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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES For the years ended December 31, 2024 and 2023, income tax expense attributable to income from operations consisted of the following (in thousands):
|  | 2024 |  | 2023 |  |
Current expense: |  |  |  |  |  |
Federal |  | $ | 4,877 |  |  | $ | 7,149 |  |  |
State |  | 416 |  |  | 961 |  |  |
Total current |  | 5,293 |  |  | 8,110 |  |  |
Deferred expense/(benefit): |  |  |  |  |  |
Federal |  | 1,029 |  |  | (1,271) |  |  |
State |  | 92 |  |  | (338) |  |  |
Total deferred |  | 1,121 |  |  | (1,609) |  |  |
Income tax expense |  | $ | 6,414 |  |  | $ | 6,501 |  |  |
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):
|  | 2024 |  | 2023 |  |
Statutory federal tax rate |  | 21 | % |  | 21 | % |  |
Tax computed at statutory rate |  | $ | 6,318 |  |  | $ | 6,615 |  |  |
Increase (reduction) resulting from: |  |  |  |  |  |
Tax-exempt income |  | (528) |  |  | (509) |  |  |
831(b) premium adjustment |  | — |  |  | (202) |  |  |
Dividend exclusion |  | (10) |  |  | (9) |  |  |
State taxes, net of Federal impact |  | 437 |  |  | 580 |  |  |
Nondeductible interest expense |  | 51 |  |  | 38 |  |  |
Other items, net |  | 146 |  |  | (12) |  |  |
Income tax expense |  | $ | 6,414 |  |  | $ | 6,501 |  |  |
Effective tax rate |  | 21.3 | % |  | 20.6 | % |  |
The lower tax expense in 2024 when compared to 2023 can be attributed to a decrease in pretax income. 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, 2024 and 2023, are presented below (in thousands):
Deferred tax assets: |  | 2024 |  | 2023
Allowance for credit losses |  | $ | 5,858 |  |  | $ | 5,775 |
Depreciation |  | 1,122 |  |  | 1,408 |
Deferred compensation and directors' fees |  | 1,444 |  |  | 1,388 |
Operating lease liabilities |  | 1,435 |  |  | 1,484 |
Purchase accounting adjustment – fixed assets |  | 154 |  |  | 153 |
Net unrealized losses on securities available for sale |  | 22,487 |  |  | 22,296 |
Defined benefit pension and other benefit plans |  | 527 |  |  | 1,054 |
Nonaccrued interest |  | 381 |  |  | 484 |
Accrued expense |  | 74 |  |  | 96 |
Other items, net |  | 135 |  |  | 133 |
Total gross deferred tax assets |  | 33,617 |  |  | 34,271 |
Deferred tax liabilities: |  |  |  |
Deferred loan fees and costs |  | 1,220 |  |  | 1,389 |
Prepaid pension |  | 4,283 |  |  | 4,144 |
Discount accretion |  | 163 |  |  | 121 |
Core deposit intangible |  | 1,821 |  |  | 1,790 |
REIT dividend |  | 775 |  |  | — |
Operating lease right-of-use assets |  | 1,435 |  |  | 1,484 |
Accrual for employee benefit plans |  | 11 |  |  | 8 |
Other items, net |  | 241 |  |  | 210 |
Total gross deferred tax liabilities |  | 9,949 |  |  | 9,146 |
Net deferred tax asset |  | $ | 23,668 |  |  | $ | 25,125 |
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, 2024 and 2023, 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, 2024 and 2023, 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 2021 and for New York State taxing authorities for the year prior to 2021. New York State taxing authorities recently completed audits of the Corporation for the years 2018, 2019, and 2020. There were no adjustments as a result of the New York State audits.

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