XML 38 R21.htm IDEA: XBRL DOCUMENT v3.24.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
For the years ended December 31, 2023 and 2022, income tax expense attributable to income from operations consisted of the following (in thousands):
20232022
Current expense:
Federal$7,149 $5,501 
State961 883 
Total current8,110 6,384 
Deferred expense/(benefit):
Federal(1,271)1,365 
State(338)357 
Total deferred(1,609)1,722 
Income tax expense$6,501 $8,106 

Income tax expense differed from the amounts computed by applying the U.S. Federal statutory income tax rate to income before income tax expense as follows (in thousands):
 20232022
Statutory federal tax rate21 %21 %
Tax computed at statutory rate$6,615 $7,747 
Increase (reduction) resulting from:
Tax-exempt income(509)(434)
831(b) premium adjustment(202)(309)
Dividend exclusion(9)(7)
State taxes, net of Federal impact580 988 
Nondeductible interest expense38 8 
Other items, net(12)113 
Income tax expense$6,501 $8,106 
Effective tax rate20.6 %22.0 %
The lower tax expense in 2023 when compared to 2022 can be attributed to a decrease in pretax income.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022, are presented below (in thousands):
Deferred tax assets:
20232022
Allowance for credit losses$5,775 $5,147 
Depreciation1,408 1,133 
Deferred compensation and directors' fees1,388 1,128 
Operating lease liabilities1,484 1,688 
Purchase accounting adjustment – fixed assets153 153 
Net unrealized losses on securities available for sale22,296 25,310 
Defined benefit pension and other benefit plans1,054 1,320 
Nonaccrued interest484 415 
Accrued expense96 117 
Other items, net133 112 
Total gross deferred tax assets34,271 36,523 
Deferred tax liabilities:
Deferred loan fees and costs1,389 1,358 
Prepaid pension4,144 4,055 
Discount accretion121 108 
Core deposit intangible1,790 1,733 
REIT dividend— 561 
Operating lease right-of-use assets1,484 1,688 
Accrual for employee benefit plans8 5 
Other210 219 
Total gross deferred tax liabilities9,146 9,727 
Net deferred tax asset$25,125 $26,796 

Realization of deferred tax assets is dependent upon the generation of future taxable income. A valuation allowance is recognized 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 assets, the level of historical taxable income and projected future taxable income over the periods in which the temporary differences comprising the deferred tax assets will be deductible.  Based on its assessment, management determined that no valuation allowance is necessary.
As of December 31, 2023 and 2022, the Corporation did not have any unrecognized tax benefits.
The Corporation accounts for interest and penalties related to uncertain tax positions as part of its provision for Federal and State income taxes. As of December 31, 2023 and 2022, the Corporation did not accrue any interest or penalties related to its uncertain tax positions.
The Corporation is not currently subject to examinations by Federal taxing authorities for the years prior to 2020 and for New York State taxing authorities for the year prior to 2020. New York State taxing authorities recently completed audits of the Corporation for the years 2018, 2019, and 2020. There were no adjustments as a result of the New York State audits.