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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
Note 12 - Income Taxes
The provision for income taxes is as follows:
 For the Year Ended December 31,
(In thousands)202420232022
Current
Federal$19,415 $14,716 $2,770 
State5,887 6,061 (1,266)
Deferred
Federal8,882 9,524 23,710 
State670 (82)6,415 
 $34,854 $30,219 $31,629 
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)202420232022
Tax rate applied to income before income taxes$32,727 $28,193 $29,009 
Increase (decrease) resulting from the effects of:
Nondeductible acquisition costs— 300 924 
Tax exempt interest on loans and securities(852)(639)(406)
Income from bank owned life insurance(2,108)(2,217)(935)
State income taxes(1,377)(1,256)(1,081)
Tax credit investments(641)(402)(406)
Stock compensation66 (446)(992)
Executive compensation disallowance111 638 402 
Other371 69 (36)
Federal tax provision28,297 24,240 26,479 
State tax provision6,557 5,979 5,150 
Total income tax provision$34,854 $30,219 $31,629 
 
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)20242023
Allowance for credit losses$38,093 $40,710 
Other real estate owned220 91 
Accrued stock compensation4,296 4,556 
Federal tax loss carryforward2,364 2,660 
State tax loss carryforward1,160 1,084 
Lease liabilities11,334 12,811 
Net unrealized securities losses49,446 50,817 
Deferred compensation3,118 2,828 
Accrued interest and fee income22,244 34,665 
Other4,951 7,027 
Gross deferred tax assets137,226 157,249 
Less: Valuation allowance— — 
Deferred tax assets net of valuation allowance137,226 157,249 
Core deposit intangible(18,040)(24,301)
Net unrealized derivatives gains9 (670)
Premises and equipment(841)(1,771)
Right-of-use assets(10,375)(11,854)
Other(4,990)(5,421)
Gross deferred tax liabilities(34,237)(44,017)
Net deferred tax assets$102,989 $113,232 
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 2024, net unrealized losses on debt securities of $207.3 million resulted in a deferred tax asset of $49.4 million. In 2023, unrealized losses of $212.7 million resulted in a deferred tax asset of $50.8 million.
At December 31, 2024, the Company's net DTAs of $103.0 million consisted of $87.0 million of net U.S. federal DTAs and $20.7 million of net state DTAs. At December 31, 2023, the Company's net DTAs of $113.2 million consisted of $91.0 million of net U.S. federal DTAs and $22.2 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 $103.0 million in net DTAs well in advance of the statutory carryforward period. At December 31, 2024, approximately $2.4 million of DTAs related to federal net operating losses which will expire in annual installments beginning in 2029 through 2032. Additionally, $1.2 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, 2024.
In accordance with ASC Topic 718, Compensation – Stock Compensation, the Company recognized net expense of $0.2 million and benefits of $0.5 million and $1.1 million in 2024, 2023, and 2022, 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 $3.2 million, $2.8 million and $2.5 million was reflected as income tax expense for the years ended December 31, 2024, 2023, and 2022, respectively. The amounts of affordable housing tax credits, amortization and tax benefits recorded as income tax expense for the year ended December 31, 2024 were $3.0 million, $3.2 million, and $0.8 million, 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, and for the year ended December 31, 2022 were $2.0 million, $2.5 million and $1.0 million, respectively. The carrying value of the affordable housing credit investments was $36.3 million and $39.5 million at December 31, 2024 and 2023, respectively, of which $18.3 million and $26.3 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 2024. 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 America2021
Florida2021