INCOME TAXES

12 Months Ended

Dec. 31, 2020

INCOME TAXES

INCOME TAXES

13. INCOME TAXES

The following table details the components of income tax expense:

	Year Ended December 31,
(In thousands)	2020		2019		2018
Current:
Federal	$	16,262	$	12,665	$	5,270
State		1,457		639		1,023
Total current		17,719		13,304		6,293
Deferred:
Federal		(3,782)		(419)		3,299
State		(252)		1,175		(451)
Total deferred		(4,034)		756		2,848
Total income tax expense	$	13,685	$	14,060	$	9,141

The following table is a reconciliation of the expected federal income tax expense at the statutory tax rate to the actual provision:

	Year Ended December 31,
	2020				2019				2018
			Percentage				Percentage				Percentage
			of Pre-tax				of Pre-tax				of Pre-tax
(Dollars in thousands)	Amount		Earnings		Amount		Earnings		Amount		Earnings
Federal income tax expense computed by applying the statutory rate to income before income taxes	$	11,703	21	%	$	13,808	21	%	$	10,157	21	%
Tax-exempt income		(851)	(1)			(920)	(1)			(1,002)	(2)
State taxes, net of federal income tax benefit		1,214	2			1,425	2			1,999	4
Other		1,619	3			(253)	(1)			(2,013)	(4)
Income tax expense	$	13,685	25	%	$	14,060	21	%	$	9,141	19	%

The following table summarizes the composition of deferred tax assets and liabilities:

	December 31,
(In thousands)	2020		2019
Deferred tax assets:
Allowance for credit losses and off-balance sheet credit exposure	$	13,983	$	10,305
Net unrealized losses on securities		—		343
Compensation and related benefit obligations		1,674		2,368
Net deferred loan costs and fees		2,588		—
Purchase accounting fair value adjustments		3,574		4,735
Net change in pension and other post-retirement benefits plans		3,608		2,809
Net operating loss carryforward		786		3,229
Net loss on cash flow hedges		1,905		304
Operating lease liabilities		13,684		13,444
Other		1,234		200
Total deferred tax assets		43,036		37,737
Deferred tax liabilities:
Pension and SERP expense		(5,366)		(4,904)
Net unrealized gains on securities		(1,285)		—
Depreciation		(546)		(956)
REIT undistributed net income		(3,178)		(2,403)
Net deferred loan costs and fees		—		(2,413)
State and local taxes		(1,345)		(1,227)
Operating lease right-of-use assets		(13,172)		(12,934)
Other		(970)		(835)
Total deferred tax liabilities		(25,862)		(25,672)
Net deferred tax asset	$	17,174	$	12,065

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of the State and City of New York and the State of New Jersey. The Company is no longer subject to examination by taxing authorities for years

before 2015. There are no unrecorded tax benefits, and the Company does not expect the total amount of unrecognized income tax benefits to significantly increase in the next twelve months.

In connection with the acquisition of FNBNY, the Company acquired a federal net operating loss (“NOL”) carryforward subject to Internal Revenue Code Section 382. The Company recorded a deferred tax asset that it expects to realize within the carryforward period. At December 31, 2020, the remaining federal NOL carryforward was $2.9 million. At December 31, 2020, the Company had New York State NOL carryforward of $2.1 million, and recorded a deferred tax asset that it expects to recover within the carryforward period. At December 31, 2020, the Company had New York City NOL carryforward of zero. The New York State and New York City NOLs at December 31, 2020 included NOLs acquired in connection with the CNB and FNBNY acquisitions.