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Income Taxes
 9 Months Ended
Sep. 30, 2020
Income Tax Disclosure [Abstract]  
INCOME TAXES

4. INCOME TAXES

 

Our effective tax rate for the three and nine months ended September 30, 2020 was 17.7 percent and 15.8 percent, respectively, compared to 17.0 percent and 18.4 percent, respectively, for the same periods in 2019. Effective rates are dependent upon components of pretax earnings and the related tax effects. The effective rate was lower for the nine-month period in 2020 due to investment tax credits recognized using the flow-through method of accounting, whereby income taxes payable and income tax expense were reduced. Additionally, lower levels of pretax earnings caused tax-favored adjustments to be larger on a percentage basis in 2020 compared to the prior year. For the three-month period, a higher level of pretax earnings in 2020 resulted in a higher effective tax rate.

 

Income tax expense attributable to income from operations for the three and nine-month periods ended September 30, 2020 and 2019 differed from the amounts computed by applying the U.S. federal tax rate of 21 percent to pretax income by the items detailed in the below table. In interim periods, income taxes are adjusted to reflect the effective tax rate we anticipate for the year, with adjustments flowing through the other items, net line.

 

 

 

For the Three Months Ended September 30,

 

For the Nine Months Ended September 30,

 

 

2020

 

2019

 

2020

 

2019

(in thousands)

 

Amount

 

 

%

 

 

 

Amount

 

 

%

 

 

 

Amount

 

 

%

 

 

 

Amount

 

 

%

 

 

Provision for income taxes at the statutory rate of 21%

 

$

10,817

 

 

 

21.0

 

%

 

$

8,179

 

 

 

21.0

 

%

 

$

18,275

 

 

 

21.0

 

%

 

$

35,598

 

 

 

21.0

 

%

Increase (reduction) in taxes resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excess tax benefit on share-based compensation

 

 

(848

)

 

 

(1.6

)

%

 

 

(614

)

 

 

(1.6

)

%

 

 

(2,141

)

 

 

(2.4

)

%

 

 

(3,546

)

 

 

(2.1

)

%

Tax exempt interest income

 

 

(324

)

 

 

(0.6

)

%

 

 

(276

)

 

 

(0.7

)

%

 

 

(960

)

 

 

(1.1

)

%

 

 

(930

)

 

 

(0.6

)

%

Dividends received deduction

 

 

(221

)

 

 

(0.4

)

%

 

 

(218

)

 

 

(0.6

)

%

 

 

(705

)

 

 

(0.8

)

%

 

 

(635

)

 

 

(0.4

)

%

Investment tax credit

 

 

(316

)

 

 

(0.6

)

%

 

 

—

 

 

 

0.0

 

%

 

 

(1,766

)

 

 

(2.0

)

%

 

 

—

 

 

 

0.0

 

%

ESOP dividends paid deduction

 

 

(134

)

 

 

(0.3

)

%

 

 

(136

)

 

 

(0.3

)

%

 

 

(403

)

 

 

(0.5

)

%

 

 

(413

)

 

 

(0.2

)

%

Nondeductible expenses

 

 

275

 

 

 

0.5

 

%

 

 

243

 

 

 

0.6

 

%

 

 

639

 

 

 

0.7

 

%

 

 

1,166

 

 

 

0.7

 

%

Other items, net

 

 

(127

)

 

 

(0.3

)

%

 

 

(555

)

 

 

(1.4

)

%

 

 

799

 

 

 

0.9

 

%

 

 

12

 

 

 

0.0

 

%

Total tax expense

 

$

9,122

 

 

 

17.7

 

%

 

$

6,623

 

 

 

17.0

 

%

 

$

13,738

 

 

 

15.8

 

%

 

$

31,252

 

 

 

18.4

 

%