(

)

Income Taxes

The income tax expense included in the accompanying unaudited condensed consolidated statements of income principally relates to the Company’s proportionate share of the pre-tax income of its wholly-owned subsidiaries. The determination of income tax expense for interim reporting purposes is based upon the estimated effective tax rate for the year, adjusted for the impact of any discrete items which are accounted for in the period in which they occur.

The Company recorded tax expense of approximately

24.4%

and

33.6%

of income before income tax expense, for each of the

three

-month periods ended

June 30, 2018

and

2017,

respectively. The decrease in the effective tax rate for the current period is largely due to a change in the statutory federal tax rate for

2018

and share-based payment related tax benefits recorded of approximately

$86,000.

The Company recorded tax expense of approximately

24.5%

and

33.3%

of income before income tax expense, for each of the

six

-month periods ended

June 30, 2018

and

2017,

respectively. The decrease in the effective tax rate for the current period is largely due to a change in the statutory federal tax rate for

2018

and share-based payment related tax benefits recorded of approximately

$184,000.

The Company notes the potential for volatility in its effective tax rate, as any windfall or shortfall tax benefits related to its share-based compensation plans will be recorded directly into income tax expense.

December 22, 2017,

the United States enacted tax reform legislation commonly known as the Tax Cuts and Jobs Act (the

“2017

Tax Act”), resulting in significant modifications to existing law. The Tax Act effected a reduction in the corporate tax rate from

35%

21%,

and changes to executive compensation limitations under IRC Section

162

(m), among other changes. The Company made what it considers to be a reasonable estimate of the impact of the Tax Act in its financials for the year ended

December 31, 2017.

The Company has

not

recorded any changes to this estimate for the

three

-month period ended

June 30, 2018.

Staff Accounting Bulletin (“SAB”)

No.

118

issued by the Securities and Exchange Commission (“SEC”), provides for a measurement period of

one

year from the enactment date to finalize the accounting for effects of the

2017

Tax Act. In accordance with SEC guidance, provisional amounts

may

be refined as a result of additional guidance from and interpretations by, U.S. regulatory and standard-setting bodies, and changes in

assumptions. In the subsequent period, provisional amounts will be adjusted for the effects, if any, of interpretative guidance issued after

December 31, 2017,

by the U.S. Department of the Treasury.