Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

5. INCOME TAXES

Our effective tax rate for the three and nine months ended September 30, 2023 was 9.9 percent and 18.7 percent, respectively, compared to 20.7 percent and 20.0 percent, respectively, for the same period in 2022. Effective rates are dependent upon components of pretax earnings and the related tax effects. The effective tax rate was lower for the three and nine-month periods in 2023, as lower pretax income increased the percentage impact of tax-favored adjustments.

Income tax expense attributable to income from operations for the three and nine-month period ended September 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 September 30, 2023								For the Nine Months Ended September 30, 2023
	2023				2022				2023				2022
(in thousands)	Amount		%		Amount		%		Amount		%		Amount		%
Provision for income taxes at the statutory rate of 21%	$	3,154	21.0	%	$	116,487	21.0	%	$	49,107	21.0	%	$	127,401	21.0	%
Increase (reduction) in taxes resulting from:
Excess tax benefit on share-based compensation		(395)	(2.6)	%		(95)	(0.0)	%		(3,263)	(1.4)	%		(2,270)	(0.4)	%
Tax exempt interest income		(270)	(1.8)	%		(280)	(0.1)	%		(827)	(0.4)	%		(850)	(0.1)	%
Dividends received deduction		(164)	(1.1)	%		(240)	(0.0)	%		(597)	(0.3)	%		(673)	(0.1)	%
Tax credit		(779)	(5.2)	%		(1,461)	(0.3)	%		(2,338)	(1.0)	%		(4,383)	(0.7)	%
ESOP dividends paid deduction		(142)	(1.0)	%		(136)	(0.0)	%		(423)	(0.2)	%		(404)	(0.0)	%
Nondeductible expenses		158	1.1	%		34	0.0	%		1,505	0.6	%		608	0.1	%
Other items, net		(79)	(0.5)	%		500	0.1	%		678	0.4	%		1,667	0.2	%
Total tax expense	$	1,483	9.9	%	$	114,809	20.7	%	$	43,842	18.7	%	$	121,096	20.0	%

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.