Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income tax expense consists of the following:

Year ended December 31,	2024		2023		2022
Current:
Federal	$	38.1	$	46.1	$	45.2
State	9.7		12.8		14.4
Total current	47.8		58.9		59.6
Deferred:
Federal	17.8		16.0		(3.7)
State	2.9		4.4		(1.0)
Total deferred	20.7		20.4		(4.7)
Total income tax expense	$	68.5	$	79.3	$	54.9

Total income tax provision differs from the amount of income tax determined by applying the statutory federal income tax rate of 21% for the periods presented to income before income taxes due to the following:

Year ended December 31,	2024		2023		2022
Tax expense at the statutory tax rate	$	61.9	$	70.7	$	54.0
Increase (decrease) in tax resulting from:
Tax-exempt income	(7.4)		(8.1)		(8.4)
State income tax, net of federal income tax benefit	10.0		13.6		10.6
Deficiency (benefit) of stock-based compensation plans	0.6		0.3		0.2
Nondeductible transaction costs	—		—		2.0
Federal tax credits	(0.3)		(0.2)		(4.3)
FDIC premiums	2.5		2.0		1.6
Other, net	1.2		1.0		(0.8)
Tax expense at effective tax rate	$	68.5	$	79.3	$	54.9

The tax effects of temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities that give rise to significant portions of the net deferred tax asset (liability) relate to the following:

December 31,	2024		2023
Deferred tax assets:
Loans, principally due to allowance for credit losses	$	50.7	$	56.7
Loan discount	11.5		21.7
Investment securities, unrealized losses	106.1		118.1
Derivatives, unrealized losses	0.8		0.3
Deferred compensation	22.5		18.6
Non-performing loan interest	2.5		2.2
Other real estate owned write-downs and carrying costs	—		1.4
Net operating loss carryforwards (1)	1.0		1.1
Lease liabilities	8.9		11.0
Other reserves	7.2		10.7
Contract incentives	6.4		7.5
Discount on acquired investment securities	6.8		10.1
Other	4.3		4.8
Deferred tax assets	$	228.7	$	264.2

December 31,	2024		2023
Deferred tax liabilities:
Fixed assets, principally differences in bases and depreciation	$	(20.6)	$	(19.8)
Deferred loan costs	(3.2)		(4.1)
Investment in joint venture partnership, principally due to differences in depreciation of partnership assets	(0.8)		(2.4)
Right of use assets	(8.2)		(10.3)
Prepaid amounts	(0.8)		(0.9)
Government agency stock dividends	(1.2)		(1.3)
Goodwill and other intangibles	(68.6)		(68.1)
Mortgage servicing rights	(6.4)		(6.9)
Other	(0.5)		(0.4)
Deferred tax liabilities	(110.3)		(114.2)
Net deferred tax assets	$	118.4	$	150.0

(1) As of December 31, 2024, the Company had remaining federal net operating loss carryforwards of $2.0 million from acquired companies, which is available to offset federal taxable income, and state net operating loss carryforwards in amounts which vary by state. The federal net operating losses will expire in 2030 and the state net operating losses of $11.6 million began expiring in 2023 and ending in 2036. The use of these carryforwards is subject to annual limitations. The Company believes it is more likely than not that these items will be utilized within the carryforward period.

A valuation allowance was not required for the deferred tax assets as of December 31, 2024 and 2023 because it is more likely than not these assets will be realized through future reversals of existing taxable temporary differences, and future taxable income. Uncertain tax positions were not significant at December 31, 2024 or 2023.

The Company had current net income tax receivables of $22.2 million and $16.4 million at December 31, 2024 and 2023, respectively.

The Company is subject to income tax in the U.S. federal jurisdiction and also in various states. The Company is no longer subject to examination by taxing authorities for years before 2021.

The Company holds investments in certain tax-advantaged limited partnerships whose purpose is to invest in qualified affordable housing projects and community revitalization projects. The Company’s investments in these entities generate a return primarily through the realization of federal income tax credits and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods.

The carrying value of the Company’s tax credit investments was $103.8 million and $90.8 million as of December 31, 2024 and 2023, respectively, reported within other assets on the consolidated balance sheets. For the years ended December 31, 2024, 2023, and 2022 the Company recorded $11.6 million, $9.3 million, and $3.6 million, respectively, of amortization related to these investments under the proportional amortization method within the provision for income taxes, and $0.4 million, $2.8 million, and $3.3 million of amortization within other non-interest expense on the consolidated statements of income.

For the years ended December 31, 2024, 2023, and 2022 the Company recorded $13.3 million, $9.8 million, and $8.5 million, respectively, in tax credits and other tax benefits within the provision for income taxes on its consolidated statements of income.

The Company's unfunded capital commitments to these investments were $25.2 million and $32.3 million as of December 31, 2024 and 2023, respectively, reported within accounts payable and accrued expenses on the consolidated balance sheets.