XML 30 R15.htm IDEA: XBRL DOCUMENT
v3.19.1

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2018
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 2015. The following table summarizes income tax expense for years ended December 31.
(Dollars in thousands) | 2018 |  | 2017 |  | 2016
Current expense | $ | 1,097 |  | $ | 1,260 |  | $ | 1,498
Deferred expense (benefit) | 543 |  | 443 |  | (232)
Expense due to enactment of federal tax reform legislation | 0 |  | 2,635 |  | 0
Income tax expense | $ | 1,640 |  | $ | 4,338 |  | $ | 1,266
The following table reconciles the Company's effective income tax rate to its statutory federal rate for years ended December 31.
| 2018 |  | 2017 |  | 2016
Statutory federal tax rate | 21.0 | % |  | 34.0 | % |  | 34.0 | %
Increase (decrease) resulting from: |  |  |  |  |
Tax exempt interest income | (7.7) | % |  | (13.0) | % |  | (16.0) | %
Income from life insurance | (1.7) | % |  | (2.4) | % |  | (4.7) | %
Disallowed interest expense | 0.8 | % |  | 1.0 | % |  | 1.0 | %
Low-income housing credits and related expense | (2.5) | % |  | (4.6) | % |  | (7.2) | %
Merger related | 0.6 | % |  | 0.0 | % |  | 0.0 | %
Expense due to enactment of federal tax reform legislation | 0.0 | % |  | 21.2 | % |  | 0.0 | %
Regulatory settlement | 0.0 | % |  | 0.0 | % |  | 4.3 | %
Change in statutory federal tax rate | 0.0 | % |  | 0.0 | % |  | 2.3 | %
Other | 0.9 | % |  | (1.3) | % |  | 2.3 | %
Effective income tax rate | 11.4 | % |  | 34.9 | % |  | 16.0 | %
Income tax expense includes $211,000, $405,000 and $483,000 related to net security gains for the years ended December 31, 2018, 2017, and 2016. Effective January 1, 2016, the Company changed its 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. On December 22, 2017, federal tax reform legislation, commonly referred to as the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), was enacted. Among other things, the Tax Act reduced the Company's statutory federal tax rate from 34% to 21% effective January 1, 2018. As a result, we were required to remeasure, through income tax expense, certain deferred tax assets and liabilities using the enacted rate at which we expect them to be recovered or settled. The remeasurement of our net deferred tax asset resulted in additional federal deferred tax expense of $2,635,000, which is included in total tax expense for 2017. Also on December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provided guidance on accounting for the tax effects of the Tax Act. SAB 118 provided for a measurement period that should not extend beyond one year from the Tax Act's enactment date for companies to complete the accounting under ASC 740, Income Taxes. In remeasuring our net deferred tax asset, we estimated the income in 2017 for our limited partnership investments in affordable housing real estate partnerships and interest income on nonperforming loans. Adjustment between our estimates and the actual amounts determined during the measurement period did not have a material impact to our consolidated financial statements. The Company's deferred tax asset related to low-income housing credit carryforwards was not impacted by the change in statutory tax rate, as it is treated as payments on future federal income taxes due and not subject to remeasurement. However, the Tax Act did change alternative minimum tax credit carryforwards to be refundable credits. To reflect this change, the Company reclassed its alternative minimum tax credit carryforwards, totaling $5,343,000 at December 31, 2017, from deferred tax assets to other assets in the consolidated balance sheets. There were no penalties or interest related to income taxes recorded in the income statement for the years ended December 31, 2018, 2017 and 2016 and no amounts accrued for penalties as of December 31, 2018 and 2017. The following table summarizes the Company's deferred tax assets and liabilities at December 31.
(Dollars in thousands) | 2018 |  | 2017
Deferred tax assets: |  |  |
Allowance for loan losses | $ | 3,143 |  | $ | 2,919
Deferred compensation | 723 |  | 355
Retirement and salary continuation plans | 1,416 |  | 1,301
Share-based compensation | 742 |  | 597
Off-balance sheet reserves | 219 |  | 207
Nonaccrual loan interest | 537 |  | 258
Net unrealized losses on securities available for sale | 791 |  | 0
Purchase accounting adjustments | 1,795 |  | 39
Bonus accrual | 470 |  | 25
Low-income housing credit carryforward | 641 |  | 2,313
Other | 321 |  | 390
Total deferred tax assets | 10,798 |  | 8,404
Deferred tax liabilities: |  |  |
Depreciation | 458 |  | 488
Net unrealized gains on securities available for sale | 0 |  | 757
Mortgage servicing rights | 590 |  | 536
Purchase accounting adjustments | 1,021 |  | 251
Other | 150 |  | 122
Total deferred tax liabilities | 2,219 |  | 2,154
Net deferred tax asset, included in Other Assets | $ | 8,579 |  | $ | 6,250
At December 31, 2018, the Company has low-income housing credit carryforwards that expire through 2038. A deferred tax asset is recognized for these carryforwards because the benefit is more likely than not to be realized.

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://fasb.org/us-gaap/role/ref/legacyRef -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