Federal and State Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Federal and State Income Taxes

Federal and State Income Taxes

The following table is a summary of consolidated income tax expense:

	Years ended
(Dollars in thousands)	December 31, 2024		December 31, 2023	December 31, 2022
Current
Federal	$	23,695	27,626	42,951
State	9,857		16,548	21,950
Total current income tax expense	33,552		44,174	64,901
Deferred 1
Federal	2,010		404	1,712
State	598		103	465
Total deferred income tax expense	2,608		507	2,177
Total income tax expense	$	36,160	44,681	67,078

______________________________

1 Includes tax benefit of operating loss carryforwards of $307,000, $313,000, and $315,000 for the years ended December 31, 2024, 2023, and 2022, respectively.

Combined federal and state income tax expense differs from that computed at the federal statutory corporate income tax rate as follows:

	Years ended
	December 31, 2024		December 31, 2023		December 31, 2022
Federal statutory rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal income tax benefit	3.6	%	4.9	%	4.8	%
Tax-exempt interest income	(4.5	%)	(4.3	%)	(4.4	%)
Tax credits	(5.5	%)	(5.6	%)	(2.8	%)
Other, net	1.4	%	0.7	%	(0.5	%)
Effective income tax rate	16.0	%	16.7	%	18.1	%

The tax effect of temporary differences which give rise to a significant portion of deferred tax assets and deferred tax liabilities are as follows:

(Dollars in thousands)	December 31, 2024		December 31, 2023
Deferred tax assets
Available-for-sale debt securities	$	102,448	124,533
Allowance for credit losses	56,430		53,074
Employee benefits	12,234		9,465
Operating lease liabilities	9,943		11,093
Deferred compensation	9,144		8,690
Acquisition fair market value adjustments	5,471		3,606
Interest rate swaps	2,356		4,502
Net operating loss carryforwards	567		919
Transferred debt securities	395		1,601
Other	3,951		4,112
Total gross deferred tax assets	202,939		221,595
Deferred tax liabilities
Depreciation of premises and equipment	(21,321)		(17,728)
Deferred loan costs	(10,043)		(10,103)
Operating lease ROU assets	(9,042)		(10,207)
Intangibles	(7,854)		(6,014)
Prepaid assets	(3,146)		(3,098)
Mortgage servicing rights	(2,980)		(3,137)
Debt securities fair value hedge	(2,356)		(4,502)
Other	(7,242)		(7,736)
Total gross deferred tax liabilities	(63,984)		(62,525)
Net deferred tax asset	$	138,955	159,070

The Company has federal net operating loss carryforwards of $1,544,000 expiring between 2024 and 2036. The Company has Colorado net operating loss carryforwards of $6,993,000 expiring between 2026 and 2037. The net operating loss carryforwards originated from acquisitions.

The Company and the Bank file consolidated income tax returns for the federal jurisdiction and several states that require consolidated income tax returns. Wyoming, Washington and Nevada do not impose a corporate income tax. All required income tax returns have been timely filed. The following schedule summarizes the years that remain subject to examination as of December 31, 2024:

	Years ended December 31,
Federal	2011, 2012, 2013, 2016, 2021, 2022 and 2023
Colorado	2009, 2010, 2011, 2012, 2020, 2021, 2022 and 2023
Arizona, California, Kentucky, Michigan, Minnesota, New Jersey, Texas, & Wisconsin	2020, 2021, 2022 and 2023
Alabama, Alaska, Arkansas, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Mississippi, Missouri, Montana, New Mexico, New York, North Carolina, North Dakota, New Hampshire, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Utah, & Virginia	2021, 2022 and 2023

The Company had no unrecognized income tax benefits as of December 31, 2024 and 2023. The Company recognizes interest related to unrecognized income tax benefits in interest expense and penalties are recognized in other expense. Interest expense and penalties recognized with respect to income tax liabilities for the years ended December 31, 2024, 2023, and 2022 was not significant. The Company had no accrued liabilities for the payment of interest or penalties at December 31, 2024 and 2023.

The Company has assessed the need for a valuation allowance and determined that a valuation allowance was not necessary at December 31, 2024 and 2023. The Company believes that it is more-likely-than-not that the Company’s deferred tax assets will be realizable by offsetting future taxable income from reversing taxable temporary differences and anticipated future taxable income (exclusive of reversing temporary differences). In its assessment, the Company considered its strong earnings history, no history of income tax credit carryforwards expiring unused, and no expected future net operating losses (for tax purposes).