Income Tax

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Tax

Income Tax

An income tax expense (benefit) reconciliation at the statutory rate to the Company’s actual income tax expense (benefit) is shown below:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
	(Dollars in thousands)
Computed at the statutory rate (21%)	$	(1,727)	$	2,465	$	(855)	$	4,516
Increase (decrease) resulting from
Tax-exempt income	(779)		(712)		(1,569)		(1,425)
Nondeductible expenses	34		64		98		137
State tax credit	—		—		—		(1,361)
State income taxes	39		519		181		960
Equity based compensation	13		(6)		39		(61)
Goodwill impairment	1,553		—		1,553		—
Other adjustments	4		(33)		(17)		(50)
Actual tax expense (benefit)	$	(863)	$	2,297	$	(570)	$	2,716

The tax effects of temporary differences related to deferred taxes shown on the consolidated Balance Sheets are presented below:

	June 30, 2020		December 31, 2019
	(Dollars in thousands)
Deferred tax assets
Allowance for loan losses	$	17,426	$	13,928
Lease incentive	279		294
Impairment of available-for-sale securities	—		493
Valuation allowance on real estate	273		—
Loan fees	3,921		2,317
Net operating loss carryover	353		339
Accrued expenses	1,016		2,131
Deferred compensation	2,213		2,444
State tax credit	2,842		3,287
Other	431		81
Total deferred tax asset	28,754		25,314
Deferred tax liability
Fair market value adjustments - trust preferred securities	(344)		(348)
Net unrealized gain on securities available-for-sale	(8,134)		(5,339)
FHLB stock basis	(1,133)		(996)
Premises and equipment	(3,303)		(3,620)
Other	(999)		(1,229)
Total deferred tax liability	(13,913)		(11,532)
Net deferred tax asset	$	14,841	$	13,782

CARES Act

The CARES Act, which was enacted on March 27, 2020 in the U.S., includes many measures to assist companies, including temporary changes to income and non-income-based tax laws. Some of the key tax-related provisions of the bill include:

•Allowing NOLs originating in 2018, 2019 or 2020 to be carried back five years; and

•Increasing the net interest expense deduction limit to 50% of adjusted taxable income from 30% for tax years beginning January 1, 2019 and 2020.

•The Company would be able to carry back a portion of a net operating loss if incurred during 2020 to offset income from the prior year.

•The Company continues to analyze the potential impact of this legislation on its financial position and results of operations.