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INCOME TAXES
 12 Months Ended
Sep. 30, 2023
Income Taxes [Abstract]  
INCOME TAXES

NOTE K - INCOME TAXES

 

The Company’s income tax expense is comprised of the following components for the years ended September 30, 2023 and 2022:

 

   September 30, 
   2023   2022 
   (In thousands) 
         
Current  $3,647   $3,163 
Deferred   (615)   87 
Total income tax expense  $3,032   $3,250 

 

A reconciliation of income tax at the statutory tax rate to the effective income tax expense for the years ended September 30, 2023 and 2022 is as follows:

 

   September 30, 
   2023   2022 
   (In thousands) 
         
Income tax expense at statutory rate  $2,256   $2,339 
Increase (decrease) resulting from:          
State income taxes, net of federal income tax benefit   931    922 
Tax-exempt income, net   (90)   (87)
Nondeductible expenses   58    37 
Share based compensation   54    
—
 
Employee stock ownership plan   11    3 
Other, net   (188)   36 
Total income tax expense  $3,032   $3,250 

 

The major sources of temporary differences and their deferred tax effect at September 30, 2023 and 2022 are as follows:

   September 30, 
   2023   2022 
   (In thousands) 
         
Allowance for loan losses  $2,342   $2,369 
Net unrealized loss, investment securities available-for-sale   483    472 
Deferred loan fees   287    244 
Unrealized loss, minimum pension liability   132    288 
Employee benefits   265    
—
 
Allowance for transaction expense   11    
—
 
Straight line rent   72    88 
Gross deferred tax asset   3,592    3,461 
           
Depreciation   (588)   (816)
Employee benefits   
—
    (122)
Mortgage servicing rights   (8)   
—
 
Gross deferred tax liability   (596)   (938)
Net deferred tax asset, included in other assets  $2,996   $2,523 

 

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. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible and carry forwards are available.

 

There were no valuation allowances for the year ended September 30, 2023 and 2022. The Company has considered future market growth, forecasted earnings, future taxable income, feasible and permissible tax planning strategies in determining the realizability of deferred tax assets. 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 Bank’s statutory income tax rate in the State of New Jersey was 9.0% for the years ending September 30, 2023 and 2022. The State of New Jersey has imposed a temporary surtax on corporations earning New Jersey allocated income in excess of $1 million. The surtax is set at a rate of 2.5% and it currently effective through December 31, 2023. Accordingly, the Company used an 11.5% State tax rate for the calculation of its State income tax expense the years ended September 30, 2023 and 2022.