Income Taxes |
Income Taxes 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 |
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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 |
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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 |
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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 |
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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.
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