Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income taxes are as follows:

	Years Ended December 31,
(in thousands)	2023		2022		2021
Current tax provision	$	27,070	$	33,876	$	26,872
Deferred tax expense (benefit)	(1,017)		2,747		5,422
Total provision for income taxes	$	26,053	$	36,623	$	32,294

    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)	2023		2022		2021
Federal income tax, at statutory rates	$	23,266	$	30,238	$	26,740
Increase (deduction) in taxes resulting from:
Tax-exempt income	(2,038)		(2,085)		(1,114)
State income tax, net of federal income tax effect	3,913		6,942		6,176
Excess tax (benefits) expense from employee share-based payments	(129)		(69)		89
Non-deductible expenses	751		1,524		—
Other, net	290		73		403
Provision for income taxes	$	26,053	$	36,623	$	32,294

The net deferred tax asset consisted of the following.

	December 31,
(in thousands)	2023		2022
Deferred tax assets:
Allowance for credit losses	$	22,422	$	21,198
Stock based compensation plans	1,706		1,506
Purchase accounting fair market value adjustments	206		1,111
Non-accrued interest	599		470
Deferred compensation	3,426		3,371
Loss on equity securities	462		511
Depreciation and amortization	37		—
Federal net operating loss carryforward	2,065		3,264
State tax net operating loss carryforward	2,701		1,017
Unrealized loss on investment securities	23,135		26,756
Other, net	369		531
Gross deferred tax assets	57,128		59,735
Deferred tax liabilities:
Core deposit intangible from acquired companies	1,984		2,595
Undistributed income from subsidiary not consolidated for tax return purposes (REIT)	1,535		1,097
Deferred loan costs	4,424		3,496
Depreciation and amortization	—		690
Prepaid expenses	906		970
Other	1,104		1,108
Gross deferred tax liabilities	9,953		9,956
Net deferred tax assets	$	47,175	$	49,779

The Company recorded net deferred tax assets of $7.2 million as a result of the acquisition of 1st Constitution in 2022.

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, 2023 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, 2023 or 2022.

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 2020 or to state and local examinations by tax authorities for the years before 2020.