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INCOME TAXES
 12 Months Ended
Sep. 30, 2024
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, 2024 and 2023:

 

   For the Year Ended 
   September 30, 
   2024   2023 
   (In thousands) 
         
         
Current  $3,423   $3,647 
Deferred   (106)   (615)
Total income tax expense  $3,317   $3,032 

 

A reconciliation of income tax at the statutory tax rate to the effective income tax expense for the years ended September 30, 2024 and 2023 is as follows:

 

   September 30, 
   2024   2023 
   (In thousands) 
         
Income tax expense at statutory rate  $2,331   $2,256 
Increase (decrease) resulting from:          
State income taxes, net of federal income tax benefit   1,005    931 
Tax-exempt income, net   (103)   (90)
BOLI policy surrender tax   277    
—
 
Nondeductible expenses   56    58 
Share based compensation   40    54 
Employee stock ownership plan   6    11 
Other, net   (295)   (188)
Total income tax expense  $3,317   $3,032 

 

The major sources of temporary differences and their deferred tax effect at September 30, 2024 and 2023 are as follows:

   September 30, 
   2024   2023 
   (In thousands) 
         
Allowance for credit losses  $2,248   $2,342 
Net unrealized loss, investment securities available-for-sale   278    483 
Deferred loan fees   296    287 
Unrealized loss, minimum pension liability   132    132 
Employee benefits   340    265 
Allowance for transaction expense   6    11 
Straight line rent   54    72 
Gross deferred tax asset   3,354    3,592 
           
Depreciation   (551)   (588)
Mortgage servicing rights   (45)   (8)
Gross deferred tax liability   (596)   (596)
Net deferred tax asset, included in other assets  $2,758   $2,996 

 

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, 2024 and 2023. 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, 2024 and 2023. The State of New Jersey has imposed a temporary surtax on corporations earning New Jersey allocated income in excess of $1 million for the Company’s tax year ended September 30, 2023 and has imposed a surtax on corporations earning New Jersey allocated income in excess of $10 million for the Company’s tax year ended September 30, 2024. The surtax is set at a rate of 2.5% and it currently effective through 2029. Accordingly, the Company used an 11.5% State tax rate for the calculation of its State income tax expense for the years ended September 30, 2024 and 2023.