v3.26.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
There was no current and deferred income tax expense for the years ended December 31, 2025, and 2024 due to the net loss for both years. There was no tax benefit due to the full valuation allowance on the net deferred tax assets. Additionally, the Company had no income tax payments or refunds during the 2025 and 2024 periods.
There was no income from foreign countries for the years ended December 31, 2025, and 2024.
The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. Federal statutory tax amount for the year ended December 31, 2025:
AmountPercent
(In thousands)
U.S Federal Statutory Tax rate$(2,105)(21.00)%
State and local taxes, net of federal income tax effect (1)— — %
Changes in Valuation Allowance1,652 16.48 %
Non-deductible compensation205 2.04 %
Stock compensation125 1.25 %
Transaction costs281 2.80 %
Other Nontaxable or Nondeductible items, net (2)(143)(1.43)%
Other adjustments(15)(0.15)%
Total$— — %
(1) State taxes in New Jersey made up the majority (greater than 50%) of the tax effect of this category.
(2) The other nontaxable or nondeductible items category includes items such as bank owned life insurance, tax exempt income, ESOP adjustments, and other non-deductible expenses. None of those items individually or in the aggregate exceeded the 5% quantitative threshold for separate disclosure.
The following table presents required disclosure pursuant to ASC 740, Income Taxes, and reconciles the U.S. Federal statutory tax amount for the year ended December 31, 2024:
(In thousands)
Loss before income tax benefit$(11,911)
Applicable statutory federal income tax rate21.00 %
Computed “expected” federal income tax benefit$(2,501)
Increase (decrease) in federal income tax expense resulting from:
State income taxes, net of federal benefit(835)
Valuation allowance3,311 
Tax-exempt income(37)
Bank owned life insurance(102)
Non-deductible compensation14 
ESOP fair market value adjustment(4)
Stock compensation145 
Other items, net9 
Total$— 
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 as follows:
20252024
(In thousands)
Deferred tax assets:
Allowance for credit losses on loans and REO$4,273 $3,688 
Allowance for losses held-to-maturity securities22 23 
Net unrealized losses on securities available-for-sale3,996 6,472 
Accrued post retirement benefits1,220 1,128 
Accrued interest receivable202 169 
Accrued bonus312 607 
Stock compensation1,307 962 
Premises and equipment552 393 
Finance lease liability6,587 7,075 
Charitable contribution carryover2,536 2,533 
Federal net operating loss carryforward 9,666 8,896 
State net operating loss carryforward3,610 2,956 
Other335 253 
Total gross deferred tax assets34,618 35,155 
Deferred tax liabilities:
Net unrealized gains on derivatives315 2,689 
Deferred loan fees, net615 563 
Unrealized actuarial gains on post retirement benefits193 99 
Finance lease right-of-use asset6,101 6,597 
Other55 86 
Total gross deferred tax liabilities7,279 10,034 
Net deferred tax asset27,339 25,121 
Valuation allowance(27,339)(25,121)
Gross deferred tax assets after valuation allowance$— $— 
Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.
On the basis of this evaluation, for the year ended December 31, 2025, a valuation allowance of $27.3 million has been maintained. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. Net deferred tax assets are included in other assets.
At December 31, 2025, the Company had federal net operating loss (“NOL”) carryforwards of $46.7 million with no expiration date. Under the provisions of the 2017 Tax Cuts and Jobs Act, use of our federal NOL carryforwards will be limited to 80% of taxable income in future periods. The Company also had New Jersey net operating loss carryforwards of $45.9 million, the majority of which expire in 18 years. At this time, we believe it is more likely than not the benefit from both the federal and state NOL carryforwards will not be realized. As such, we have provided a valuation allowance of $13.3 million on the deferred tax assets related to the NOL carryforwards. The Company contributed $9.0 million to the Blue Foundry Charitable Foundation in 2021 and the deferred benefit has a five-year carryforward limitation.
Retained earnings at December 31, 2025 and 2024, includes approximately $14.6 million, for which no provision for income tax has been made. This amount represents an allocation of income to bad debt deductions for tax purposes only. Events that would result in taxation of these reserves include the failure to qualify as a bank for tax purposes, distributions in complete or partial liquidation, stock redemptions and excess distributions to stockholders.
The Company and its subsidiary are subject to U.S. federal income tax as well as state income taxes, primarily New Jersey. The Company is no longer subject to examination by Federal taxing authorities for tax years before January 1, 2021, and State taxing authorities for tax years before January 1, 2020. Currently, the Company is not under examination by any taxing authority. The Company's New Jersey state tax returns for the tax years ended December 31, 2015 through 2018 were audited during 2021. The completion of this examination did not have a material impact on the Company's effective tax rates and financials.