Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Components of Consolidated Income Tax Expense

The components of consolidated income tax expense are as follows (in thousands):


	Year Ended December 31,
	2020		2019		2018
Current tax expense
Federal	$	22,104	$	20,403	$	13,109
State	14,586		12,655		9,323
	$	36,690	33,058		22,432
Deferred tax expense
Federal	(9,500)		695		1,842
State	(4,654)		997		758
	(14,154)		1,692		2,600
Total tax expense	$	22,536	$	34,750	$	25,032

Schedule of Components of Investments in Qualified Affordable Housing Projects

The Company recognized, as components of tax expense, tax credits and other tax benefits, and amortization expense relating to our investments in Qualified Affordable Housing Projects as follows for the periods indicated (in thousands):


	Year Ended December 31,
	2020		2019		2018
Tax credits and other tax benefits – decrease in tax expense	$	(4,200)	$	(2,546)	$	(1,993)
Amortization – increase in tax expense	$	3,581	$	2,705	$	1,814

Reconciliation of Effective Tax Rate and Statutory Federal Income Tax Rate

The effective tax rate and the statutory federal income tax rate are reconciled as follows:


	Year Ended December 31,
(in thousands)	2020		2019		2018
Federal statutory income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	7.7		7.9		8.6
Tax-exempt interest on municipal obligations	(0.9)		(0.7)		(1.0)
Tax-exempt life insurance related income	(0.8)		(0.6)		(0.6)
Low income housing tax credits	(4.8)		(2.3)		(2.2)
Low income housing tax credit amortization	4.1		2.1		2.0
Equity compensation	0.4		(0.4)		(0.4)
Non-deductible merger expenses	—		—		0.2
Other	(0.9)		0.4		(0.8)
Effective Tax Rate	25.8	%	27.4	%	26.8	%

Company's Net Deferred Tax Asset Recorded in Other Assets

The temporary differences, tax effected, which give rise to the Company’s net deferred tax asset recorded in other assets are as follows as of December 31 for the years indicated (in thousands):


	December 31,
	2020		2019
Deferred tax assets:
Allowance for losses and reserve for unfunded commitments	$	28,159	$	9,871
Deferred compensation	1,786		2,342
Accrued pension liability	383		3,309
Other accrued expenses	1,537		1,678
Additional unfunded status of the supplemental retirement plans	13,275		9,868
Operating lease liability	8,270		8,142
State taxes	2,870		2,441
Share based compensation	837		803
Nonaccrual interest	725		649
Acquisition cost basis	2,372		4,556
Unrealized loss on securities	—		—
Tax credits	513		576
Net operating loss carryforwards	1,131		1,578
Other	327		348
Total deferred tax assets	62,185		46,161
Deferred tax liabilities:
Securities income	(762)		(762)
Depreciation	(7,231)		(6,109)
Right of use asset	(8,232)		(8,242)
Merger related fixed asset valuations	(30)		(30)
Securities accretion	(702)		(560)
Mortgage servicing rights valuation	(1,490)		(1,813)
Unrealized gain on securities	(5,671)		(1,001)
Core deposit intangible	(4,812)		(6,453)
Junior subordinated debt	(1,553)		(1,672)
Prepaid expenses and other	(502)		(469)
Total deferred tax liability	(30,985)		(27,111)
Net deferred tax asset	$	31,200	$	19,050