v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

Note 10. Income Taxes

The provision for income taxes for the years ended December 31, 2025, 2024 and 2023 consisted of the following:

 

 

 

For the Years Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

Current tax provision:

 

 

 

 

 

 

 

 

 

Federal

 

$

8,607

 

 

$

748

 

 

$

105

 

State

 

 

1,757

 

 

 

1,482

 

 

 

1,452

 

Total current tax provision

 

 

10,364

 

 

 

2,230

 

 

 

1,557

 

Deferred tax provision:

 

 

 

 

 

 

 

 

 

Federal

 

 

(896

)

 

 

2,410

 

 

 

773

 

State

 

 

1,330

 

 

 

276

 

 

 

696

 

Total deferred tax provision

 

 

434

 

 

 

2,686

 

 

 

1,469

 

Valuation allowance

 

 

(1,070

)

 

 

(203

)

 

 

(525

)

Total provision for income taxes

 

$

9,728

 

 

$

4,713

 

 

$

2,501

 

 

 

 

Reconciliation between the reported income tax expense and the amount computed by multiplying consolidated income before taxes by the statutory federal income tax rate of 21 percent for the years ended December 31, 2025 2024 and 2023 were as follows:

 

 

 

For the Years Ended December 31,

 

 

 

2025

 

 

 

 

 

2024

 

 

 

 

 

2023

 

 

 

 

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

 

 

(Dollars in thousands)

 

 

 

 

U.S. federal statutory tax rate

 

$

8,071

 

 

 

21.0

%

 

$

3,294

 

 

 

21.0

%

 

$

1,229

 

 

 

21.0

%

State and local tax, net of federal benefit (1)

 

 

2,439

 

 

 

6.3

%

 

 

1,389

 

 

 

8.9

%

 

 

1,697

 

 

 

29.0

%

Changes in valuation allowance

 

 

(1,070

)

 

 

(2.8

%)

 

 

(203

)

 

 

(1.3

%)

 

 

(525

)

 

 

(9.0

%)

Nontaxable or nondeductible items (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other nontaxable or nondeductible

 

 

429

 

 

 

1.1

%

 

 

280

 

 

 

1.8

%

 

 

211

 

 

 

3.6

%

Other adjustments

 

 

(141

)

 

 

(0.4

%)

 

 

(47

)

 

 

(0.3

%)

 

 

(111

)

 

 

(1.9

%)

Provision for income taxes

 

$

9,728

 

 

 

25.2

%

 

$

4,713

 

 

 

30.1

%

 

$

2,501

 

 

 

42.7

%
(1)
State and local taxes in New York State and New York City made up the majority (greater than 50%) of the tax effect in this category.
(2)
The nontaxable or nondeductible items category includes items such as other nondeductible expenses. None of those items individually or in the aggregate exceeded the 5% quantitative threshold for separate disaggregation for the years ended December 31, 2025, 2024 and 2023..

 

Total income taxes paid for the years ended December 31, 2025, 2024 and 2023 consists of the following:

 

 

 

 

For the Years Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

Federal

 

$

6,794

 

 

$

1,050

 

 

$

—

 

State and Local:

 

 

 

 

 

 

 

 

 

New York State

 

 

1,086

 

 

 

924

 

 

 

865

 

Other States

 

 

30

 

 

 

4

 

 

 

—

 

New York City

 

 

545

 

 

 

493

 

 

 

673

 

Total income taxes paid

 

$

8,455

 

 

$

2,471

 

 

$

1,538

 

 

Management maintains a valuation allowance against its net New York State and New York City deferred tax assets as it is unlikely these deferred tax assets will be utilized to reduce the Company's tax liability in future years. For the years ended December 31, 2025 and 2024, the valuation allowance decreased by $1.07 million and decreased by $0.2 million, respectively. In 2025, the Company utilized a portion of the net operating losses in New York State and New York City which in turn decreased the 2025 valuation allowance.

 

Management has determined that it is not required to establish a valuation allowance against any other deferred tax assets in accordance with GAAP since it is more likely than not that the deferred tax assets will be fully utilized in future periods. In assessing the need for a valuation allowance, management considers the scheduled reversal of the deferred tax liabilities, the level of historical taxable income, and the projected future taxable income over the periods that the temporary differences comprising the deferred tax assets will be deductible.

 

For federal income tax purposes, a financial institution may carry net operating losses (“NOLs”) forward indefinitely. The use of NOLs to offset income is limited to 80% of taxable income. At December 31, 2025, the Company has no federal NOL carryforward.

 

The state and city of New York allow for a three-year carryback period and carryforward period of twenty years on NOLs generated on or after tax year 2015. For tax years prior to 2015, no carryback period is allowed. Ponce De Leon Federal Bank, the predecessor of Ponce Bank, has no pre-2015 carryforwards for New York State or New York City purposes. Furthermore, there are post-2015 carryforwards available of $58.0 million for New York State purposes and $20.3 million for New York City purposes. Finally, for New Jersey purposes, losses may only be carried forward 20 years, with no allowable carryback period. At December 31, 2025, the Bank had no Connecticut or New Jersey net operating losses carryforwards.

 

At December 31, 2025 and 2024, the Company had no unrecognized tax benefits recorded.

 

The Company is subject to U.S. federal income tax, New York State income tax, Connecticut income tax, New Jersey income tax, Florida income tax and New York City income tax. The Company is generally no longer subject to examination by taxing authorities for years before 2022.

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2025 and 2024 are presented below:

 

 

 

At December 31,

 

 

 

2025

 

 

2024

 

 

 

(in thousands)

 

Deferred tax assets:

 

 

 

 

 

 

Allowance for credit losses

 

$

7,934

 

 

$

6,942

 

Interest on nonaccrual loans

 

 

1,643

 

 

 

1,265

 

Unrealized loss on available-for-sale securities

 

 

2,934

 

 

 

4,141

 

Amortization of intangible assets

 

 

109

 

 

 

46

 

Operating lease liabilities

 

 

9,152

 

 

 

9,470

 

Net operating losses

 

 

5,191

 

 

 

6,656

 

Charitable contribution carryforward

 

 

257

 

 

 

1,476

 

Compensation and benefits

 

 

1,172

 

 

 

844

 

Deferred loan fees and cost, net

 

 

154

 

 

 

—

 

Other

 

 

1,465

 

 

 

1,627

 

Total gross deferred tax assets

 

 

30,011

 

 

 

32,467

 

Deferred tax liabilities:

 

 

 

 

 

 

Depreciation of premises and equipment

 

 

537

 

 

 

724

 

Right of use assets

 

 

8,600

 

 

 

8,975

 

Deferred loan fees and cost, net

 

 

—

 

 

 

337

 

Other

 

 

225

 

 

 

139

 

Total gross deferred tax liabilities

 

 

9,362

 

 

 

10,175

 

Valuation allowance

 

 

9,148

 

 

 

10,218

 

Net deferred tax assets

 

$

11,501

 

 

$

12,074