Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes [Abstract]

Income Taxes

11.          Income Taxes

The significant components of income tax expense attributable to operations are as follows:

	Years Ended December 31,
(In thousands)	2021		2020			2019
Current
Federal	$	35,483	$	36,358		$	28,475
State		8,626		9,768			7,653
Total Current	$	44,109	$	46,126		$	36,128
Deferred
Federal	$	507	$	(14,021	)	$	(1,379	)
State		357		(3,406	)		(338	)
Total Deferred	$	864	$	(17,427	)	$	(1,717	)
Total income tax expense	$	44,973	$	28,699		$	34,411

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

	December 31,
(In thousands)	2021		2020
Deferred tax assets:
Allowance for loan losses	$	22,479	$	27,282
Lease liability		6,744		8,141
Deferred compensation		9,584		11,602
Postretirement benefit obligation		1,286		1,511
Fair value adjustments from acquisitions		199		259
Loan fees		12,936		5,400
Accrued liabilities		1,424		1,307
Stock-based compensation expense		2,679		3,213
Unrealized losses on securities		1,482		-
Other		4,200		3,558
Total deferred tax assets	$	63,013	$	62,273
Deferred tax liabilities:
Pension benefits	$	16,137	$	14,406
Lease right-of-use asset		5,681		6,567
Amortization of intangible assets		13,187		12,725
Premises and equipment, primarily due to accelerated depreciation		4,962		4,774
Unrealized gain on securities		-		7,732
Other		1,008		952
Total deferred tax liabilities	$	40,975	$	47,156
Net deferred tax asset at year-end	$	22,038	$	15,117
Net deferred tax asset at beginning of year		15,117		2,534
Increase in net deferred tax asset	$	6,921	$	12,583

Realization of deferred tax assets is dependent upon the generation of future taxable income. A valuation allowance is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Based on available evidence, gross deferred tax assets will ultimately be realized and a valuation allowance was not deemed necessary at December 31, 2021 and 2020.

The following is a reconciliation of the provision for income taxes to the amount computed by applying the applicable Federal statutory rate to income before taxes:

	Years Ended December 31,
(In thousands)	2021			2020			2019
Federal income tax at statutory rate	$	41,971		$	27,948		$	32,641
Tax exempt income		(1,014	)		(981	)		(1,233	)
Net increase in cash surrender value of life insurance		(1,230	)		(1,135	)		(927	)
Federal tax credits		(1,884	)		(1,705	)		(1,458	)
State taxes, net of federal tax benefit		7,097			5,026			5,773
Stock-based compensation, excess tax benefit		(323	)		(152	)		(342	)
Other, net		356			(302	)		(43)
Income tax expense	$	44,973		$	28,699		$	34,411

A reconciliation of the beginning and ending balance of Federal and State gross unrecognized tax benefits (“UTBs”) is as follows:

(In thousands)	2021		2020
Balance at January 1	$	1,178	$	779
Additions for tax positions of prior years		80		254
Current period tax positions		287		145
Balance at December 31	$	1,545	$	1,178
Amount that would affect the effective tax rate if recognized, gross of tax	$	1,221	$	931

The Company recognizes interest and penalties on the income tax expense line in the accompanying consolidated statements of income. The Company monitors changes in tax statutes and regulations to determine if significant changes will occur over the next 12 months. As of December 31, 2021, no significant changes to UTBs are projected; however, tax audit examinations are possible, but it is not reasonably possible to estimate when examinations in subsequent years will be completed. The Company recognized an insignificant amount of interest expense related to UTBs in the consolidated statement of income for the year ended December 31, 2021.

As of December 31, 2021, the Company is no longer subject to U.S. Federal tax examination by tax authorities for years prior to 2016. The tax years 2015 to 2019 are currently being audited by New York State.