Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense (benefit) for the years ended December 31, 2024, 2023 and 2022 is summarized as follows:

	Years Ended December 31,
(In thousands)	2024		2023		2022
Current income taxes:
Federal	$	178,075	$	165,518	$	116,976
State	52,882		62,948		48,633
Foreign	10,076		13,696		3,207
Total current income taxes	$	241,033	$	242,162	$	168,816
Deferred income taxes:
Federal	$	2,914	$	(8,245)	$	18,560
State	7,927		(9,750)		(1,183)
Foreign	170		(1,712)		4,680
Total deferred income taxes	$	11,011	$	(19,707)	$	22,057
Total income tax expense	$	252,044	$	222,455	$	190,873

The Company’s income before income taxes in 2024, 2023 and 2022 includes $27.3 million, $42.5 million and $27.7 million, respectively, of foreign income attributable to its Canadian subsidiary.

The tax effects of certain transactions are recorded directly to shareholders’ equity rather than income tax expense. The tax effect of fair value adjustments on securities available-for-sale and derivative instruments in cash flow hedges are recorded directly to shareholders’ equity as part of other comprehensive income (loss) and are reflected on the Consolidated Statements of Comprehensive Income. The tax effect of unrealized gains and losses on certain foreign currency transactions is also recorded in shareholders’ equity as part of other comprehensive income (loss).

A reconciliation of the differences between taxes computed using the statutory Federal income tax rate and actual income tax expense is as follows:

	Years Ended December 31,
(Dollars in thousands)	2024		2023		2022
Income tax expense using the statutory Federal income tax rate of 21% on income before taxes	$	198,889	$	177,467	$	147,117
(Decrease) increase in tax resulting from:
Tax-exempt interest, net of interest expense disallowance	(5,338)		(5,348)		(3,936)
State taxes, net of federal tax benefit	48,039		42,027		37,328
Income earned on bank owned life insurance	(1,139)		(1,013)		(102)
Excess tax benefits on share based compensation	(3,621)		(2,314)		(2,278)
Meals, entertainment and related expenses	2,823		2,439		1,506
FDIC insurance expense	8,602		7,713		6,014
Non-deductible compensation expense	2,587		2,147		2,361
Foreign subsidiary, net	4,600		3,060		2,376
Tax benefits related to tax credits, net	(3,049)		(3,632)		(338)
Other, net	(349)		(91)		825
Income tax expense	$	252,044	$	222,455	$	190,873

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2024 and 2023 are as follows:

(In thousands)	2024		2023
Deferred tax assets:
Net unrealized losses on securities included in other comprehensive income	$	151,886	$	126,155
Allowance for credit losses	113,648		113,105
Right-of-use liability	39,691		43,693
Deferred compensation	34,850		25,369
Stock-based compensation	14,741		13,762
Loans	12,104		435
FDIC special assessment	6,926		9,092
Net unrealized losses on derivatives included in other comprehensive income	4,032		—
Federal net operating loss carryforward	549		697
Other	1,091		4,495
Total gross deferred tax assets	379,518		336,803
Deferred tax liabilities:
Equipment leasing	165,363		165,806
Capitalized servicing rights	52,298		49,857
Goodwill and intangible assets	42,733		16,019
Premises and equipment	38,554		35,288
Right-of-use asset	32,651		36,249
Net unrealized gains on derivatives included in other comprehensive income	—		11,516
Deferred loan fees and costs	7,889		7,434
Other	2,660		2,652
Total gross deferred tax liabilities	342,148		324,821
Net deferred tax assets	$	37,370	$	11,982

Management has determined that a valuation allowance is not required for the deferred tax assets at December 31, 2024 because it is more likely than not that these assets could be realized through future reversals of existing taxable temporary differences, tax planning strategies and future taxable income. This conclusion is based on the Company’s historical earnings, its current level of earnings and prospects for continued growth and profitability.

The Company has Federal net operating loss (“NOL”) carryforwards of $2.6 million that begin to expire in 2029 through 2035 and are subject to IRC Section 382 annual limitation. The NOL carryforwards were a result of acquisitions.

The Company accounts for uncertainties in income taxes in accordance with ASC 740, “Income Taxes.” At December 31, 2024, 2023, and 2022, the Company had no unrecognized tax benefits related to uncertain tax positions that, if recognized, would impact the effective tax rate. If the Company were to record interest or penalties associated with uncertain tax positions, the interest or penalties would be included in income tax expense. As of December 31, 2024, the Company does not expect the total amount of unrecognized tax benefits to significantly increase in the next 12 months.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in numerous state jurisdictions and in Canada. In the ordinary course of business, we are routinely subject to audit by the taxing authorities of these jurisdictions. Currently, the Company’s U.S. federal income tax returns are open and subject to audit for the 2021 tax return year forward, and in general, the Company’s state income tax returns are open and subject to audit from the 2021 tax return year forward, subject to individual state statutes of limitation. The Company has extended the statute of limitations on certain state income tax returns for tax years 2017 through 2020 due to an ongoing audit. The Company’s Canadian subsidiary’s Canadian income tax returns are also subject to audit for the 2021 tax return year forward.