Income Taxes

12 Months Ended

Dec. 31, 2019

The income tax expense (benefit) attributable to income from operations is summarized as follows:



(In thousands)	Current		Deferred			Total
2019
Federal	$	15,161	$	2,668		$	17,829
State	2,782		405			3,187
Total	$	17,943	$	3,073		$	21,016
2018
Federal	$	16,391	$	2,281		$	18,672
State	3,060		73			3,133
Total	$	19,451	$	2,354		$	21,805
2017
Federal	$	26,860	$	14,749		$	41,609
State	1,162		(151		)	1,011
Total	$	28,022	$	14,598		$	42,620

The primary reasons for the differences between income tax expense and the amount computed by applying the statutory federal income tax rate to earnings are as follows:



	2019		2018		2017
Statutory federal income tax rate	21.0	%	21.0	%	35.0	%
State income taxes, net of federal benefit	2.5		2.4		0.7
Tax exempt income	(1.5	)	(1.5	)	(2.6	)
Excess benefits from equity-based compensation	(0.8	)	(0.6	)	(1.6	)
Bank-owned life insurance income	(0.5	)	(0.4	)	(0.8	)
Federal tax credit	(0.7	)	(0.6	)	(2.0	)
Enactment of Federal tax reform	0.0		0.0		15.7
All other	0.5		0.6		0.4
Total	20.5	%	20.9	%	44.8	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31 were as follows:



(In thousands)	2019			2018
Deferred tax assets:
Allowance for loan and lease losses	$	9,913		$	10,676
Lease liability	8,363			0
Interest income on nonperforming loans	368			384
Compensation and benefits	10,972			10,885
Liabilities held at fair value	4			12
Other	1,842			2,333
Total	$	31,462		$	24,290
Deferred tax liabilities:
Prepaid pension	9,856			8,700
Right of use asset	7,790			0
Depreciation	4,688			4,193
Intangibles	1,128			971
Purchase accounting adjustments	274			328
Leases	2,472			1,790
Other	1,478			1,459
Total deferred tax liabilities	$	27,686		$	17,441
Net deferred tax asset at year-end	$	3,776		$	6,849
Net deferred tax asset at beginning of year	$	6,849		$	9,203
Decrease in net deferred tax asset	(3,073		)	(2,354		)
Federal tax reform remeasurement of AOCI deferred tax asset	$	0		$	0
Deferred tax expense	$	3,073		$	2,354

The above analysis does not include recorded deferred tax assets (liabilities) of $(1.3) million and $7.5 million as of December 31, 2019 and 2018, respectively, related to net unrealized holdings losses/(gains) in the available-for-sale securities portfolio. In addition, the analysis excludes recorded deferred tax assets of $15.5 million and $12.9 million, as of December 31, 2019 and 2018, respectively, related to employee benefit plans.

Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management considers the scheduled reversal of the deferred tax liabilities, the level of historical taxable income, and the projected future taxable income over the periods in which the temporary differences comprising the deferred tax assets will be deductible. Based on its assessment, management determined that no valuation allowance was necessary at December 31, 2019 and 2018.

At December 31, 2019 and December 31, 2018, the Company had no ASC 740-10 unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months. The Company recognizes interest and penalties on unrecognized tax benefits in income tax expense in its Consolidated Statements of Income.

The Company is subject to U.S. federal income tax and income tax in New York and various state jurisdictions. All tax years ending after December 31, 2015 are open to examination by the taxing authorities.