
Total income tax expense	$	19,162	18.6	%

Schedule of Deferred Tax Assets and Liabilities

The net deferred tax asset recorded in the consolidated balance sheet at September 30, 2026 and December 31, 2025 consisted of the following:


(dollars in thousands)	September 30, 2026		December 31, 2025
Deferred tax assets:
Bad debts	$	17,531	$	17,574
Pension and deferred compensation liability	2,624		2,430
Nonaccrual loan interest	574		1,403
Long-term incentive plan	3,300		2,685
Lease liability	2,872		2,370
Deferred loan fees	655		540
Net operating loss carryforward	1,176		1,900
Other	927		733
	29,659		29,635
Deferred tax liabilities:
Depreciation	5,922		5,333
Loan servicing rights	410		433
State taxes	962		1,096
Intangible assets	1,266		1,266
REIT spillover dividend	1,750		1,750
Prepaid expenses	1,273		1,155
Lease right of use	2,872		2,370
Other	273		247
	14,728		13,650
Valuation allowance	0		0
Net deferred tax asset	$	14,931	$	15,985