INCOME TAXES

9 Months Ended

Sep. 30, 2019

INCOME TAXES

INCOME TAXES

5. INCOME TAXES

Our effective tax rate for the three and nine-month periods ended September 30, 2019 was 17.0 percent and 18.4 percent, respectively, compared to 15.1 percent and 15.4 percent, respectively, for the same periods in 2018. Effective rates are dependent upon components of pretax earnings and the related tax effects. The effective rate was reduced for the three and nine-month period in 2018 by an increased level of tax exempt securities and stock option exercises and the corresponding tax benefits. Additionally, the effective rate was higher for the first nine months of 2019 due to higher levels of pre-tax earnings, which caused the tax-favored adjustments to be smaller on a percentage basis in 2019 compared to the prior year.

Income tax expense attributable to income from operations for the three and nine-month periods ended September 30, 2019 and 2018 differed from the amounts computed by applying the U.S. federal tax rate of 21 percent to pretax income by the items detailed in the below table. In interim periods, income taxes are adjusted to reflect the effective tax rate we anticipate for the year, with adjustments flowing through the other items line.

	For the Three-Month Periods Ended September 30,								For the Nine-Month Periods Ended September 30,
	2019				2018				2019				2018
(in thousands)	Amount		%		Amount		%		Amount		%		Amount		%
Provision for income taxes at the statutory rate of 21%	$	8,179	21.0	%	$	9,733	21.0	%	$	35,598	21.0	%	$	21,061	21.0	%
Increase (reduction) in taxes resulting from:
Excess tax benefit on share-based compensation		(614)	(1.6)	%		(2,273)	(4.9)	%		(3,546)	(2.1)	%		(4,340)	(4.3)	%
Tax exempt interest income		(276)	(0.7)	%		(375)	(0.8)	%		(930)	(0.6)	%		(1,460)	(1.5)	%
Dividends received deduction		(218)	(0.6)	%		(150)	(0.3)	%		(635)	(0.4)	%		(516)	(0.5)	%
ESOP dividends paid deduction		(136)	(0.3)	%		(139)	(0.3)	%		(413)	(0.2)	%		(423)	(0.4)	%
Other items, net		(312)	(0.8)	%		181	0.4	%		1,178	0.7	%		1,128	1.1	%
Total tax expense	$	6,623	17.0	%	$	6,977	15.1	%	$	31,252	18.4	%	$	15,450	15.4	%