INCOME TAXES

12 Months Ended

Dec. 31, 2025

INCOME TAXES

INCOME TAXES

14. INCOME TAXES

The expense for income taxes is summarized below and includes both federal and applicable state corporate income taxes:

	YEAR ENDED DECEMBER 31,
	2025		2024
	(IN THOUSANDS)
Current	$	192	$	832
Deferred		992		(34)
Income tax expense	$	1,184	$	798

The reconciliation between the federal statutory tax rate and the Company’s effective consolidated income tax rate is as follows:

	YEAR ENDED DECEMBER 31,
	2025				2024
	AMOUNT		RATE		AMOUNT		RATE
	(IN THOUSANDS, EXCEPT PERCENTAGES)
Income tax expense based on federal statutory rate	$	1,427	21.0	%	$	924	21.0	%
Tax exempt income		(310)	(4.6)			(247)	(5.6)
Other		67	1.0			121	2.7
Total expense for income taxes	$	1,184	17.4	%	$	798	18.1	%

The following table highlights the major components comprising the deferred tax assets and liabilities for each of the periods presented:

	AT DECEMBER 31,
	2025		2024
	(IN THOUSANDS)
DEFERRED TAX ASSETS:
Allowance for credit losses - loans	$	2,757	$	2,922
Allowance for credit losses - securities		19		94
Allowance for credit losses - unfunded commitments		71		203
Unrealized investment security losses		2,088		3,544
Premises and equipment		765		912
Lease liabilities		825		895
Net operating loss		448		469
Interest rate hedges		25		36
Other		157		173
Total tax assets		7,155		9,248
DEFERRED TAX LIABILITIES:
Investment accretion		(161)		(129)
Lease right-of-use assets		(735)		(815)
Accrued pension obligation		(7,591)		(6,602)
Other		(304)		(290)
Total tax liabilities		(8,791)		(7,836)
Net deferred tax (liability) asset	$	(1,636)	$	1,412

At December 31, 2025 and 2024, the Company had no valuation allowance established against its deferred tax assets as we believe the Company will generate sufficient future taxable income to fully utilize these assets.

The Company utilizes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more likely than not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more likely than not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company has no tax liability for uncertain tax positions. The Company’s federal and state income tax returns for taxable years through 2021 have been closed for purposes of examination by the Internal Revenue Service and the Pennsylvania Department of Revenue.