XML 30 R15.htm IDEA: XBRL DOCUMENT
v3.6.0.2

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2016
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The Company files income tax returns in the U.S. federal jurisdiction, the Commonwealth of Pennsylvania and the State of Maryland. The Company is no longer subject to tax examination by tax authorities for years before 2013. The following table summarizes income tax expense (benefit) for years ended December 31.
(Dollars in thousands) | 2016 |  | 2015 |  | 2014
Current expense: |  |  |  |  |
Federal | $ | 1,499 |  |  | $ | 844 |  |  | $ | 81 |
State | (1 | ) |  | (7 | ) |  | 10 |
| 1,498 |  |  | 837 |  |  | 91 |
Deferred expense (benefit): |  |  |  |  |
Federal | (249 | ) |  | 779 |  |  | 2,723 |
State | 17 |  |  | 18 |  |  | 18 |
| (232 | ) |  | 797 |  |  | 2,741 |
Change in valuation allowance on deferred taxes | 0 |  |  | 0 |  |  | (18,964 | )
Income tax expense (benefit) | $ | 1,266 |  |  | $ | 1,634 |  |  | $ | (16,132 | )
The following table reconciles the effective income tax rate to the statutory federal rate for years ended December 31.
| 2016 |  | 2015 |  | 2014
Statutory federal tax rate | 34.0 | % |  | 35.0 | % |  | 35.0 | %
Increase (decrease) resulting from: |  |  |  |  |
State taxes, net of federal benefit | 0.1 | % |  | 0.1 | % |  | 0.1 | %
Tax exempt interest income | (16.0 | )% |  | (11.3 | )% |  | (7.3 | )%
Valuation allowance on deferred tax assets | 0.0 | % |  | 0.0 | % |  | (145.8 | )%
Earnings from life insurance | (4.7 | )% |  | (3.8 | )% |  | (2.6 | )%
Disallowed interest expense | 1.0 | % |  | 0.4 | % |  | 0.2 | %
Low-income housing credits and related expense | (7.2 | )% |  | (5.0 | )% |  | (3.7 | )%
Regulatory settlement | 4.3 | % |  | 0.0 | % |  | 0.0 | %
Change in statutory federal tax rate | 2.3 | % |  | 0.0 | % |  | 0.0 | %
Other | 2.2 | % |  | 1.8 | % |  | 0.1 | %
Effective income tax rate | 16.0 | % |  | 17.2 | % |  | (124.0 | )%
Income tax expense includes $483,000, $673,000 and $677,000 related to net security gains for the years ended December 31, 2016, 2015, and 2014. Effective January 1, 2016, the Company changed the statutory federal tax rate from 35% to 34% to reflect its assessment that it will not be in the higher tax bracket. As a result, income tax expense for 2016 increased $185,000 due to the application of the new rate to existing deferred balances. The following table summarizes deferred tax assets and liabilities at December 31.
(Dollars in thousands) | 2016 |  | 2015
Deferred tax assets: |  |  |
Allowance for loan losses | $ | 4,725 |  |  | $ | 5,111 |
Deferred compensation | 545 |  |  | 547 |
Retirement plans and salary continuation | 1,942 |  |  | 1,824 |
Share-based compensation | 583 |  |  | 343 |
Off-balance sheet reserves | 313 |  |  | 218 |
Nonaccrual loan interest | 370 |  |  | 246 |
Net unrealized losses on securities available for sale | 600 |  |  | 0 |
Goodwill | 92 |  |  | 124 |
Bonus accrual | 236 |  |  | 359 |
Low-income housing credit carryforward | 1,983 |  |  | 1,652 |
Alternative minimum tax credit carryforward | 4,048 |  |  | 2,195 |
Charitable contribution carryforward | 50 |  |  | 211 |
Net operating loss carryforward | 2,520 |  |  | 4,431 |
Other | 429 |  |  | 182 |
Total deferred tax assets | 18,436 |  |  | 17,443 |
Deferred tax liabilities: |  |  |
Depreciation | 771 |  |  | 815 |
Net unrealized gains on securities available for sale | 0 |  |  | 646 |
Mortgage servicing rights | 777 |  |  | 669 |
Purchase accounting adjustments | 435 |  |  | 352 |
Other | 195 |  |  | 181 |
Total deferred tax liabilities | 2,178 |  |  | 2,663 |
Net deferred tax asset, included in Other Assets | $ | 16,258 |  |  | $ | 14,780 |
At December 31, 2016, the Company has charitable contribution, low-income housing, and net operating loss carryforwards that expire through 2019, 2036, and 2032, respectively. Deferred tax assets are recognized for these carryforwards because the benefit is more likely than not to be realized. In assessing whether or not some or all of the Company's deferred tax assets are more likely than not to be realized in the future, management considers all positive and negative evidence, including projected future taxable income, tax planning strategies and recent financial operating results. A valuation allowance to reflect management's estimate of the temporary deductible differences that may expire was recorded in 2012. In 2014, that valuation allowance was reversed based on management's conclusion that profitable operations, improvements in asset quality, strengthened capital position, reduced regulatory risk and improvement in economic conditions made the allowance no longer necessary.

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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration