INCOME TAXES

12 Months Ended

Dec. 31, 2020

Note 9 – Income Taxes

The provisions for income taxes for the years ended December 31, were as follows:


(Dollars in thousands)	2020		2019		2018
Current:
Federal	$	10,899	$	10,450	$	2,203
State	2,019		2,101		1,031
	$	12,918	$	12,551	$	3,234
Deferred:
Federal	$	(3,183)	$	(3,716)	$	117
State	(203)		(237)		22
	(3,386)		(3,953)		139
Income tax expense	$	9,532	$	8,598	$	3,373

Following is a reconciliation of income taxes at federal statutory rates to recorded income taxes for the year ended December 31:


	2020				2019				2018
(Dollars in thousands)	Amount		%		Amount		%		Amount		%
Income tax at federal statutory rate	$	9,858	21.0	%	$	7,353	21.0	%	$	3,229	21.0	%
Tax effect of:
State income taxes, net of federal income taxes	1,435		3.1	%	2,101		6.0	%	738		4.8	%
Tax exempt earnings	(1,381)		(3.0)	%	(856)		(2.8)	%	(594)		(3.9)	%
Other	(380)		(0.8)	%	—		—	%	—		—	%
	$	9,532	20.3	%	$	8,598	24.2	%	$	3,373	21.9	%

Deferred income tax assets and liabilities were comprised of the following at December 31:


(Dollars in thousands)	2020		2019
Gross deferred tax assets:
Allowance for loan losses	$	7,141	$	3,310
Minimum pension liability	1,544		1,589

SERP/RSU	1,039		652
Other	1,209		10
Total gross deferred tax assets	10,933		5,561

Gross deferred tax liabilities:
Depreciation	(1,733)		(1,505)
Pension	(262)		(164)
Unrealized gain on securities available-for-sale	(2,320)		(1,088)
Holding gain on equity securities	(3,893)		(3,838)
Goodwill	(2,498)		(2,134)
Total gross deferred tax liabilities	(10,706)		(8,729)

Net deferred tax assets (liabilities)	$	227	$	(3,168)

Deferred income tax assets and deferred income tax liabilities were included in other assets and other liabilities, respectively.

The Company has invested, as a limited partner, in three Section 42 affordable housing investment funds. In exchange for these investments, the Company receives its pro rata share of income, expense, gains and losses, including tax credits, that are received by the projects. As of December 31, 2020 and December 31, 2019, the Company recognized, as an investment, $2.8 million and $3.0 million in the aggregate between the three affordable housing investment funds. In addition, the Company has recognized no gains or losses from the funds.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details