Note 11: Income Taxes
On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act, which significantly changes the existing U.S. tax laws, including a reduction in the corporate tax rate from 35% to 21%. As a result of enactment of the legislation, the Company recorded in the fourth quarter of 2017, an additional one-time income tax benefit of $6.9 million, primarily related to the re-measurement of certain deferred tax assets and liabilities and included an expense of $243,000 related to the adjustment of the deferred tax asset for net unrealized losses on available for sale securities.
The provision for income taxes includes these components for the years ended December 31, 2017, 2016 and 2015:
|
|
|
Year Ended |
|
|||||||
|
|
|
December 31, |
|
|||||||
|
|
|
2017 |
|
|
2016 |
|
2015 |
|
||
|
|
|
|
(In thousands) |
|
||||||
|
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
Current tax payable |
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
21,413 |
|
$ |
18,627 |
|
$ |
15,022 |
|
|
State |
|
|
3,479 |
|
|
4,477 |
|
|
3,293 |
|
|
Deferred tax payable |
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
|
(2,627) |
|
|
(441) |
|
|
604 |
|
|
State |
|
|
212 |
|
|
(995) |
|
|
(121) |
|
|
Income tax expense |
|
$ |
22,477 |
|
$ |
21,668 |
|
$ |
18,798 |
|
|
Effective tax rate |
|
|
29.1 |
% |
|
39.5 |
% |
|
39.8 |
% |
A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax expense for the years ended December 31, 2017, 2016 and 2015, is shown below:
|
|
|
Year Ended |
|||||||
|
|
|
December 31, |
|||||||
|
|
|
2017 |
|
|
2016 |
|
2015 |
||
|
|
|
(In thousands) |
|||||||
|
Computed at the statutory rate (35%) |
|
$ |
27,006 |
|
$ |
19,178 |
|
$ |
16,513 |
|
Increase resulting from |
|
|
|
|
|
|
|
|
|
|
State income taxes |
|
|
2,399 |
|
|
2,264 |
|
|
2,062 |
|
Effect of Tax Cuts and Jobs Act |
|
|
(6,928) |
|
|
— |
|
|
— |
|
Other |
|
|
— |
|
|
226 |
|
|
223 |
|
Actual tax expense |
|
$ |
22,477 |
|
$ |
21,668 |
|
$ |
18,798 |
The tax effects of temporary differences related to deferred taxes shown on the balance sheet were:
|
|
|
December 31, |
||||
|
|
|
2017 |
|
2016 |
||
|
|
|
(In thousands) |
||||
|
Deferred tax assets |
|
|
|
|
|
|
|
Allowance for loan losses |
|
$ |
2,286 |
|
$ |
2,482 |
|
Unrealized loss on available-for-sale securities |
|
|
442 |
|
|
429 |
|
State tax |
|
|
421 |
|
|
330 |
|
Other |
|
|
105 |
|
|
470 |
|
Total assets |
|
|
3,254 |
|
|
3,711 |
|
Deferred tax liabilities |
|
|
|
|
|
|
|
Depreciation |
|
|
(152) |
|
|
(272) |
|
Mortgage-servicing rights |
|
|
(16,037) |
|
|
(19,009) |
|
Other |
|
|
— |
|
|
(37) |
|
Total liabilities |
|
|
(16,189) |
|
|
(19,318) |
|
Net deferred tax liability |
|
$ |
(12,935) |
|
$ |
(15,607) |