Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

4. INCOME TAXES

Our effective tax rate for the three and six months ended June 30, 2023 was 19.1 percent and 19.4 percent, respectively, compared to 65.8 percent and 12.1 percent, respectively, for the same period in 2022. Effective rates are dependent upon components of pretax earnings and the related tax effects. Tax-favored adjustments acting on pretax earnings resulted in a lower effective tax rate for the second quarter of 2023. The effective tax rate was higher for the six-month period in 2023, as higher pretax income decreased the percentage impact of tax-favored adjustments.

Income tax expense attributable to income from operations for the three and six-month period ended June 30, 2023 and 2022 differed from the amounts computed by applying the U.S. federal tax rate of 21 percent to pretax income by the items detailed in the below table. In interim periods, income taxes are adjusted to reflect the effective tax rate we anticipate for the year, with adjustments flowing through the other items, net line.

	For the Three Months Ended June 30, 2023								For the Six Months Ended June 30, 2023
	2023				2022				2023				2022
(in thousands)	Amount		%		Amount		%		Amount		%		Amount		%
Provision for income taxes at the statutory rate of 21%	$	20,167	21.0	%	$	(1,376)	21.0	%	$	45,953	21.0	%	$	10,914	21.0	%
Increase (reduction) in taxes resulting from:
Excess tax benefit on share-based compensation		(878)	(0.9)	%		(761)	11.6	%		(2,868)	(1.3)	%		(2,175)	(4.2)	%
Tax exempt interest income		(274)	(0.3)	%		(288)	4.4	%		(557)	(0.3)	%		(570)	(1.1)	%
Dividends received deduction		(209)	(0.2)	%		(163)	2.5	%		(433)	(0.2)	%		(434)	(0.8)	%
Tax credit		(780)	(0.8)	%		(1,461)	22.3	%		(1,559)	(0.7)	%		(2,922)	(5.6)	%
ESOP dividends paid deduction		(144)	(0.2)	%		(138)	2.1	%		(281)	(0.1)	%		(268)	(0.5)	%
Nondeductible expenses		745	0.8	%		258	(3.9)	%		1,346	0.6	%		574	1.1	%
Other items, net		(248)	(0.3)	%		(386)	5.8	%		758	0.4	%		1,168	2.2	%
Total tax expense	$	18,379	19.1	%	$	(4,315)	65.8	%	$	42,359	19.4	%	$	6,287	12.1	%

We have recorded our deferred tax assets and liabilities using the statutory federal tax rate of 21 percent. We believe it is more likely than not that all deferred tax assets will be recovered, given the carry back availability as well as the result of future operations, which will generate sufficient taxable income to realize the deferred tax asset.