Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of the income tax expense (benefit) for the years ended December 31, 2021, 2020 and 2019 are as follows:

(in thousands)	2021		2020		2019
Current tax expense:
Federal	$	23,225	$	7,401	$	9,748
State	4,681		2,163		2,279
Deferred tax expense (benefit)	5,803		(12,176)		670
Total income tax expense (benefit)	$	33,709	$	(2,612)	$	12,697

The following table shows a reconciliation of the income tax expense (benefit) at the statutory federal income tax rate to the Company’s effective income tax rate for the three years ended December 31, 2021:

	2021				2020				2019
(in thousands, except percentages)	Amount		%		Amount		%		Amount		%
Tax expense (benefit) calculated at the statutory federal income tax rate	$	30,244	21.00	%	$	(910)	21.00	%	$	13,447	21.00	%
Increases (decreases) resulting from:
Non-taxable interest income	(350)		(0.24)	%	(634)		14.62	%	(1,132)		(1.77)	%
Non-taxable BOLI income	(1,146)		(0.80)	%	(1,196)		27.59	%	(1,199)		(1.87)	%
Stock-based compensation	(856)		(0.59)	%	(55)		1.27	%	(454)		(0.71)	%
State and city income taxes, net of federal income tax benefit	3,697		2.57	%	1,709		(39.43)	%	1,800		2.81	%
Rate differential on deferred items	769		0.53	%	(1,907)		44.00	%	162		0.25	%
Noncontrolling interest	548		0.38	%	—		—	%	—		—	%
Disallowed interest expense allocable to tax exempt securities and other expenses	421		0.29	%	396		(9.14)	%	624		0.97	%
Other, net	382		0.27	%	(15)		0.36	%	(551)		(0.85)	%
Total income tax expense (benefit)	$	33,709	23.41	%	$	(2,612)	60.27	%	$	12,697	19.83	%

The composition of the net deferred tax asset is as follows:

	December 31,
(in thousands)	2021		2020
Tax effect of temporary differences
Lease liability	$	34,935	$	—
Provision for loan losses	15,669		25,548
Deferred compensation expense	4,258		2,509
Interest income on nonaccrual loans	1,153		1,317
Dividend income	408		803
Stock-based compensation expense	865		583
Goodwill amortization	(4,707)		(4,603)
Depreciation and amortization	(2,892)		(5,166)
Net unrealized gains in other comprehensive (loss) income	(4,833)		(10,246)
Right-of-use asset	(34,491)		—
Other	936		946
Net deferred tax assets	$	11,301	$	11,691

The Company evaluates the deferred tax asset for recoverability using a consistent approach which considers the relative impact of negative and positive evidence, including its own historical financial performance and that of its operating subsidiaries and projections of future taxable income. This evaluation involves significant judgment by management about assumptions that are subject to change from period to period. Management believes that the weight of all the positive evidence currently available exceeds the negative evidence in support of the realization of the future tax benefits associated with the federal net deferred tax asset. As a result, management has concluded that the federal net deferred tax asset in its entirety will more likely than not be realized. Therefore, a valuation allowance is not considered necessary. If future results differ significantly from the Company’s current projections, a valuation allowance against the net deferred tax asset may be required.

At December 31, 2021 and 2020, the Company had accumulated net operating losses (“NOLs”) in the State of Florida of approximately $166.5 million and $163.2 million, respectively. These NOLs are carried forward for a maximum of 20 years based on applicable Florida law. The deferred tax asset related to these NOLs at December 31, 2021 and 2020 is approximately $7.2 million and $7.1 million, respectively. A full valuation allowance has been recorded against the state deferred tax asset related to these NOLs as management believes it is more likely than not that the tax benefit will not be realized.

At December 31, 2021 and 2020, the Company had no unrecognized tax benefits or associated interest or penalties that needed to be accrued.