INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The following table provides the components of income tax expense for the years ended December 31:

(In thousands)	2021		2020		2019
Current income taxes:
Federal	$	48,445	$	43,115	$	28,404
State	15,850		13,785		6,598
Total current	64,295		56,900		35,002
Deferred income taxes:
Federal	9,634		(22,793)		234
State	2,623		(6,636)		1,192
Total deferred	12,257		(29,429)		1,426
Total income tax expense	$	76,552	$	27,471	$	36,428

The Company does not have uncertain tax positions that are deemed material, and did not recognize any adjustments for unrecognized tax benefits.

The Company is subject to U.S. federal income tax and income tax in various state jurisdictions. All tax years ending after December 31, 2017 are open to examination. The examination by the District of Columbia for the tax years 2017-2019 was finalized in 2021 with no adjustments.

Temporary differences between the amounts reported in the financial statements and the tax bases of assets and liabilities result in deferred taxes. Deferred tax assets and liabilities, shown as the sum of the appropriate tax effect for each significant type of temporary difference, are presented in the following table at December 31 for the years indicated:

(In thousands)	2021		2020
Deferred tax assets:
Allowance for credit losses	$	27,980	$	42,231
Lease liability	17,280		19,192
Employee benefits	7,740		6,108
Unrealized losses on pension plan	2,827		3,249
Deferred loan fees and costs	3,879		4,486
Equity based compensation	1,636		1,856
Unrealized losses on investments available-for-sale	121		—
Losses on other real estate owned	21		203
Other than temporary impairment	76		75
Loan and deposit premium/discount	553		1,081
Reserve for recourse loans	223		546
Net operating loss carryforward	2,023		1,475
Other	207		181
Gross deferred tax assets	64,566		80,683
Valuation allowance	(2,137)		(1,479)
Net deferred tax asset	62,429		79,204
Deferred tax liabilities:
Right of use asset	(14,888)		(16,693)
Unrealized gains on investments available-for-sale	—		(9,684)
Pension plan costs	(2,092)		(2,211)
Depreciation	(2,552)		(2,950)
Intangible assets	(5,653)		(6,894)
Bond accretion	(78)		(195)
Section 481 adjustments	—		(669)
Fair value acquisition adjustments	(624)		(555)
Other	(626)		(567)
Gross deferred tax liabilities	(26,513)		(40,418)
Net deferred tax asset	$	35,916	$	38,786

The Company has approximately $29.9 million of state net operating loss carryover which begins to expire in 2032. The Company believes that it is more likely than not that the future benefit from the state net operating loss carryover will not be realized. As such, there is a valuation allowance on the deferred tax assets of the jurisdictions in which those net operating losses relate.

The reconcilements between the statutory federal income tax rate and the effective rate for the years ended December 31 are presented in the following table:

(Dollars in thousands)	2021				2020				2019
	Amount		Percentage of Pre-Tax Income		Amount		Percentage of Pre-Tax Income		Amount		Percentage of Pre-Tax Income
Income tax expense at federal statutory rate	$	65,448	21.0	%	$	26,130	21.0	%	$	32,101	21.0	%
Increase/ (decrease) resulting from:
Tax exempt income, net	(2,271)		(0.7)		(2,472)		(2.0)		(2,101)		(1.4)
Bank-owned life insurance	(602)		(0.2)		(567)		(0.5)		(665)		(0.4)
State income taxes, net of federal income tax benefits	14,593		4.7		5,648		4.5		6,154		4.0
Federal tax law change	—		—		(1,764)		(1.4)		—		—
Other, net	(616)		(0.2)		496		0.5		939		0.6
Total income tax expense and rate	$	76,552	24.6	%	$	27,471	22.1	%	$	36,428	23.8	%

Under the CARES Act, which was enacted on March 27, 2020, net operating losses arising in tax years beginning after December 31, 2017, and before January 1, 2021 can be carried back five tax years preceding the tax year in which the loss originated. During the prior year, the Company utilized net operating losses acquired as a part of the 2018 WashingtonFirst acquisition. Following the passage of the CARES Act, the Company carried back WashingtonFirst's 2018 net operating loss to tax years 2013 through 2015. As a result, the Company recorded a tax benefit of $1.8 million for 2020 due to the federal statutory rates for the 2013, 2014 and 2015 tax years being higher than the 2018 tax year.