Income Taxes

12 Months Ended

Dec. 31, 2019

The components of income tax expense from operations for the years ended December 31, 2019, 2018 and 2017 were as follows:



(In thousands)	Current		Deferred		Total
Year ended December 31, 2019:
U.S. federal	$	82,556	$	11,388	$	93,944
State and local	12,323		2,807		15,130
Total	$	94,879	$	14,195	$	109,074
Year ended December 31, 2018:
U.S. federal	$	90,390	$	3,220	$	93,610
State and local	10,223		2,116		12,339
Total	$	100,613	$	5,336	$	105,949
Year ended December 31, 2017:
U.S. federal	$	89,154	$	12,190	$	101,344
State and local	7,735		1,427		9,162
Total	$	96,889	$	13,617	$	110,506

The components of income tax (benefit) expense recorded directly to stockholders’ equity for the years ended December 31, 2019, 2018 and 2017 were as follows:



(In thousands)	2019		2018			2017
Unrealized gain (loss) on available for sale debt securities	$	50,163	$	(18,634	)	$	2,104
Change in fair value on cash flow hedges	7,818		2,286			—
Accumulated pension (benefit) loss	389		222			(184		)
Income tax (benefit) expense allocated to stockholders’ equity	$	58,370	$	(16,126	)	$	1,920

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2019 and 2018 were as follows:



(In thousands)	2019			2018
Deferred tax assets:
Loans, principally due to allowance for loan losses	$	39,130		$	39,169
Unrealized loss on available for sale debt securities	—			16,140
Equity-based compensation	7,554			7,609
Deferred compensation	6,662			5,911
Unearned fee income	5,053			4,125
Accrued expenses	4,270			2,152
Other	4,057			4,640
Total deferred tax assets	66,726			79,746
Deferred tax liabilities:
Equipment lease financing	68,814			55,738
Unrealized gain on available for sale debt securities	34,024			—
Land, buildings and equipment	17,202			14,207
Cash flow hedges	9,015			2,104
Intangibles	6,491			5,973
Other	7,331			5,309
Total deferred tax liabilities	142,877			83,331
Net deferred tax liabilities	$	(76,151	)	$	(3,585	)

Management believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the total deferred tax assets.

A reconciliation between the expected federal income tax expense using the federal statutory tax rate and the Company's actual income tax expense is provided below. The federal statutory tax rate was 21% in 2019 and 2018, and 35% in 2017. The effective tax rate is calculated by dividing income taxes by income before income taxes less the non-controlling interest expense.



(In thousands)	2019			2018			2017
Computed “expected” tax expense	$	111,364		$	113,293		$	150,461
Increase (decrease) in income taxes resulting from:
Tax-exempt interest, net of cost to carry	(10,973		)	(11,502		)	(20,295		)
Contribution of appreciated securities	—			—			(10,864		)
State and local income taxes, net of federal tax benefit	11,953			9,748			5,955
Tax reform enactment	—			—			(6,753		)
Share-based award payments	(3,337		)	(3,928		)	(6,613		)
Other	67			(1,662		)	(1,385		)
Total income tax expense	$	109,074		$	105,949		$	110,506

The gross amount of unrecognized tax benefits was $1.4 million and $1.3 million at December 31, 2019 and 2018, respectively, and the total amount of unrecognized tax benefits that would impact the effective tax rate, if recognized, was $1.1 million and $993 thousand, respectively. The activity in the accrued liability for unrecognized tax benefits for the years ended December 31, 2019 and 2018 was as follows:



(In thousands)	2019			2018
Unrecognized tax benefits at beginning of year	$	1,257		$	1,208
Gross increases – tax positions in prior period	18			31
Gross decreases – tax positions in prior period	(4		)	—
Gross increases – current-period tax positions	361			322
Lapse of statute of limitations	(260		)	(304		)
Unrecognized tax benefits at end of year	$	1,372		$	1,257

The Company and its subsidiaries are subject to income tax by federal, state and local government taxing authorities. Tax years 2016 through 2019 remain open to examination for U.S. federal income tax and for major state taxing jurisdictions.