
	Year ended December 31,
(Dollars in thousands)	2020		2019		2018
Current income taxes:
Federal taxes	$	57,716	$	31,401	$	26,164
State and local taxes	6,768		7,977		6,513
Deferred income taxes:
Federal taxes	(32,962)		5,987		3,455
State and local taxes	114		1,087		(77)
Total	$	31,636	$	46,452	$	36,055

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following is a summary of the significant components of the Company's deferred tax assets and liabilities as of December 31, 2020 and 2019:


(Dollars in thousands)	2020		2019
Deferred tax assets:

Allowance for credit losses	$	48,050	$	9,991
Purchase accounting adjustments—loans	18,084		32,333
Reserves and other accruals	17,115		14,663
Investments	2,045		2,323


Derivatives	5,009		182
Employee benefit plans	2,504		3,581
Lease liabilities	34,955		38,181

Other (1)	821		633
Total deferred tax assets	$	128,583	$	101,887
Deferred tax liabilities:
Unrealized gains on available-for-sale securities	$	(18,997)	$	(8,651)
Unrealized gains on equity investments	—		(10,031)
Accelerated depreciation	(4,233)		(1,745)
Other (2)	(1,278)		(841)
Right of use assets	(31,707)		(34,907)
Deferred loan costs	(783)		(2,843)
Intangibles	(22,373)		(24,625)
Total deferred tax liabilities	(79,371)		(83,643)
Net deferred tax asset	$	49,212	$	18,244

Included in the table above is the effect of certain temporary differences for which no deferred tax expense or benefit was recognized. In 2020, such items consisted primarily of $19.0 million of unrealized gains on certain investments in debt and equity securities accounted for under ASC 320 along with $1.6 million of unrealized losses related to postretirement benefit obligations accounted for under ASC 715 and $5.0 million of unrealized losses on derivatives accounted for under ASC 815. In 2019, they consisted primarily of $8.7 million of unrealized losses on certain investments in debt and equity securities along with $1.2 million of unrealized gains related to postretirement benefit obligations and $0.2 million of unrealized losses on derivatives.

Based on the Company's history of prior earnings and its expectations of the future, it is anticipated that operating income and the reversal pattern of its temporary differences will, more likely than not, be sufficient to realize a net deferred tax asset of $49.2 million at December 31, 2020.

As a result of the acquisition of Beneficial on March 1, 2019, the Company recorded a net deferred tax asset (DTA) of $18.9 million. The Company expects to utilize all tax attributes acquired from Beneficial so no valuation allowance has been recorded against the DTA.

Pursuant to accounting guidance, The Company is not required to provide deferred taxes on Beneficial’s tax loan loss reserve as of December 31, 1987. As of December 31, 2020, Beneficial had unrecognized deferred income taxes of approximately $1.7 million with respect to this reserve. This reserve could be recognized as taxable income and create a current and/or deferred tax liability using the income tax rates then in effect if one of the following occur: (1) the Bank’s retained earnings represented by this reserve are used for distributions in liquidation or for any other purpose other than to absorb losses from bad debts; (2) the Bank fails to qualify as a Bank, as provided by the Internal Revenue Code; or (3) there is a change in federal tax law.


	Year ended December 31,
Year Ended December 31,	2020		2019		2018
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State tax, net of federal tax benefit	3.7		3.5		3.1


Adjustment to net deferred tax asset for enacted changes in tax laws and rates	(1.2)		—		(0.5)
Tax-exempt interest	(0.7)		(0.6)		(0.8)
Bank-owned life insurance income	(0.2)		(0.1)		—
Excess tax benefits from share-based compensation	—		(1.0)		(1.8)
Nondeductible acquisition costs	—		0.2		0.4
Federal tax credits, net of amortization	(0.8)		(0.2)		(0.1)
Nondeductible compensation	—		0.9		—
Other	—		0.2		(0.2)
Effective tax rate	21.8	%	23.9	%	21.1	%

As a result of the adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, the Company recorded less than $0.1 million of income tax expense in 2020, compared to $2.0 million and $3.5 million of income tax benefits in 2019 and 2018, respectively, related to excess tax benefits from stock compensation. This accounting standard will result in volatility to future effective tax rates.

The Company has $0.6 million of remaining Federal NOLs. Such NOLs expire beginning in 2030 and, due to Internal Revenue Service (IRS) limitations, $0.1 million are being utilized each year. Accordingly, the Company fully expects to utilize all of these NOLs. The Company has no state NOLs.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. Benefits from tax positions are recognized in the financial statements only when it is more-likely-than-not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met. ASC 740 also provides guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties.

There were no unrecognized tax benefits as of December 31, 2020. The Company records interest and penalties on potential income tax deficiencies as income tax expense. Federal tax years 2017 through 2020 remain subject to examination as of December 31, 2020, while tax years 2016 through 2020 remain subject to examination by state taxing jurisdictions. No federal or state income tax return examinations are currently in process. The Company does not expect to record or realize any material unrecognized tax benefits during 2021.

As a result of the adoption of ASC 326 - Credit Losses on January 1, 2020, the tax impact relating to the incremental provision for expected credit losses from financial assets held at amortized cost has been reflected as a credit to retained earnings to reflect the tax impact of increased credit reserves. Accordingly, $8.5 million of such impact has been reflected as an income tax credit and deferred tax asset on the Company's Consolidated Statements of Financial Condition.

On March 27, 2020, the CARES Act was enacted, and Section 2303(b) of this act provides the Company with an opportunity to carry back net operating losses (NOLs) arising from 2018, 2019 and 2020 to the prior five tax years. The Company has such NOLs reflected on its balance sheet as a portion of its current tax receivables, which were previously valued at the federal corporate income tax rate of 21%. However, the provisions of the CARES Act provide for NOL carryback claims to be calculated based on a rate of 35%, which was the federal corporate tax rate in effect for the carryback years. Consequently, effective December 31, 2020, the Company has revalued the benefit from its NOLs to reflect a 35% tax rate, which resulted in the recognition of an additional $1.7 million income tax benefit and deferred tax asset on the Company's Consolidated Statements of Financial Condition.

The amortization of the low-income housing credit investments has been reflected as income tax expense of $3.3 million for the year ended December 31, 2020, compared to $3.0 million and $1.9 million for the years ended December 31, 2019 and December 31, 2018, respectively.

The amount of affordable housing tax credits, amortization and tax benefits recorded as income tax expense for the year ended December 31, 2020 were $2.9 million, $3.3 million and $0.9 million respectively. The carrying value of the investment in affordable housing credits is $26.6 million December 31, 2020, compared to $25.8 million December 31, 2019.