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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Taxes [Abstract]  
Income Taxes Note 16 - Income Taxes

The components of income tax expense are summarized as follows:

Years Ended December 31,

2024

2023

2022

(In Thousands)

Current income tax expense:

Federal

$

4,529

$

8,917

$

12,323

State

2,860

5,592

6,215

7,389

14,509

18,538

Deferred income tax benefit:

Federal

351

(1,634)

(967)

State

(93)

(903)

(40)

258

(2,537)

(1,007)

Total Income Tax Expense

$

7,647

$

11,972

$

17,531

The tax effects of existing temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities are as follows:

December 31,

2024

2023

Deferred income tax assets:

(In Thousands)

Allowance for credit losses

$

10,176 

$

9,805 

Benefit plans

7 

-

Nonaccrual interest

749 

176 

Benefit plan-accumulated other comprehensive loss

10 

166 

Net operating loss carry forwards

1,070 

1,166 

Lease liability

3,756 

3,806 

Unrealized loss on securities

2,149 

2,860 

Capital loss carryover (1)

477 

477 

Deferred fees and costs

782 

1,168 

Other

2,077 

3,002 

21,253 

22,626

Deferred income tax liabilities:

Purchase accounting adjustment on premises and equipment acquired

69 

71 

Right-of-use assets

3,626 

3,697 

SBA servicing asset

252 

319 

Borrowing modification

125 

282 

Benefit plans

-

44 

4,072 

4,413

Net Deferred Tax Asset

$

17,181 

$

18,213

(1) Tax benefit relating to capital loss on securities sold in 2023 which will expire in 2028.


‎

Note 16 - Income Taxes (continued)

A summary of the change in the net deferred tax asset is as follows:

 

Years Ended December 31,

2024

2023

(In Thousands)

Balance at beginning of year:

$

18,213

$

16,462

Effect of adopting ASU No. 2016-13 ("CECL")

-

(1,148)

Deferred tax benefit

(258)

2,537

Other comprehensive income

Available-for-sale securities

(618)

355

Benefit plan

(156)

7

Balance at end of year

$

17,181

$

18,213

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. In making this assessment, management has considered the profitability of current core operations, future market growth, forecasted earnings, future taxable income, and ongoing, feasible and permissible tax planning strategies. If the Company was to determine that it would not be able to realize a portion of its net deferred tax asset in the future for which there is currently no valuation allowance, an adjustment to the net deferred tax asset would be charged to earnings in the period such determination was made. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and capital gains during the periods in which temporary differences are deductible and carry forwards are available. The Company believes it will generate sufficient future taxable income and taxable gains to realize the tax benefits related to the remaining net deferred tax assets in our consolidated statements of financial condition.

In conjunction with the Company’s acquisition of IA Bancorp in 2018, the Company acquired a federal net operating loss carry forward of $8.7 million. This carry forward is available for use through 2035; however, in accordance with Internal Revenue Code Section 382, usage of the carry forward is limited to $459,000 annually on a cumulative basis (portions of the $459,000 not used in a particular year may be added to subsequent usage). At December 31, 2024 and 2023, the Company had approximately $5.1 million and $5.6 million remaining of this federal net operating loss carry forward available to offset future taxable income for federal tax reporting purposes.

The following table presents a reconciliation between the reported income tax expense and the income tax expense which would be computed by applying the normal federal income tax rate of 21.0 percent to income before income tax expense.

Years Ended December 31,

2024

2023

2022

(In Thousands)

Federal income tax expense at statutory rate

$

5,517

$

8,706

$

13,253

Increases (decreases) in income taxes resulting from:

State income tax, net of federal income tax effect

2,186

3,704

4,878

Tax-exempt income

(13)

(30)

(63)

Bank-owned life insurance earnings

(553)

(368)

(561)

Other items, net

510

(40)

24

Effective Income Tax Expense

$

7,647

$

11,972

$

17,531

Effective Income Tax Rate

29.1

%

28.9

%

27.8

%