INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2022

The provision for income taxes is comprised of the following components:


	Years Ended December 31
	2022		2021		2020
	(Dollars in thousands)
Current expense
Federal	$	60,216	$	21,539	$	32,171
State	24,979		11,054		17,004
Total current expense	85,195		32,593		49,175
Deferred expense (benefit)
Federal	(970)		3,032		(10,872)
State	(284)		58		(6,634)
Total deferred expense (benefit)	(1,254)		3,090		(17,506)
Total expense	$	83,941	$	35,683	$	31,669

Schedule of Income Tax Rate Reconciliation

The difference between the statutory federal income tax rate and the effective income tax rate reported for the last three years is detailed below:


	Years Ended December 31
	2022				2021				2020
	(Dollars in thousands)
Computed statutory federal income tax provision	$	73,028	21.00	%	$	32,902	21.00	%	$	32,096	21.00	%
State taxes, net of federal tax benefit	19,728		5.67	%	8,754		5.59	%	8,147		5.33	%
Low Income Housing Project Investments	(3,364)		(0.97)	%	(2,308)		(1.47)	%	(1,851)		(1.21)	%
Nontaxable interest, net	(3,191)		(0.92)	%	(1,022)		(0.65)	%	(723)		(0.47)	%
Increase in cash surrender value of life insurance	(1,885)		(0.54)	%	(1,405)		(0.90)	%	(1,345)		(0.88)	%
Increase (decrease) in uncertain positions	(1,035)		(0.30)	%	50		0.03	%	—		—	%
Stock-based compensation	(202)		(0.06)	%	(372)		(0.24)	%	(1,067)		(0.70)	%
CARES Act - net operating loss carryback (1)	—		—	%	—		—	%	(4,809)		(3.15)	%
Change in valuation allowance	52		0.01	%	26		0.02	%	—		—	%
Merger and other related costs (non-deductible)	—		—	%	630		0.40	%	—		—	%


Other, net	810		0.25	%	(1,572)		(1.00)	%	1,221		0.80	%
Total expense	$	83,941	24.14	%	$	35,683	22.78	%	$	31,669	20.72	%

Schedule of Net Deferred Tax Asset

The tax-effected components of the net deferred tax asset at December 31 of the years presented were as follows:


	2022		2021
	(Dollars in thousands)
Deferred tax assets
Accrued expenses not deducted for tax purposes	$	16,162	$	15,909
Allowance for credit losses	42,748		41,541

Derivatives fair value adjustment	14,328		—
Employee and director equity compensation	1,388		1,489

Foreign Tax Credit Carryforward	89		89
Loan basis difference fair value adjustment	2,273		2,286
Net operating loss carry-forward	606		637
Net unrealized loss on securities available for sale	38,968		2,921
Operating lease liability	17,069		17,970


Other	791		1,188
Gross deferred tax assets	$	134,422	$	84,030
Valuation allowance	(358)		(306)
Total deferred tax assets net of valuation allowance	$	134,064	$	83,724
Deferred tax liabilities
Core deposit and other intangibles	$	4,137	$	5,927
Deferred loan fees, net	8,281		6,107
Derivatives fair value adjustment	—		5,536
Fixed assets	18,132		18,437
Goodwill	11,432		11,249



Prepaid pension	3,469		3,296
Right of use asset	16,565		16,829
Other	2,112		1,825
Gross deferred tax liabilities	$	64,128	$	69,206
Total net deferred tax asset	$	69,936	$	14,518

Reconciliation of Unrecognized Tax Benefits

The Company accounts for uncertainties in income taxes by providing a tax reserve for certain positions. The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits:


	(Dollars in thousands)
Balance at December 31, 2019	$	532
Reduction of tax positions for prior years	$	(58)
Balance at December 31, 2020	$	474
Reduction of tax positions for prior years	(29)

Increase for current year tax positions	2,433
Balance at December 31, 2021	2,878
Reduction of tax positions for prior years	(1,047)
Increase for prior year tax positions	128
Increase for current year tax positions	761
Balance at December 31, 2022	$	2,720

Schedule of changes in accrued interest and penalties related to uncertain tax positions

The following table summarizes the changes in accrued interest and penalties related to uncertain tax positions for the periods presented:


	As of December 31
	2022		2021		2020
	(Dollars in thousands)
Beginning Balance	$	920	$	95	$	43
Expense (benefit) recognized in provision for income taxes	(335)		69		52
Acquired obligation for interest and penalties (1)	—		756		—
Ending Balance	$	585	$	920	$	95

(1) Represents balances of accrued interest and penalties assumed by the Company in connection with the Meridian acquisition.