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Income Taxes
12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision for federal and state income taxes included in the accompanying consolidated statement of income consists of the following:
For the Years Ended December 31,
(Dollars in thousands)202420232022
Current:
Federal$18,535 $16,775 $18,188 
State2,105 1,520 1,447 
Deferred:
Federal(1,048)(609)(458)
State(223)(101)(87)
$19,369 $17,585 $19,090 

The provision for income taxes differs from the expected statutory provision as follows:
For the Years Ended December 31,
202420232022
Expected provision at statutory rate21.0 %21.0 %21.0 %
Difference resulting from:
Tax exempt interest income, net of disallowance(1.8)(1.9)(1.7)
Increase in value of bank owned life insurance assets(0.8)(0.8)(0.8)
Stock-based compensation0.1 (0.2)(0.2)
State income taxes, net of federal benefits1.5 1.2 1.1 
Changes in valuation allowance0.1 0.2 0.7 
Federal benefit of state deferred tax asset revaluation — (0.8)
Other0.2 0.3 0.3 
Effective tax rate20.3 %19.8 %19.6 %

Retained earnings included $6.0 million at December 31, 2024, 2023 and 2022, which was originally generated by Fox Chase Bank (acquired in 2016), for which no provision for federal income tax has been made. This amount represents deductions for bad debt reserves for tax purposes, which were only allowed to savings institutions that met certain criteria prescribed by the Internal Revenue Code of 1986, as amended. The Small Business Job Protection Act of 1996 eliminated the special bad debt deduction granted solely to thrifts. Under the terms of the Small Business Job Protection Act, there would be no recapture of the pre-1988 (base year) reserves. However, these pre-1988 reserves would be subject to recapture under the
rules of the Internal Revenue Code if the Corporation pays a cash dividend in excess of cumulative retained earnings or liquidates.

At December 31, 2024 and 2023, the Corporation had no material unrecognized tax benefits or accrued interest and penalties recorded. The Corporation does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months. Interest and penalties are recorded in noninterest expense in the year they are assessed. For tax purposes, interest is treated as a deductible expense and penalties are treated as a non-deductible expense.

The Corporation and its subsidiaries are subject to U.S. federal income tax, as well as income tax of the Commonwealth of Pennsylvania and various other state and local jurisdictions. The Corporation and its subsidiaries are generally no longer subject to examination by federal, state and local taxing authorities for years prior to December 31, 2021.

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred state taxes are combined with federal deferred taxes (net of the impact of deferred state tax on the deferred federal tax) and are shown in the table below by major category.

The Corporation has a state net operating loss carry-forward of $108.7 million which will begin to expire in 2025 if not utilized. A valuation allowance at December 31, 2024 and 2023 was attributable to deferred tax assets generated in certain state jurisdictions for which management believes it is more likely than not that such deferred tax assets will not be realized. Other than the valuation allowance on certain state deferred tax assets, management has determined that no additional valuation allowance is necessary for deferred tax assets because it is more likely than not that these assets will be realized through future reversals of existing temporary differences and through future taxable income. The Corporation will continue to review the criteria related to the recognition of deferred tax assets on a regular basis.

The assets and liabilities giving rise to the Corporation's deferred tax assets and liabilities are as follows:
At December 31,
(Dollars in thousands)20242023
Deferred tax assets:
Allowance for credit losses, loans and leases$19,447 $18,838 
Deferred compensation1,693 1,795 
Actuarial adjustments on retirement benefits*1,715 3,126 
State net operating losses4,285 3,778 
Other-than-temporary impairments on equity securities 99 
Net unrealized holding losses on securities available-for-sale and swaps*9,984 10,342 
Lease liability7,029 7,687 
Other deferred tax assets2,775 2,577 
Gross deferred tax assets46,928 48,242 
Valuation allowance(3,959)(3,527)
Total deferred tax assets, net of valuation allowance42,969 44,715 
Deferred tax liabilities:
Mortgage servicing rights1,350 1,885 
Retirement plans4,768 4,719 
Deferred loan fees and costs1,549 1,539 
Acquisition-related fair value adjustments554 779 
Intangible assets4,843 4,349 
Depreciation1,123 1,534 
Right of use asset6,369 7,013 
Other deferred tax liabilities1,118 1,104 
Total deferred tax liabilities21,674 22,922 
Net deferred tax assets$21,295 $21,793 
*Represents the amount of deferred taxes recorded in accumulated other comprehensive income.