Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes [Abstract]

Income Taxes

11.          Income Taxes

The significant components of income tax expense attributable to operations are as follows:

	Years Ended December 31,
(In thousands)	2023		2022			2021
Current
Federal	$	22,829	$	51,077		$	35,483
State		5,890		12,934			8,626
Total Current	$	28,719	$	64,011		$	44,109
Deferred
Federal	$	4,593	$	(15,862	)	$	507
State		1,365		(3,988	)		357
Total Deferred	$	5,958	$	(19,850	)	$	864
Total income tax expense	$	34,677	$	44,161		$	44,973

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

	December 31,
(In thousands)	2023		2022
Deferred tax assets:
Allowance for loan losses	$	28,039	$	24,792
Lease liability		6,917		6,273
Deferred compensation		9,915		9,181
Fair value adjustments on acquisitions		18,306		125
Loan fees		30,778		33,389
Stock-based compensation expense		3,006		2,822
Unrealized losses on securities		45,446		53,663
Other		9,362		5,902
Total deferred tax assets	$	151,769	$	136,147
Deferred tax liabilities:
Pension benefits	$	14,742	$	13,103
Lease right-of-use asset		6,551		5,877
Amortization of intangible assets		22,850		14,112
Premises and equipment, primarily due to accelerated depreciation		2,746		4,889
Other		1,669		846
Total deferred tax liabilities	$	48,558	$	38,827
Net deferred tax asset at year-end	$	103,211	$	97,320
Net deferred tax asset at beginning of year		97,320		22,038
Increase in net deferred tax asset	$	5,891	$	75,282

Realization of deferred tax assets is dependent upon the generation of future taxable income. A valuation allowance is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Based on available evidence, gross deferred tax assets will ultimately be realized and a valuation allowance was not deemed necessary at December 31, 2023 and 2022.

The following is a reconciliation of the provision for income taxes to the amount computed by applying the applicable Federal statutory rate to income before taxes:

	Years Ended December 31,
(In thousands)	2023			2022			2021
Federal income tax at statutory rate	$	32,226		$	41,193		$	41,971
Tax exempt income		(1,442	)		(984	)		(1,014	)
Net increase in cash surrender value of life insurance		(1,367	)		(1,215	)		(1,230	)
Federal tax credits		(2,855	)		(2,417	)		(1,884	)
State taxes, net of federal tax benefit		5,732			7,067			7,097
Other, net		2,383			517			33
Income tax expense	$	34,677		$	44,161		$	44,973

A reconciliation of the beginning and ending balance of Federal and State gross unrecognized tax benefits (“UTBs”) is as follows:

(In thousands)	2023			2022
Balance at January 1	$	1,942		$	1,545
Additions for tax positions of prior years		647			3
Reduction for tax positions of prior years		(104	)		-
Current period tax positions		394			394
Balance at December 31	$	2,879		$	1,942
Amount that would affect the effective tax rate if recognized, gross of tax	$	2,274		$	1,535

The Company recognizes interest and penalties on the income tax expense line in the accompanying consolidated statements of income. The Company monitors changes in tax statutes and regulations to determine if significant changes will occur over the next 12 months. As of December 31, 2023, no significant changes to UTBs are projected; however, tax audit examinations are possible, but it is not reasonably possible to estimate when examinations in subsequent years will be completed. The Company recognized an insignificant amount of interest expense related to UTBs in the consolidated statement of income for the year ended December 31, 2023, 2022 and 2021.

As of December 31, 2023, the Company is no longer subject to U.S. Federal tax examination by tax authorities for years prior to 2020. The tax years 2017 to 2019 are currently being audited by New York State.