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INCOME TAXES | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES For the years ended December 31, 2021 and 2020, income tax expense attributable to income from operations consisted of the following (in thousands):
|  | 2021 |  | 2020 |  |
Current expense: |  |  |  |  |  |
Federal |  | $ | 5,732 |  |  | $ | 4,413 |  |  |
State |  | 1,033 |  |  | 280 |  |  |
Total current |  | 6,765 |  |  | 4,693 |  |  |
Deferred expense/(benefit): |  |  |  |  |  |
Federal |  | 527 |  |  | (136) |  |  |
State |  | 43 |  |  | 50 |  |  |
Total deferred |  | 570 |  |  | (86) |  |  |
Income tax expense |  | $ | 7,335 |  |  | $ | 4,607 |  |  |
Income tax expense differed from the amounts computed by applying the U.S. Federal statutory income tax rate to income before income tax expense as follows (in thousands):
|  | 2021 |  | 2020 |  |
Statutory federal tax rate |  | 21 | % |  | 21 | % |  |
Tax computed at statutory rate |  | $ | 7,090 |  |  | $ | 5,013 |  |  |
Increase (reduction) resulting from: |  |  |  |  |  |
Tax-exempt income |  | (380) |  |  | (395) |  |  |
831(b) premium adjustment |  | (291) |  |  | (296) |  |  |
Dividend exclusion |  | (8) |  |  | (5) |  |  |
State taxes, net of Federal impact |  | 803 |  |  | 118 |  |  |
Nondeductible interest expense |  | 4 |  |  | 5 |  |  |
Other items, net |  | 117 |  |  | 167 |  |  |
Income tax expense |  | $ | 7,335 |  |  | $ | 4,607 |  |  |
Effective tax rate |  | 21.7 | % |  | 19.3 | % |  |
The higher tax expense in 2021 when compared to 2020 can be attributed to an increase in pretax income. 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 presented below (in thousands):
|  | 2021 |  | 2020
Deferred tax assets: |  |  |  |
Allowance for loan losses |  | $ | 5,546 |  |  | $ | 5,393 |
Accrual for employee benefit plans |  | — |  |  | 47 |
Depreciation |  | 979 |  |  | 681 |
Deferred compensation and directors' fees |  | 1,130 |  |  | 1,045 |
Operating lease liabilities |  | 1,976 |  |  | 1,831 |
Purchase accounting adjustment – loans |  | — |  |  | 1 |
Purchase accounting adjustment – fixed assets |  | 153 |  |  | 149 |
Gain on deemed sale of securities |  | — |  |  | 54 |
Net unrealized losses on securities available for sale |  | 886 |  |  | — |
Accounting for defined benefit pension and other benefit plans |  | 1,347 |  |  | 2,302 |
Nonaccrued interest |  | 473 |  |  | 687 |
Accrued expense |  | 139 |  |  | 158 |
Other items, net |  | 127 |  |  | 48 |
Total gross deferred tax assets |  | 12,756 |  |  | 12,396 |
Deferred tax liabilities: |  |  |  |
Deferred loan fees and costs |  | 355 |  |  | 274 |
Prepaid pension |  | 3,715 |  |  | 3,344 |
Net unrealized gains on securities available for sale |  | — |  |  | 3,124 |
Discount accretion |  | 78 |  |  | 50 |
Core deposit intangible |  | 1,556 |  |  | 1,353 |
REIT dividend |  | 608 |  |  | 616 |
Operating lease right-of-use assets |  | 1,976 |  |  | 1,831 |
Accrual for employee benefit plans |  | 3 |  |  | — |
Other |  | 344 |  |  | 168 |
Total gross deferred tax liabilities |  | 8,635 |  |  | 10,760 |
Net deferred tax asset |  | $ | 4,121 |  |  | $ | 1,636 |
Realization of deferred tax assets is dependent upon the generation of future taxable income. A valuation allowance is recognized when it is more likely than not that some portion of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management considers the scheduled reversal of the deferred tax assets, the level of historical taxable income and projected future taxable income over the periods in which the temporary differences comprising the deferred tax assets will be deductible. Based on its assessment, management determined that no valuation allowance is necessary. As of December 31, 2021 and 2020, the Corporation did not have any unrecognized tax benefits. The Corporation accounts for interest and penalties related to uncertain tax positions as part of its provision for Federal and State income taxes. As of December 31, 2021 and 2020, the Corporation did not accrue any interest or penalties related to its uncertain tax positions. The Corporation is not currently subject to examinations by Federal taxing authorities for the years prior to 2018 and for New York State taxing authorities for the year prior to 2018. New York State taxing authorities are currently auditing the Corporation with the years 2018, 2019, and 2020. The Corporation does not anticipate material adjustments as a result of the New York State audits.

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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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