Income Taxes

12 Months Ended

Dec. 31, 2022

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)	2022		2021		2020
Current
Federal	$	58,982	$	57,916	$	33,020
State	22,092		12,035		16,193
Total current	81,074		69,951		49,213
Deferred
Federal	12,531		9,115		(25,895)
State	(97)		6,247		(3,118)
Total deferred	12,434		15,362		(29,013)
Total income tax expense	$	93,508	$	85,313	$	20,200

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, 2022 and 2021, included in other assets and accrued expenses and other liabilities on the consolidated balance sheets, respectively, were as follows:

($ in Thousands)	2022		2021
Deferred tax assets
Allowance for loan losses	$	79,142	$	72,199
Allowance for other losses	10,558		12,704
Accrued liabilities	2,842		4,285
Deferred compensation	30,246		31,896
Benefit of state tax losses and credit carryforwards	7,476		6,245
Nonaccrual interest	891		1,374
Lease liability	7,390		12,954
Net unrealized losses on AFS securities	80,148		1,989
Net unrealized losses on pension and postretirement benefits	14,803		1,308
Other	4,545		3,806
Total deferred tax assets	$	238,041	$	148,760
Deferred tax liabilities
Prepaid expenses	$	64,480	$	61,826
Goodwill	23,119		22,785
Mortgage banking activities	20,145		14,382
Deferred loan fee income	4,269		7,848
State deferred taxes	1,389		1,234
Lease financing	3,145		—
Bank premises and equipment	20,860		20,705
Purchase accounting	10,381		11,500
Basis difference from equity securities and other investments	5,582		2,597
Other	821		667
Total deferred tax liabilities	$	154,191	$	143,544
Net deferred tax assets	$	83,850	$	5,216

The changes in the valuation allowance related to net operating losses for 2022 and 2021 were as follows:

($ in Thousands)	2022		2021
Valuation allowance for deferred tax assets, beginning of year	$	—	$	(251)
Decrease in current year	—		251
Valuation allowance for deferred tax assets, end of year	$	—	$	—

At December 31, 2022, the Corporation had state net operating loss carryforwards of $132 million (of which $25 million was acquired from various acquisitions) that will begin expiring in 2023.

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

	2022		2021		2020
Federal income tax rate at statutory rate	21.0	%	21.0	%	21.0 %
Increases (decreases) resulting from:
Tax-exempt interest and dividends	(3.4)	%	(3.0)	%	(3.9)	%
State income taxes (net of federal benefit)	4.2	%	3.8	%	3.7 %
Bank owned life insurance	(0.5)	%	(0.6)	%	(0.9)	%
Tax effect of tax credits and benefits, net of related expenses	(1.6)	%	(1.8)	%	(1.8)	%
Tax reserve adjustments / settlements	—	%	—	%	0.1 %
Net tax (benefit) expense from stock-based compensation	(0.2)	%	—	%	0.3 %
Restructuring in conjunction with ABRC sale	—	%	(0.1)	%	(13.7)	%
FDIC premium	0.7	%	0.5	%	0.8 %
Other	0.1	%	(0.2)	%	0.6 %
Effective income tax rate	20.3	%	19.6	%	6.2	%

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, 2022. If income taxes had been provided, the deferred tax liability would have been approximately $26 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 2019 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 that, if recognized, would affect the effective tax rate was as follows:

($ in Thousands)	2022		2021
Balance at beginning of year	$	2,324	$	2,740
Subtractions for tax positions related to prior years	(486)		(613)
Additions for tax positions related to current year	395		197
Balance at end of year	$	2,233	$	2,324

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, as well as accrued interest and penalties, were immaterial at both December 31, 2022 and 2021. At December 31, 2022 and 2021, the Corporation believes it has appropriately accounted for any unrecognized tax benefits. Management does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next twelve months.