| INCOME TAXES |
14. INCOME TAXES The net deferred tax asset at December 31, 2025 and 2024 represents the following temporary difference components: | | | | | | | | | December 31, | | December 31, | (In Thousands) | | 2025 | | 2024 | Deferred tax assets: | | | | | | | Unrealized holding losses on securities | | $ | 6,531 | | $ | 10,459 | Allowance for credit losses on loans | | | 6,765 | | | 4,400 | Purchase accounting adjustments on loans | | | 1,727 | | | 333 | Deferred compensation | | | 2,008 | | | 1,465 | Operating leases liability | | | 780 | | | 692 | Deferred loan origination fees | | | 712 | | | 697 | Accrued incentive compensation | | | 735 | | | 678 | Net operating loss carryforward | | | 305 | | | 423 | Bank premises and equipment | | | 56 | | | 0 | Other deferred tax assets | | | 1,708 | | | 1,520 | Total deferred tax assets | | | 21,327 | | | 20,667 | | | | | | | | Deferred tax liabilities: | | | | | | | Core deposit intangibles | | | 2,522 | | | 456 | Right-of-use assets from operating leases | | | 780 | | | 692 | Bank premises and equipment | | | 0 | | | 290 | Mortgage servicing rights | | | 210 | | | 0 | Defined benefit plans - ASC 835 | | | 97 | | | 90 | Other deferred tax liabilities | | | 103 | | | 41 | Total deferred tax liabilities | | | 3,712 | | | 1,569 | Deferred tax asset, net | | $ | 17,615 | | $ | 19,098 |
The provision for income taxes for the year ended December 31, 2025 includes the following: | | | | (In Thousands) | | 2025 | Current expense: | | $ | | Federal | | | 2,171 | State | | | 327 | Deferred expense: | | | | Federal | | | 2,705 | State | | | 13 | Total provision | | $ | 5,216 |
The Company operates exclusively in the United States and had no foreign income, foreign income tax expense, or foreign income taxes paid for the year ended December 31, 2025. The provision for income taxes for the years ended December 31, 2024 and 2023 includes the following | | | | | | | | (In Thousands) | | 2024 | | 2023 | | Currently payable | | $ | 7,417 | | $ | 5,499 | | Deferred | | | (1,504) | | | 836 | | Total provision | | $ | 5,913 | | $ | 6,335 | |
A reconciliation of income tax at the statutory rate to the Corporation’s effective rate is as follows: | | | | | | | | | | | | | | | | | | 2025 | | 2024 | | 2023 | (Dollars In Thousands) | | Amount | | % | | Amount | | % | | Amount | | % | Federal at statutory rate | | $ | 6,015 | | 21.0 | | $ | 6,693 | | 21.0 | | $ | 6,401 | | 21.0 | State income tax, net of federal benefit | | | 269 | (a) | 0.9 | | | 297 | | 0.9 | | | 329 | | 1.1 | Nontaxable or nondeductible items: | | | | | | | | | | | | | | | | Tax-exempt interest income | | | (978) | | (3.4) | | | (964) | | (3.0) | | | (964) | | (3.2) | Increase in cash surrender value and other income from life insurance, net | | | (398) | | (1.4) | | | (369) | | (1.2) | | | (586) | | (1.9) | ESOP dividends | | | (150) | | (0.5) | | | (144) | | (0.5) | | | (143) | | (0.5) | Surrender of bank-owned life insurance | | | 0 | | 0.0 | | | 0 | | 0.0 | | | 950 | | 3.1 | Nondeductible interest expense | | | 322 | | 1.1 | | | 368 | | 1.3 | | | 283 | | 0.9 | Other, net | | | 136 | | 0.5 | | | 32 | | 0.1 | | | 65 | | 0.3 | Effective income tax provision | | $ | 5,216 | | 18.2 | | $ | 5,913 | | 18.6 | | $ | 6,335 | | 20.8 |
(a) State taxes in New Jersey and New York State made up the majority (greater than 50 percent) of the tax effect in this category. Income taxes paid by jurisdiction were as follows: | | | | | | Year Ended | | | December 31, | (Dollars In Thousands) | | 2025 | Federal | | $ | 8,238 | State: | | | | New Jersey | | | 340 | New York | | | 187 | Other | | | 30 | Total cash taxes paid | | $ | 8,795 |
The Corporation has a net operating loss (“NOL”) available to be carried forward against future federal taxable income. Availability of the NOL does not expire; however, the amount is subject to an annual limitation under Code Section 382 and further limited annually to no more than 80% of taxable income without regard to the NOL. At December 31, 2025, the unused amount of the NOL is $1.6 million. The Corporation has no unrecognized tax benefits, nor pending examination issues related to tax positions taken in preparation of its income tax returns. The Corporation is generally no longer subject to examination for returns prior to 2022.
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