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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
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)

 

2024

 

 

2023

 

 

2022

 

Federal:

 

 

 

 

 

 

 

 

 

Current expense

 

$

19,576

 

 

$

25,814

 

 

$

27,228

 

Deferred (benefit)/expense

 

 

(11,461

)

 

 

(11,862

)

 

 

(7,817

)

State:

 

 

 

 

 

 

 

 

 

Current expense

 

 

6,685

 

 

 

7,889

 

 

 

7,511

 

Deferred (benefit)/expense

 

 

(4,384

)

 

 

(3,414

)

 

 

1,176

 

Change in valuation allowance

 

 

1,548

 

 

 

 

 

 

 

Total income tax expense

 

$

11,964

 

 

$

18,427

 

 

$

28,098

 

 

Total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 21 percent for 2024, 2023, and 2022, respectively, to income before taxes as a result of the following:

 

(In thousands)

 

2024

 

 

2023

 

 

2022

 

"Tax expense computed at applicable statutory rate"

 

$

9,440

 

 

$

14,129

 

 

$

21,513

 

(Decrease)/increase in taxes resulting from:

 

 

 

 

 

 

 

 

 

Tax-exempt income

 

 

(174

)

 

 

(261

)

 

 

(236

)

State income taxes, net of Federal benefit

 

 

1,818

 

 

 

3,535

 

 

 

7,109

 

Bank owned life insurance income

 

 

(327

)

 

 

(266

)

 

 

(261

)

Life insurance expense

 

 

163

 

 

 

238

 

 

 

21

 

Interest disallowance

 

 

100

 

 

 

143

 

 

 

34

 

Meals and entertainment expense

 

 

106

 

 

 

78

 

 

 

39

 

Stock-based compensation

 

 

127

 

 

 

889

 

 

 

(130

)

Change in valuation allowance

 

 

1,548

 

 

 

—

 

 

 

—

 

Other

 

 

(837

)

 

 

(58

)

 

 

9

 

Total income tax expense

 

$

11,964

 

 

$

18,427

 

 

$

28,098

 

 

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)

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Allowance for credit losses

 

$

19,430

 

 

$

17,540

 

Tax net operating loss carryforward

 

 

134

 

 

 

262

 

Capital loss carryforward

 

 

1,548

 

 

 

1,763

 

Organization costs

 

 

3

 

 

 

7

 

Unrealized loss on securities available for sale

 

 

27,182

 

 

 

25,408

 

Unrealized loss on equity security

 

 

558

 

 

 

488

 

Stock compensation expense

 

 

6,081

 

 

 

2,621

 

Nonaccrual interest

 

 

31

 

 

 

115

 

Accrued compensation

 

 

7,923

 

 

 

7,201

 

Accrued expenses

 

 

833

 

 

 

1,079

 

Discount accretion

 

 

1,441

 

 

 

 

Lease liabilities

 

 

11,486

 

 

 

3,328

 

Finance lease

 

 

516

 

 

 

672

 

Other

 

 

1,170

 

 

 

1,080

 

Total deferred tax assets

 

$

78,336

 

 

$

61,564

 

Deferred tax liabilities:

 

 

 

 

 

 

Lease financing

 

$

38,343

 

 

$

48,002

 

Cash flow hedge

 

 

2,078

 

 

 

1,883

 

Deferred loan origination costs and fees

 

 

2,090

 

 

 

1,878

 

Deferred income

 

 

4,420

 

 

 

4,479

 

Amortization of intangible assets

 

 

2,451

 

 

 

1,245

 

Lease right-of-use asset

 

 

10,619

 

 

 

3,126

 

Other

 

 

406

 

 

 

446

 

      Total deferred tax liabilities

 

 

60,407

 

 

 

61,059

 

Net deferred tax asset/(liability) before valuation allowance

 

 

17,929

 

 

 

505

 

   Valuation allowance

 

 

(1,548

)

 

 

—

 

Net deferred tax asset/(liability)

 

$

16,381

 

 

$

505

 

 

Management believes that not all existing net deductible temporary differences that comprise the net deferred tax asset will reverse during periods in which the Company generates sufficient taxable income of appropriate character. Accordingly, management has established a valuation allowance on all of the Company’s capital loss carryforward. Based on all available evidence, Management believes it is more likely than not the Company will realize the remaining deferred tax assets. Significant changes in the Company's operations and or economic conditions could affect the benefits of the recognized net deferred tax assets.

 

At December 31, 2024, the Company had $2.5 million of state net operating loss ("NOL") carryforward available to offset future taxable income. These operating loss carryforwards have various expirations beginning in 2033.

 

On June 28 2024, the governor of New Jersey signed into law a new Corporate Transit Fee, which increases the NJ corporate tax rate from 9% to 11.5%. This fee will be imposed on businesses that have New Jersey taxable income of $10 million or more for tax years beginning January 1, 2024 through December 31, 2028.

 

The Bank made an adjustment to income tax expense and deferred tax assets/liabilities to reflect the new state tax rate.

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 2021 or by state and local tax authorities for years prior to 2019.