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INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income tax expense (benefit) for the years ended December 31, 2021 and 2020, consists of the following:

CurrentDeferredTotal
(In thousands)
December 31, 2021
Federal$140 $5,810 $5,950 
State— 3,668 3,668 
$140 $9,478 $9,618 
December 31, 2020
Federal$(1,582)$(3,570)$(5,152)
State161 (2,875)(2,714)
$(1,421)$(6,445)$(7,866)

A reconciliation between the actual income tax expense and the expected federal income tax expense (computed by multiplying income before income tax expense times the applicable statutory federal income tax rate) for the years ended December 31, 2021 and 2020, is as follows:
20212020
(In thousands)
Income (loss) before income tax (benefit) expense$(26,724)$(39,372)
Applicable statutory federal income tax rate21.00 %21.00 %
Computed “expected” federal income tax (benefit) expense$(5,612)$(8,268)
Increase (decrease) in federal income tax expense resulting from:
State income taxes, net of federal benefit(1,614)(2,143)
Valuation Allowance16,719 — 
Tax-exempt income(108)(132)
Impairment of Goodwill— 3,247 
CARES Act – Carryback expense (benefit)247 (568)
Other(14)(2)
Total$9,618 $(7,866)
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020, are as follows:
20212020
Deferred tax assets:(In Thousands)
Allowance for loan losses and REO$4,617 $5,136 
Allowance for losses premises and equipment— 3,915 
Net unrealized losses on derivatives69 1,559 
Accrued postretirement benefits1,217 1,077 
Accrued interest receivable179 108 
Accrued bonus506 112 
Finance Lease Liability7,504 7,178 
Charitable contribution carryover2,709 — 
Funded status of benefit plans342 490 
Federal net operating loss carryforward 6,648 — 
State net operating loss carryforward2,392 553 
Other37 49 
Total gross deferred tax assets26,220 20,177 
Valuation allowance(16,868)(72)
Gross deferred tax assets after valuation allowance9,352 20,105 
Deferred tax liabilities:
Net unrealized gains on securities available for sale327 1,509 
Deferred loan fees, net1,198 1,472 
Premises and equipment489 — 
Finance Lease ROU Asset7,156 6,993 
Other182 114 
Total gross deferred tax liabilities9,352 10,088 
Net deferred tax asset$— $10,017 

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2021. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.

On the basis of this evaluation, for the year ended December 31, 2021, a valuation allowance of $16.8 million has been recorded. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. Net deferred tax assets are included in other assets.
At December 31, 2021, the Company had federal net operating loss (“NOL”) carryforwards of $31.7 million with no expiration date. Under the provisions of the 2017 Tax Cuts and Jobs Act, use of our federal NOL carryforwards will be limited to 80% of taxable income in future periods. The Company also had New Jersey net operating loss carryforwards of $33.6 million, the majority of which expire in 20 years. We believe it is more likely than not the benefit from both the federal and state NOL carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $9.0 million on the deferred tax assets related to the NOL carryforwards. The Company contributed $9.0 million to the Blue Foundry Charitable Foundation, and the deferred benefit has a 5 year carryforward limitation.

Retained earnings at December 31, 2021 and 2020, includes approximately $14.6 million, for which no provision for income tax has been made. This amount represents an allocation of income to bad debt deductions for tax purposes only. Events that would result in taxation of these reserves include the failure to qualify as a bank for tax purposes, distributions in complete or partial liquidation, stock redemptions and excess distributions to stockholders.

The Company and its subsidiary are subject to U.S. federal income tax as well as state income taxes, primarily New Jersey. The Company is no longer subject to examination by Federal taxing authorities for tax years before January 1, 2018, and State taxing authorities for tax years before January 1, 2017. Currently, the Company is not under examination by any taxing authority. The Company's New Jersey state tax returns for the tax years ended December 31, 2015 through 2018 were audited during 2021. The completion of this examination did not have a material impact on the Company's effective tax rates and financials.