Annual report pursuant to Section 13 and 15(d)

Income Taxes

v2.4.0.6
Income Taxes
 12 Months Ended
Dec. 31, 2011
Income Taxes [Abstract]  
Income Taxes

9. INCOME TAXES

The Company files income tax returns in the U. S., the Commonwealth of Virginia, and other states. With few exceptions, the Company is no longer subject to U. S. federal, state and local income tax examinations by tax authorities for years prior to 2008.

Net deferred tax assets and liabilities consist of the following components as of December 31, 2011 and 2010 (dollars in thousands):

 

     2011      2010  

Deferred tax assets:

      

Allowance for loan losses

    $ 13,822       $ 13,442   

Benefit plans

      1,300         1,164   

Nonaccrual loans

      1,577         1,374   

Purchase accounting

      5,110         8,467   

Other

      2,524         1,787   
  

 

 

     

 

 

  

Total deferred tax assets

    $ 24,333       $ 26,234   
  

 

 

     

 

 

  

Deferred tax liabilities:

      

Depreciation

      

Purchase accounting

    $ 6,447       $ 8,729   

Other

      2,303         2,561   

Securities available for sale

      6,158         1,990   
  

 

 

     

 

 

  

Total deferred tax liabilities

      14,908         13,280   
  

 

 

     

 

 

  

Net deferred tax asset

    $ 9,425       $ 12,954   
  

 

 

     

 

 

  

In assessing the ability to realize deferred tax assets, management considers the scheduled reversal of temporary differences, projected future taxable income, and tax planning strategies. Management believes it is more likely than not the Company will realize its deferred tax assets and, accordingly, no valuation allowance has been established.

The provision for income taxes charged to operations for the years ended December 31, 2011, 2010, and 2009 consists of the following (dollars in thousands):

 

     2011     2010     2009  

Current tax expense

    $ 11,879      $ 9,856      $ 3,315   

Deferred tax expense (benefit)

      (615 )      (1,273 )      (2,425 ) 
  

 

 

    

 

 

    

 

 

  

Income tax expense

    $ 11,264      $ 8,583      $ 890   
  

 

 

    

 

 

    

 

 

  

 

The income tax expense differs from the amount of income tax determined by applying the U. S. federal income tax rate to pretax income for the years ended December 31, 2011, 2010, and 2009, due to the following (dollars in thousands):

 

     2011     2010     2009  

Computed "expected" tax expense

    $ 14,600      $ 11,027      $ 3,238   

(Decrease) in taxes resulting from:

       

Tax-exempt interest income, net

      (2,681 )      (2,513 )      (2,180 ) 

Other, net

      (655 )      69        (168 ) 
  

 

 

    

 

 

    

 

 

  

Income tax expense

    $ 11,264      $ 8,583      $ 890   
  

 

 

    

 

 

    

 

 

  

The effective tax rates were 27.1%, 27.2%, and 9.6%, for years ended December 31, 2011, 2010, and 2009, respectively. Tax credits totaled $203,000, $132,000, and $172,000, for the years ended December 31, 2011, 2010, and 2009, respectively.