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INCOME TAXES
 12 Months Ended
Sep. 30, 2025
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, 2025 and 2024:

 

   Years Ended September 30, 
   2025   2024 
   (In thousands) 
Current  $4,397   $3,423 
Deferred   (348)   (106)
Total income tax expense  $4,049   $3,317 

A reconciliation of income tax at the statutory tax rate to the effective income tax expense for the years ended September 30, 2025 and 2024 is as follows:

 

   Years Ended September 30, 
   2025   2024 
   (In thousands) 
Income tax expense at statutory rate  $2,900   $2,331 
Increase (decrease) resulting from:          
State income taxes, net of federal income tax benefit   1,183    1,005 
Tax-exempt income, net   (153)   (103)
BOLI policy surrender tax   -    277 
Nondeductible expenses   54    56 
Share based compensation   39    40 
Employee stock ownership plan   18    6 
Other, net   8    (295)
Total income tax expense  $4,049   $3,317 

 

The major sources of temporary differences and their deferred tax effect at September 30, 2025 and 2024 are as follows:

 

   Years Ended September 30, 
   2025   2024 
   (In thousands) 
Allowance for credit losses  $2,403   $2,248 
Net unrealized loss, investment securities available-for-sale   180    278 
Deferred loan fees   434    296 
Unrealized loss, minimum pension liability   -    132 
Employee benefits   503    340 
Allowance for transaction expense   13    6 
Straight line rent   45    54 
Gross deferred tax asset   3,578    3,354 
Depreciation   (565)   (551)
Unrealized gain, minimum pension liability   (13)   - 
OREO   (16)   - 
Mortgage servicing rights   (121)   (45)
Gross deferred tax liability   (715)   (596)
Net deferred tax asset, included in other assets  $2,863   $2,758 

 

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, 2025 and 2024. 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, 2025 and 2024. The State of New Jersey has imposed a surtax on corporations earning New Jersey allocated income in excess of $10 million for the Company’s tax years ended September 30, 2025 and 2024. The surtax is set at a rate of 2.5% and is 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, 2025 and 2024.