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Income Taxes | 12 Months Ended
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Dec. 31, 2013
Income Taxes [Abstract] |
Income Taxes | (9)Income Taxes Income tax expense (benefit) consists of the following (in thousands):
| December 31,
| 2013 |  | 2012 |  | 2011
Federal tax expense (benefit): |  |  |  |  |
Current | $ 12,493 |  | $ 10,081 |  | $ 8,319
Deferred | (2,758) |  | (1,876) |  | (2,257)
| 9,735 |  | 8,205 |  | 6,062
State and local tax expense (benefit): |  |  |  |  |
Current | 2,276 |  | 1,568 |  | 1,061
Deferred | (1,275) |  | (857) |  | (626)
| 1,001 |  | 711 |  | 435
Total income tax expense | $ 10,736 |  | $ 8,916 |  | $ 6,497
The Company recorded net deferred tax assets of approximately $1.6 million as a result of the acquisition of Flatbush Federal Bancorp at December 31, 2012. The Company recorded a deferred tax liability of approximately $2.4 million as a result of the FDIC-assisted transaction at December 31, 2011. Reconciliation between the amount of reported total income tax expense and the amount computed by multiplying the applicable statutory income tax rate for the years ended December 31, 201 3, 201 2, and 201 1 is as follows (dollars in thousands):
| December 31,
| 2013 |  | 2012 |  | 2011
Tax expense at statutory rate of 35% | $ 10,459 |  | $ 8,731 |  | $ 8,162
Increase (decrease) in taxes resulting from: |  |  |  |  |
State tax, net of federal income tax | 651 |  | 462 |  | 283
Bank owned life insurance | (1,262) |  | (1,009) |  | (1,041)
Merger related costs | - |  | 207 |  | -
Incentive stock options | 149 |  | 149 |  | 149
Uncertain tax position | 448 |  | 231 |  | -
Bargain purchase gain | - |  | - |  | (1,246)
Other, net | 291 |  | 145 |  | 190
Income tax expense | $ 10,736 |  | $ 8,916 |  | $ 6,497
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 201 3 and 201 2, are as follows (in thousands):
| December 31,
| 2013 |  | 2012
Deferred tax assets: |  |  |
Allowance for loan losses | $ 10,387 |  | $ 11,373
Capitalized leases | 492 |  | 607
Deferred compensation | 2,500 |  | 2,503
Accrued salaries | 737 |  | 742
Postretirement benefits | 539 |  | 519
Equity awards | 2,686 |  | 2,183
Unrealized actuarial losses on post retirement benefits | - |  | 197
Straight-line leases adjustment | 1,032 |  | 1,024
Asset retirement obligation | 102 |  | 102
Reserve for accrued interest receivable | 1,233 |  | 1,806
Reserve for loan commitments | 180 |  | 144
Employee Stock Ownership Plan | 241 |  | 195
Other | 493 |  | 619
Depreciation | 1,259 |  | 582
Fair value adjustments of acquired loans | 5,381 |  | 433
Fair value adjustments of pension benefit obligations | 172 |  | 732
Unrealized losses securities | 3,556 |  | -
Total gross deferred tax assets | 30,990 |  | 23,761
Deferred tax liabilities: |  |  |
Unrealized gains on securities – AFS | - |  | 12,332
Unrealized actuarial gains on post retirement benefits | 478 |  | -
Fair value adjustments of acquired securities | 17 |  | 754
Fair value adjustments of deposit liabilities | 45 |  | 46
Deferred loan fees | 1,105 |  | 531
Total gross deferred tax liabilities | 1,645 |  | 13,663
Net deferred tax asset | $ 29,345 |  | $ 10,098
The Company has determined that a valuation allowance should be established for certain state and local tax benefits related to the Company’s contribution to the Northfield Bank Foundation. The carryforward for state and local benefits expired during 2012 which resulted in the elimination of the deferred tax asset and corresponding valuation allowance. The Company has determined that it is not required to establish a valuation reserve for the remaining net deferred tax asset account 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 profitability. Management will continue to review the tax criteria related to the recognition of deferred tax assets. As a savings institution, the Bank is subject to a special federal tax provision regarding its frozen tax bad debt reserve. At December 31, 201 3, and December 31, 2012, the Bank’s federal tax bad debt base-year reserve was $5.9 million, with a related net deferred tax liability of $2.8 million, which has not been recognized since the Bank does not expect that this reserve will become taxable in the foreseeable future. Events that would result in taxation of this reserve include redemptions of the Bank’s stock or certain excess distributions by the Bank to the Company. A reconciliation of the Company’s uncertain tax positions are as follows (in thousands):
| December 31,
| 2013 |  | 2012 |  | 2011
Beginning balance | $ 231 |  | $ - |  | $ -
Additions based on tax positions related to prior years | 448 |  | 231 |  | -
Ending balance | $ 679 |  | $ 231 |  | $ -
The Company recorded an additional federal tax provision of $448,000 in 2013 to increase its liability for uncertain tax positions primarily due to denied deductions identified in the federal tax filings from 2009 to 2010 as a result of the on-going Internal Revenue Service’s audit over the respective tax years, related to the Company’s stock offering in 2010. The following years are open for examination or under examination:
| · |  | Federal tax filings for 2009 through present. The 2009 and 2010 filings are currently under audit.
| · |  | New York State tax filings 2010 through the present.
| · |  | New York City tax filings 2007 through the present. Currently the 2007, 2008, and 2009 filings are under examination.
| · |  | State of New Jersey 2010 through present.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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