Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income tax expense (benefit) attributable to continuing operations

Income tax expense attributable to continuing operations for each of the years ended December 31 is as follows (in thousands):


	2020		2019		2018
Current tax expense :
Federal	$	98,082	$	77,422	$	73,921
State	19,270		4,538		4,822
Total current tax expense	117,352		81,960		78,743
Deferred tax expense:
Federal	(45,450)		12,446		10,162
State	(12,865)		2,250		1,603

Total deferred tax (benefit) expense	(58,315)		14,696		11,765
Total income tax expense	$	59,037	$	96,656	$	90,508

Income tax rate reconciliation

Pinnacle Financial's income tax expense differs from the amounts computed by applying the Federal income tax statutory rate of 21% to income before income taxes. A reconciliation of the differences for each of the years in the three-year period ended December 31, 2020 is as follows (in thousands):


	2020		2019		2018
Income tax expense at statutory rate	$	77,985	$	104,483	$	94,489
State excise tax expense, net of federal tax effect	5,059		5,363		5,076
Tax-exempt securities	(13,706)		(11,078)		(7,222)
Federal tax credits	(3,717)		(1,704)		(845)
Bank owned life insurance	(4,759)		(3,646)		(2,764)
Insurance premiums	(272)		(238)		(112)

Excess tax benefits associated with equity compensation	(417)		(1,011)		(2,966)

Other items	(1,136)		4,487		4,852
Income tax expense	$	59,037	$	96,656	$	90,508

Components of deferred income taxes included in other assets

The components of deferred income taxes included in other assets in the accompanying consolidated balance sheets at December 31, 2020 and 2019 are as follows (in thousands):


	2020		2019
Deferred tax assets:
Allowance for credit losses	$	72,316	$	23,051
Loans	14,694		20,808
Insurance	690		673
Accrued liability for supplemental retirement agreements	7,457		7,308
Restricted stock and stock options	9,181		10,515

Cash flow hedge	—		1,373
Equity method investment	171		425
Lease liability	23,894		22,782
Other real estate owned	2,287		691
Net federal operating loss carryforward and credits	1,796		5,954
Annual incentive compensation	8,712		12,626
Partnership interests	25,225		—
Allowance for off balance sheet credit exposures	6,069		618
Other deferred tax assets	2,559		2,501
Total deferred tax assets	175,051		109,325

Deferred tax liabilities:
Depreciation and amortization	14,418		12,455
Core deposit and other intangible assets	11,077		13,253
Securities	34,373		8,287
Cash flow hedge	19,627		—
REIT dividends	1,366		1,650
FHLB related liabilities	1,798		925
Right-of-use assets and other leasing transactions	22,232		21,169
Subordinated debt	1,920		2,050
Partnership interests	—		3,534
Other deferred tax liabilities	1,630		1,875
Total deferred tax liabilities	108,441		65,198
Net deferred tax assets	$	66,610	$	44,127

Rollforward of uncertain tax positions

A reconciliation of the beginning and ending unrecognized tax benefit related to state uncertain tax positions is as follows (in thousands):


	2020		2019		2018
Balance at January 1,	$	6,910	$	5,083	$	2,838
Increases due to tax positions taken during the current year	2,748		1,827		2,245
Increases due to tax positions taken during a prior year	—		—		—
Decreases due to the lapse of the statute of limitations during the current year	—		—		—
Decreases due to settlements with the taxing authorities during the current year	—		—		—
Balance at December 31,	$	9,658	$	6,910	$	5,083