Entity information:

• Entity registrant name: PATHFINDER BANCORP, INC.
• CIK: 0001609065
• SEC filing page: http://www.sec.gov/Archives/edgar/data/1609065/000156459018007279/0001564590-18-007279-index.htm
• XBRL Instance: http://www.sec.gov/Archives/edgar/data/1609065/000156459018007279/pbhc-20171231.xml
• XBRL Cloud Viewer: https://edgardashboard.xbrlcloud.com/flex/viewer/XBRLViewer.html#instance=http://www.sec.gov/Archives/edgar/data/1609065/000156459018007279/pbhc-20171231.xml
• EDGAR Dashboard: https://edgardashboard.xbrlcloud.com/edgar-dashboard/?cik=0001609065
• Generator: Donnelley Financial Solutions
• Total assets: 881,257,000
• Income tax expense (benefit): 922,000
• Found reconcilation from statutory to effective rates: True
• Found income tax policy: Coming soon!

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NOTE 17: Income Taxes

The provision for income taxes for the years ended December 31, is as follows:

 

 

The provision for income taxes includes the following

 

 

The components of the net deferred tax asset, included in other assets as of December 31, are as follows:

 

 

Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the carry back period.  A valuation allowance is provided when it is more likely than not that some portion, or all 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 liabilities, the level of historical taxable income and the projected future level of taxable income over the periods in which the temporary differences comprising the deferred tax assets will be deductible.  

Deferred income tax assets and liabilities are determined using the liability method.  Under this method, the net deferred tax asset or liability is recognized for the future tax consequences.  This is attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating and capital loss carry forwards.  Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.  If current available evidence about the future raises doubt about the likelihood of a deferred tax asset being realized, a valuation allowance is established.  The judgment about the level of future taxable income, including that which is considered capital, is inherently subjective and is reviewed on a continual basis as regulatory and business factors change. In prior years, management believed that it may not have been able to generate sufficient future taxable income in the form of capital gains to offset its capital loss carry forward position before those potential tax benefits expired.  Accordingly, a valuation allowance of $150,000 was maintained at December 31, 2016.  During 2017, the Company recognized net capital gains of $428,000, effectively utilizing all capital loss carryforward tax benefits established in prior years and thereby eliminating the need for any valuation allowance related to the future utilization of those carryforwards at December 31, 2017.  As a result, the Company maintained no valuation allowance related to future tax benefits related to the utilization of capital loss carryforwards at December 31, 2017. 

On December 22, 2017 the Tax Act was signed into law. The Tax Act instituted significant changes to various sections of the Internal Revenue Code that effects the Company.  Most notably, the Tax Act reduces the Company’s marginal federal income tax rate from 34% to 21% starting January 1, 2018.  Generally Accepted Accounting Principles (“GAAP”) requires that the impact of the provisions of the Tax Act be accounted for in the period of enactment.  Accordingly, the Company recorded an income tax benefit in the fourth quarter of 2017 related to the Tax Act in the amount of $155,000.  The reduction in income tax expense was largely attributable to the reduction in the value of net deferred tax assets and liabilities reflecting lower future tax obligations resulting from the Tax Act’s enacted lower federal corporate tax rate.   

A reconciliation of the federal statutory income tax rate to the effective income tax rate for the years ended December 31, is as follows: