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INCOME TAXES
 12 Months Ended
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):
20242023
Current expense:
Federal$4,877 $7,149 
State416 961 
Total current5,293 8,110 
Deferred expense/(benefit):
Federal1,029 (1,271)
State92 (338)
Total deferred1,121 (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):
 20242023
Statutory federal tax rate21 %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 impact437 580 
Nondeductible interest expense51 38 
Other items, net146 (12)
Income tax expense$6,414 $6,501 
Effective tax rate21.3 %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:
20242023
Allowance for credit losses$5,858 $5,775 
Depreciation1,122 1,408 
Deferred compensation and directors' fees1,444 1,388 
Operating lease liabilities1,435 1,484 
Purchase accounting adjustment – fixed assets154 153 
Net unrealized losses on securities available for sale22,487 22,296 
Defined benefit pension and other benefit plans527 1,054 
Nonaccrued interest381 484 
Accrued expense74 96 
Other items, net135 133 
Total gross deferred tax assets33,617 34,271 
Deferred tax liabilities:
Deferred loan fees and costs1,220 1,389 
Prepaid pension4,283 4,144 
Discount accretion163 121 
Core deposit intangible1,821 1,790 
REIT dividend775 — 
Operating lease right-of-use assets1,435 1,484 
Accrual for employee benefit plans11 8 
Other items, net241 210 
Total gross deferred tax liabilities9,949 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.