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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision for income taxes is as follows:
 For the Year Ended December 31,
(In thousands)202320222021
Current   
Federal$14,716 $2,770 $23,661 
State6,061 (1,266)3,882 
Deferred
Federal9,524 23,710 6,800 
State(82)6,415 (8)
 $30,219 $31,629 $34,335 
The difference between the total expected tax expense (computed by applying the U.S. Federal tax rate of 21% to pretax income) and the reported income tax provision relating to income before income taxes is as follows:
 For the Year Ended December 31,
(In thousands)202320222021
Tax rate applied to income before income taxes$28,193 $29,009 $33,335 
Increase (decrease) resulting from the effects of:
Nondeductible acquisition costs300 924 419 
Tax exempt interest on loans and securities(639)(406)(414)
Income from bank owned life insurance(2,217)(935)(862)
State income taxes(1,256)(1,081)(813)
Tax credit investments(402)(406)(213)
Stock compensation(446)(992)(1,239)
Executive compensation disallowance638 402 253 
Other69 (36)(5)
Federal tax provision24,240 26,479 30,461 
State tax provision5,979 5,150 3,874 
Total income tax provision$30,219 $31,629 $34,335 
 
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following is a summary of the significant components of the Company's deferred tax assets and liabilities as of:
 December 31,
(In thousands)20232022
Allowance for credit losses$40,710 $31,097 
Other real estate owned91 591 
Accrued stock compensation4,556 2,931 
Federal tax loss carryforward2,660 3,150 
State tax loss carryforward1,084 1,117 
Lease liabilities12,811 12,868 
Net unrealized securities losses50,817 59,392 
Deferred compensation2,828 2,766 
Accrued interest and fee income34,665 16,035 
Other7,027 1,755 
Gross deferred tax assets157,249 131,702 
Less: Valuation allowance— — 
Deferred tax assets net of valuation allowance157,249 131,702 
Core deposit intangible(24,301)(18,767)
Net unrealized derivatives gains(670)— 
Premises and equipment(1,771)(2,214)
Right of use assets(11,854)(12,039)
Other(5,421)(4,225)
Gross deferred tax liabilities(44,017)(37,245)
Net deferred tax assets$113,232 $94,457 
Included in the table above is the effect of temporary differences associated with the Company's investments in debt securities accounted for under ASC Topic 320, Investments - Debt Securities, for which no deferred tax expense or benefit was recognized. These items are recorded as Accumulated Other Comprehensive Income in the shareholders' equity section of the consolidated balance sheet. In 2023, unrealized losses on debt securities of $212.7 million resulted in a deferred tax asset of $50.8 million. In 2022, unrealized losses of $247.4 million resulted in a deferred tax asset of $59.4 million.
At December 31, 2023, the Company's net deferred tax assets ("DTAs") of $113.2 million consisted of $91.0 million of net U.S. federal DTAs and $22.2 million of net state DTAs. At December 31, 2022, the Company's net DTAs of $94.5 million consisted of $76.8 million of U.S. federal DTAs and $17.7 million of net state DTAs.
Management assesses the necessity of a valuation allowance recorded against DTAs at each reporting period. The determination of whether a valuation allowance for net DTAs is appropriate is subject to considerable judgment and requires an evaluation of positive and negative evidence. Based on an assessment of relevant evidence, including favorable trending in asset quality and certainty regarding the amount of future taxable income that the Company forecasts, management concluded that it was more likely than not that its net DTAs will be realized based upon future taxable income. Management's determination in the realization of projected future taxable income is based upon analysis of the Company's risk profile and its trending financial performance, including credit quality. The Company believes it can reasonably predict future results of operations that result in taxable income at sufficient levels over the future period of time that the Company has available to realize its net DTA.
Management expects to realize the $113.2 million in net DTAs well in advance of the statutory carryforward period. At December 31, 2023, approximately $2.7 million of DTAs related to federal net operating losses which will expire in annual installments beginning in 2029 through 2032. Additionally, $1.1 million of the DTAs related to state net operating losses which will expire in annual installments beginning in 2029 through 2034. Remaining DTAs are not related to net operating losses or credits and therefore, have no expiration date.
The Company recognizes interest and penalties, as appropriate, as part of the provisioning for income taxes. No interest or penalties were accrued at December 31, 2023.
In accordance with ASC Topic 718, Compensation – Stock Compensation, the Company recognized $0.5 million, $1.1 million and $0.9 million in 2023, 2022, and 2021, respectively, of discrete tax benefits related to share-based compensation.
In accordance with ASC Topic 323, Investments-Equity Method and Joint Ventures, amortization of the Company's low-income housing credit investments of $2.8 million, $2.5 million and $1.6 million was reflected as income tax expense for the years ended December 31, 2023, 2022, and 2021, respectively. The amounts of affordable housing tax credits, amortization and tax benefits recorded as income tax expense for the year ended December 31, 2023 were $2.7 million, $2.8 million, and $1.5 million, respectively. The amounts of affordable housing tax credits, amortization and tax benefits recorded as income tax expense for the year ended December 31, 2022 were $2.0 million, $2.5 million and $1.0 million, respectively, and for the year ended December 31, 2021 were $1.2 million, $1.6 million and $0.7 million, respectively. The carrying value of the affordable housing credit investments was $39.5 million and $27.3 million at December 31, 2023 and 2022, respectively, of which $26.3 million and $17.6 million, respectively, was unfunded.
The Company has no unrecognized income tax benefits or provisions due to uncertain income tax positions. No federal or state income tax return examinations are currently in process. The Company does not expect to record or realize any material unrecognized tax benefits during 2023. The following are the major tax jurisdictions in which the Company operates and the earliest tax year, exclusive of the impact of the net operating loss carryforwards, subject to examination:
Jurisdiction Tax Year
United States of America2020
Florida2020