Note 10- Income Taxes

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

INCOME TAXES

NOTE 10—INCOME TAXES

Income tax provisions for interim quarterly periods are generally based on an estimated annual effective income tax rate calculated separately from the effect of significant, infrequent or unusual items related specifically to interim periods. The income tax impact of discrete items are recognized in the period these occur.

The following table summarizes income tax expense, including the impact of discrete items, for each period presented:

	Three months ended September 30,				Nine months ended September 30,
(In thousands)	2021		2020		2021		2020
Deferred income tax expense (benefit)	$	1,817	$	(1,407)	$	3,046	$	(473)
Discrete items:
State income taxes - West Virginia		(229)		—		(1,615)		—
Stock-based compensation		—		—		219		435
Total income tax expense (benefit)	$	1,588	$	(1,407)	$	1,650	$	(38)

Discrete items include the impact of legislative changes in Virginia and West Virginia and tax expense for the excess of book expense over the tax deduction for vested restricted stock awards. Excluding these discrete items, our effective tax rate for the three months ended September 30, 2021 and 2020 was 21% and 23%, respectively. Similarly, our effective tax rate for the nine months ended September 30, 2021 and 2020 was 13% and 19%, respectively. The primary difference from the federal statutory rate of 21% in each period is related to state taxes, permanent differences for non-deductible expenses and depletion expense for income tax purposes.