INCOME TAXES

12 Months Ended

Dec. 31, 2023

INCOME TAXES

INCOME TAXES

NOTE I:  INCOME TAXES

The provision for income taxes for the years ended December 31 is as follows:

(000’s omitted)	2023		2022		2021
Current:
Federal	$	36,617	$	41,025	$	35,507
State and other		7,193		9,899		8,158
Deferred:
Federal		(4,877)		1,163		5,493
State and other		(2,626)		146		2,496
Provision for income taxes	$	36,307	$	52,233	$	51,654

Components of the net deferred tax asset, included in other assets, as of December 31, 2023 and 2022 are as follows:

(000’s omitted)	2023		2022
Investment securities	$	157,456	$	191,953
Allowance for credit losses		16,398		15,346
Employee benefits		5,727		5,775
Operating lease liabilities		10,211		7,552
Other, net		6,023		4,385
Deferred tax asset		195,815		225,011
Goodwill and intangibles		39,366		39,454
Operating lease right-of-use assets		9,872		7,303
Loan origination costs		10,777		9,731
Depreciation		383		96
Mortgage servicing rights		306		640
Pension		19,181		18,154
Deferred tax liability		79,885		75,378
Net deferred tax asset	$	115,930	$	149,633

The Company has determined that no valuation allowance is necessary as it is more likely than not that the gross deferred tax assets will be realized through future reversals of existing temporary differences and through future taxable income.

A reconciliation of the differences between the federal statutory income tax rate and the effective tax rate for the years ended December 31 is shown in the following table:

	2023		2022		2021
Federal statutory income tax rate	21.0	%	21.0	%	21.0	%
Increase (reduction) in taxes resulting from:
Tax-exempt interest	(1.7)		(1.3)		(1.1)
State income taxes, net of federal benefit	2.2		3.3		3.6
Stock-based compensation	(0.2)		(0.3)		(0.9)
Federal tax credits	(0.5)		(1.0)		(1.0)
Other, net	0.8		0.0		(0.2)
Effective income tax rate	21.6	%	21.7	%	21.4	%

As of December 31, 2023, 2022 and 2021, there was no amount of material unrecognized tax benefits that would impact the Company’s effective tax rate if recognized. It is reasonably possible that the amount of unrecognized tax benefits could change in the next twelve months as a result of various examinations and expiration of statutes of limitations on prior tax returns.

The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits as part of income taxes in the consolidated statements of income. The accrued interest related to tax positions was immaterial.

The Company’s federal and state income tax returns are routinely subject to examination from various governmental taxing authorities. Such examinations may result in challenges to the tax return treatment applied by the Company to specific transactions. Management believes that the assumptions and judgment used to record tax-related assets or liabilities have been appropriate. Future examinations by taxing authorities of the Company’s federal or state tax returns could have a material impact on the Company’s results of operations. The Company’s federal income tax returns for years after 2019 may still be examined by the Internal Revenue Service. New York State income tax returns for years after 2018 may still be examined by the New York Department of Taxation and Finance. The Company is currently under examination by the New York Department of Taxation and Finance in connection with tax years 2015 to 2017, and has not received notice of proposed adjustments. It is not possible to estimate if and when those examinations may be completed.