XML 35 R18.htm IDEA: XBRL DOCUMENT

INCOME TAXES

12 Months Ended

Dec. 31, 2020

NOTE 10. INCOME TAXES

The following table summarizes the current and deferred components of income tax expense (benefit) for each of the years ended December 31, 2020, 2019 and 2018:


(in thousands)	2020		2019		2018
Current:
Federal tax expense	$	7,165	$	2,639	$	6,775
State tax expense		1,280		550		1,230
Total current tax expense		8,445		3,189		8,005

Deferred tax expense		(38)		1,020		(443)
Total income tax expense	$	8,407	$	4,209	$	7,562

The following table reconciles the expected federal income tax expense (computed by applying the federal statutory tax rate of 21%) to recorded income tax expense for the years ended December 31, 2020, 2019 and 2018:


	2020				2019				2018
(in thousands, except ratios)	Amount		Rate		Amount		Rate		Amount		Rate
Statutory tax rate	$	8,747	21.00	%	$	5,633	21.00	%	$	8,505	21.00	%
Increase (decrease) resulting from:
State taxes, net of federal benefit		1,120	2.69			547	2.04			908	2.24
Tax exempt interest		(1,301)	(3.12)			(1,375)	(5.13)			(1,315)	(3.25)
Federal tax credits		(330)	(0.79)			(282)	(1.05)			(125)	(0.31)
Officers' life insurance		(403)	(0.97)			(431)	(1.61)			(382)	(0.94)
Gain of disposal of low income housing tax credit investments		147	0.35			—	—			—	—
Stock-based compensation plans		52	0.12			(20)	(0.07)			(120)	(0.30)
Other		375	0.90			137	0.51			91	0.23
Effective tax rate	$	8,407	20.18	%	$	4,209	15.69	%	$	7,562	18.67	%

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 31, 2020 and 2019 are summarized below. The net deferred tax asset, which is included in other assets, amounted to $1.7 million at December 31, 2020 and $3.9 million at December 31, 2019.

The significant components of deferred tax assets and liabilities at December 31, 2020 and December 31, 2019 were as follows:


	2020				2019
(in thousands)	Assets		Liabilities		Assets		Liabilities
Allowance for loan losses	$	4,464	$	—	$	3,507	$	—
Deferred compensation		4,129		—		3,383		—
Unrealized gain or loss on securities available for sale		—		4,404		—		1,858
Unrealized gain or loss on derivatives		623		—		307		—
Depreciation		—		2,261		—		1,722
Deferred loan origination costs		—		1,190		—		862
Non-accrual interest		492		—		381		—
Branch acquisition costs and goodwill		—		1,034		—		712
Core deposit intangible		—		1,078		—		1,231
Acquisition fair value adjustments		1,833		—		2,223		—
Prepaid expenses		—		301		—		311
Mortgage servicing rights		—		784		—		703
Equity compensation		432		—		468		—
Prepaid pension		—		377		—		359
Contract incentives		1,017		—		1,167		—
Right of use asset		—		2,419		—		2,253
Lease liability		2,487		—		2,273		—
Other		116		—		167		—
Total	$	15,593	$	13,848	$	13,876	$	10,011

The Company has determined that a valuation allowance is not required for its net deferred tax asset since it is more likely than not that this asset is realizable principally through future taxable income and future reversal of existing temporary differences.

GAAP requires the measurement of unrecorded tax benefits related to uncertain tax positions. An unrecorded tax benefit is the difference between the tax benefit of a position taken, or expected to be taken, on a tax return and the benefit recorded for accounting purposes. At December 31, 2020 and 2019, the Company had no unrecorded tax benefits and does not expect the amount of unrecorded tax benefits to significantly increase within the next twelve months.

The Company is subject to income tax in the U.S. federal jurisdiction and also in the states of Maine, New Hampshire and Massachusetts. The Company is no longer subject to examination by taxing authorities for years before 2017.

- 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 + Details