XML 28 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
Income Taxes
3 Months Ended
Mar. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes

Note 10—Income Taxes

The Company uses an estimated annual effective tax rate method in computing its interim tax provision. This effective tax rate is based on forecasted annual pre-tax income, permanent tax differences and statutory tax rates.

The effective tax rates for the three months ended March 31, 2018 and 2017 were 16.3% and 40.9%, respectively. The reduction in the effective tax rate is primarily a result of the passage of the Tax Cuts and Jobs Act (the “Tax Act”), which was enacted on December 22, 2017. Among other things, the Tax Act reduces the corporate federal income tax rate from 35% to 21%, effective January 1, 2018. Also on December 22, 2017, the SEC issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for the Tax Act’s impact. SAB 118 provides a measurement period, not to extend beyond one year from the date of enactment during which a company, acting in good faith, may complete the accounting for the impacts of the Tax Act. The Company recorded a net income tax benefit of $724,000 as a result of the rate change. 

Net deferred tax assets remained relatively unchanged at $47.4 million at March 31, 2018 compared to December 31, 2017.  The reduction in the Company’s net operation loss carryforwards being applied to the current year tax liability was offset by an increase in its deferred tax asset related to unrealized holding losses on securities available-for-sale.