Northfield Bancorp, Inc.NFBK
Northfield Bancorp, Inc. Income Taxes Disclosure
Income Taxes
Income tax expense (benefit) consists of the following (in thousands):
| December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Federal tax expense (benefit): | |||||||||||||||||
| Current | $ | 6,256 | $ | 7,438 | $ | 15,784 | |||||||||||
| Deferred | 940 | 1,880 | (233) | ||||||||||||||
| 7,196 | 9,318 | 15,551 | |||||||||||||||
| State and local tax expense (benefit): | |||||||||||||||||
| Current | 3,038 | 3,734 | 8,581 | ||||||||||||||
| Deferred | 322 | 1,039 | (392) | ||||||||||||||
| 3,360 | 4,773 | 8,189 | |||||||||||||||
| Total income tax expense | $ | 10,556 | $ | 14,091 | $ | 23,740 | |||||||||||
A reconciliation between the amount of reported total income tax expense and the amount computed by multiplying the applicable statutory income tax rate for the years ended December 31, 2024, 2023, and 2022, is as follows (dollars in thousands):
| December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Tax expense at statutory rate | $ | 8,505 | $ | 10,869 | $ | 17,820 | |||||||||||
| Applicable statutory federal income tax rate | 21 | % | 21 | % | 21 | % | |||||||||||
| Increase (decrease) in taxes resulting from: | |||||||||||||||||
| State tax, net of federal income tax | 2,654 | 3,770 | 6,469 | ||||||||||||||
| Bank owned life insurance | (885) | (762) | (717) | ||||||||||||||
| Effect of tax rate change in accumulated other comprehensive income | (586) | — | — | ||||||||||||||
| ESOP fair market value adjustment | (168) | (6) | 69 | ||||||||||||||
| Tax expense related to incentive stock options expired | 572 | — | — | ||||||||||||||
| Other, net | 464 | 220 | 99 | ||||||||||||||
| Income tax expense | $ | 10,556 | $ | 14,091 | $ | 23,740 | |||||||||||
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023, are as follows (in thousands):
| December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Deferred tax assets: | |||||||||||
| Allowance for credit losses | $ | 10,039 | $ | 10,703 | |||||||
| Deferred compensation | 2,630 | 2,814 | |||||||||
| Accrued salaries | 879 | 463 | |||||||||
| Postretirement benefits | 261 | 283 | |||||||||
| Equity awards | 1,397 | 2,113 | |||||||||
| Unrealized actuarial losses on post-retirement benefits | 48 | 9 | |||||||||
| Straight-line leases adjustment | 1,297 | 1,461 | |||||||||
| Asset retirement obligation | 49 | 48 | |||||||||
| Reserve for accrued interest receivable | 713 | 694 | |||||||||
| Reserve for loan commitments | 151 | 69 | |||||||||
| Employee Stock Ownership Plan | 637 | 631 | |||||||||
| Other | 434 | 381 | |||||||||
| Depreciation | 3,854 | 3,791 | |||||||||
| Fair value adjustments of acquired loans | 524 | 755 | |||||||||
| Fair value adjustments of pension benefit obligations | 96 | 140 | |||||||||
| Unrealized losses on securities | 8,695 | 12,601 | |||||||||
| Total gross deferred tax assets | 31,704 | 36,956 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Fair value adjustments of acquired securities | 105 | 151 | |||||||||
| Fair value adjustments of deposit liabilities | 19 | 31 | |||||||||
| Deferred loan fees | 2,427 | 2,481 | |||||||||
| Other | 39 | 51 | |||||||||
| Total gross deferred tax liabilities | 2,590 | 2,714 | |||||||||
| Net deferred tax asset | $ | 29,114 | $ | 34,242 | |||||||
Net deferred tax assets are included in other assets on the consolidated balance sheets.
The Company has determined that it is not required to establish a valuation reserve for the deferred tax asset since it is “more likely than not” that the deferred tax asset will be realized through future reversals of existing taxable temporary differences. The conclusion that it is “more likely than not” that the deferred tax asset will be realized is based on the history of earnings and the prospects for continued profitability. Management will continue to review the tax criteria related to the recognition of deferred tax assets.
As a savings institution, the Bank is subject to a special federal tax provision regarding its frozen tax bad debt reserve. At December 31, 2024 and December 31, 2023, the Bank’s federal tax bad debt base-year reserve was $5.9 million, with a related net deferred tax liability of $1.7 million, which has not been recognized since the Bank does not expect that this reserve will become taxable in the foreseeable future. Events that would result in taxation of this reserve include redemptions of the Bank’s stock or certain excess distributions by the Bank to the Company.
A reconciliation of the Company’s uncertain tax positions are as follows (in thousands):
| December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Beginning balance | $ | 299 | $ | 87 | $ | 141 | |||||||||||
| Settlements based on tax positions related to prior years | (298) | (135) | (31) | ||||||||||||||
| Additions (reductions) based on tax positions related to prior years | 406 | 347 | (23) | ||||||||||||||
| Ending balance | $ | 407 | $ | 299 | $ | 87 | |||||||||||
The Company recognizes interest and penalties on income taxes in income tax expense.
The following years are open for examination or under examination:
•Federal tax filings for 2021 through present.
•New York State tax filings 2021 through present.
•New York City tax filings 2021 through present.
•State of New Jersey 2020 through present.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.