Income Taxes

9 Months Ended

Sep. 30, 2022

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,				Nine Months Ended September 30,
	2022		2021		2022		2021
Current	$	5,513	$	2,350	$	9,082	$	17,840
Deferred	3,418		7,366		15,879		20,904
Total	$	8,931	$	9,716	$	24,961	$	38,744

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, 2022 and 2021:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2022				2021				2022				2021
Federal taxes calculated at statutory rate	$	8,560	21.0	%	$	11,551	21.0	%	$	23,390	21.0	%	$	37,844	21.0	%
Increase (decrease) resulting from:
State taxes, net of federal    benefit	1,018		2.5	%	3,279		6.0	%	3,551		3.2	%	6,908		3.8	%
Benefit from equity based    compensation	(82)		(0.2)	%	(1,784)		(3.2)	%	(388)		(0.3)	%	(2,129)		(1.2)	%
Municipal interest income,    net of interest    disallowance	(443)		(1.1)	%	(416)		(0.8)	%	(1,331)		(1.2)	%	(1,259)		(0.7)	%
Bank-owned life insurance	(78)		(0.2)	%	(74)		(0.1)	%	(231)		(0.2)	%	(240)		(0.1)	%
NOL Carryback provision    under CARES Act	—		—	%	(3,424)		(6.2)	%	—		—	%	(3,424)		(1.9)	%
Offering costs	—		—	%	—		—	%	—		—	%	127		0.1	%
Section 162(m) limitation	39		0.1	%	1,065		1.9	%	201		0.2	%	1,313		0.7	%
Other	(83)		(0.2)	%	(481)		(0.9)	%	(231)		(0.3)	%	(396)		(0.2)	%
Income tax expense, as    reported	$	8,931	21.9	%	$	9,716	17.7	%	$	24,961	22.4	%	$	38,744	21.5	%

The Company is subject to Internal Revenue Code Section 162(m), which limits the deductibility of compensation paid to certain individuals. It is the Company’s policy to apply the Section 162(m) limitations to stock-based compensation first and then followed by cash compensation. As a result of the vesting of these units and cash compensation paid to date, the Company has disallowed a portion of its compensation paid to the applicable individuals.

The components of the net deferred tax assets (liabilities) at September 30, 2022 and December 31, 2021, are as follows: 

	September 30,		December 31,
	2022		2021
Deferred tax assets:
Allowance for credit losses	$	39,064	$	35,233
Operating lease liabilities	18,774		12,478
Net operating loss	1,158		1,370
Amortization of core deposit intangibles	403		—
Deferred compensation	4,390		5,484
Unrealized loss on debt securities	67,253		—
Unrealized loss on cash flow hedges	—		205
Other assets	4,891		8,301
Subtotal	135,933		63,071
Deferred tax liabilities:
FHLB stock dividends	$	(484)	$	(484)
Operating leases - right of use assets	(17,386)		(11,287)
Depreciation	(7,335)		(7,938)
Amortization of core deposit intangibles	—		(116)
Unrealized gain on equity securities	(2,297)		(2,407)
Unrealized gain on cash flow hedges	(313)		—
Unrealized gain on debt securities	—		(1,324)
Mortgage servicing rights	(44,667)		(30,098)
Goodwill	(15,338)		(13,743)
Other liabilities	(2,753)		(2,494)
Subtotal	(90,573)		(69,891)
Net deferred tax assets (liabilities)	$	45,360	$	(6,820)

The Company had a net operating loss carryforward generated as a result of a previous acquisition amounting to $5,515 and $6,523 as of September 30, 2022 and December 31, 2021, respectively. The net operating loss carryforward can be used to offset taxable income in future periods and reduce income tax liabilities in those future periods. While net operating losses are subject to certain annual utilization limits under Section 382, the Company believes the net operating loss carryforwards will be realized based on the projected annual limitation and the length of the net operating loss carryover period. The Company's determination of the realization of the net deferred tax asset is based on its assessment of all available positive and negative evidence. The net operating loss carryforward will begin to expire in 2029.