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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The following table presents the components of income tax expense for the years indicated:
Year Ended December 31,
202120202019
(In thousands)
Current Income Tax Expense:
Federal$131,559 $78,161 $113,807 
State54,744 27,530 34,575 
Total current income tax expense186,303 105,691 148,382 
Deferred Income Tax Expense (Benefit):
Federal15,799 (28,740)5,062 
State13,273 (1,778)10,860 
Total deferred income tax expense (benefit)29,072 (30,518)15,922 
Total income tax expense$215,375 $75,173 $164,304 
The following table presents a reconciliation of the recorded income tax expense to the amount of taxes computed by applying the applicable federal statutory income tax rates of 21% for 2021, 2020, and 2019 to earnings before income taxes:
Year Ended December 31,
202120202019
(In thousands)
Computed expected income tax (benefit) expense at federal statutory rate$172,690 $(244,104)$132,917 
State tax (benefit) expense, net of federal tax benefit55,682 (77,934)43,575 
Goodwill impairment— 407,232 — 
Tax‑exempt interest benefit(12,312)(5,202)(8,092)
Increase in cash surrender value of life insurance(1,367)(1,309)(1,298)
Low income housing tax credits, net of amortization(6,430)(4,605)(3,217)
Nondeductible employee compensation4,660 2,830 4,430 
Nondeductible FDIC premiums2,535 2,383 1,302 
Change in unrecognized tax benefits(860)(187)941 
Valuation allowance change(16,201)(5,288)(32,036)
Expired capital loss carryforward— — 3,136 
State tax refunds— (2,554)— 
State rate and apportionment changes16,330 4,217 19,138 
Other, net648 (306)3,508 
Recorded income tax expense$215,375 $75,173 $164,304 
The Company recognized $33.6 million, $28.1 million, and $20.0 million of tax credits and other tax benefits associated with its investments in LIHTC partnerships for the years ended December 31, 2021, 2020, and 2019. The amount of amortization of such investments reported in income tax expense under the proportional amortization method of accounting was $27.1 million for 2021, $23.5 million for 2020, and $16.7 million for 2019.
At December 31, 2021, we had no federal net operating loss carryforwards and approximately $314.4 million of unused state net operating loss carryforwards available to be applied against future taxable income. A majority of the state net operating loss carryforwards will expire in varying amounts from 2022 through 2040. A portion of the state net operating loss carryforwards generated after December 31, 2017 will carry forward indefinitely due to the state conformity to the federal net operating loss carryforward provisions as modified by the Tax Cuts and Jobs Act.
As of December 31, 2021, for federal tax purposes, we had no foreign tax credit carryforwards. The foreign tax credit carryforward was fully utilized in 2021.
The following table presents the tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities as of the dates indicated:
December 31,
20212020
(In thousands)
Deferred Tax Assets:
Book allowance for loan losses in excess of tax specific charge-offs$76,384 $122,753 
Interest on nonaccrual loans3,150 3,335 
Deferred compensation5,209 5,298 
Foreclosed assets valuation allowance289 334 
State tax benefit6,768 3,108 
Net operating losses19,646 34,658 
Accrued liabilities29,057 20,477 
Unrealized loss from FDIC‑assisted acquisitions886 1,310 
Tax mark-to-market on loans6,543 2,155 
Equity investments— 2,115 
Goodwill— 451 
Tax credits— 2,232 
Lease liability39,095 38,521 
Gross deferred tax assets187,027 236,747 
Valuation allowance(24,882)(41,083)
Deferred tax assets, net of valuation allowance162,145 195,664 
Deferred Tax Liabilities:
Core deposit and customer relationship intangibles1,746 5,877 
Deferred loan fees and costs2,337 3,763 
Unrealized gain on securities available‑for‑sale24,972 66,098 
Premises and equipment, principally due to differences in depreciation1,466 3,120 
FHLB stock613 637 
Subordinated debt17,110 18,639 
Equity investments5,475 — 
Goodwill6,166 — 
Operating leases86,000 95,026 
ROU assets34,129 33,345 
Other 1,712 794 
Gross deferred tax liabilities181,726 227,299 
Total net deferred tax liabilities$(19,581)$(31,635)
Based upon our taxpaying history and estimates of taxable income over the years in which the items giving rise to the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deferred tax assets.
The Company had net income taxes receivable of $36.3 million and $59.3 million at December 31, 2021 and December 31, 2020.
As of December 31, 2021 and 2020, the Company had a valuation allowance of $24.9 million and $41.1 million against DTAs. Periodic reviews of the carrying amount of DTAs are made to determine if a valuation allowance is necessary. A valuation allowance is required, based on available evidence, when it is more likely than not that all or a portion of a DTA will not be realized due to the inability to generate sufficient taxable income in the period and/or of the character necessary to utilize the benefit of the DTA. All available evidence, both positive and negative, that may affect the realizability of the DTA is identified and considered in determining the appropriate amount of the valuation allowance. It is more likely than not that these deferred tax assets subject to a valuation allowance will not be realized primarily due to their character and/or the expiration of the carryforward periods.
The net reduction in the total valuation allowance during the year ended December 31, 2021 was $16.2 million. Of this amount, $14.3 million consisted principally of adjustments to state net operating loss DTAs. The adjustment to the state operating loss DTAs at December 31, 2021, was a result of changes in state apportionments. The DTAs had been subjected to a full valuation allowance because the Company had previously determined that they were more likely than not to be expired unused. As a result, the change in the tax attributes supporting the $14.3 million of deferred tax assets had no impact on the Company's effective tax rate for the year ended December 31, 2021. The remaining $1.9 million reduction in the valuation allowance was primarily due to an increase in the amount of foreign tax credit expected to be utilized prior to expiration and adjustments to capital deferred tax assets.
The following table summarizes the activity related to the Company's unrecognized tax benefits for the years indicated:
Year Ended December 31,
Unrecognized Tax Benefits20212020
(In thousands)
Balance, beginning of year$3,376 $10,748 
Increase based on tax positions related to prior years— 879 
Reductions for tax positions related to prior years(698)(7,813)
Reductions for tax positions as a result of a lapse of the applicable statute of limitations(123)(438)
Balance, end of year$2,555 $3,376 
Unrecognized tax benefits that would affect the effective tax rate if recognized$2,555 $3,376 
Due to the potential for the resolution of federal and state examinations and the expiration of various statutes of limitations, it is reasonably possible that our gross unrecognized tax benefits may decrease within the next twelve months by as much as $2.1 million.
We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. For the years ended December 31, 2021 and December 31, 2020, we reduced our accrual for interest expense and penalties and recognized tax benefits of $0.2 million for 2021 and $0.2 million for 2020. For the year ended December 31, 2019, we recognized $0.7 million in expense for interest expense and penalties. We had $1.1 million and $1.3 million accrued for the payment of interest and penalties as of December 31, 2021 and 2020.
We file federal and state income tax returns with the Internal Revenue Service ("IRS") and various state and local jurisdictions and generally remain subject to examinations by these tax jurisdictions for tax years 2017 through 2020. We are currently under examination by certain state jurisdictions for tax years 2015 through 2018.