NOTE 11 - INCOME TAXES
The components of income tax expense for the years ended December 31, 2017 and 2016, were as follows:
|
|
|
2017 |
|
2016 |
||
|
Provision for income taxes |
|
|
|
|
|
|
|
Current |
|
$ |
7,212 |
|
$ |
5,398 |
|
Deferred |
|
|
(718) |
|
|
206 |
|
Total provision for income taxes |
|
$ |
6,494 |
|
$ |
5,604 |
On December 22, 2017, the U.S. Government enacted the Tax Act. The Tax Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. For businesses, the Tax Act reduces the corporate federal income tax rate from a maximum of 35% to a flat 21% rate. The corporate income tax rate reduction was effective January 1, 2018. The Tax Act required a revaluation the Company’s deferred tax assets and liabilities to account for the future impact of lower corporate tax rates and other provisions of the legislation. As a result of the Company’s revaluation, the Company recognized $396,000 in tax benefit due to a net deferred tax liability position.
A reconciliation of the effective income tax rate with the federal statutory tax rates at December 31, 2017 and 2016 was as follows:
|
|
|
2017 |
|
2016 |
|
||||||
|
|
|
Amount |
|
Rate |
|
Amount |
|
Rate |
|
||
|
Income tax provision at statutory rate |
|
$ |
7,203 |
|
35.0 |
% |
$ |
5,636 |
|
35.0 |
% |
|
Tax exempt income |
|
|
(218) |
|
(1.0) |
|
|
(255) |
|
(1.6) |
|
|
Decrease in tax resulting from other items |
|
|
(487) |
|
(2.4) |
|
|
42 |
|
0.3 |
|
|
Income tax rate differential |
|
|
(396) |
|
(1.9) |
|
|
— |
|
— |
|
|
ESOP |
|
|
392 |
|
1.9 |
|
|
181 |
|
1.1 |
|
|
Total |
|
$ |
6,494 |
|
31.6 |
% |
$ |
5,604 |
|
34.8 |
% |
Total deferred tax assets and liabilities at December 31, 2017 and 2016 were as follows:
|
|
|
2017 |
|
2016 |
||
|
Deferred Tax Assets |
|
|
|
|
|
|
|
Allowance for loan losses |
|
$ |
1,912 |
|
$ |
2,467 |
|
Non-accrued loan interest |
|
|
9 |
|
|
3 |
|
Non-qualified stock options |
|
|
— |
|
|
159 |
|
Securities available-for-sale |
|
|
130 |
|
|
294 |
|
Other |
|
|
210 |
|
|
437 |
|
Total deferred tax assets |
|
|
2,261 |
|
|
3,360 |
|
Deferred Tax Liabilities |
|
|
|
|
|
|
|
Loan origination costs |
|
|
(870) |
|
|
(1,242) |
|
Servicing rights |
|
|
(1,461) |
|
|
(3,003) |
|
Prepaids |
|
|
(52) |
|
|
(72) |
|
Stock dividend - FHLB stock |
|
|
(1) |
|
|
(1) |
|
Property, plant, and equipment |
|
|
(484) |
|
|
(203) |
|
Total deferred tax liabilities |
|
|
(2,868) |
|
|
(4,521) |
|
Net deferred tax liabilities |
|
$ |
(607) |
|
$ |
(1,161) |
The Company files a U.S. Federal income tax return and Oregon State return, which are subject to examination by tax authorities for years 2014 and later. At December 31, 2017 and 2016, the Company had no uncertain tax positions. The Company recognizes interest and penalties in tax expense and at December 31, 2017 and 2016, the Company recognized no interest and penalties.