Income Taxes

3 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table presents the components of Income tax expense and effective tax rates for the periods indicated:

	Three months ended March 31,
	2021			2020
	(In thousands)
Income before income taxes	$	16,728		$	908
Income tax expense	6,076			102
Net income before attribution to noncontrolling interests	$	10,652		$	806
Effective tax rate	36.3		%	11.2		%

The effective tax rate for the three months ended March 31, 2021 of 36.3%, with related tax expense of $6.1 million, was calculated based on a forecasted 2021 annual effective tax rate. The effective tax rate is more than the statutory rate of 21% due primarily to Merger costs related to the proposed merger with SVB, state and local income taxes, and the accounting for investments in affordable housing projects. These items were partially offset by earnings from tax-exempt investments and income tax credits. During the first quarter of 2021, the Company recorded a tax expense of approximately $3.0 million due to certain Merger costs related to the proposed merger with SVB that are expected to be non-deductible.

The effective tax for the three months ended March 31, 2020 of 11.2%, with related tax expense of $0.1 million, was calculated based on a forecasted 2020 annual effective tax rate. The effective tax rate was less than the statutory rate of 21% due primarily to earnings from tax-exempt investments and income tax credits, partially offset by state and local income taxes and the accounting for investments in affordable housing projects.

The effective tax rate for the three months ended March 31, 2021 is more than the effective tax rate for the same period in 2020 due primarily to the higher level of income in 2021 as compared to 2020 and as a result of approximately $3.0 million tax expense recorded discretely in the first quarter of 2021 due to the expected non-deductible Merger costs.