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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | 13. Income Taxes The following is a summary of income tax expense for the years ended December 31, 2017, 2016, and 2015:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Current – federal |  | $ | 8,978 |  |  | $ | 6,181 |  |  | $ | 7,777 |
Current – state |  |  | 29 |  |  |  | (33 | ) |  |  | 139 |
Deferred – federal |  |  | 376 |  |  |  | 1,023 |  |  |  | 376 |
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate |  |  | 3,009 |  |  |  | 0 |  |  |  | 0 |
Income tax expense |  | $ | 12,392 |  |  | $ | 7,171 |  |  | $ | 8,292 |
The reconciliation of income tax attributable to pre-tax income at the federal statutory tax rates to income tax expense is as follows:
|  | 2017 |  |  | % |  |  | 2016 |  |  | % |  |  | 2015 |  |  | % |
Tax at statutory rate |  | $ | 12,688 |  |  |  | 35.0 |  |  | $ | 9,699 |  |  |  | 35.0 |  |  | $ | 10,671 |  |  |  | 35.0 |
Tax exempt income, net |  |  | (1,899 | ) |  |  | (5.2 | ) |  |  | (2,054 | ) |  |  | (7.4 | ) |  |  | (1,816 | ) |  |  | (6.0 | )
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate |  |  | 3,009 |  |  |  | 8.3 |  |  |  | 0 |  |  |  | 0.00 |  |  |  | 0 |  |  |  | 0.0 |
Bank owned life insurance |  |  | (581 | ) |  |  | (1.6 | ) |  |  | (379 | ) |  |  | (1.3 | ) |  |  | (418 | ) |  |  | (1.4 | )
Merger costs |  |  | 0 |  |  |  | 0.0 |  |  |  | 170 |  |  |  | 0.6 |  |  |  | 30 |  |  |  | 0.1 |
Other |  |  | (825 | ) |  |  | (2.3 | ) |  |  | (265 | ) |  |  | (1.0 | ) |  |  | (175 | ) |  |  | (0.5 | )
Income tax expense |  | $ | 12,392 |  |  |  | 34.2 |  |  | $ | 7,171 |  |  |  | 25.9 |  |  | $ | 8,292 |  |  |  | 27.2 |
Income tax expense for 2017 was impacted by the adjustment of our deferred tax assets and liabilities related to the reduction in the U.S. federal statutory income tax rate to 21% under the Tax Cuts and Jobs Act, which was enacted on December 22, 2017. As a result of the new law, which is more fully discussed below, the Corporation recognized additional tax expense totaling $3,009, as detailed in the table above. Year-end deferred taxes are presented in the table below. As a result of the Tax Cuts and Jobs Act enacted on December 22, 2017 (discussed below), deferred taxes as of December 31, 2017 are based on the newly enacted U.S. statutory federal income tax rate of 21%. Deferred taxes as of December 31, 2016 are based on the previously enacted U.S. statutory federal income tax rate of 35%.
|  | 2017 |  |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for loan losses |  | $ | 2,840 |  |  | $ | 4,679 |
Fair value adjustments – business combination |  |  | 1,135 |  |  |  | 2,530 |
Deferred compensation |  |  | 1,903 |  |  |  | 2,891 |
Impaired security valuation |  |  | 0 |  |  |  | 379 |
Net operating loss carryover |  |  | 71 |  |  |  | 627 |
Post-retirement benefits |  |  | 892 |  |  |  | 1,688 |
Unrealized loss on interest rate swap |  |  | 34 |  |  |  | 161 |
Nonaccrual loan interest |  |  | 390 |  |  |  | 649 |
Accrued expenses |  |  | 699 |  |  |  | 1,282 |
Deferred fees and costs |  |  | 598 |  |  |  | 629 |
Other |  |  | 344 |  |  |  | 465 |
|  |  | 8,906 |  |  |  | 15,980 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Unrealized gain on securities available for sale |  |  | 126 |  |  |  | 750 |
Premises and equipment |  |  | 1,413 |  |  |  | 2,258 |
Unrealized gain on trading securities |  |  | 156 |  |  |  | 118 |
Intangibles – section 197 |  |  | 2,593 |  |  |  | 4,735 |
Mortgage servicing rights |  |  | 291 |  |  |  | 487 |
Other |  |  | 78 |  |  |  | 23 |
|  |  | 4,657 |  |  |  | 8,371 |
Net deferred tax asset |  | $ | 4,249 |  |  | $ | 7,609 |
At December 31, 2017 and 2016, the Corporation has no unrecognized tax benefits. The Corporation does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months. The Corporation recognizes interest and/or penalties related to income tax matters as part of income tax expense. At December 31, 2017 and 2016, there were no amounts accrued for interest and/or penalties and no amounts recorded as expense for the years ending December 31, 2017, 2016, and 2015. The Corporation and its subsidiaries are subject to U.S. federal income tax. The Corporation is no longer subject to examination by the taxing authorities for years prior to 2013. Tax years 2014 through 2016 remain open to federal examination. In connection with its acquisition of FC Banc Corp., the Corporation assumed a federal net operating loss carryforward of $6,367, which expires in 2033. Under Section 382 of the Internal Revenue Code, the utilization of the loss carryforward in future years is limited based on the consideration paid and other factors. The annual limitation on the utilization of this loss carry forward is $1,455. As of December 31, 2017, the balance of the net operating loss carryforward is $338. Management believes that the net operating loss carryforward will be used in full before its expiration. The Tax Cuts and Jobs Act was enacted on December 22, 2017. Among other things, the new law (i) establishes a new, flat corporate federal statutory income tax rate of 21%, (ii) eliminates the corporate alternative minimum tax and allows the use of any such carryforwards to offset regular tax liability for any taxable year, (iii) limits the deduction for net interest expense incurred by U.S. corporations, (iv) allows businesses to immediately expense, for tax purposes, the cost of new investments in certain qualified depreciable assets, (v) eliminates or reduces certain deductions related to meals and entertainment expenses, (vi) modifies the limitation on excessive employee remuneration to eliminate the exception for performance-based compensation and clarifies the definition of a covered employee and (vii) limits the deductibility of deposit insurance premiums. The Tax Cuts and Jobs Act also significantly changes U.S. tax law related to foreign operations, however, such changes do not currently impact us.

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- 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
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