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Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

NOTE 13: Income Taxes

​

Principal components of income tax expense as reflected in the Consolidated Statements of Income are as follows:

​

​	​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
(Dollars in thousands)		2021			2020			2019
Current taxes	​	$	9,049	​	$	7,612	​	$	4,728	​
Deferred taxes	​		(90)	​		(817)	​		354	​
​	​	$	8,959	​	$	6,795	​	$	5,082	​

​

Income tax expense for the years ended December 31, 2021, 2020 and 2019 differed from the federal statutory rate applied to income before income taxes for the following reasons:

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

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Year Ended December 31,

​

​

​

2021

​

​

2020

​

​

2019

​

(Dollars in thousands)

​

Amount

​

Percent

​

Amount

​

Percent

​

Amount

​

Percent

Income tax at statutory rates

​

$

7,997

21.0

%

$

6,136

​

21.0

%

$

5,026

21.0

%

State income taxes

​

1,340

3.5

​

1,449

​

5.0

​

695

2.9

​

Tax-exempt interest income

​

(396)

(1.0)

​

(493)

​

(1.7)

​

(453)

(1.9)

​

Excess compensation

​

​

571

​

1.5

​

​

328

​

1.1

​

​

—

​

—

​

Change in tax law

​

​

—

​

—

​

​

(326)

​

(1.1)

​

​

—

​

—

​

Income from bank-owned life insurance

​

​

(110)

​

(0.3)

​

​

(107)

​

(0.4)

​

​

(149)

​

(0.6)

​

Investments in qualified housing projects

​

​

(48)

​

(0.1)

​

​

(82)

​

(0.3)

​

​

(93)

​

(0.4)

​

Share based compensation

​

(83)

(0.2)

​

(77)

​

(0.3)

​

​

(126)

(0.5)

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Contribution of real property

​

​

(107)

​

(0.3)

​

​

—

​

—

​

​

—

​

—

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Merger related expenses

​

​

—

​

—

​

​

29

​

0.1

​

​

96

​

0.4

​

Other

​

(205)

(0.5)

​

(62)

​

(0.2)

​

86

0.3

​

​

​

$

8,959

23.6

%

$

6,795

23.2

%

$

5,082

21.2

%

​

The CARES Act, enacted in March 2020, included a provision that allowed net operating losses generated in years prior to 2020 to be carried back for up to five tax years.  Previously, tax law only allowed for net operating losses to be carried forward to future tax years.  During 2020, the Corporation recognized income tax benefits of $326,000 related to net operating losses generated by Peoples in 2019, which were able to be applied to years prior to 2018 at higher income tax rates than the current statutory rate as a result of the CARES Act.

​

The Corporation’s net deferred income taxes totaled $13.61 million and $13.56 million at December 31, 2021 and 2020, respectively. The tax effects of each type of significant item that gave rise to deferred taxes are:

​

​

​	​	​	​	​	​	​	​
​		December 31,
(Dollars in thousands)	​	2021		​	2020
Deferred tax assets	​	​	​	​	​	​	​
Allowances for loan losses and OREO losses	​	$	9,960	​	$	9,743	​
Nonqualified defined contribution plan	​		3,948	​		3,595	​
Lease liabilities	​	​	2,057	​	​	1,906	​
Fair value adjustments related to business combinations	​		1,119	​		1,716	​
Share-based compensation	​		752	​		920	​
Reserve for indemnification losses	​		821	​		879	​
Accrued expenses	​	​	352	​	​	779	​
Cash flow hedges	​		158	​		471	​
Other	​		1,275	​		1,364	​
Deferred tax assets	​		20,442	​		21,373	​
Deferred tax liabilities	​	​	​	​	​	​	​
Goodwill and other intangible assets	​		(3,114)	​		(3,164)	​
Right of use assets	​	​	(1,938)	​	​	(1,868)	​
Depreciation	​		(989)	​		(1,272)	​
Net unrealized gain on securities available for sale	​		(116)	​		(1,169)	​
Defined benefit plan	​		(677)	​		(345)	​
Deferred tax liabilities	​		(6,834)	​		(7,818)	​
Net deferred tax assets	​	$	13,608	​	$	13,555	​

​

The Corporation files income tax returns in the U.S. federal jurisdiction and several states. With few exceptions, the Corporation is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2018.

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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

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-Publisher FASB
-Name Accounting Standards Codification
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