INCOME TAXES

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The components of income taxes consist of (dollars in thousands):

	Years Ended December 31,
	2022		2021		2020
Income tax expense
Current expense:
Federal	$	20,815	$	20,261	$	21,027
State	13,883		8,448		12,144
Deferred expense:
Federal	(700)		3,644		(3,657)
State	(572)		1,021		(1,652)
Total income tax expense	$	33,426	$	33,374	$	27,862

A reconciliation of federal and state income taxes at statutory rates to the income taxes included in the accompanying Consolidated Statements of Income is as follows:

	Years Ended December 31,
	2022		2021		2020
Percent of pretax income
Income tax at federal statutory rate	21.0	%	21.0	%	21.0	%
Effect of:
Tax-exempt interest, net	(1.1)	%	(1.1)	%	(1.6)	%
Stock incentive	0.1	%	—	%	0.2	%
State income taxes, net	6.5	%	4.5	%	6.5	%
Income on bank owned life insurance	(0.5)	%	(0.7)	%	(0.9)	%
Tax credit investments	(5.6)	%	(3.6)	%	(3.2)	%
Other, net	0.3	%	1.2	%	(0.3)	%
Effective income tax rate	20.7	%	21.3	%	21.7	%

Net deferred taxes, reported in other assets or other liabilities in the accompanying Consolidated Balance Sheets, include the following amounts of deferred tax assets and liabilities (dollars in thousands):

	As of December 31,
	2022		2021
Deferred taxes
Deferred tax assets:
ACL	$	26,979	$	25,884
Unrealized loss on cash flow hedge	8,365		273
Unrealized losses on securities available for sale	88,666		9,199
Unrealized losses on securities held to maturity	11,919		—
Stock-based compensation	5,504		4,204
Deferred compensation	53		55
Purchase accounting adjustments	656		1,213
Accrued vacation	411		398
Lease liabilities	3,564		2,893
Employee costs	3,298		2,847
Other	376		390
Total deferred tax assets	149,791		47,356
Deferred tax liabilities:
Basis in premises and equipment	(1,541)		(1,347)
Affordable housing partnerships and other investments	(6,669)		(3,696)
Purchase accounting adjustments	(1,207)		(1,362)
Mortgage servicing assets	(2,132)		(2,853)
Basis in core deposit, customer intangible assets, and asset purchase goodwill	(6,956)		(9,485)
Deferred loan origination costs	(3,845)		(2,454)
Right of use assets	(3,518)		(2,877)
Unrealized gain on equity securities	(512)		(1,099)
Other	(586)		(560)
Total deferred tax liabilities	(26,966)		(25,733)
Net deferred tax asset	$	122,825	$	21,623

Management believes that it is more likely than not that the other deferred tax assets included in the accompanying Consolidated Balance Sheets will be fully realized. The Company has determined that no valuation allowance is required for any deferred tax assets as of December 31, 2022, or 2021.