Annual report pursuant to Section 13 and 15(d)

Income Taxes

v2.4.0.6
Income Taxes
 12 Months Ended
Dec. 31, 2012
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 or state income tax examinations by tax authorities for years prior to 2009.

Net deferred tax assets and liabilities consist of the following components as of December 31, 2012 and 2011 (dollars in thousands):

 

                 
    2012     2011  

Deferred tax assets:

                

Allowance for loan losses

   $ 12,221     $ 13,822  

Benefit plans

     1,429       1,300  

Nonaccrual loans

     1,148       1,577  

Purchase accounting

     2,980       5,110  

Stock grants

     1,232       888  

Other real estate owned

     2,709       985  

Other

     1,018       830  
   

 

 

    

 

 

  

Total deferred tax assets

     22,737       24,512  
   

 

 

    

 

 

  
     

Deferred tax liabilities:

                

Purchase accounting

   $ 6,057     $ 8,135  

Securities available for sale

     6,101       6,158  

Other

     899       794  
   

 

 

    

 

 

  

Total deferred tax liabilities

     13,057       15,087  
   

 

 

    

 

 

  

Net deferred tax asset

   $ 9,680     $ 9,425  
   

 

 

    

 

 

  

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, 2012, 2011, and 2010 consists of the following (dollars in thousands):

 

                         
    2012     2011     2010  
       

Current tax expense

   $ 14,528     $ 11,879     $ 9,856  

Deferred tax expense (benefit)

     (195 )      (615 )      (1,273 ) 
   

 

 

    

 

 

    

 

 

  

Income tax expense

   $ 14,333     $ 11,264     $ 8,583  
   

 

 

    

 

 

    

 

 

  

 

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, 2012, 2011, and 2010, due to the following (dollars in thousands):

 

                         
    2012     2011     2010  
       

Computed “expected” tax expense

   $ 17,411     $ 14,600     $ 11,027  

(Decrease) in taxes resulting from:

                        

Tax-exempt interest income, net

     (2,614 )      (2,681 )      (2,513 ) 

Other, net

     (464 )      (655 )      69  
   

 

 

    

 

 

    

 

 

  

Income tax expense

   $ 14,333     $ 11,264     $ 8,583  
   

 

 

    

 

 

    

 

 

  

The effective tax rates were 28.8%, 27.1%, and 27.2%, for years ended December 31, 2012, 2011, and 2010, respectively. Tax credits totaled $217,000, $203,000, and $132,000, for the years ended December 31, 2012, 2011, and 2010, respectively.