Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 13 Income Taxes

The current and deferred amounts of income tax expense (benefit) were as follows:

	Years Ended December 31,
($ in Thousands)	2021		2020		2019
Current
Federal	$	57,916	$	33,020	$	50,560
State	12,035		16,193		15,327
Total current	69,951		49,213		65,887
Deferred
Federal	9,115		(25,895)		14,094
State	6,247		(3,118)		(261)
Total deferred	15,362		(29,013)		13,833
Total income tax expense	$	85,313	$	20,200	$	79,720

Temporary differences between the amounts reported on the financial statements and the tax bases of assets and liabilities resulted in deferred taxes. DTAs and liabilities at December 31, 2021 and 2020, included in other assets and accrued expenses and other liabilities on the consolidated balance sheets, respectively, were as follows:

($ in Thousands)	2021		2020
Deferred tax assets
Allowance for loan losses	$	72,199	$	88,967
Allowance for other losses	12,704		16,347
Accrued liabilities	4,285		3,776
Deferred compensation	31,896		27,896
Benefit of tax loss and credit carryforwards	6,245		9,789
Nonaccrual interest	1,374		1,763
Lease liability	12,954		13,328
Basis difference from equity securities and other investments	—		6,329
Net unrealized losses on AFS securities	1,989		—
Net unrealized losses on pension and postretirement benefits	1,308		9,110
Other	3,806		997
Total deferred tax assets	$	148,760	$	178,302
Valuation allowance for deferred tax assets	—		(251)
Total deferred tax assets after valuation allowance	$	148,760	$	178,051
Deferred tax liabilities
Prepaid expenses	$	61,826	$	63,113
Goodwill	22,785		21,698
Mortgage banking activities	14,382		10,403
Deferred loan fee income	7,848		9,799
State deferred taxes	1,234		2,636
Lease financing	—		116
Bank premises and equipment	20,705		30,188
Purchase accounting	11,500		12,658
Basis difference from equity securities and other investments	2,597		—
Net unrealized gains on AFS securities	—		13,568
Other	667		1,049
Total deferred tax liabilities	$	143,544	$	165,228
Net deferred tax assets (liabilities)	$	5,216	$	12,823

At December 31, 2020, the valuation allowance for DTAs of approximately $251,000 was related to the deferred tax benefit of specific federal tax loss carryforwards of $3 million from a 2017 acquisition. The changes in the valuation allowance related to net operating losses for 2021 and 2020 were as follows:

($ in Thousands)	2021		2020
Valuation allowance for deferred tax assets, beginning of year	$	(251)	$	(251)
Decrease in current year	251		—
Valuation allowance for deferred tax assets, end of year	$	—	$	(251)

At December 31, 2021, the Corporation had state net operating loss carryforwards of $79 million (of which $32 million was acquired from various acquisitions) that will begin expiring in 2031.

The effective income tax rate differs from the statutory federal tax rate. The major reasons for this difference were as follows:

	2021		2020		2019
Federal income tax rate at statutory rate	21.0	%	21.0 %		21.0 %
Increases (decreases) resulting from:
Tax-exempt interest and dividends	(3.0)	%	(3.9)	%	(3.3)	%
State income taxes (net of federal benefit)	3.8	%	3.7 %		3.5 %
Bank owned life insurance	(0.6)	%	(0.9)	%	(0.8)	%
Tax effect of tax credits and benefits, net of related expenses	(1.8)	%	(1.8)	%	(0.9)	%
Tax reserve adjustments / settlements	—	%	0.1 %		0.2 %
Net tax (benefit) expense from stock-based compensation	—	%	0.3 %		(0.2)	%
Restructuring in conjunction with ABRC sale	(0.1)	%	(13.7)	%	—	%
FDIC premium	0.5	%	0.8 %		0.5 %
Other	(0.2)	%	0.6 %		(0.4)	%
Effective income tax rate	19.6	%	6.2	%	19.6	%

Savings banks acquired by the Corporation in 1997 and 2004 qualified under provisions of the Internal Revenue Code that permitted them to deduct from taxable income an allowance for bad debts that differed from the provision for such losses charged to income for financial reporting purposes. Accordingly, no provision for income taxes has been made for $100 million of retained income at December 31, 2021. If income taxes had been provided, the deferred tax liability would have been approximately $25 million. Management does not expect this amount to become taxable in the future; therefore, no provision for income taxes has been made.

The Corporation and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Corporation’s federal income tax returns are open and subject to examination from the 2018 tax return year and forward. The years open to examination by state and local government authorities varies by jurisdiction.

A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:

($ in Millions)	2021		2020
Balance at beginning of year	$	3	$	3
Subtractions for tax positions related to prior years	(1)		—
Balance at end of year	$	2	$	3

At December 31, 2021 and 2020, the total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate were $2 million and $3 million, respectively.

The Corporation recognizes interest and penalties accrued related to unrecognized tax benefits in the income tax expense line on the consolidated statements of income. Interest and penalty benefits were negligible at both December 31, 2021 and 2020. Accrued interest and penalties were negligible at both December 31, 2021 and December 31, 2020. Management does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next twelve months.