Income taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income taxes

Income taxes:

An allocation of federal and state income taxes between current and deferred portions is presented below:

	Three Months Ended September 30,
	2020		2019
Current	$	13,123	$	9,167
Deferred	(15,163)		(1,449)
Total	$	(2,040)	$	7,718
	Nine Months Ended September 30,
	2020		2019
Current	$	37,038	$	25,907
Deferred	(31,543)		(5,900)
Total	$	5,495	$	20,007

The following table presents a reconciliation of federal income taxes at the statutory federal rate of 21% to the Company's effective tax rates for the three and nine months ended September 30, 2020 and 2019:

	Three Months Ended September 30,
	2020				2019
Federal taxes calculated at statutory rate	$	(1,604)	21.0	%	$	6,653	21.0	%
Increase (decrease) resulting from:
State taxes, net of federal benefit	100		(1.3)	%	1,512		4.7	%
Benefit from equity based compensation	(7)		0.1	%	(275)		(0.9)	%
Municipal interest income, net of interest disallowance	(422)		5.5	%	(211)		(0.7)	%
Bank owned life insurance	(55)		0.7	%	(11)		0.1	%
Merger costs	126		(1.6)	%	—		—	%
Other	(177)		2.3	%	50		0.2	%
Income tax (benefit) expense, as reported	$	(2,040)	26.7	%	$	7,718	24.4	%
	Nine Months Ended September 30,
	2020				2019
Federal taxes calculated at statutory rate	$	4,938	21.0	%	$	17,272	21.0	%
Increase (decrease) resulting from:
State taxes, net of federal benefit	1,266		5.4	%	3,855		4.7	%
Expense (benefit) from equity based compensation	154		0.7	%	(668)		(0.8)	%
Municipal interest income, net of interest disallowance	(996)		(4.2)	%	(650)		(0.8)	%
Bank owned life insurance	(90)		(0.4)	%	(38)		0.1	%
Merger costs	289		1.2	%	—		—	%
Other	(65)		(0.3)	%	236		0.3	%
Income tax expense, as reported	$	5,495	23.4	%	$	20,007	24.3	%

As of September 30, 2020, the Company acquired $8,346 of net operating losses from Franklin. The net operating loss carryforwards can be used to offset taxable income in future periods and reduce income tax liabilities in those future periods. It is possible that net operating losses acquired will be subject to limitation under IRC Section 382. The net operating loss carryforward is set to expire as of December 31, 2030.

The components of the net deferred tax assets (liabilities) at September 30, 2020 and December 31, 2019, are as follows: 

	September 30,		December 31
	2020		2019
Deferred tax assets:
Allowance for credit losses	$	51,869	$	8,113
Operating lease liabilities	14,892		9,373
Federal net operating loss	1,753		—
Amortization of core deposit intangibles	—		1,386
Deferred compensation	8,250		5,231
Unrealized loss on debt securities	—		54
Unrealized loss on equity securities	41		60
Unrealized loss on cash flow hedges	347		—
Other	6,684		2,388
Subtotal	83,836		26,605
Deferred tax liabilities:
FHLB stock dividends	$	(561)	$	(550)
Operating leases - right of use assets	(13,863)		(8,641)
Depreciation	(5,689)		(5,078)
Amortization of core deposit intangibles	(668)		—
Unrealized gain on cash flow hedges	—		(203)
Unrealized gain on debt securities	(12,116)		(3,051)
Mortgage servicing rights	(18,557)		(19,678)
Goodwill	(10,691)		(8,859)
Other	200		(1,035)
Subtotal	(61,945)		(47,095)
Net deferred tax assets (liabilities)	$	21,891	$	(20,490)