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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes for the years ended December 31, 2022, 2021 and 2020 consisted of the following (in thousands):
|  | For the Year Ended December 31,
|  | 2022 |  | 2021 |  | 2020
Current |  |  |  |  |  |
Federal |  | $ | 32,981 |  |  | $ | 19,696 |  |  | $ | 15,731 |
State |  | 11,807 |  |  | 8,861 |  |  | 6,617 |
Total current |  | 44,788 |  |  | 28,557 |  |  | 22,348 |
Deferred |  |  |  |  |  |
Federal |  | 2,231 |  |  | 3,228 |  |  | (2,746) |
State |  | (454) |  |  | 380 |  |  | (1,869) |
Total deferred |  | 1,777 |  |  | 3,608 |  |  | (4,615) |
Total provision for income taxes |  | $ | 46,565 |  |  | $ | 32,165 |  |  | $ | 17,733 |
Included in other comprehensive income was the income tax impact attributable to the unrealized gain/loss on debt securities and accretion of unrealized losses on debt securities reclassified to held-to-maturity arising during the year in the amount of $10.4 million, $870,000, and $721,000 for the years ended December 31, 2022, 2021 and 2020, respectively. The income tax provision reconciled to the income taxes that would have been computed at the statutory federal rate for the years ended December 31, 2022, 2021 and 2020 is as follows (dollars in thousands):
|  | For the Year Ended December 31,
|  | 2022 |  | 2021 |  | 2020
Income before provision for income taxes |  | $ | 193,922 |  |  | $ | 142,241 |  |  | $ | 81,042 |
Federal income tax, at statutory rates |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Computed “expected” federal income tax expense |  | $ | 40,724 |  |  | $ | 29,871 |  |  | $ | 17,019 |
Increase (decrease) in federal income tax expense resulting from |  |  |  |  |  |
State income taxes, net of federal benefit |  | 8,927 |  |  | 7,223 |  |  | 3,751 |
Earnings on BOLI |  | (1,381) |  |  | (1,435) |  |  | (1,349) |
Tax exempt interest |  | (786) |  |  | (768) |  |  | (1,161) |
Merger related expenses |  | 90 |  |  | 24 |  |  | 138 |
Stock compensation |  | 26 |  |  | (110) |  |  | (136) |
Reclassification of certain tax effect from accumulated other comprehensive income |  | (157) |  |  | (173) |  |  | (204) |
Research and development and other credits |  | (471) |  |  | (475) |  |  | — |
Dividends received deduction |  | (371) |  |  | (510) |  |  | — |
Other items, net |  | (36) |  |  | (1,482) |  |  | (325) |
Total provision for income taxes |  | $ | 46,565 |  |  | $ | 32,165 |  |  | $ | 17,733 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2022 and 2021 are presented in the following table (in thousands):
|  | December 31,
|  | 2022 |  | 2021
Deferred tax assets: |  |  |  |
Allowance for credit losses on loans and debt securities HTM |  | $ | 14,887 |  |  | $ | 12,915 |
Other reserves |  | 2,870 |  |  | 3,115 |
Incentive compensation |  | 4,715 |  |  | 3,546 |
Deferred compensation |  | 419 |  |  | 471 |
Stock plans |  | 2,693 |  |  | 2,565 |
Unrealized losses on assets held-for-sale |  | 1,080 |  |  | 1,626 |
Unrealized losses on AFS securities |  | 11,849 |  |  | 1,332 |
Net operating loss carryforwards related to acquisition |  | 23,100 |  |  | 28,057 |
Other, net |  | 3,031 |  |  | 1,867 |
Federal and state alternative minimum tax |  | 2,294 |  |  | 2,295 |
Total gross deferred tax assets |  | 66,938 |  |  | 57,789 |
Deferred tax liabilities: |  |  |  |
Unrealized gain on equity securities |  | (2,155) |  |  | — |
Premises and equipment |  | (4,362) |  |  | (5,704) |
Deferred loan and commitment costs, net |  | (1,937) |  |  | (2,579) |
Purchase accounting adjustments |  | (2,300) |  |  | (2,056) |
Investments, discount accretion |  | (365) |  |  | (371) |
Total gross deferred tax liabilities |  | (11,119) |  |  | (10,710) |
Net deferred tax assets |  | $ | 55,819 |  |  | $ | 47,079 |
The Co mpany has federal net operating losses from the acquisitions of Colonial American Bank (“Colonial American”) and Sun Bancorp, Inc. (“Sun”). At December 31, 2022 and 2021, the net operating losses from Colonial American were $3.9 million and $4.3 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, 2022 and 2021, the net operating losses from Sun were $106.1 million and $129.4 million, respectively. These net operating losses are subject to annual limitation under Code Section 382 of approximately $23.3 million through 2022 and $9.3 million thereafter. These net operating losses will expire between 2029 and 2036. At both December 31, 2022 and 2021, the Company had $2.3 million of Alternative Minimum Tax (“AMT”) Tax Credits that were part of the Sun acquisition. These credits are subject to the same Code Section 382 limitation as indic ated above but do not expire. At December 31, 2022, 2021 and 2020, the Company determi ned that it is not required to establish 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, 2022 included approximately $10.8 million for which no deferred income tax liability has been recognized. This amount represents an allocation of income to bad debt deductions for tax purposes only for tax years prior to 1988. If the Bank were to liquidate, the entire amount would have to be recaptured and would create income for tax purposes only, which would be subject to the then-current corporate income tax rate. The Company’s federal and state income tax returns are routinely subject to examination by the Internal Revenue Service and New Jersey, New York, Pennsylvania, and several other state and city tax authorities the Company operates in. The Company believes the assumptions used to record tax-related assets or liabilities have been appropriate. However, such examinations may result in challenges to the tax return treatment applied by the Company to specific transactions. The Company is currently under examination by the New Jersey Department of Taxation in connection with the 2014 to 2017 tax years. As of December 31, 2022, the Company has not received any notices of proposed adjustments from this audit. The Company also received notification of an upcoming examination by the New York State Department of Taxation and Finance in connection with the 2019 to 2021 tax years. The tax years that remain subject to examination by the federal government and most state or city tax authorities include the tax years 2019 and forward. Excluding the above, the tax years that remain subject to examination by New Jersey are 2018 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 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, 2022, subject to reclassification, was $550,000. There were no unrecognized tax benefits for the years ended December 31, 2022, 2021 and 2020.

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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 https://asc.fasb.org/extlink&oid=121826272&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 https://asc.fasb.org/extlink&oid=122134291&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 https://asc.fasb.org/extlink&oid=121826272&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 https://asc.fasb.org/extlink&oid=122134291&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 https://asc.fasb.org/extlink&oid=121826272&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 https://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 https://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 https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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