Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income tax expense from operations for the years ended December 31, 2022, 2021 and 2020 were as follows:

(In thousands)	Current		Deferred		Total
Year ended December 31, 2022:
U.S. federal	$	96,849	$	19,990	$	116,839
State and local	13,793		1,726		15,519
Total	$	110,642	$	21,716	$	132,358
Year ended December 31, 2021:
U.S. federal	$	104,924	$	22,184	$	127,108
State and local	15,174		3,429		18,603
Total	$	120,098	$	25,613	$	145,711
Year ended December 31, 2020:
U.S. federal	$	92,035	$	(14,055)	$	77,980
State and local	14,798		(5,485)		9,313
Total	$	106,833	$	(19,540)	$	87,293

The components of income tax (benefit) expense recorded directly to stockholders’ equity for the years ended 2022, 2021 and 2020 were as follows:

(In thousands)	2022		2021		2020
Unrealized gain (loss) on available for sale debt securities	$	(382,697)	$	(80,211)	$	53,909
Change in fair value on cash flow hedges	(6,446)		(6,040)		20,795
Accumulated pension (benefit) loss	1,161		1,484		(1,059)
Adoption of ASU 2016-13	—		—		1,183
Income tax (benefit) expense allocated to stockholders’ equity	$	(387,982)	$	(84,767)	$	74,828

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2022 and 2021 were as follows:

(In thousands)	2022		2021
Deferred tax assets:
Unrealized loss on available for sale debt securities	$	374,973	$	—
Loans, principally due to allowance for credit losses	43,553		$	41,507
Deferred compensation	7,864		7,777
Equity-based compensation	7,491		7,348
Accrued expenses	6,748		6,340
Unearned fee income	5,534		5,258
Other	1,737		3,284
Total deferred tax assets	447,900		71,514
Deferred tax liabilities:
Equipment lease financing	91,913		74,827
Cash flow hedges	19,747		23,633
Land, buildings, and equipment	17,210		18,728
Private equity investments	9,393		3,034
Intangible assets	7,519		7,459
Unrealized gain on available for sale debt securities	—		7,724
Other	8,138		8,396
Total deferred tax liabilities	153,920		143,801
Net deferred tax assets (liabilities)	$	293,980	$	(72,287)

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, therefore, no valuation allowance is needed for the deferred tax assets at year end.

A reconciliation between the expected federal income tax expense using the federal statutory tax rate of 21%, and the Company's actual income tax expense for 2022, 2021, and 2020 is provided below. The effective tax rate is calculated by dividing income taxes by income before income taxes less the non-controlling interest expense.

(In thousands)	2022		2021		2020
Computed “expected” tax expense	$	130,359	$	142,060	$	92,683
Increase (decrease) in income taxes resulting from:
Tax-exempt interest, net of cost to carry	(8,473)		(9,002)		(10,013)
State and local income taxes, net of federal tax benefit	12,260		14,697		7,357
Share-based award payments	(1,669)		(2,941)		(3,090)
Other	(119)		897		356
Total income tax expense	$	132,358	$	145,711	$	87,293

The gross amount of unrecognized tax benefits was $1.2 million and $1.3 million at December 31, 2022 and 2021, respectively, and the total amount of unrecognized tax benefits that would impact the effective tax rate, if recognized, was $1.0 million at both December 31, 2022 and 2021. The activity in the accrued liability for unrecognized tax benefits for the years ended December 31, 2022 and 2021 was as follows:

(In thousands)	2022		2021
Unrecognized tax benefits at beginning of year	$	1,276	$	1,331
Gross increases – tax positions in prior period	21		15
Gross decreases – tax positions in prior period	—		(8)
Gross increases – current-period tax positions	235		222
Lapse of statute of limitations	(327)		(284)
Unrecognized tax benefits at end of year	$	1,205	$	1,276

The Company and its subsidiaries are subject to income tax by federal, state and local government taxing authorities. Tax years 2019 through 2022 remain open to examination for U.S. federal income tax and for major state taxing jurisdictions.