Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

(12) INCOME TAXES

The components of the Company’s income tax expense (benefit) are as follows:

	Year Ended December 31,
	2022		2021		2020
	(Dollars in thousands)
Current taxes:
Federal	$	39,197	$	28,359	$	25,974
State		4,813		5,365		7,443
Deferred taxes		322		7,044		(9,491	)
Total income taxes	$	44,332	$	40,768	$	23,926

Income tax (benefit) expense applicable to securities transactions approximated $453,000, $220,000 and $(82,000) for the years ended December 31, 2022, 2021 and 2020, respectively.

A reconciliation of tax expense at the federal statutory tax rate applied to income before taxes is presented in the following table. The federal statutory tax rate was 21% in 2022, 2021 and 2020:

	Year Ended December 31,
	2022			2021			2020
	(Dollars in thousands)
Tax expense at the federal statutory tax rate	$	49,861		$	43,764		$	25,937
Increase (decrease) in tax expense from:
Tax-exempt income, net		(337	)		(436	)		(507	)
Modified endowment life contracts		(487	)		(501	)		(508	)
Share based compensation excess tax benefit		(2,905	)		(1,643	)		(412	)
Tax deductible dividends paid on ESOP		(481	)		(490	)		(453	)
State tax expense, net of federal tax benefit		3,788			4,779			5,606
Bargain purchase gain		—			(1,007	)		—
Utilization of tax credits:
New markets tax credits, net of tax expense		(3,745	)		(3,192	)		(3,121	)
Low-income housing tax credits, net of amortization		(1,024	)		(1,533	)		(1,273	)
Other tax credits		(91	)		(379	)		(320	)
Other, net		(247	)		1,406			(1,023	)
Total tax expense	$	44,332		$	40,768		$	23,926

The net deferred tax asset consisted of the following and is reported in other assets:

	December 31,
	2022			2021
	(Dollars in thousands)
Unrealized net losses on securities	$	22,107		$	—
Provision for credit losses		20,988			17,654
Write-downs of other real estate owned		938			255
Deferred compensation		2,142			2,320
Stock-based compensation		1,643			1,575
Investments in partnership interests		6,056			3,840
Other		1,123			901
Gross deferred tax assets		54,997			26,545
Unrealized net gains on securities		—			(684	)
Premium on securities of banks acquired		(98	)		(120	)
Intangibles		(6,346	)		(5,756	)
Basis difference related to tax credits		(4,118	)		(2,979	)
Depreciation		(20,360	)		(14,545	)
Prepaid expense deducted		(1,139	)		(1,120	)
Other		(185	)		(169	)
Gross deferred tax liabilities		(32,246	)		(25,373	)
Net deferred tax asset	$	22,751		$	1,172

The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if applicable, in income tax expense. During the years ended December 31, 2022, 2021 and 2020, the Company did not recognize or accrue any interest and penalties related to unrecognized tax benefits. Federal and various state income tax statutes dictate that tax returns filed in any of the previous three reporting periods remain open to examination, which includes tax return years 2019 to 2021. In addition, the 2018 return was amended and therefore will remain open through 2023. The Company has no open examinations with either the Internal Revenue Service or any state agency.

Management performs an analysis of the Company’s tax position annually and believes it is more likely than not that all of its tax positions will be utilized in future years.