Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The income tax expense (benefit) attributable to income from operations is summarized as follows:

(In thousands)	Current		Deferred		Total
2022
Federal	$	19,238	$	994	$	20,232
State	4,409		(84)		4,325
Total	$	23,647	$	910	$	24,557
2021
Federal	$	19,345	$	1,485	$	20,830
State	4,039		313		4,352
Total	$	23,384	$	1,798	$	25,182
2020
Federal	$	22,199	$	(5,247)	$	16,952
State	4,009		(1,037)		2,972
Total	$	26,208	$	(6,284)	$	19,924

The primary reasons for the differences between income tax expense and the amount computed by applying the statutory federal income tax rate to earnings are as follows:

	2022		2021		2020
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	3.1		3.0		2.4
Tax exempt income	(1.1)		(1.2)		(1.8)
Excess benefits from equity-based compensation	(0.3)		(0.5)		(0.2)
Bank-owned life insurance income	(0.2)		(0.4)		(0.5)
Federal tax credit	0.0		0.0		(0.4)
All other	(0.1)		0.1		(0.1)
Total	22.4	%	22.0	%	20.4	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31 were as follows:

(In thousands)	2022		2021
Deferred tax assets:
Allowance for credit losses	$	12,387	$	11,160
Lease liability	8,535		7,277
Interest income on nonperforming loans	503		470
Compensation and benefits	12,316		12,303
Purchase accounting adjustments	517		360
Liabilities held at fair value	56		21
Deferred loan fees and costs	1,053		1,664
Other	593		1,017
Total	$	35,960	$	34,272
Deferred tax liabilities:
Prepaid pension	11,528		10,875
Right of use asset	8,222		7,092
Depreciation	3,767		3,586
Intangibles	1,489		1,401
Leases	2,617		1,985
Other	1,571		1,657
Total deferred tax liabilities	$	29,194	$	26,596
Net deferred tax asset at year-end	6,766		7,676
Net deferred tax asset at beginning of year	7,676		9,474
Decrease in net deferred tax asset	(910)		(1,798)
Deferred tax expense	$	910	$	1,798

The above analysis does not include recorded deferred tax assets (liabilities) of $58.6 million and $4.7 million as of December 31, 2022 and 2021, respectively, related to net unrealized holdings losses/(gains) in the available-for-sale debt securities portfolio. In addition, the analysis excludes recorded deferred tax assets of $9.8 million and $13.4 million, as of December 31, 2022 and 2021, respectively, related to employee benefit plans.

Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management considers the scheduled reversal of the deferred tax liabilities, the level of historical taxable income, and the projected future taxable income over the periods in which the temporary differences comprising the deferred tax assets will be deductible. Based on its assessment, management determined that no valuation allowance was necessary at December 31, 2022 and 2021.

At December 31, 2022 and December 31, 2021, the Company had an insignificant amount of ASC 740-10 unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months. The Company recognizes interest and penalties on unrecognized tax benefits in income tax expense in its Consolidated Statements of Income.

The Company is subject to U.S. federal income tax and income tax in New York and various state jurisdictions. All tax years ending after December 31, 2018 are open to examination by the taxing authorities.