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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

(17.) INCOME TAXES

The income tax (benefit) expense for the years ended December 31 consisted of the following (in thousands):

 

 

2024

 

 

2023

 

 

2022

 

Current tax expense (benefit):

 

 

 

 

 

 

 

 

 

Federal

 

$

9,031

 

 

$

13,302

 

 

$

15,371

 

State

 

 

(185

)

 

 

835

 

 

 

3,408

 

Total current tax expense

 

 

8,846

 

 

 

14,137

 

 

 

18,779

 

Deferred tax (benefit) expense:

 

 

 

 

 

 

 

 

 

Federal

 

 

(26,987

)

 

 

(1,136

)

 

 

(3,250

)

State

 

 

(8,361

)

 

 

(212

)

 

 

(1,132

)

Total deferred tax (benefit) expense

 

 

(35,348

)

 

 

(1,348

)

 

 

(4,382

)

Total income tax (benefit) expense

 

$

(26,502

)

 

$

12,789

 

 

$

14,397

 

 

The effective income tax rate differed from the statutory federal income tax rate for the years ended December 31 as follows:

 

 

 

2024

 

 

2023

 

 

2022

 

Statutory federal tax rate

 

 

(21.0

%)

 

 

21.0

%

 

 

21.0

%

Increase (decrease) resulting from:

 

 

 

 

 

 

 

 

 

Tax exempt interest income

 

 

(0.6

)

 

 

(0.8

)

 

 

(0.9

)

Tax credits and adjustments

 

 

(6.4

)

 

 

(2.1

)

 

 

(2.6

)

Non-taxable earnings on company owned life insurance

 

 

(1.7

)

 

 

0.9

 

 

 

-

 

State taxes, net of federal tax benefit

 

 

(9.9

)

 

 

0.8

 

 

 

2.5

 

Nondeductible expenses

 

 

0.3

 

 

 

0.3

 

 

 

0.2

 

Other, net

 

 

0.4

 

 

 

0.2

 

 

 

0.1

 

Effective tax rate

 

 

(38.9

%)

 

 

20.3

%

 

 

20.1

%

 

Total income tax (benefit) expense was as follows for the years ended December 31 (in thousands):

 

 

 

2024

 

 

2023

 

 

2022

 

Income tax (benefit) expense

 

$

(26,502

)

 

$

12,789

 

 

$

14,397

 

Shareholder’s equity

 

 

23,196

 

 

 

6,044

 

 

 

(42,812

)

 

The Company recognizes deferred income taxes for the estimated future tax effects of differences between the tax and financial statement bases of assets and liabilities considering enacted tax laws. These differences result in deferred tax assets and liabilities, which are included in other assets in the Company’s consolidated statements of financial condition. The Company also assesses the likelihood that deferred tax assets will be realizable based on, among other considerations, future taxable income and establishes, if necessary, a valuation allowance for those deferred tax assets determined to not likely be realizable. A deferred tax asset valuation allowance is recognized if, based on the weight of available evidence (both positive and negative), it is more likely than not that some portion or all of the deferred tax assets will not be realized. The future realization of deferred tax benefits depends upon the existence of sufficient taxable income within the carry-back and carry-forward periods. Management’s judgment is required in determining the appropriate recognition of deferred tax assets and liabilities, including projections of future taxable income.

Based upon the Company’s historical and projected future levels of pre-tax and taxable income, the scheduled reversals of taxable temporary differences to offset future deductible amounts, and prudent and feasible tax planning strategies, management believes it is more likely than not that the deferred tax assets will be realized. Therefore, no valuation allowance has been recorded as of December 31, 2024 and 2023.

In 2024 and 2023, the Company recognized the impact of its investments in limited partnerships that generated qualifying tax credits resulting in a $4.6 million and $3.0 million reduction in income tax expense, respectively, and an $775 thousand and $252 thousand net loss recorded in noninterest income, respectively. See Note 1, Summary of Significant Accounting Policies, for the Company’s accounting policy for income taxes and these tax credit investments.

(17.) INCOME TAXES (Continued)

The Company’s net deferred tax asset is included in other assets in the consolidated statements of financial condition. The tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities are as follows at December 31 (in thousands):

 

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Allowance for credit losses

 

$

13,362

 

 

$

14,011

 

Leases–right of use obligations

 

 

8,351

 

 

 

8,657

 

Deferred compensation

 

 

1,168

 

 

 

1,471

 

Investment in limited partnerships

 

 

1,369

 

 

 

785

 

SERP agreements

 

 

45

 

 

 

92

 

Litigation settlement reserve

 

 

5,899

 

 

 

-

 

Share-based compensation

 

 

793

 

 

 

930

 

Tax attribute carryforward benefit

 

 

28,116

 

 

 

-

 

Net unrealized loss on securities available for sale

 

 

15,823

 

 

 

38,549

 

Accrued pension costs

 

 

463

 

 

 

297

 

Deferred loan origination costs

 

 

178

 

 

 

-

 

Other

 

 

1,219

 

 

 

1,395

 

Gross deferred tax assets

 

 

76,786

 

 

 

66,187

 

Deferred tax liabilities:

 

 

 

 

 

 

Leases–right of use assets

 

 

7,738

 

 

 

8,077

 

Prepaid expenses

 

 

1,015

 

 

 

929

 

Intangible assets

 

 

2,523

 

 

 

2,760

 

Depreciation and amortization

 

 

3,153

 

 

 

3,833

 

Loan servicing assets

 

 

409

 

 

 

354

 

Deferred loan origination costs

 

 

-

 

 

 

154

 

Other

 

 

1,063

 

 

 

1,347

 

Gross deferred tax liabilities

 

 

15,901

 

 

 

17,454

 

Net deferred tax asset

 

$

60,885

 

 

$

48,733

 

The Company and its subsidiaries are primarily subject to federal and New York income taxes. The federal income tax years currently open for audit are 2018 through 2024. The New York income tax years currently open for audit are 2019 through 2024.

At December 31, 2024, the Company had tax attribute carryforward benefits totaling $28.1 million for federal and New York net operating losses and tax credit carryforwards generated in the fourth quarter of 2024, primarily due to the realized losses from the investment security repositioning. At December 31, 2024, the Company had a federal net operating loss carryforward of $40 thousand with no expiration date, a federal credit carryforwards of $14 thousand that expires in 2044, and a New York net operating loss carryforward of $117 thousand that expires in 2044.

 

The Company’s unrecognized tax benefits and changes in unrecognized tax benefits were not significant as of or for the years ended December 31, 2024, 2023 and 2022. There were no material interest or penalties recorded in the income statement in income tax expense for the years ended December 31, 2024, 2023 and 2022. As of December 31, 2024 and 2023, there were no amounts accrued for interest or penalties related to uncertain tax positions.