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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision (benefit) for income taxes for the years ended December 31, 2018, 2017 and 2016 consists of the following (in thousands):
|  | For the Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
Current |  |  |  |  |  |
Federal |  | $ | 18,030 |  |  | $ | (12,754 | ) |  | $ | 6,259 |
State |  | 108 |  |  | 169 |  |  | 96 |
Total current |  | 18,138 |  |  | (12,585 | ) |  | 6,355 |
Deferred |  |  |  |  |  |
Federal |  | (4,568 | ) |  | 35,440 |  |  | 5,798 |
State |  | — |  |  | — |  |  | — |
Total deferred |  | (4,568 | ) |  | 35,440 |  |  | 5,798 |
|  | $ | 13,570 |  |  | $ | 22,855 |  |  | $ | 12,153 |
Included in other comprehensive income is income tax expense attributable to the net accretion of unrealized losses on securities available-for-sale arising during the year in the amount of $1.1 million, $276,000, and $330,000 for the years ended December 31, 2018, 2017 and 2016, respectively. Effective January 1, 2017, the Company adopted ASU 2016-09 “Compensation - Stock Compensation,” which decreased income tax expense by $1.8 million for the year ended December 31, 2017. Under the ASU, the tax benefits of exercised stock options and vested stock awards are recognized as a benefit to income tax expense in the reporting period which they occur. Prior to the adoption of the ASU, included in stockholders’ equity is income tax benefit attributable to stock plans in the amount of and $62,000 for the year ended December 31, 2016. A reconciliation between the provision for income taxes and the expected amount computed by multiplying income before the provision for income taxes times the applicable statutory Federal income tax rate for the years ended December 31, 2018, 2017 and 2016 is as follows (in thousands):
|  | For the Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
Income before provision for income taxes |  | $ | 85,502 |  |  | $ | 65,325 |  |  | $ | 35,199 |
Applicable statutory Federal income tax rate |  | 21.0 | % |  | 35.0 | % |  | 35.0 | %
Computed “expected” Federal income tax expense |  | $ | 17,955 |  |  | $ | 22,864 |  |  | $ | 12,320 |
(Decrease) increase in Federal income tax expense resulting from |  |  |  |  |  |
Tax exempt interest |  | (615 | ) |  | (839 | ) |  | (390 | )
ESOP fair market value adjustment |  | 125 |  |  | 223 |  |  | 131 |
ESOP dividends |  | (136 | ) |  | (230 | ) |  | (223 | )
Earnings on BOLI |  | (1,072 | ) |  | (1,155 | ) |  | (781 | )
Merger related expenses |  | 322 |  |  | 478 |  |  | 1,005 |
State income taxes net of Federal benefit |  | 85 |  |  | 110 |  |  | 62 |
Stock compensation |  | (758 | ) |  | (1,823 | ) |  | — |
Impact of Tax Cuts and Jobs Act (“Tax Reform”) |  | (1,854 | ) |  | 3,643 |  |  | — |
Reclassification of certain tax effect from accumulated other comprehensive income |  | (586 | ) |  | — |  |  | — |
Other items, net |  | 104 |  |  | (416 | ) |  | 29 |
|  | $ | 13,570 |  |  | $ | 22,855 |  |  | $ | 12,153 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2018 and 2017 are presented in the following table (in thousands):
|  | December 31,
|  | 2018 |  | 2017
Deferred tax assets: |  |  |  |
Allowance for loan losses |  | $ | 3,501 |  |  | $ | 3,311 |
Reserve for repurchased loans |  | 55 |  |  | 97 |
Reserve for uncollected interest |  | 119 |  |  | 49 |
Incentive compensation |  | 1,302 |  |  | — |
Deferred compensation |  | 529 |  |  | 519 |
Other reserves |  | 334 |  |  | 115 |
Stock plans |  | 950 |  |  | 864 |
ESOP |  | 142 |  |  | 126 |
Purchase accounting adjustments |  | 59,110 |  |  | 3,436 |
Net operating loss carryforward related to acquisition |  | 2,736 |  |  | 3,741 |
Other real estate owned |  | 90 |  |  | 170 |
Unrealized loss on securities |  | 1,225 |  |  | 1,898 |
Federal and state alternative minimum tax |  | 1,410 |  |  | 2,451 |
Total gross deferred tax assets |  | 71,503 |  |  | 16,777 |
Deferred tax liabilities: |  |  |  |
Incentive compensation |  | — |  |  | (127 | )
Excess servicing on sale of mortgage loans |  | (18 | ) |  | (28 | )
Investments, discount accretion |  | (232 | ) |  | (244 | )
Deferred loan and commitment costs, net |  | (1,478 | ) |  | (1,119 | )
Premises and equipment, differences in depreciation |  | (4,350 | ) |  | (373 | )
Undistributed REIT income |  | (1,730 | ) |  | (12,322 | )
Other |  | (318 | ) |  | (642 | )
Total gross deferred tax liabilities |  | (8,126 | ) |  | (14,855 | )
Net deferred tax assets |  | $ | 63,377 |  |  | $ | 1,922 |
The 2018 deferred tax expense does not equal the change in net deferred tax assets as a result of deferred taxes recorded in connection with the Sun acquisition of $57.6 million. The Company has Federal net operating losses from the acquisitions of Colonial American, Cape and Sun. At December 31, 2018 and 2017, the net operating losses from Colonial American were $5.3 million and $5.9 million, respectively. These net operating losses are subject to annual limitation under Code Section 382 of approximately $330,000, and will expire between 2029 and 2034. At December 31, 2018 and 2017, the net operating losses from Cape were $6.1 million and $10.5 million, respectively. These net operating losses are subject to annual limitation under Code Section 382 of approximately $4.5 million, and will expire between 2020-2023. At December 31, 2018 the net operating losses from Sun were $218.9 million. These net operating losses are subject to annual limitation under Code Section 382 of approximately $9.3 million, and will expire between 2029 and 2036. As of December 31, 2018 and 2017, the Company had $1.8 million of New Jersey AMA Tax Credits. These credits do not expire. As of December 31, 2018 and 2017, the Company had $1.0 million of AMT Tax Credits that were part of the Cape acquisition. These credits are subject to the same Code Section 382 limitation as indicated above but do not expire. At December 31, 2018, 2017 and 2016, the Company determined that it is not required to establis h a valuation reserve for the remaining net deferred tax assets since it is “more likely than not” that the net deferred tax assets will be realized through future reversals of existing taxable temporary differences, future taxable income and tax planning strategies. The conclusion that it is “more likely than not” that the remaining net deferred tax assets will be realized is based on the history of earnings and the prospects for continued growth. Management will continue to review the tax criteria related to the recognition of deferred tax assets. Retained earnings at December 31, 2018 includes approximately $10.8 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 failure to qualify as a bank for tax purposes, distributions in complete or partial liquidation, stock redemptions and excess distributions to stockholders. At December 31, 2018, the Company had an unrecognized deferred tax liability of $2.3 million with respect to this reserve. There were no unrecognized tax benefits for the years ended December 31, 2018, 2017 and 2016. The tax years that remain subject to examination by the Federal government and the state of New York include the years ended December 31, 2015 and forward. The tax years that remain subject to examination by the state of New Jersey include the years ended December 31, 2014 and forward. With the enactment of the Tax Reform on December 22, 2017, the federal corporate income tax rate was reduced from 35% to 21% effective January 1, 2018. Accounting guidance requires that the effect of income tax law changes on deferred taxes should be recognized as a component of income tax expense related to continuing operations, but also to items initially recognized in other comprehensive income. As a result of the reduction in the U.S. federal statutory income tax rate, the Company recognized additional income tax benefit of $1.9 million for the year ended December 31, 2018 and additional income tax expense of $3.6 million for the year ended December 31, 2017. Because accounting guidance requires the effect of income tax law changes on deferred taxes to be recognized as a component of income tax expense related to continuing operations, this additional income tax expense included $1.8 million related to items recognized in other comprehensive income. These amounts will continue to be reported as separate components of accumulated other comprehensive income until such time as the underlying transactions from which such amounts arose are settled through continuing operations. At such time, the reclassification from accumulated other comprehensive income will be recognized as a net tax benefit. The amount included in accumulated other comprehensive income at December 31, 2018, subject to reclassification, was $1.2 million.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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