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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The following table presents the components of income tax expense for the years indicated:
Year Ended December 31,
202320222021
(In thousands)
Current Tax Expense:
Federal$34,219 $63,833 $131,559 
State3,387 44,734 54,744 
Total current tax expense37,606 108,567 186,303 
Deferred Tax (Benefit) Expense:
Federal(238,865)35,789 15,799 
State(110,942)(401)13,273 
Total deferred tax (benefit) expense (349,807)35,388 29,072 
Total income tax (benefit) expense$(312,201)$143,955 $215,375 
The following table presents a reconciliation of the recorded income tax expense to the amount of taxes computed by applying the applicable federal statutory income tax rates of 21% for 2023, 2022, and 2021 to earnings before income taxes:
Year Ended December 31,
202320222021
(In thousands)
Computed expected income tax (benefit) expense at federal statutory rate$(464,381)$119,189 $172,690 
State tax (benefit) expense, net of federal tax benefit(156,669)36,310 55,682 
Goodwill impairment286,811 — — 
Tax‑exempt interest benefit(12,518)(12,293)(12,312)
Increase in cash surrender value of life insurance(1,455)(1,246)(1,367)
Low income housing tax credits, net of amortization(8,574)(7,158)(6,430)
Nondeductible employee compensation3,947 6,067 4,660 
Nondeductible acquisition‑related expense5,456 — — 
Nondeductible FDIC premiums18,973 4,257 2,535 
Change in unrecognized tax benefits443 (2,017)(860)
Valuation allowance change(5,948)1,805 (16,201)
Disallowed interest12,318 2,455 446 
Equity compensation shortfall (windfall)4,949 (410)(705)
State rate and apportionment changes2,240 (2,189)16,330 
Other, net2,207 (815)907 
Recorded income tax (benefit) expense$(312,201)$143,955 $215,375 
The Company recognized $42.7 million, $34.4 million, and $33.6 million of tax credits and other tax benefits associated with its investments in LIHTC partnerships for the years ended December 31, 2023, 2022, and 2021. The amount of amortization of such investments reported in income tax expense under the proportional amortization method of accounting was $34.1 million for 2023, $28.0 million for 2022, and $27.1 million for 2021.
As of December 31, 2023, for federal tax purposes, the Company had $75.7 million of LIHTC and solar tax credit carryforwards available to apply against future tax liability, expiring from 2042 to 2043. The Company had $6.0 million state LIHTC carryforwards, which can be carried forward indefinitely.
At December 31, 2023, we had $908.1 million of federal net operating loss carryforwards, almost all of which can be carried forward indefinitely, and approximately $1.29 billion of state net operating loss carryforwards available to be applied against future taxable income. A majority of the state net operating loss carryforwards will expire in varying amounts from 2024 through 2043. A portion of the state net operating loss carryforwards generated after December 31, 2017 can be carried forward indefinitely due to the state conformity to the federal net operating loss carryforward provisions as modified by the Tax Cuts and Jobs Act.
The following table presents the tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities as of the dates indicated:
December 31,
20232022
(In thousands)
Deferred Tax Assets:
Book allowance for loan losses in excess of tax specific charge-offs$90,531 $80,653 
Fair value mark on acquired loans96,844 — 
Interest on nonaccrual loans4,866 2,649 
Deferred compensation5,256 5,011 
Foreclosed assets valuation allowance663 298 
State tax benefit— 6,743 
Net operating losses282,127 20,178 
Accrued liabilities106,834 31,336 
Unrealized loss from FDIC‑assisted acquisitions767 876 
Unrealized loss on securities available-for-sale101,602 224,680 
Unrealized loss on securities held-to-maturity71,197 78,330 
Equity investments— 2,322 
Goodwill81,607 — 
Tax credits80,610 — 
Lease liability45,742 41,038 
FDIC indemnification asset9,273 — 
Core deposit and customer relationship intangibles— 1,428 
Other1,582 2,837 
Gross deferred tax assets979,501 498,379 
Valuation allowance(21,061)(26,687)
Deferred tax assets, net of valuation allowance958,440 471,692 
Deferred Tax Liabilities:
Core deposit and customer relationship intangibles29,885 — 
Deferred loan fees and costs1,039 1,341 
Unrealized gain on credit-linked notes2,212 — 
Premises and equipment, principally due to differences in depreciation6,682 4,186 
FHLB stock4,717 602 
Tax mark-to-market on loans539 1,711 
Subordinated debt15,862 15,776 
Equity investments9,953 — 
Goodwill— 9,229 
Operating leases110,522 121,978 
ROU assets37,918 35,021 
Gross deferred tax liabilities219,329 189,844 
Total net deferred tax assets $739,111 $281,848 
Based upon our taxpaying history and estimates of taxable income over the years in which the items giving rise to the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deferred tax assets. The Company's net deferred tax assets increased at December 31, 2023, compared to December 31, 2022 primarily due to goodwill impairment, net operating losses generated in 2023, and deferred tax assets recorded as a result of the Merger transaction.
The Company had net income taxes receivable of $34.5 million and $90.2 million at December 31, 2023 and December 31, 2022.
As of December 31, 2023 and 2022, the Company had a valuation allowance of $21.1 million and $26.7 million against DTAs. Periodic reviews of the carrying amount of DTAs are made to determine if a valuation allowance is necessary. A valuation allowance is required, based on available evidence, when it is more likely than not that all or a portion of a DTA will not be realized due to the inability to generate sufficient taxable income in the period and/or of the character necessary to utilize the benefit of the DTA. All available evidence, both positive and negative, that may affect the realizability of the DTA is identified and considered in determining the appropriate amount of the valuation allowance. It is more likely than not that these deferred tax assets subject to a valuation allowance will not be realized primarily due to their character and/or the expiration of the carryforward periods.
The net decrease of $5.6 million in the total valuation allowance during the year ended December 31, 2023 was primarily related to adjustments to the DTA for amounts that were fully reserved.
The following table summarizes the activity related to the Company's unrecognized tax benefits for the years indicated:
Year Ended December 31,
Unrecognized Tax Benefits20232022
(In thousands)
Balance, beginning of year$407 $2,555 
Increase based on tax positions related to prior years1,598 — 
Reductions for tax positions related to prior years(407)— 
Reductions for tax positions as a result of a lapse of the applicable statute of limitations— (2,148)
Balance, end of year$1,598 $407 
Unrecognized tax benefits that would affect the effective tax rate if recognized$1,598 $407 
Our gross unrecognized tax benefits are not expected to decrease within the next 12 months.
We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. For the year ended December 31, 2023, we increased our accrual for interest expense and penalties, and recognized tax expense of $0.3 million. For the years ended December 31, 2022 and 2021, we reduced our accrual for interest expense and penalties, and recognized tax benefits of $0.7 million for 2022 and $0.2 million for 2021. We had $0.6 million and $0.3 million accrued for the payment of interest and penalties as of December 31, 2023 and 2022.
We file federal and state income tax returns with the Internal Revenue Service (“IRS”) and various state and local jurisdictions and generally remain subject to examinations by these tax jurisdictions for tax years 2019 through 2022. We are currently under examination by certain state jurisdictions for tax years 2014 through 2020.