Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income taxes are as follows:

	Years Ended December 31,
(in thousands)	2022		2021		2020
Current tax provision	$	33,876	$	26,872	$	24,022
Deferred tax expense (benefit)	2,747		5,422		(6,763)
Total provision for income taxes	$	36,623	$	32,294	$	17,259

    The income tax provision reconciled to the income taxes that would have been computed at the statutory federal rate of 21% as follows.

	Years Ended December 31,
(in thousands)	2022		2021		2020
Federal income tax, at statutory rates	$	30,238	$	26,740	$	15,703
Increase (deduction) in taxes resulting from:
Tax-exempt income	(2,085)		(1,114)		(961)
State income tax, net of federal income tax effect	6,942		6,176		2,178
Excess tax (benefits) expense from employee share-based payments	(69)		89		132
Non-deductible expenses	1,524		—		—
Other, net	73		403		207
Provision for income taxes	$	36,623	$	32,294	$	17,259

The net deferred tax asset consisted of the following.

	December 31,
(in thousands)	2022		2021
Deferred tax assets:
Allowance for credit losses	$	21,198	$	17,837
Stock based compensation plans	1,506		1,446
Purchase accounting fair market value adjustments	1,111		1,487
Non-accrued interest	470		504
Deferred compensation	3,371		2,796
Loss on equity securities	511		136
Federal net operating loss carryforward	3,264		303
State tax net operating loss carryforward	1,017		—
Unrealized loss on investment securities	26,756		—
Other, net	531		514
Gross deferred tax assets	59,735		25,023
Deferred tax liabilities:
Core deposit intangible from acquired companies	2,595		705
Undistributed income from subsidiary not consolidated for tax return purposes (REIT)	1,097		903
Deferred loan costs	3,496		2,150
Depreciation and amortization	690		1,660
Prepaid expenses	970		824
Unrealized gain on investment securities	—		1,228
Other	1,108		235
Gross deferred tax liabilities	9,956		7,705
Net deferred tax assets	$	49,779	$	17,318

The Company recorded net deferred tax assets of $7.2 million as a result of the acquisition of 1st Constitution.

The Company evaluates the realizability of its deferred tax assets by examining its earnings history and projected future earnings and by assessing whether it is more likely than not that carryforwards would not be realized. Based upon the majority of the Company’s deferred tax assets having no expiration date, the Company’s earnings history, and the projections of future earnings, the Company’s management believes that it is more likely than not that all of the Company’s deferred tax assets as of December 31, 2022 will be realized.

The Company evaluates tax positions that may be uncertain using a recognition threshold of more likely than not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the consolidated financial statements. The Company had no unrecognized tax benefits or related interest or penalties at December 31, 2022 or 2021.

The Company is subject to U.S. federal income tax law as well as income tax of various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few significant exceptions, the Company is no longer subject to U.S. federal examinations by tax authorities for the years before 2019 or to state and local examinations by tax authorities for the years before 2019.