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INCOME TAXES | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | 11. INCOME TAXES The income tax expense included in the consolidated financial statements for the years ended December 31 is allocated as follows:
(In thousands) |  | 2018 |  |  | 2017 |  |  | 2016 |
Federal: |  |  |  |  |  |  |  |  |  |  |  |
Current (benefit)/expense |  | $ | (7,046 | ) |  | $ | 1,559 |  |  | $ | 13,207 |
Deferred expense |  |  | 16,908 |  |  |  | 13,922 |  |  |  | 486 |
State: |  |  |  |  |  |  |  |  |  |  |  |
Current expense |  |  | 3,554 |  |  |  | 2,133 |  |  |  | 2,105 |
Deferred expense |  |  | 134 |  |  |  | 196 |  |  |  | 466 |
Total income tax expense |  | $ | 13,550 |  |  | $ | 17,810 |  |  | $ | 16,264 |
Total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 21 percent for 2018 and 35 percent for both 2017 and 2016, respectively, to income before taxes as a result of the following:
(In thousands) |  | 2018 |  |  | 2017 |  |  | 2016 |
Computed “expected” tax expense |  | $ | 12,121 |  |  | $ | 19,008 |  |  | $ | 14,959 |
(Decrease)/increase in taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Tax-exempt income |  |  | (402 | ) |  |  | (584 | ) |  |  | (496 | )
State income taxes |  |  | 2,942 |  |  |  | 1,514 |  |  |  | 1,671 |
Bank owned life insurance income |  |  | (290 | ) |  |  | (475 | ) |  |  | (492 | )
Life insurance expense |  |  | 148 |  |  |  | 479 |  |  |  | 297 |
Gain on death benefit |  |  | (630 | ) |  |  | — |  |  |  | — |
Interest disallowance |  |  | 115 |  |  |  | 124 |  |  |  | 95 |
Meals and entertainment expense |  |  | 25 |  |  |  | 76 |  |  |  | 77 |
Stock-based compensation |  |  | (481 | ) |  |  | (982 | ) |  |  | 15 |
Tax reform impact |  |  | — |  |  |  | (1,648 | ) |  |  | — |
Other |  |  | 2 |  |  |  | 298 |  |  |  | 138 |
Total income tax expense |  | $ | 13,550 |  |  | $ | 17,810 |  |  | $ | 16,264 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31 are as follows:
(In thousands) |  | 2018 |  |  | 2017 |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for loan losses |  | $ | 10,537 |  |  | $ | 9,972 |
Tax net operating loss carryforward |  |  | 7,046 |  |  |  | — |
Lease adjustment |  |  | — |  |  |  | 49 |
Post-retirement benefits |  |  | — |  |  |  | 297 |
Organization costs |  |  | 13 |  |  |  | 14 |
Unrealized loss on securities available for sale |  |  | 969 |  |  |  | 714 |
Unrealized loss on equity security |  |  | 79 |  |  |  | — |
Stock plan |  |  | 1,534 |  |  |  | 118 |
Nonaccrual interest |  |  | 31 |  |  |  | 31 |
Accrued compensation |  |  | 189 |  |  |  | 900 |
Capital leases |  |  | 1,051 |  |  |  | 774 |
Total gross deferred tax assets |  | $ | 21,449 |  |  | $ | 12,869 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Lease financing |  | $ | 33,191 |  |  | $ | 10,091 |
Cash flow hedge |  |  | 265 |  |  |  | 392 |
Deferred loan origination costs and fees |  |  | 1,214 |  |  |  | 1,072 |
Deferred income |  |  | 2,693 |  |  |  | 729 |
Investment securities, principally due to the accretion of bond discount |  |  | — |  |  |  | 13 |
Other |  |  | 115 |  |  |  | 20 |
Total gross deferred tax liabilities |  |  | 37,478 |  |  |  | 12,317 |
Net deferred tax (liability)/asset |  | $ | (16,029 | ) |  | $ | 552 |
Based upon taxes paid and projected future taxable income, Management believes that it is more likely than not that the gross deferred tax assets will be realized. At December 31, 2018 and 2017, the Company had no unrecognized tax benefits. The Company does not expect the amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months. The Company had Federal tax net operating losses arising in 2018 related to accelerated depreciation on lease financing activity of approximately $34 million and may be carried forward indefinitely. These losses cannot be carried back. On December 22, 2017, the Tax Cuts and Jobs Act (H.R. 1) (the “Act”) was signed into law. The Act contains several changes in existing tax law impacting businesses, including a reduction in the Federal corporate income tax rate from 35 percent to 21 percent, effective January 1, 2018. As a result, the Company’s effective tax rate was 23.5 percent for 2018 as compared to 32.8 percent for 2017. The Company determined a reduction in the value of its net deferred tax liability of approximately $1.6 million, which was a result of a reduction in the Federal corporate tax rate that is expected to apply to the reversal of the Company’s temporary differences. The Company recorded the reduction in the deferred tax liability as an income tax benefit in the Company’s statement of income in 2017. The tax benefit was net of tax expense of $215 thousand related to the other comprehensive income revaluation adjustment. On July 1, 2018, the 2019 New Jersey Budget (“Budget”) was passed which established a 2.5 percent surtax on businesses that have New Jersey allocated net income in excess of $1.0 million. The surtax is effective as of January 1, 2018 and will continue through 2019. The surtax will adjust to 1.5 percent for 2020 and 2021. In addition, effective for taxable years beginning on or after January 1, 2019, banks will be required to file combined reports of taxable income including their parent holding company, their real estate investment trust (“REIT”) subsidiary and all other subsidiaries including those that qualify as New Jersey Investment Companies, and Delaware Investment Holding Companies. The Company is subject to U.S. Federal income tax as well as income tax of various state jurisdictions. The Company is no longer subject to federal examination for tax years prior to 2015. The tax years of 2015, 2016 and 2017 remain open to federal examination. The Company is no longer subject to state and local examinations by tax authorities for tax years prior to 2014. The tax years of 2014, 2015, 2016 and 2017 remain open for state examination.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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