Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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

	Years Ended December 31,
($ in thousands)	2023		2022		2021
Current
Federal	$	29,319	$	58,982	$	57,916
State	5,283		22,092		12,035
Total current	34,602		81,074		69,951
Deferred
Federal	(8,371)		12,531		9,115
State	(3,135)		(97)		6,247
Total deferred	(11,506)		12,434		15,362
Total income tax expense	$	23,097	$	93,508	$	85,313

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, 2023 and 2022, included in other assets and accrued expenses and other liabilities on the consolidated balance sheets, respectively, were as follows:

($ in thousands)	2023		2022
Deferred tax assets
Allowance for loan losses	$	83,378	$	79,142
Allowance for other losses	8,933		10,558
Accrued liabilities	14,089		2,842
Deferred compensation	28,429		30,246
Federal tax credits carryforward	8,849		—
Benefit of state tax losses and credit carryforwards	9,068		7,476
Nonaccrual interest	901		891
Partnerships	2,365		—
Lease liability	6,785		7,390
Net unrealized losses on AFS securities	48,632		80,148
Net unrealized losses on pension and postretirement benefits	8,506		14,803
Other	9,403		4,545
Total deferred tax assets	$	229,338	$	238,041
Deferred tax liabilities
Prepaid expenses	$	66,381	$	64,480
Goodwill	22,161		23,119
Mortgage banking activities	20,799		20,145
Deferred loan fee income	8,097		4,269
State deferred taxes	1,387		1,389
Lease financing	15,297		3,145
Bank premises and equipment	20,389		20,860
Purchase accounting	7,898		10,381
Basis difference from equity securities and other investments	7,593		5,582
Other	1,207		821
Total deferred tax liabilities	$	171,209	$	154,191
Net deferred tax assets	$	58,129	$	83,850

At December 31, 2023, the Corporation had state net operating loss carryforwards of $126 million (of which $2 million was acquired from various acquisitions) that will begin expiring in 2024.

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

	2023		2022		2021
Federal income tax rate at statutory rate	21.0	%	21.0	%	21.0	%
Increases (decreases) resulting from:
Tax-exempt interest and dividends	(7.4)	%	(3.4)	%	(3.0)	%
State income taxes (net of federal benefit)	0.3	%	4.2	%	3.8	%
Bank owned life insurance	(1.1)	%	(0.5)	%	(0.6)	%
Tax effect of tax credits and benefits, net of related expenses	(4.7)	%	(1.6)	%	(1.8)	%
Net tax (benefit) from stock-based compensation	—	%	(0.2)	%	—	%
Restructuring in conjunction with ABRC sale	—	%	—	%	(0.1)	%
FDIC premium	3.0	%	0.7	%	0.5	%
Other	0.1	%	0.1	%	(0.2)	%
Effective income tax rate	11.2	%	20.3	%	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, 2023. 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 2020 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)	2023		2022
Balance at beginning of year	$	2,233	$	2,324
Subtractions for tax positions related to prior years	(441)		(486)
Additions for tax positions related to current year	435		395
Balance at end of year	$	2,227	$	2,233

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, 2023 and 2022. At December 31, 2023 and 2022, 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.