Income Tax

9 Months Ended

Sep. 30, 2020

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Dollars in thousands)
Computed at the statutory rate (21%)	$	1,996	$	2,725	$	1,141	$	7,241
Increase (decrease) resulting from
Tax-exempt income	(766)		(722)		(2,335)		(2,147)
Nondeductible expenses	21		71		119		208
State tax credit	—		—		—		(1,361)
State income taxes	320		566		501		1,526
Equity based compensation	(15)		(5)		24		(66)
Goodwill impairment	—		—		1,553		—
Other adjustments	(58)		(43)		(75)		(93)
Actual tax expense	$	1,498	$	2,592	$	928	$	5,308

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



	September 30, 2020		December 31, 2019
	(Dollars in thousands)
Deferred tax assets

Allowance for loan losses	$	18,613	$	13,928
Lease incentive	322		294
Impairment of available-for-sale securities	—		493
Valuation allowance on real estate	269		—
Loan fees	3,747		2,317
Net operating loss carryover	344		339
Accrued expenses	1,485		2,131
Deferred compensation	2,776		2,444

State tax credit	2,519		3,287
Other	60		81
Total deferred tax asset	30,135		25,314
Deferred tax liability
Fair market value adjustments - trust preferred securities	(341)		(348)
Net unrealized gain on securities available-for-sale	(8,357)		(5,339)
FHLB stock basis	(1,194)		(996)
Premises and equipment	(3,150)		(3,620)
Other	(1,229)		(1,229)
Total deferred tax liability	(14,271)		(11,532)
Net deferred tax asset	$	15,864	$	13,782

CARES Act

The CARES Act, enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws. As a result of the CARES Act, 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.

- 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.

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