Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 14. Income Taxes

Income tax expense (benefit) included in net income consisted of the following components:

	Years Ended December 31,
($ in thousands)	2024		2023		2022
Included in net income
Current federal	$	94,382	$	72,884	$	142,433
Current state		14,477		10,656		14,840
Total current provision		108,859		83,540		157,273
Deferred federal		3,648		12,139		(23,556	)
Deferred state		651		1,847		1,390
Total deferred provision		4,299		13,986		(22,166	)
Total expense included in net income	$	113,158	$	97,526	$	135,107

Income tax expense does not reflect the tax effects of amounts recognized in other comprehensive income and in AOCI, a separate component of stockholders’ equity. These amounts include unrealized gains and losses on securities available for sale or transferred to held to maturity, unrealized gains and losses on derivatives and hedging transactions, and valuation adjustments of defined benefit and other post-retirement benefit plans. Refer to Note 12 – Stockholders’ Equity for additional information.

Temporary differences arise between the tax bases of assets or liabilities and their carrying amounts for financial reporting purposes. The expected tax effects from when these differences are resolved are recorded currently as deferred tax assets or liabilities.

Significant components of the Company’s deferred tax assets and liabilities were as follows:

	December 31,
($ in thousands)	2024			2023
Deferred tax assets:
Allowance for loan losses	$	80,270		$	76,407
Loan purchase accounting adjustments		—			164
State net operating loss		2,560			3,348
Lease liability		26,686			28,226
Net unrealized losses on securities available-for-sale and cash flow hedges		155,432			148,825
Derivatives		22,840			26,344
Other		14,271			15,553
Gross deferred tax assets		302,059			298,867
Valuation allowance		(4,623	)		(5,145	)
Net deferred tax assets	$	297,436		$	293,722
Deferred tax liabilities:
Employee compensation and benefits	$	(14,708	)	$	(9,895	)
Fixed assets & intangibles		(33,500	)		(28,129	)
Lease financing		(60,354	)		(56,576	)
Right-of-use asset		(22,383	)		(23,773	)
Loan purchase accounting adjustments		(8	)		—
Other		(19,916	)		(21,965	)
Gross deferred tax liabilities	$	(150,869	)	$	(140,338	)
Net deferred tax asset	$	146,567		$	153,384

Reported income tax expense (benefit) differed from amounts computed by applying the statutory income tax rate of 21% for the years ended December 31, 2024, 2023 and 2022 to earnings or loss before income taxes. Historically, the primary differences have been due to tax-exempt income, federal and state tax credits and excess tax benefits from stock-based compensation. The main source of tax credits has been investments in tax-advantaged securities and tax credit projects. These investments are made primarily in the markets we serve and directed at tax credits issued under the Federal and State New Market Tax Credit (NMTC) programs, Low-Income Housing Tax Credit (LIHTC) programs, as well as pre-2018 Qualified Zone Academy Bonds (QZAB) and Qualified School Construction Bonds (QSCB). A summary of the factors that impacted income tax expense follows.

	2024						2023						2022
($ in thousands)	Amount			%			Amount			%			Amount			%
Taxes computed at statutory rate	$	120,534			21.0	%	$	102,927			21.0	%	$	138,431			21.0	%
Increases (decreases) in taxes resulting from:
State income taxes, net of federal income tax benefit		12,640			2.2	%		10,323			2.1	%		13,272			2.0	%
Tax-exempt interest		(8,443	)		(1.5	%)		(8,755	)		(1.8	%)		(8,612	)		(1.3	%)
Life insurance contracts		(6,017	)		(1.1	%)		(4,020	)		(0.8	%)		(1,812	)		(0.3	%)
Tax credits		(9,453	)		(1.6	%)		(9,443	)		(1.9	%)		(8,039	)		(1.2	%)
Employee share-based compensation		(1,514	)		(0.2	%)		(505	)		(0.1	%)		(2,084	)		(0.3	%)
FDIC assessment disallowance		2,466			0.4	%		2,893			0.6	%		1,836			0.3	%
Impact of deferred tax asset re-measurement		(435	)		(0.1	%)		—			—			—			—
Net operating loss carryback under CARES act		—			—			—			—			238			0.0	%
Other, net		3,380			0.6	%		4,106			0.8	%		1,877			0.3	%
Income tax expense	$	113,158			19.7	%	$	97,526			19.9	%	$	135,107			20.5	%

The Company had approximately $58.3 million in state net operating loss carryforwards that originated in the tax years 2003 through 2024 and begin expiring in 2032. A $58.3 million gross state valuation allowance has been established for all non-bank entity level state net operating loss carryforwards, which translates to a net $2.6 million valuation allowance in the Company’s deferred tax inventory. The remainder of the allowance is related to deferred executive compensation. The impact of this valuation allowance is not material to the financial statements.

The tax benefit of a position taken or expected to be taken in a tax return should be recognized when it is more likely than not that the position will be sustained on its technical merits. The liability for unrecognized tax benefits was immaterial as of December 31, 2024, 2023 and 2022. The Company does not expect the liability for unrecognized tax benefits to change significantly during 2025. The Company recognizes interest and penalties, if any, related to income tax matters in income tax expense, and the amounts recognized during 2024, 2023 and 2022 were insignificant.

The Company and its subsidiaries file a consolidated U.S. federal income tax return, as well as filing various state returns. Generally, the federal returns for years prior to 2021 are no longer subject to examination. State returns that are open to examination vary by jurisdiction and are generally open three to four years.