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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The current and deferred amounts of income tax expense (benefit) for the years ended December 31, 2024, 2023 and 2022 are as follows (in thousands):
 Years ended December 31,
 202420232022
Current:
Federal$30,510 31,972 41,379 
State15,851 12,684 20,859 
Total current income tax expense46,361 44,656 62,238 
Deferred:
Federal(1,406)905 1,825 
State(10,865)1,820 395 
Total deferred income tax expense(12,271)2,725 2,220 
Total income tax expense$34,090 47,381 64,458 
The Company recorded a deferred tax (benefit) expense of ($5.0) million, $11.1 million and ($68.2) million during 2024, 2023 and 2022, respectively, related to the unrealized gains (losses) on available for sale debt securities, which is reported in accumulated other comprehensive income (loss), net of tax. The Company recorded a deferred tax (benefit) expense of ($2.0) million, ($3.9) million and $6.2 million in 2024, 2023 and 2022, respectively, related to the unrealized gains (losses) on cash flow hedge advances, which is reported in accumulated other comprehensive income (losses), net of tax. Also, the Company recorded a deferred tax expense (benefit) of $1.1 million, $884,000 and $(517,000) in 2024, 2023 and 2022, respectively,
related to the amortization of post-retirement benefit obligations, which is reported in accumulated other comprehensive income (loss), net of tax.
A reconciliation between the amount of reported total income tax expense and the amount computed by multiplying the applicable statutory income tax rate is as follows (in thousands):
 Years ended December 31,
 202420232022
Tax expense at statutory rates$31,419 36,932 50,422 
Increase (decrease) in taxes resulting from:
State tax, net of federal income tax benefit11,027 11,313 16,791 
Rate Change(7,008)— — 
Tax-exempt interest income(2,861)(2,514)(2,590)
Bank-owned life insurance(2,459)(1,361)(1,257)
Other, net3,972 3,011 1,092 
Total income tax expense$34,090 47,381 64,458 
The net deferred tax asset is included in other assets in the Consolidated Statements of Financial Condition. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2024 and 2023 are as follows (in thousands):
20242023
Deferred tax assets:
Allowance for credit losses on loans$54,931 28,404 
Allowance for credit loss on off-balance sheet ("OBS") credit exposure1,998 924 
Post-retirement benefit5,485 5,758 
Deferred compensation2,926 384 
Purchase accounting adjustments105,950 — 
Depreciation4,836 1,126 
SERP1,991 1,137 
ESOP— 402 
Stock-based compensation3,694 2,963 
Non-accrual interest807 172 
State Net Operating Loss ("NOL")2,268 — 
Federal NOL1,389 160 
Unrealized losses on available for sale debt securities66,646 57,198 
Lease liability18,489 15,914 
Other4,666 112 
Total gross deferred tax assets276,076 114,654 
Deferred tax liabilities:
Pension expense10,161 8,997 
Contingent consideration436 283 
Deferred loan costs17,668 11,376 
Investment securities, principally due to accretion of discounts71 66 
Purchase accounting adjustments— 371 
Intangibles2,151 1,620 
Originated mortgage servicing rights129 147 
Pension liability adjustments2,546 1,459 
Net unrealized gain on hedging activities1,641 3,674 
Lease right-of-use asset17,648 15,084 
Total gross deferred tax liabilities52,451 43,077 
Net deferred tax asset$223,625 71,577 
Retained earnings as of December 31, 2024 includes approximately $51.8 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. As of December 31, 2024, the Company had an unrecognized tax liability of $14.7 million with respect to this reserve.
As a result of the Beacon acquisition in 2011 and the Lakeland acquisition in 2024, the Company acquired federal net operating loss carryforwards. There are approximately $6.6 million of NOL carryforwards available to offset future taxable income as of December 31, 2024. If not utilized, $653,000 of carryforward will expire in 2031, but the balance can be carried forward indefinitely subject to an 80% limitation on utilization. The federal NOLs are subject to annual Code Section 382 limitation in the amount of approximately $197,000. The Company has a state NOL carryforward of $61.9 million, as a result of the Lakeland acquisition. These net operating losses are subject to an annual limitation of approximately $30 million under IRS section 382. Management has determined that it is more likely than not that it will realize the net deferred tax asset based upon the nature and timing of the items listed above. In order to fully realize the net deferred tax asset, the Company will need to generate future taxable income. Management has projected that the Company will generate sufficient taxable income to utilize the net deferred tax asset; however, there can be no assurance that such levels of taxable income will be generated.
The Company’s policy is to report interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The Company did not have any liabilities for uncertain tax positions as of December 31, 2024 and 2023.
The Company and its subsidiaries file a consolidated U.S. Federal income tax return. For tax periods prior to December 31, 2018, New Jersey tax law does not and has not allowed for a taxpayer to file a tax return on a combined or consolidated basis with another member of the affiliated group where there is common ownership. The Company and its subsidiaries is required to file a combined New Jersey state income tax return on apportioned and allocated income. Also, the Company and its subsidiaries file a combined tax income tax return in New York State, New York City, and will file a Connecticut income tax return based upon apportioned and allocated income. The Company, through its bank subsidiary, files a Pennsylvania Mutual Thrift Institution Tax return.
The Company's Federal and Pennsylvania Mutual Thrift Institutions tax returns are open for examination from 2021. The Company's New York State tax returns are open for examination from 2021. The Company's New Jersey State tax returns are open for examination from 2020.