v3.19.1

Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act (the “2017 Tax Act”) became law. The 2017 Tax Act includes a number of changes to existing U.S. tax laws that impact the Company, most notably a reduction of the U.S. corporate income tax rate to 21 percent for tax years beginning after December 31, 2017. The components of income tax expense are as follows:
Income Tax Expense |  |
|  | For the Years Ended December 31,
(in thousands) |  | 2018 |  | 2017
Current |  |  |  |
Federal |  | $ | 3,696 |  |  | $ | 4,612 |
State |  | 1,427 |  |  | 1,231 |
Total Current Expense |  | 5,123 |  |  | 5,843 |
Deferred tax benefit |  | (141 | ) |  | (239 | )
Change in corporate income tax rate |  | — |  |  | 1,386 |
Total Income Tax Expense |  | $ | 4,982 |  |  | $ | 6,990 |
The components of the net deferred tax asset are:
Net Deferred Tax Asset |  |  |  |
(in thousands) |  | 2018 |  | 2017
Deferred tax assets |  |  |  |
Allowance for loan and credit losses |  | 3,384 |  |  | 3,003 |
Reserve for recourse on mortgage loans sold |  | 138 |  |  | 125 |
Nonaccrual interest |  | 63 |  |  | 268 |
Foreclosed real estate write-downs |  | 3 |  |  | 8 |
Stock-based compensation |  | 239 |  |  | 188 |
Long-term incentive program (LTIP) |  | 189 |  |  | 77 |
Core deposit intangible |  | 24 |  |  | 26 |
Unrealized loss on investment securities available for sale |  | 227 |  |  | 97 |
Net operating loss carryforward |  | 244 |  |  | 212 |
|  | 4,511 |  |  | 4,004 |
Deferred tax liabilities |  |  |  |
Unrealized gain on cash flow hedging derivative |  | 2 |  |  | 2 |
Unrealized gain on loans held for sale |  | 51 |  |  | 9 |
Accumulated depreciation |  | 516 |  |  | 399 |
Deferred casualty gain |  | 1 |  |  | 1 |
Other |  | 43 |  |  | — |
|  | 613 |  |  | 411 |
Net deferred tax asset before valuation allowance |  | 3,898 |  |  | 3,593 |
Less: Valuation allowance |  | 244 |  |  | 212 |
Net deferred tax asset |  | 3,654 |  |  | 3,381 |
The differences between the federal income tax rate and the effective tax rate for the Company are reconciled as follows:
Reconciliation of Federal Tax Rate to the Effective Rate |  |
|  | 2018 |  | 2017
Statutory federal income tax rate |  | 21.00 | % |  | 34.00 | %
Increase (decrease) resulting from |  |  |  |
State income taxes, net of federal income tax benefit |  | 6.35 |  |  | 5.37 |
Nondeductible expenses |  | 0.42 |  |  | 0.84 |
Tax exempt income |  | (0.04 | ) |  | (0.22 | )
Change in corporate income tax rate |  | — |  |  | 9.83 |
Other |  | 0.34 |  |  | (0.24 | )
Effective Tax Rate |  | 28.07 | % |  | 49.58 | %
Deferred tax assets represent the future tax benefit of deductible differences and, if it is more likely than not that a tax asset will not be realized, a valuation allowance is required to reduce the net deferred tax assets to net realizable value. As of December 31, 2018, management has determined that it is more likely than not that the majority of the deferred tax asset from continuing operations will be realized. At December 31, 2018 and 2017, a valuation allowance of $244,376 and $212,367 was recognized, respectively, for a State of Maryland net operating loss carryforward that may not be realizable. The Company does not have material uncertain tax positions and did not recognize any adjustments for unrecognized tax benefits. The Company remains subject to examination of income tax returns for the years ending after December 31, 2015.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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