XML 42 R26.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income tax expense (benefit) for the years ended December 31 is comprised of:
(dollars in thousands) | 2017 |  |  | 2016 |  |  | 2015 |
Federal |  |  |  |  |
Current | $ | 32,282 |  |  | $ | 24,521 |  |  | $ | 24,825 |
Deferred | 13,980 |  |  | 665 |  |  | (427 | )
Total Federal | 46,262 |  |  | 25,186 |  |  | 24,398 |
State |  |  |  |  |
Current | 323 |  |  | 248 |  |  | — |
Deferred | (148 | ) |  | (129 | ) |  | — |
Total State | 175 |  |  | 119 |  |  | — |
Total Federal and State | $ | 46,437 |  |  | $ | 25,305 |  |  | $ | 24,398 |
The Tax Act includes significant changes to the U.S. corporate tax system including: a federal corporate rate reduction from 35 percent to 21 percent. The Tax Act also establishes new tax laws that became effective January 1, 2018. U.S. GAAP requires a company to record the effects of a tax law change in the period of enactment. As a result, we re-measured our deferred tax assets and liabilities and recorded an adjustment of $13.4 million. The re-measurement adjustment was recognized as an increase to our income tax expense in the fourth quarter of 2017. This adjustment incorporates assumptions made based upon our current interpretation of the Tax Act and may change as we receive additional clarification and implementation guidance. The statutory to effective tax rate reconciliation for the years ended December 31 is as follows:
| 2017 |  |  | 2016 |  |  | 2015 |
Statutory tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Low income housing tax credits | (2.9 | )% |  | (3.8 | )% |  | (4.4 | )%
Tax-exempt interest | (4.0 | )% |  | (4.4 | )% |  | (4.1 | )%
Bank owned life insurance | (0.8 | )% |  | (0.8 | )% |  | (0.8 | )%
Other | 0.3 | % |  | 0.2 | % |  | 1.0 | %
Adjustment to net deferred tax assets for enacted changes in tax laws and rates | 11.3 | % |  | — | % |  | — | %
Effective Tax Rate | 38.9 | % |  | 26.2 | % |  | 26.7 | %
Significant components of our temporary differences were as follows at December 31:
(dollars in thousands) | 2017 |  |  | 2016 |
Deferred Tax Assets: |  |  |
Allowance for loan losses | 12,440 |  |  | 19,446 |
Purchase accounting adjustments | — |  |  | 365 |
Other employee benefits | 3,095 |  |  | 3,983 |
Low income housing partnerships | 3,213 |  |  | 4,845 |
Net adjustment to funded status of pension | 6,481 |  |  | 10,018 |
Impairment of securities | 300 |  |  | 1,318 |
State net operating loss carryforwards | 3,598 |  |  | 3,114 |
Other | 2,355 |  |  | 4,984 |
Gross Deferred Tax Assets | 31,482 |  |  | 48,073 |
Less: Valuation allowance | (3,598 | ) |  | (3,114 | )
Total Deferred Tax Assets | 27,884 |  |  | 44,959 |
Deferred Tax Liabilities: |  |  |
Net unrealized holding gains on securities available-for-sale | $ | (638 | ) |  | $ | (2,557 | )
Prepaid pension | (1,749 | ) |  | (2,770 | )
Deferred loan income | (2,937 | ) |  | (3,815 | )
Purchase accounting adjustments | (100 | ) |  | — |
Depreciation on premises and equipment | (480 | ) |  | (1,239 | )
Other | (1,401 | ) |  | (1,766 | )
Total Deferred Tax liabilities | (7,305 | ) |  | (12,147 | )
Net Deferred Tax Asset | $ | 20,579 |  |  | $ | 32,812 |
We establish a valuation allowance when it is more likely than not that we will not be able to realize the benefit of the deferred tax assets. Except for Pennsylvania net operating losses, or NOLs, we have determined that a valuation allowance is unnecessary for the deferred tax assets because it is more likely than not that these assets will be realized through future reversals of existing temporary differences and through future taxable income. The valuation allowance is reviewed quarterly and adjusted based on management’s assessments of realizable deferred tax assets. Gross deferred tax assets were reduced by a valuation allowance of $3.6 million in 2017 related to Pennsylvania income tax NOLs. The Pennsylvania NOL carryforwards total $36.0 million and will expire in the years 2020-2037. Unrecognized Tax Benefits The following table reconciles the change in Federal and State gross unrecognized tax benefits, or UTB, for the years ended December 31:
(dollars in thousands) | 2017 |  |  | 2016 |  |  | 2015 |
Balance at beginning of year | $ | 804 |  |  | $ | 1,102 |  |  | $ | 284 |
Prior period tax positions |  |  |  |  |
Increase | — |  |  | — |  |  | 818 |
Decrease | (37 | ) |  | (449 | ) |  | — |
Current period tax positions | 142 |  |  | 151 |  |  | — |
Reductions for statute of limitations expirations | — |  |  | — |  |  | — |
Balance at End of Year | $ | 909 |  |  | $ | 804 |  |  | $ | 1,102 |
Amount That Would Impact the Effective Tax Rate if Recognized | $ | 770 |  |  | $ | 610 |  |  | $ | 542 |
We classify interest and penalties as an element of tax expense. We monitor changes in tax statutes and regulations to determine if significant changes will occur over the next 12 months. As of December 31, 2017, no significant changes to UTB are projected, however, tax audit examinations are possible. As of December 31, 2017, all income tax returns filed for the tax years 2014 through 2016 remain subject to examination by the IRS. Currently, our income tax return for the 2015 tax year is under examination by the IRS. We do not expect that the results of this examination will have a material effect on our financial condition or results of operations.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration