Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Components of Consolidated Income Tax Expense

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


	Year Ended December 31,
	2023		2022		2021
Current tax expense
Federal	$	26,133	$	34,155	$	28,763
State	19,781		22,355		18,221
	$	45,914	56,510		46,984
Deferred tax expense
Federal	(1,330)		(5,224)		(872)
State	(1,069)		(2,798)		(64)
	(2,399)		(8,022)		(936)
Total tax expense	$	43,515	$	48,488	$	46,048

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,
	2023		2022		2021
Tax credits and other tax benefits – decrease in tax expense	$	(10,857)	$	(6,370)	$	(4,224)
Amortization – increase in tax expense	$	9,092	$	6,178	$	3,604

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)	2023		2022		2021
Federal statutory income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	7.9		7.9		7.9
Tax-exempt interest on municipal obligations	(0.7)		(0.7)		(0.5)
Tax-exempt life insurance related income	(0.4)		(0.4)		(0.5)
Low income housing tax credits	(6.6)		(3.7)		(2.6)
Low income housing tax credit amortization	5.6		3.6		2.2
Equity compensation	0.3		(0.2)		(0.1)
Non-deductible merger expenses	—		0.1		0.1
Other	(0.1)		0.3		0.6
Effective Tax Rate	27.0	%	27.9	%	28.1	%

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 for the years indicated (in thousands):


	December 31,
	2023		2022
Deferred tax assets:
Allowance for losses and reserve for unfunded commitments	$	37,656	$	32,519
Deferred compensation	1,534		1,696

Other accrued expenses	3,899		2,720
Additional unfunded status of the supplemental retirement plans	15,434		16,036
Operating lease liability	8,355		8,575
State taxes	3,346		3,649
Share based compensation	1,050		1,132
Nonaccrual interest	706		643
Acquisition cost basis	12,046		14,640
Unrealized loss on securities	68,535		85,897
Tax credits	852		852
Net operating loss carryforwards	953		2,098
Other	190		120
Total deferred tax assets	154,556		170,577
Deferred tax liabilities:
Securities income	(777)		(777)
Depreciation	(8,364)		(8,270)
Right of use asset	(7,726)		(7,941)
Funded pension liability	(3,999)		(4,110)
Securities accretion	(2,265)		(1,265)
Mortgage servicing rights valuation	(1,946)		(1,976)

Core deposit intangible	(2,814)		(4,778)
Junior subordinated debt	(1,171)		(1,293)
Prepaid expenses and other	(1,170)		(991)
Total deferred tax liability	(30,232)		(31,401)
Net deferred tax asset	$	124,324	$	139,176