v3.26.1
Income Taxes
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income taxes are as follows:
Years Ended June 30,
202620252024
(In Thousands)
Current income tax expense:
Federal$8,445 $3,709 $4,352 
State1,477 2,157 2,406 
9,922 5,866 6,758 
Deferred income tax expense:
Federal(746)(156)4 
State396 (786)(871)
(350)(942)(867)
Valuation allowance1,566 — — 
Total income tax expense$11,138 $4,924 $5,891 
The following table presents a reconciliation between the reported income taxes for the periods presented and the income taxes which would be computed by applying the federal income tax rates applicable to those periods. The federal income tax rate of 21% was applicable for the years ended June 30, 2026, 2025 and 2024.
Years Ended June 30,
202620252024
AmountPercentAmountPercentAmountPercent
(Dollars In Thousands)
Income (loss) before income taxes$47,402 $30,999 $(80,776)
U.S federal statutory tax rate9,954 21.0 %6,510 21.0 %(16,963)21.0 %
Increases in income taxes resulting from:
State tax, net of federal tax effect (1)
1,888 4.0 $1,083 3.5 1,213 (1.5)
Goodwill impairment— — — — 18,935 (23.4)
Surrender of bank-owned life insurance policies— — — — 4,477 (5.5)
Nontaxable or non-deductible items
Income from bank-owned life insurance(2,262)(4.8)(2,235)(7.2)(1,902)2.4 
ESOP shares released and dividends paid(344)(0.7)(353)(1.1)(331)0.4 
Other nontaxable or non-deductible537 1.1 180 0.6 211 (0.3)
Other reconciling items(201)(0.4)(261)(0.8)251 (0.3)
9,572 4,924 5,891 
Valuation allowance1,566 3.3 %— — %— — %
Total income tax expense $11,138 $4,924 $5,891 
Effective income tax rate23.50 %15.88 %(7.29)%
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(1)    State taxes in New Jersey made up the majority (greater than 50 percent) of the tax effect in this category.
The effective income tax rate represents total income tax expense divided by income before income taxes. Retained earnings at June 30, 2026, includes approximately $38.4 million of bad debt allowance, pursuant to the IRC, for which income taxes have not been provided. If such amount is used for purposes other than to absorb bad debts, including distributions in liquidation, it will be subject to income tax at the then current rate.
A tax position is recognized if it is more likely than not that the position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation process, if any. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment.
Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the applicable carry over period. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. 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 in which the temporary differences comprising the deferred tax assets will be deductible.
During the year ended June 30, 2026, the Company established a $1.6 million valuation allowance against a deferred tax asset related to certain non-qualified legacy stock options. This valuation allowance does not affect management's conclusion that the Company's remaining deferred tax assets are more likely than not to be realized.
The tax effects of existing temporary differences that give rise to deferred income tax assets and liabilities are as follows:
June 30,
20262025
(In Thousands)
Deferred income tax assets:
Purchase accounting$2,587 $3,140 
Accumulated other comprehensive income
Unrealized loss on securities available for sale27,993 32,542 
Allowance for credit losses13,143 13,161 
Benefit plans2,609 2,596 
Compensation1,687 1,268 
Stock-based compensation2,314 2,689 
Uncollected interest1,609 1,581 
Depreciation2,461 2,634 
Net operating loss carryover838 1,522 
Capital loss carryforward662 703 
Other items716 643 
Total deferred tax assets before valuation allowance56,619 62,479 
Valuation allowance(1,566)— 
Total deferred tax assets55,053 62,479 
Deferred income tax liabilities:
Deferred loan fees and costs1,627 1,756 
Accumulated other comprehensive income
Derivatives1,986 2,844 
Defined benefit plans307 276 
Goodwill2,434 2,400 
Total deferred tax liabilities6,354 7,276 
Net deferred income tax asset$48,699 $55,203 
The following table presents income taxes paid for the years ended June 30, 2026, 2025 and 2024:
Years Ended June 30,
202620252024
(Dollars In Thousands)
Federal taxes paid$6,800 $2,300 $5,400 
State and city taxes paid:
New Jersey1,200 545 350 
New York506 514 565 
New York City398 693 299 
Other53 10 20 
Total state and city taxes paid2,157 1,762 1,234 
Total income taxes paid$8,957 $4,062 $6,634 
The Company and its subsidiaries are subject to U.S. federal income tax, as well as income tax of the state of New Jersey and various other states. The Company is generally no longer subject to examination by federal, state and local taxing authorities for tax years prior to June 30, 2023.