Income Taxes

12 Months Ended

Dec. 31, 2024

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
2024
Federal	$	20,248	$	(3,313)	$	16,935
State	4,837		231		5,068
Total	$	25,085	$	(3,082)	$	22,003
2023
Federal	$	2,583	$	381	$	2,964
State	346		(815)		(469)
Total	$	2,929	$	(434)	$	2,495
2022
Federal	$	19,238	$	994	$	20,232
State	4,409		(84)		4,325
Total	$	23,647	$	910	$	24,557

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:

	2024		2023		2022
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	4.5	%	(3.1)	%	3.1	%
Tax exempt income	(1.3)	%	(9.4)	%	(1.1)	%
Excess benefits from equity-based compensation	(0.1)	%	1.1	%	(0.3)	%
Bank-owned life insurance income	(0.6)	%	(3.0)	%	(0.2)	%
Surrender of Bank-owned life insurance	0.0	%	13.6	%	0.0	%
Federal tax credit	(0.2)	%	(0.8)	%	0.0	%
Non-Deductible Meals & Entertainment	0.1	%	1.3	%	0.0	%
Section 162(m) Limitation	0.1	%	1.1	%	0.2	%
Deductible ESOP Dividends under 404(k)	(0.3)	%	(2.5)	%	(0.3)	%
All other	0.5	%	1.5	%	0.0	%
Total	23.7	%	20.8	%	22.4	%

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)	2024		2023
Deferred tax assets:
Allowance for credit losses	$	14,733	$	13,731
Lease liability	7,119		7,267
Interest income on nonperforming loans	870		992
Compensation and benefits	12,936		12,414
Purchase accounting adjustments	323		424
Liabilities held at fair value	78		54
Deferred loan fees and costs	1,290		1,111
Net operating loss carryforwards	0		491
Other	753		744
Total	$	38,102	$	37,228
Deferred tax liabilities:
Prepaid pension	12,019		11,813
Right of use asset	6,763		6,955
Depreciation	3,068		3,505
Intangibles	1,675		1,600
Leases	2,199		2,688
Taxable bank-owned life insurance policies	0		1,834
Contingent Commissions	871		778
Other	1,336		855
Total deferred tax liabilities	$	27,931	$	30,028
Net deferred tax asset at year-end	10,171		7,200
Net deferred tax asset at beginning of year	7,200		6,766
Increase in net deferred tax asset	2,971		434
Investments in tax credit structures accounting standard adoption recorded through equity	111		0
Deferred tax benefit	$	(3,082)	$	(434)

Net operating loss carryforwards for New York and New York City purposes of $8.5 million and 344,000 were generated in 2023. These net operating losses were fully utilized in 2024.

The above analysis does not include recorded deferred tax assets (liabilities) of $33.9 million and $32.7 million as of December 31, 2024 and 2023, 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 $5.6 million and $8.4 million, as of December 31, 2024 and 2023, 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, 2024 and 2023.

At December 31, 2024, 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, 2020 are open to examination by the taxing authorities.