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INCOME TAXES | 12 Months Ended
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Dec. 31, 2019
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) |  | 2019 |  |  | 2018 |  |  | 2017 |
Federal: |  |  |  |  |  |  |  |  |  |  |  |
Current (benefit)/expense |  | $ | 5,647 |  |  | $ | (7,046 | ) |  | $ | 1,559 |
Deferred expense |  |  | 6,087 |  |  |  | 16,908 |  |  |  | 13,922 |
State: |  |  |  |  |  |  |  |  |  |  |  |
Current expense |  |  | 3,028 |  |  |  | 3,554 |  |  |  | 2,133 |
Deferred expense |  |  | 3,926 |  |  |  | 134 |  |  |  | 196 |
Total income tax expense |  | $ | 18,688 |  |  | $ | 13,550 |  |  | $ | 17,810 |
Total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 21 percent for both 2019 and 2018, respectively, and 35 percent for 2017, to income before taxes as a result of the following:
(In thousands) |  | 2019 |  |  | 2018 |  |  | 2017 |
Computed “expected” tax expense |  | $ | 13,886 |  |  | $ | 12,121 |  |  | $ | 19,008 |
(Decrease)/increase in taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Tax-exempt income |  |  | (431 | ) |  |  | (402 | ) |  |  | (584 | )
State income taxes, net of Federal benefit |  |  | 2,540 |  |  |  | 2,942 |  |  |  | 1,514 |
Impact of state tax reform, net of Federal benefit |  |  | 2,954 |  |  |  | — |  |  |  | — |
Bank owned life insurance income |  |  | (277 | ) |  |  | (290 | ) |  |  | (475 | )
Life insurance expense |  |  | 234 |  |  |  | 148 |  |  |  | 479 |
Gain on death benefit |  |  | — |  |  |  | (630 | ) |  |  | — |
Interest disallowance |  |  | 146 |  |  |  | 115 |  |  |  | 124 |
Meals and entertainment expense |  |  | 40 |  |  |  | 25 |  |  |  | 76 |
Stock-based compensation |  |  | (46 | ) |  |  | (481 | ) |  |  | (982 | )
Impact of Federal tax reform |  |  | — |  |  |  | — |  |  |  | (1,648 | )
Other |  |  | (358 | ) |  |  | 2 |  |  |  | 298 |
Total income tax expense |  | $ | 18,688 |  |  | $ | 13,550 |  |  | $ | 17,810 |
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) |  | 2019 |  |  | 2018 |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for loan losses |  | $ | 11,369 |  |  | $ | 10,537 |
Tax net operating loss carryforward |  |  | 6,163 |  |  |  | 7,046 |
Organization costs |  |  | 13 |  |  |  | 13 |
Cash flow hedge |  |  | 925 |  |  |  | — |
Unrealized loss on securities available for sale |  |  | — |  |  |  | 969 |
Unrealized loss on equity security |  |  | 43 |  |  |  | 79 |
Stock plan |  |  | 2,874 |  |  |  | 1,534 |
Nonaccrual interest |  |  | 74 |  |  |  | 31 |
Accrued compensation |  |  | 2,956 |  |  |  | 189 |
Accrued expenses |  |  | 1,402 |  |  |  | — |
Lease liabilities |  |  | 3,234 |  |  |  | — |
Capital leases (2018)/Finance lease (2019) |  |  | 768 |  |  |  | 1,051 |
Other |  |  | 188 |  |  |  | — |
Total gross deferred tax assets |  | $ | 30,009 |  |  | $ | 21,449 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Lease financing |  | $ | 44,841 |  |  | $ | 33,191 |
Cash flow hedge |  |  | — |  |  |  | 265 |
Unrealized gain on securities available for sale |  |  | 330 |  |  |  | — |
Deferred loan origination costs and fees |  |  | 1,355 |  |  |  | 1,214 |
Deferred income |  |  | 5,329 |  |  |  | 2,693 |
Amortization of intangible assets |  |  | 239 |  |  |  | — |
Purchase accounting |  |  | 908 |  |  |  | — |
Lease right-of-use asset |  |  | 3,158 |  |  |  |  |
Other |  |  | — |  |  |  | 115 |
Total gross deferred tax liabilities |  |  | 56,160 |  |  |  | 37,478 |
Net deferred tax liability |  | $ | (26,151 | ) |  | $ | (16,029 | )
Based upon taxes paid and projected future taxable income, Management believes that it is more likely than not that the Company that gross deferred tax assets will be realized. However, there can be no assurance that such assets will be realized if circumstances change. At December 31, 2019 and 2018, 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 has Federal tax net operating losses arising in 2019 related to accelerated depreciation on lease financing activity of approximately $45 million and may be carried forward indefinitely. These losses cannot be carried back. On July 1, 2018, the 2019 New Jersey 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 was effective as of January 1, 2018 and continued 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. New Jersey requires entities to report their real estate investment trust, registered investment company and investment company on a separate entity basis. The Bank made an adjustment to income tax expense and deferred tax assets/liabilities to reflect the new state tax rate. The Company’s effective tax rate was 28.3 percent for 2019 as compared to 23.5 percent for 2018. The Company’s effective tax rate for 2018 was positively affected by the adoption of ASU 2016-09 which resulted in a $538,000 reduction in income taxes. 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 2016. The tax years of 2016, 2017 and 2018 remain open to federal examination. The Company is no longer subject to state and local examinations by tax authorities for tax years prior to 2015. The tax years of 2015, 2016, 2017 and 2018 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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