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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income tax expense (benefit) consists of the following (in thousands):
| December 31,
| 2021 |  | 2020 |  | 2019
Federal tax expense (benefit): |  |  |  |  |
Current | $ | 15,313 |  |  | $ | 11,270 |  |  | $ | 8,543 |
Deferred | 3,107 |  |  | (2,391) |  |  | 376 |
| 18,420 |  |  | 8,879 |  |  | 8,919 |
State and local tax expense (benefit): |  |  |  |  |
Current | 8,001 |  |  | 4,825 |  |  | 4,067 |
Deferred | 52 |  |  | (667) |  |  | (199) |
| 8,053 |  |  | 4,158 |  |  | 3,868 |
Total income tax expense | $ | 26,473 |  |  | $ | 13,037 |  |  | $ | 12,787 |
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, 2021, 2020, and 2019, is as follows (dollars in thousands):
| December 31,
| 2021 |  | 2020 |  | 2019
Tax expense at statutory rate | $ | 20,397 |  |  | $ | 10,505 |  |  | $ | 11,135 |
Applicable statutory federal income tax rate | 21 | % |  | 21 | % |  | 21 | %
Increase (decrease) in taxes resulting from: |  |  |  |  |
State tax, net of federal income tax | 6,362 |  |  | 3,285 |  |  | 3,056 |
Bank owned life insurance | (862) |  |  | (793) |  |  | (1,475) |
ESOP fair market value adjustment | 102 |  |  | 42 |  |  | 187 |
Incentive stock options | 6 |  |  | 18 |  |  | 81 |
Merger related costs | — |  |  | 147 |  |  | — |
Excess tax benefits from employee share based payments | — |  |  | — |  |  | (110) |
Other, net | 468 |  |  | (167) |  |  | (87) |
Income tax expense | $ | 26,473 |  |  | $ | 13,037 |  |  | $ | 12,787 |
New Jersey State Taxation On July 1, 2018, the State of New Jersey enacted new legislation which established a 2.5% surtax on businesses that have New Jersey allocated net income in excess of $1.0 million. As originally enacted, the surtax was effective as of January 1, 2018 and continued through 2019, and was scheduled to decrease to 1.5% for 2020 and 2021, and expired beginning on or after January 1, 2022. New legislation enacted on September 29, 2020, extended the surtax rate of 2.5% through December 31, 2023, to be applied retrospectively to January 1, 2020. In addition, effective for taxable years beginning on or after January 1, 2019, banks are required to file combined reports of taxable income including their parent holding company. In May 2019, the State of New Jersey issued a tax technical bulletin, subsequently revised in December 2019, which gives guidance on the treatment of real estate investment trusts in connection with the combined reporting for New Jersey corporate business tax purposes. Real estate investment trusts and investment companies will be excluded from the combined group and will continue to file separate New Jersey tax returns. As a result of this guidance, the Company recorded an additional $889,000 of state tax expense net of federal benefit for the year ended December 31, 2019. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020, are as follows (in thousands):
| December 31,
| 2021 |  | 2020
Deferred tax assets: |  |  |
Allowance for credit losses | $ | 11,057 |  |  | $ | 10,348 |
Deferred compensation | 3,145 |  |  | 3,233 |
Accrued salaries | 1,338 |  |  | 775 |
Postretirement benefits | 354 |  |  | 346 |
Equity awards | 2,051 |  |  | 2,170 |
Straight-line leases adjustment | 1,713 |  |  | 1,533 |
Asset retirement obligation | 68 |  |  | 71 |
Reserve for accrued interest receivable | 620 |  |  | 675 |
Reserve for loan commitments | 537 |  |  | 226 |
Employee Stock Ownership Plan | 645 |  |  | 647 |
Other | 317 |  |  | 293 |
Depreciation | 3,229 |  |  | 2,798 |
Fair value adjustments of acquired loans | 1,440 |  |  | 4,967 |
Fair value adjustments of pension benefit obligations | 139 |  |  | 140 |
Total gross deferred tax assets | 26,653 |  |  | 28,222 |
Deferred tax liabilities: |  |  |
Unrealized gains on securities – AFS | 761 |  |  | 5,083 |
Unrealized actuarial gains on post retirement benefits | 15 |  |  | 15 |
Fair value adjustments of acquired securities | 580 |  |  | 825 |
Fair value adjustments of deposit liabilities | 28 |  |  | 3 |
Deferred loan fees | 2,010 |  |  | 1,387 |
Other | 23 |  |  | 26 |
Total gross deferred tax liabilities | 3,417 |  |  | 7,339 |
Net deferred tax asset | $ | 23,236 |  |  | $ | 20,883 |
Net deferred tax assets are included in other assets on the consolidated balance sheets. On January 1, 2021, the Company recorded $1.2 million of deferred tax assets as a result of the adoption of CECL. In 2020, the Company recorded net deferred tax assets of approximately $1.4 million as a result of the Victory acquisition. The Company has determined that it is not required to establish a valuation reserve for the deferred tax asset since it is “more likely than not” that the deferred tax asset will be realized through future reversals of existing taxable temporary differences. The conclusion that it is “more likely than not” that the deferred tax asset 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, 2021 and December 31, 2020, 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,
| 2021 |  | 2020 |  | 2019
Beginning balance | $ | 157 |  |  | $ | 190 |  |  | $ | 530 |
Settlements based on tax positions related to prior years | (125) |  |  | (33) |  |  | (530) |
Additions based on tax positions related to prior years | 109 |  |  | — |  |  | 190 |
Ending balance | $ | 141 |  |  | $ | 157 |  |  | $ | 190 |
The Company recognizes interest and penalties on income taxes in income tax expense. The following years are open for examination or under examination: •Federal tax filings for 2018 through present. •New York State tax filings 2015 through present. The 2015 through 2017 filings are currently under examination. •New York City tax filings 2018 through present. The 2018 and 2019 filings are currently under examination. •State of New Jersey 2017 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://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 http://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 http://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 http://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 http://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 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 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 http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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