Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense is provided on an interim basis based upon our estimate of the annual effective income tax rate, adjusted each quarter for discrete items. For the three months ended March 31, 2020 and 2019, our effective tax rate was 22.1% and 21.2%, respectively. 

At March 31, 2020 we recorded a valuation allowance against our net deferred tax assets primarily related to unrealized losses in our available-for-sale security portfolio generated by the financial market volatility resulting from the COVID-19 pandemic that exceeded the amount available to carryback. Of the $6.8 million valuation allowance, $5.8 million related to unrealized losses and was recorded in other comprehensive income. The remaining $1.0 million related to other deferred tax assets and was recorded as income tax expense.  The amount recognized in income tax expense increased the effective tax rate by 1.2% for the three months ended March 31, 2020. We will continue to monitor our deferred tax assets on a quarterly basis and if we determine it is more likely than not these deferred tax assets will be realized in the future, the related valuation allowance will be reduced.