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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense (benefit) are as follows:

	For the Years Ended December 31,
(In thousands)		2019		2018			2017
Current:
Federal	$	4,423	$	8,557		$	4,250
State		1,392		1,043			1,638
Deferred:
Federal		1,097		(3,404	)		4,256
State		150		(117	)		(259	)
Total income tax expense	$	7,062	$	6,079		$	9,885

Schedule of Reconciliation of Expected Income Tax Expense (Benefit)

A reconciliation of expected income tax expense (benefit), computed by applying the effective federal statutory rate of 21% for each of 2019 and 2018 and 35% for 2017 to income before income tax expense is as follows:

	For the Years Ended December 31,
(In thousands)		2019			2018			2017
Expected income tax expense	$	7,868		$	7,633		$	12,214
(Reductions) increases resulting from:
Tax-exempt income		(1,755	)		(2,009	)		(3,868	)
State taxes, net of federal benefit		1,218			732			896
Share-based compensation adjustment		(281	)		(286	)		(376	)
Adjustment of deferred tax asset or liability for TCJA		—			(74	)		1,824
Other, net		12			83			(805	)
Total income tax expense	$	7,062		$	6,079		$	9,885

Schedule of Deferred Assets and Liabilities

The tax effects of temporary differences which give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:

	December 31,
(In thousands)		2019			2018
Deferred tax assets:
Allowance for loan losses	$	2,452		$	2,376
ASC 715 pension funding liability		7,642			6,000
Net operating loss carryforward ⁽¹⁾		27			50
Supplemental executive retirement plan accrual		2,087			1,968
Stock compensation		1,987			1,673
Total deferred tax assets	$	14,195		$	12,067
Deferred tax liabilities:
Premises and equipment		(2,821	)		(1,937	)
Pension		(974	)		(409	)
Intangible assets		(1,379	)		(1,212	)
Unrealized gain on investment in securities available-for-sale		(3,348	)		(156	)
Other		(196	)		(80	)
Total deferred tax liabilities	$	(8,718	)	$	(3,794	)
Net deferred tax assets	$	5,477		$	8,273

⁽¹⁾

As of December 31, 2019, the Company had approximately $128,000 of net operating loss carry forwards as a result of the acquisition of Franklin Bancorp. The utilization of the net operating loss carry forward is subject to Section 382 of the Internal Revenue Code and limits the Company’s use to approximately $122,000 per year during the carry forward period, which expires in 2024.

Schedule of the Reconciliation of Unrecognized Tax Benefits

The reconciliation of the beginning unrecognized tax benefits balance to the ending balance is presented in the following table:

(In thousands)	2019			2018			2017
Balance at January 1	$	1,403		$	1,632		$	1,623
Changes in unrecognized tax benefits as a result of tax positions taken during a prior year		56			(135	)		(15	)
Changes in unrecognized tax benefits as a result of tax position taken during the current year		171			192			263
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations		(331	)		(286	)		(239	)
Balance at December 31	$	1,299		$	1,403		$	1,632