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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes for the years ended December 31, 2020, 2019 and 2018 consists of the following (in thousands):
|  | For the Year Ended December 31,
|  | 2020 |  | 2019 |  | 2018
Current |  |  |  |  |  |
Federal |  | $ | 15,731 |  |  | $ | 1,991 |  |  | $ | 18,030 |
State |  | 6,617 |  |  | 740 |  |  | 108 |
Total current |  | 22,348 |  |  | 2,731 |  |  | 18,138 |
Deferred |  |  |  |  |  |
Federal |  | (2,746) |  |  | 18,846 |  |  | (4,568) |
State |  | (1,869) |  |  | (2,793) |  |  | — |
Total deferred |  | (4,615) |  |  | 16,053 |  |  | (4,568) |
Total provision for income taxes |  | $ | 17,733 |  |  | $ | 18,784 |  |  | $ | 13,570 |
Included in other comprehensive income was income tax expense attributable to the net accretion of unrealized losses on debt securities available-for-sale arising during the year in the amount of $721,000, $874,000, and $1.1 million for the years ended December 31, 2020, 2019 and 2018, respectively. 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, 2020, 2019 and 2018 was as follows (in thousands):
|  | For the Year Ended December 31,
|  | 2020 |  | 2019 |  | 2018
Income before provision for income taxes |  | $ | 81,042 |  |  | $ | 107,358 |  |  | $ | 85,502 |
Applicable statutory Federal income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Computed “expected” Federal income tax expense |  | $ | 17,019 |  |  | $ | 22,545 |  |  | $ | 17,955 |
Increase (decrease) in Federal income tax expense resulting from |  |  |  |  |  |
State income taxes, net of Federal benefit |  | 3,751 |  |  | 583 |  |  | 85 |
Earnings on BOLI |  | (1,349) |  |  | (1,138) |  |  | (1,072) |
Tax exempt interest |  | (1,161) |  |  | (665) |  |  | (615) |
Merger related expenses |  | 138 |  |  | 297 |  |  | 322 |
Stock compensation |  | (136) |  |  | (386) |  |  | (758) |
Revaluation of state deferred tax asset |  | — |  |  | (2,205) |  |  | — |
Impact of Tax Cuts and Jobs Act (“Tax Reform”) |  | — |  |  | — |  |  | (1,854) |
Reclassification of certain tax effect from accumulated other comprehensive income |  | (204) |  |  | (221) |  |  | (586) |
Other items, net |  | (325) |  |  | (26) |  |  | 93 |
Total provision for income taxes |  | $ | 17,733 |  |  | $ | 18,784 |  |  | $ | 13,570 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2020 and 2019 are presented in the following table (in thousands):
|  | December 31,
|  | 2020 |  | 2019
Deferred tax assets: |  |  |  |
Allowance for credit losses on loans and debt securities HTM |  | $ | 16,168 |  |  | $ | 4,107 |
Other reserves |  | 2,485 |  |  | 3,061 |
Incentive compensation |  | 2,919 |  |  | 1,397 |
Deferred compensation |  | 533 |  |  | 591 |
Stock plans |  | 2,214 |  |  | 1,270 |
Unrealized loss on properties available-for-sale |  | 2,435 |  |  | 1,438 |
Unrealized loss on securities |  | 272 |  |  | 826 |
Net operating loss carryforwards related to acquisition |  | 33,014 |  |  | 39,519 |
Deferred fees on PPP loans |  | 517 |  |  | — |
Other, net |  | 195 |  |  | 178 |
Federal and state alternative minimum tax |  | 3,705 |  |  | 4,746 |
Total gross deferred tax assets |  | 64,457 |  |  | 57,133 |
Deferred tax liabilities: |  |  |  |
Unrealized gain on equity securities |  | (4,154) |  |  | — |
Premises and equipment |  | (5,871) |  |  | (7,340) |
Deferred loan and commitment costs, net |  | (2,968) |  |  | (2,379) |
Purchase accounting adjustments |  | (602) |  |  | 8,475 |
Investments, discount accretion |  | (452) |  |  | (380) |
Undistributed REIT income |  | — |  |  | (4,735) |
Other, net |  | (783) |  |  | (707) |
Total gross deferred tax liabilities |  | (14,830) |  |  | (7,066) |
Net deferred tax assets |  | $ | 49,627 |  |  | $ | 50,067 |
The 2020 deferred tax expense does not equal the change in net deferred tax assets as a result of net deferred liabilities recorded in connection with the Two River and Country Bank acquisitions of approximately $4.5 million. The Company has Federal net operating losses from the acquisitions of Colonial American Bank (“Colonial American”) and Sun. At December 31, 2020 and 2019, the net operating losses from Colonial American were $4.6 million and $4.9 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, 2020 and 2019, the net operating losses from Sun were $152.6 million and $175.9 million, respectively. These net operating losses are subject to annual limitation under Code Section 382 of approximately $23.3 million, which will expire in 2022 and $9.3 million, which will expire between 2029 and 2036. As of December 31, 2020 and 2019, the Company had $1.8 million of New Jersey Alternative Minimum Assessment Tax (“AMT”) Credits. These credits do not expire. As of December 31, 2020 and 2019, the Company had $0 and $1.0 million, respectively, of AMT Tax Credits that were part of the Cape Bancorp, Inc. (“Cape”) acquisition and $2.3 million of AMT Tax Credits that were part of the Sun acquisition. These credits are subject to the same Code Section 382 limitation as indicated above but do not expire. At December 31, 2020, 2019 and 2018, 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, 2020 included approximately $10.8 million for which no provision for income tax has been made. This amount represented 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, 2020, the Company had an unrecognized deferred tax liability of $2.8 million with respect to this reserve. There were no unrecognized tax benefits for the years ended December 31, 2020, 2019 and 2018. The tax years that remain subject to examination by the Federal government and the state of New York include the years ended December 31, 2017 and forward. The tax years that remain subject to examination by the state of New Jersey include the years ended December 31, 2016 and forward. On July 1, 2018, New Jersey enacted changes to the corporate business tax laws. This legislation required a combined group to file combined returns for tax years beginning in 2019. However, due to technical issues and inconsistencies with existing tax law, it was initially determined that the tax law change did not have an impact on deferred taxes. In December 2019, the State of New Jersey issued a clarifying technical bulletin related to the impact of the new tax legislation enacted in July 2018. This technical bulletin provided clarification to the combined income tax reporting for certain members of a unitary business group. Accordingly, this required a revaluation of some of the Company’s deferred tax assets. As a result of the revaluation of the state deferred tax assets, the Company recognized an additional income tax benefit of $2.2 million for the year ended December 31, 2019. 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 required that the effect of income tax law changes on deferred taxes 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 an 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, 2020, subject to reclassification, was $786,000.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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