Income Taxes

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Income Taxes

10. Income Taxes

The Company and its subsidiaries are subject to income tax within U.S. federal, New York, New York City, and various other state and local jurisdictions. The Company is undergoing examinations of New York City income tax returns for years ending December 31, 2015 through 2017 and New York State income tax returns for years ending December 31, 2017 through 2019. The New York State examination of tax years 2015 through 2016 was closed in 2022. The Company

remains subject to examination for its federal and various other states income tax returns for the years ending on or after December 31, 2020.

Income tax provisions are summarized as follows for the years ended December 31:

	2023		2022		2021
	(In thousands)
Federal:
Current	$	4,904	$	17,565	$	21,206
Deferred		2,681		4		(1,128)
Total federal tax provision		7,585		17,569		20,078
State and Local:
Current		2,544		10,198		8,004
Deferred		1,040		140		(597)
Total state and local tax provision		3,584		10,338		7,407
Total provision for income taxes	$	11,169	$	27,907	$	27,485

The income tax provision in the Consolidated Statements of Income has been provided at effective rates of 28.0%, 26.6%, and 25.2% for the years ended December 31, 2023, 2022, and 2021, respectively. The effective rates differ from the statutory federal income tax rate as follows for the years ended December 31:

	2023				2022				2021
	(Dollars in thousands)
Taxes at federal statutory rate	$	8,365	21.0	%	$	22,019	21.0	%	$	22,948	21.0	%
Increase (reduction) in taxes resulting from:
State and local income tax, net of Federal income tax benefit		2,831	7.1			8,167	7.8			6,865	6.3
Tax exempt income, net		(1,079)	(2.7)			(2,083)	(2.0)			(1,150)	(1.0)
Other		1,052	2.6			(196)	(0.2)			(1,178)	(1.1)
Taxes at effective rate	$	11,169	28.0	%	$	27,907	26.6	%	$	27,485	25.2	%

The components of the net deferred tax assets are as follows at December 31:

	2023		2022
	(In thousands)
Deferred tax assets:
Allowance for credit losses on loans	$	12,475	$	12,528
Net unrealized losses on securities available for sale*		24,667		28,418
Operating lease liabilities		12,680		14,289
Accrued compensation		7,882		8,709
Stock based compensation		3,140		3,171
Depreciation		2,711		2,462
Derivative adjustments		445		2,030
Pension and post-retirement benefits		2,044		2,126
Other allowances		3,609		1,185
Acquisition fair value marks		637		960
Net operating losses		491		257
Net unrealized losses on pension and post-retirement benefits*		172		124
Other		1,482		989
Deferred tax assets		72,435		77,248
Deferred tax liabilities:
Right of use assets		12,287		13,410
Net unrealized gains on cash flow hedges*		6,667		11,429
Deferred loan fees, net		3,819		3,930
Fair value adjustments		3,110		2,314
Net unrealized gains on entity specific fair value*		747		672
Other		660		24
Deferred tax liabilities		27,290		31,779
Net deferred tax asset included in other assets	$	45,145	$	45,469

*Represents the amount of deferred taxes recorded in accumulated other comprehensive loss.

At December 31, 2023, after considering all available positive and negative evidence, management concluded that a valuation allowance against deferred tax assets was not necessary because it is more likely than not that these tax benefits will be fully realized in future periods. While management continues to evaluate the need for a valuation allowance prospectively, it is not expected that a valuation allowance will be required based upon projected profitability.

At December 31, 2023 and 2022, the Company had no material unrecognized tax benefits or accrued interest and penalties recorded. The Company does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months.