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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes
Note 14 – Income Taxes
 
The following presents the components of income tax expense for the years ended December 31:
(Dollars in thousands)202220212020
Current income tax provision:   
Federal$61,962 $59,333 $32,129 
State32,754 32,794 22,743 
Total current income tax provision94,716 92,127 54,872 
Deferred income tax provision (benefit):   
Federal3,705 18,753 (26,554)
State2,194 10,054 (16,068)
Total deferred income tax provision (benefit)5,899 28,807 (42,622)
Total income tax provision$100,615 $120,934 $12,250 
 
A reconciliation from statutory federal income taxes, which are based on a statutory rate of 21% for 2022, 2021, and 2020, to the Company’s total effective income tax provisions for the years ended December 31 is as follows:
(Dollars in thousands)202220212020
Statutory federal income tax provision$80,715 $96,773 $15,246 
State taxes, net of federal income tax effect27,986 34,001 4,757 
Cash surrender life insurance(2,238)(1,890)(1,163)
Tax-exempt interest(5,215)(6,803)(4,073)
Non-deductible merger costs— — 703 
LIHTC investments(2,441)(2,716)(2,259)
Stock-based compensation shortfall (windfall)(1,954)(1,356)407 
Effect of the CARES Act— — (2,636)
Section 162(m) of the Internal Revenue Code2,956 2,015 968 
Other806 910 300 
Total income tax provision$100,615 $120,934 $12,250 
Deferred tax assets (liabilities) were comprised of the following temporary differences between the financial statement carrying amounts and the tax basis of assets at December 31:
(Dollars in thousands)20222021
Deferred tax assets:  
Accrued expenses$4,022 $3,681 
Net operating loss4,803 5,681 
Allowance for credit losses, net of bad debt charge-offs62,582 64,628 
Deferred compensation3,127 3,338 
State taxes6,965 6,834 
Loan net discounts15,566 21,980 
Stock-based compensation4,327 4,030 
Operating lease liabilities16,522 20,708 
Unrealized loss on available-for-sale securities105,313 3,156 
Federal and state credit carryovers157 2,242 
Other1,486 — 
Total deferred tax assets224,870 136,278 
Deferred tax liabilities:  
Operating lease right-of-use assets$(14,378)$(18,272)
Deferred FDIC gain(64)(69)
Core deposit intangibles(14,017)(17,676)
Loan origination costs(8,567)(7,547)
Depreciation(4,242)(4,897)
Other— (473)
Total deferred tax liabilities(41,268)(48,934)
Valuation allowance— — 
Net deferred tax assets$183,602 $87,344 

The Company accounts for income taxes by recognizing deferred tax assets and liabilities based upon temporary differences between the amounts for financial reporting purposes and the tax basis of its assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the prior two years, the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. This analysis is updated quarterly and adjusted as necessary. Based on the analysis, the Company has determined that a valuation allowance for deferred tax assets was not required as of December 31, 2022 and 2021.

As of December 31, 2022, the Company had federal and state net operating loss carryforwards of approximately $20.9 million and $5.7 million, respectively. The federal and state net operating losses will begin to expire in 2026 and 2029, respectively, unless previously utilized. In addition, the Company has tax credit carryforward of $156,000, which is scheduled to expire by 2040.

Under Section 382 of the Code, annual use of our net operating losses and tax credits may be limited if a cumulative change in ownership of more than 50% occurs within a three-year period. The Company’s federal and state net operating losses and tax credits are subject to the limitation under Section 382. The Company is expected to fully utilize the federal and state net operating losses and tax credit before it expires with the application of the Section 382 annual limitation.
The Company and its subsidiaries are subject to U.S. Federal income tax as well as income and franchise tax in multiple state jurisdictions. The statute of limitations related to the consolidated Federal income tax returns is closed for all tax years up to and including 2018. The expirations of the statutes of limitations related to the various state income and franchise tax returns vary by state. The Company is currently not under examination in any taxing jurisdiction.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31 is as follows:

(Dollars in thousands)20222021
Balance at January 1,$1,437 $255 
Increases based on tax positions related to prior years— 1,437 
Decreases related to settlements with taxing authorities— (233)
Decreases related to lapse of statute of limitation— (22)
Balance at December 31,$1,437 $1,437 

The total amount of unrecognized tax benefits was $1.4 million at December 31, 2022 and 2021, and is primarily comprised of unrecognized tax benefits related to the Opus acquisition in 2020. The total amount of tax benefits that, if recognized, would favorably impact the effective tax rate was $563,000 at December 31, 2022 and 2021. The Company does not believe that the unrecognized tax benefits will change significantly within the next twelve months.

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The Company had accrued for $89,000 and $31,000 of such interest at December 31, 2022 and 2021, respectively. No amounts for penalties were accrued at December 31, 2022 and 2021.