Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Taxes

Schedule of Provision for Income Taxes

On September 29, 2020, New Jersey’s Assembly Bill 4721 was signed into law. The bill, retroactively effective January 1, 2020, extends the 2.5% corporate income surtax until December 31, 2023.

The components of the provision for income taxes for the past three years are as follows:

	For the years ended December 31,
(In thousands)	2021		2020		2019
Federal - current provision	$	9,837	$	7,828	$	5,478
Federal - deferred benefit		(944)		(2,043)		(285)
Total federal provision		8,893		5,785		5,193
State - current provision		3,630		2,737		1,483
State - deferred benefit		(512)		(1,047)		(14)
Total state provision		3,118		1,690		1,469
Total provision for income taxes	$	12,011	$	7,475	$	6,662

Schedule of Effective Income Tax Rate Reconciliation

Reconciliation between the reported income tax provision and the amount computed by multiplying income before taxes by the statutory Federal income tax rate for the past three years is as follows:

	For the years ended December 31,
(In thousands, except percentages)	2021			2020			2019
Federal income tax provision at statutory rate	$	10,107		$	6,535		$	6,366
Increases (decreases) resulting from:
Stock option and restricted stock		(173)			(93)			(185)
Bank owned life insurance		(145)			(129)			(123)
Tax-exempt interest		(6)			(13)			(22)
Meals and entertainment		7			9			19
Captive insurance premium		(262)			(193)			(209)
State income taxes, net of federal income tax effect		2,463			1,335			1,161
Other, net		20			24			(345)
Provision for income taxes	$	12,011		$	7,475		$	6,662
Effective tax rate		25.0	%		24.0	%		22.0	%

Schedule of Deferred Tax Assets and Liabilities

The components of the net deferred tax asset at December 31, 2021 and 2020 are as follows:

(In thousands)	December 31, 2021		December 31, 2020
Deferred tax assets:
Allowance for loan losses	$	6,299	$	6,540
SERP		1,277		1,088
Stock-based compensation		1,010		811
Deferred compensation		912		737
Depreciation		451		408
Deferred loan costs		443		—
Interest rate swaps		—		290
State net operating loss		—		209
EVP retirement plan		153		155
Net unrealized security losses		—		90
Commitment reserve		113		82
Net other deferred tax assets		525		410
Gross deferred tax assets		11,183		10,820
Valuation allowance		—		(209)
Total deferred tax assets		11,183		10,611
Deferred tax liabilities:
Goodwill		428		429
Prepaid insurance		474		357
Deferred loan costs		—		289
Deferred servicing fees		99		275
Net unrealized securities gains		9		—
Bond Accretion		17		19
Interest rate swaps		116		—
Net other deferred tax liabilities		—		59
Total deferred tax liabilities		1,143		1,428
Net deferred tax asset	$	10,040	$	9,183