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Income Taxes
 12 Months Ended
Dec. 31, 2024
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,
202420232022
(In thousands)
Current Tax Expense:
Federal$45,554 $34,219 $63,833 
State1,156 3,387 44,734 
Total current tax expense46,710 37,606 108,567 
Deferred Tax (Benefit) Expense:
Federal(6,082)(238,865)35,789 
State1,138 (110,942)(401)
Total deferred tax (benefit) expense (4,944)(349,807)35,388 
Total income tax (benefit) expense$41,766 $(312,201)$143,955 
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 2024, 2023, and 2022 to earnings before income taxes:
Year Ended December 31,
202420232022
(In thousands)
Computed expected income tax (benefit) expense at federal statutory rate$35,417 $(464,381)$119,189 
State tax (benefit) expense, net of federal tax benefit12,657 (156,669)36,310 
Goodwill impairment— 286,811 — 
Tax‑exempt interest benefit(15,572)(12,518)(12,293)
Increase in cash surrender value of life insurance(1,246)(1,455)(1,246)
Low income housing tax credits, net of amortization(12,378)(8,574)(7,158)
Nondeductible employee compensation1,683 3,947 6,067 
Nondeductible acquisition‑related expense— 5,456 — 
Nondeductible FDIC premiums9,377 18,973 4,257 
Change in unrecognized tax benefits40 443 (2,017)
Valuation allowance change(2,115)(5,948)1,805 
Disallowed interest11,043 12,318 2,455 
Equity compensation shortfall (windfall)4,991 4,949 (410)
State rate and apportionment changes(4,662)2,240 (2,189)
Other, net2,531 2,207 (815)
Recorded income tax (benefit) expense$41,766 $(312,201)$143,955 
The Company recognized $57.9 million, $42.7 million, and $34.4 million of tax credits and other tax benefits associated with its investments in LIHTC partnerships for the years ended December 31, 2024, 2023, and 2022. The amount of amortization of such investments reported in income tax expense under the proportional amortization method of accounting was $45.6 million for 2024, $34.1 million for 2023, and $28.0 million for 2022.
As of December 31, 2024, for federal tax purposes, the Company had $115.5 million of LIHTC and solar tax credit carryforwards available to apply against future tax liability, expiring from 2042 to 2044. The Company had $16.3 million state LIHTC carryforwards, which can be carried forward indefinitely.
At December 31, 2024, we had $917.8 million of federal net operating loss carryforwards, almost all of which can be carried forward indefinitely, and approximately $1.37 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 2025 through 2044. 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,
20242023
(In thousands)
Deferred Tax Assets:
Book allowance for loan losses in excess of tax specific charge-offs$78,096 $90,531 
Fair value mark on acquired loans65,100 96,844 
Interest on nonaccrual loans4,569 4,866 
Deferred compensation4,902 5,256 
Foreclosed assets valuation allowance335 663 
Net operating losses292,843 282,127 
Accrued liabilities102,232 106,834 
Unrealized loss from FDIC‑assisted acquisitions413 767 
Unrealized loss on securities available-for-sale79,977 101,602 
Unrealized loss on securities held-to-maturity62,162 71,197 
Tax mark-to-market on loans250 — 
Goodwill73,863 81,607 
Tax credits130,522 80,610 
Lease liability35,447 45,742 
FDIC indemnification asset7,028 9,273 
Other3,159 1,582 
Gross deferred tax assets940,898 979,501 
Valuation allowance(19,015)(21,061)
Deferred tax assets, net of valuation allowance921,883 958,440 
Deferred Tax Liabilities:
Core deposit and customer relationship intangibles27,292 29,885 
Deferred loan fees and costs2,193 1,039 
Unrealized gain on credit-linked notes1,452 2,212 
Premises and equipment, principally due to differences in depreciation5,710 6,682 
FHLB stock553 4,717 
Tax mark-to-market on loans— 539 
Subordinated debt14,789 15,862 
Equity investments9,695 9,953 
Operating leases110,415 110,522 
ROU assets29,197 37,918 
Gross deferred tax liabilities201,296 219,329 
Total net deferred tax assets $720,587 $739,111 
Based upon our taxpaying history and estimates of taxable income over the years in which the items giving rise to the DTAs are deductible, management believes it is more likely than not the Company will realize the benefits of these DTAs. The Company's net DTAs decreased at December 31, 2024, compared to December 31, 2023 due primarily to a decrease in unrealized loss on AFS securities.
The Company had net income taxes receivable of $18.0 million and $34.5 million at December 31, 2024 and December 31, 2023.
As of December 31, 2024 and 2023, the Company had a valuation allowance of $19.0 million and $21.1 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 DTAs 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 $2.1 million in the total valuation allowance during the year ended December 31, 2024 was primarily related to the expiration and the expected realization of state net operating losses DTA that were previously 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 Benefits20242023
(In thousands)
Balance, beginning of year$1,598 $407 
Increase based on tax positions related to prior years— 1,598 
Reductions for tax positions related to prior years(953)(407)
Balance, end of year$645 $1,598 
Unrecognized tax benefits that would affect the effective tax rate if recognized$645 $1,598 
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, 2024, we reduced our accrual for interest expense and penalties by $0.4 million and recognized tax expense of $0.1 million. 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 year ended December 31, 2022, we reduced our accrual for interest expense and penalties and recognized tax benefits of $0.7 million. We had $0.2 million and $0.6 million accrued for the payment of interest and penalties as of December 31, 2024 and 2023.
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 2020 through 2023. We are currently under examination by the IRS and certain state and local jurisdictions for various tax years ranging between 2014 and 2022.