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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes for the years ended December 31, 2024, 2023 and 2022 consisted of the following (in thousands):
|  | For the Year Ended December 31,
|  | 2024 |  | 2023 |  | 2022
Current |  |  |  |  |  |
Federal |  | $ | 23,315 |  |  | $ | 20,894 |  |  | $ | 32,981 |
State |  | 7,288 |  |  | 8,655 |  |  | 11,807 |
Total current |  | 30,603 |  |  | 29,549 |  |  | 44,788 |
Deferred |  |  |  |  |  |
Federal |  | 214 |  |  | 4,250 |  |  | 2,231 |
State |  | (551) |  |  | (1,099) |  |  | (454) |
Total deferred |  | (337) |  |  | 3,151 |  |  | 1,777 |
Total provision for income taxes |  | $ | 30,266 |  |  | $ | 32,700 |  |  | $ | 46,565 |
Included in other comprehensive income was the income tax impact attributable to the unrealized gain/loss on debt securities, accretion of unrealized losses on debt securities reclassified to held-to-maturity, unrealized loss on derivative hedges and the related reclassification adjustments included in net income. These items resulted in a tax expense of $1.8 million and $4.9 million for the years ended December 31, 2024 and 2023, respectively, and a tax benefit of $10.4 million for the year ended December 31, 2022. 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, 2024, 2023 and 2022 is as follows (dollars in thousands):
|  | For the Year Ended December 31,
|  | 2024 |  | 2023 |  | 2022
Income before provision for income taxes |  | $ | 130,656 |  |  | $ | 136,765 |  |  | $ | 193,922 |
Federal income tax, at statutory rates |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Computed “expected” federal income tax expense |  | $ | 27,438 |  |  | $ | 28,721 |  |  | $ | 40,724 |
Increase (decrease) in federal income tax expense resulting from |  |  |  |  |  |
State income taxes, net of federal benefit |  | 5,518 |  |  | 5,979 |  |  | 8,927 |
Earnings on BOLI |  | (1,660) |  |  | (1,109) |  |  | (1,381) |
Tax exempt interest |  | (547) |  |  | (606) |  |  | (786) |
Merger related expenses |  | — |  |  | — |  |  | 90 |
Stock compensation |  | 391 |  |  | (298) |  |  | 26 |
Alternative minimum tax write-off |  | 1,196 |  |  | — |  |  | — |
Research and development and other credits |  | (735) |  |  | (557) |  |  | (471) |
Dividends received deduction |  | (322) |  |  | (368) |  |  | (371) |
Other items, net |  | (1,013) |  |  | 938 |  |  | (193) |
Total provision for income taxes |  | $ | 30,266 |  |  | $ | 32,700 |  |  | $ | 46,565 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023 are presented in the following table (in thousands):
|  | December 31,
|  | 2024 |  | 2023
Deferred tax assets: |  |  |  |
Allowance for credit losses on loans and debt securities HTM |  | $ | 18,981 |  |  | $ | 16,951 |
Other reserves |  | 2,790 |  |  | 2,482 |
Incentive compensation |  | 4,345 |  |  | 3,871 |
Deferred compensation |  | 338 |  |  | 370 |
Stock plans |  | 2,239 |  |  | 2,474 |
Unrealized losses on assets held-for-sale |  | 347 |  |  | 392 |
Unrealized losses on AFS securities |  | 5,346 |  |  | 7,274 |
Net operating loss carryforwards related to acquisition |  | 19,053 |  |  | 21,077 |
Section 174 capitalized costs |  | 5,457 |  |  | 3,737 |
Federal and state alternative minimum tax |  | — |  |  | 1,196 |
Other, net |  | 866 |  |  | 653 |
Total gross deferred tax assets |  | 59,762 |  |  | 60,477 |
Deferred tax liabilities: |  |  |  |
Unrealized gain on equity securities |  | (4,568) |  |  | (3,386) |
Premises and equipment |  | (3,104) |  |  | (4,891) |
Deferred loan and commitment costs, net |  | (2,814) |  |  | (2,317) |
Purchase accounting related adjustments |  | (1,698) |  |  | (1,716) |
Investments, discount accretion |  | (185) |  |  | (73) |
Other, net |  | (402) |  |  | — |
Total gross deferred tax liabilities |  | (12,771) |  |  | (12,383) |
Net deferred tax assets |  | $ | 46,991 |  |  | $ | 48,094 |
The Company has federal net operating losses from the acquisitions of Colonial American Bank (“Colonial American”) and Sun Bancorp, Inc. (“Sun”). At December 31, 2024 and 2023, the net operating losses from Colonial American were $3.3 million and $3.6 million, respe ctively. These net operating losses are subject to annual limitation under Code Section 382 of approximately $22,000, and will expire between 2029 and 2034. At December 31, 2024 and 2023, the net operating losses from Sun were $87.5 million and $96.8 million, respectively. These net operating losses are subject to annual limitation under Code Section 382 of approximately $9.3 million. These net operating losses will expire between 2029 and 2036. At December 31, 2024 and 2023, the Compan y had $0 and $1.2 million, re spectively, of Alternative Minimum 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. During 2024, the Company wrote off the remaining tax credits of $1.2 million. At December 31, 2024, 2023 and 2022, the Company determined 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. Retai ned earnings at December 31, 2024 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. As of December 31, 2024, the Company is not under examination in connection to any 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 2021 and forward. The Company incurred income tax expense of $1.8 million recognized in other comprehensive income related to Tax Reform in 2018. These amounts have been reported as separate components of accumulated other comprehensive income and reclassified and recognized as a net tax benefit in the periods in which the underlying transactions are settled through continuing operations. The amount included in accumulated other comprehensive income at December 31, 2024, subject to reclassification, was $295,000. There were no unrecognized tax benefits for the years ended December 31, 2024, 2023 and 2022.

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