INCOME TAXES

12 Months Ended

Dec. 31, 2025

INCOME TAXES

INCOME TAXES

8. INCOME TAXES

Income tax expense for the years ended December 31, 2025 and 2024 is summarized as follows (in thousands):

	Year Ended December 31,
(In thousands)	2025		2024
Current:
Federal	$	21	$	6
State		14		4
		35		10
Deferred:
Federal		(26)		94
State		—		—
		(26)		94
Total provision for income taxes	$	9	$	104

The Company’s deferred federal and state income tax and related valuation accounts represents the estimated impact of temporary differences between how we recognize our assets and liabilities under GAAP and how such assets and liabilities are recognized under federal and state tax law. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse.

The components of the net deferred tax liabilities, included in other liabilities at December 31, 2025 and 2024 in the consolidated statements of financial condition, are as follows:

	At December 31,
(In thousands)	2025		2024
Deferred tax assets:
Allowance for credit losses	$	625	$	589
Net operating loss carryforward		937		813
Nonaccrual interest		13		4
Net unrealized loss on securities available-for-sale		721		862
Other		99		98
Total deferred tax assets		2,395		2,366
Deferred tax liabilities:
Net retirement plans		(2,050)		(1,872)
Depreciation		(490)		(403)
Deferred loan fees		(328)		(394)
Other		—		(1)
Total deferred tax liabilities		(2,868)		(2,670)
Valuation allowance		(478)		(449)
Net deferred tax liabilities	$	(951)	$	(753)

Items that give rise to differences between income tax expense included in the statements of income and taxes computed by applying the statutory federal tax at a rate of 21% for the periods below included the following:

	Year Ended December 31,
(Dollars in thousands)	2025
Computed at the statutory rate	$	38	21.0	%
Change in valuation allowance		29	15.9	%
State tax (net of federal benefit)		(18)	(9.8)	%
Nontaxable interest and dividend		(34)	(18.6)	%
Income from deferred compensation plan assets		(22)	(12.1)	%
Other items		16	8.5	%
Income tax provision	$	9	4.9	%
	Year Ended December 31,
(Dollars in thousands)	2024
Computed at the statutory rate	$	171	21.0	%
Change in valuation allowance		107	13.0	%
State tax (net of federal benefit)		(107)	(13.0)	%
Nontaxable interest and dividend		(31)	(3.8)	%
Income from deferred compensation plan assets		(3)	(0.4)	%
Other items		(33)	(4.1)	%
Income tax provision	$	104	12.7	%

Income taxes paid (net of refunds) for the periods below included the following:

	Year Ended December 31,
(In thousands)	2025		2024
Federal	$	—	$	100
State		20		1
Total	$	20	$	101

	Year Ended December 31,
(In thousands)	2025		2024
State:
New York	$	16	$	1
Pennsylvania(1)		4		—
	$	20	$	1

⁽¹⁾ Jurisdiction below the threshold for the period presented

New York State (“NYS”) tax law changes were enacted in 2015 that resulted in the Company generating a significant deduction, ultimately putting the Company in a NYS net operating loss position for tax purposes that will persist for the foreseeable future. It is anticipated that the Company will continue to be subject to NYS tax based upon apportioned capital. Therefore, in 2015, the Company recorded a valuation allowance against its net New York deferred tax asset as of December 31, 2015 as it is unlikely this deferred tax asset will impact the Company’s New York tax liability in future years. The increase in valuation allowance at December 31, 2025 from December 31, 2024 was due to the increase in NYS deferred tax assets.

At December 31, 2025 and 2024, the Company had no unrecognized tax benefits recorded. The Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months.

Under current income tax laws, the base-year reserves would be subject to recapture if the Company pays a cash dividend in excess of earnings and profits or liquidates. The Bank does not expect to take any actions in the foreseeable future that would require the recapture of any Federal reserves. As a result, a deferred tax liability has not been recognized with respect to the Federal base-year reserve of $2,188,157 at December 31, 2025 and 2024, because the Bank does not expect that this amount will become taxable in the foreseeable future. The unrecognized deferred tax liability with respect to the Federal base-year reserve was $459,513 at December 31, 2025 and 2024. It is more likely than not that this liability will never be incurred because, as noted above, the Bank does not expect to take any action in the future that would result in this liability being incurred.