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Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes

Income Taxes

Note 11—Income Taxes

The provision for income taxes consists of the following:

​

​	​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
(Dollars in thousands)	​	2024		​	2023		​	2022
Current:		​			​			​		​
Federal	​	$	143,507	​	$	111,433	​	$	5,940	​
State	​		31,979	​		23,157	​		7,044	​
Total current tax expense	​		175,486	​		134,590	​		12,984	​
Deferred:	​	​	​	​	​	​	​	​	​	​
Federal	​		(10,150)	​		738	​		103,875	​
State	​		129	​		1,216	​		20,454	​
Total deferred tax (income) expense	​		(10,021)	​		1,954	​		124,329	​
Provision for income taxes	​	$	165,465	​	$	136,544	​	$	137,313	​

​

The provision for income taxes differs from that computed by applying the federal statutory income tax rate of 21% in 2024, 2023 and 2022 to income before provision for income taxes, as indicated in the following analysis:

​

​	​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
(Dollars in thousands)	​	2024		​	2023		​	2022
Income taxes at federal statutory rate		$	147,052		$	132,479		$	133,006	​
Increase (reduction) of taxes resulting from:	​	​	​	​	​	​	​	​	​	​
State income taxes, net of federal tax benefit	​		26,210	​		19,123	​		21,491	​
Non-deductible merger expenses	​	​	544	​	​	—	​	​	415	​
Increase in cash surrender value of BOLI policies	​	​	(6,402)	​	​	(5,605)	​	​	(5,105)	​
Tax-exempt interest	​		(8,090)	​		(7,016)	​		(7,828)	​
Proportional Amortization	​	​	14,419	​	​	—	​	​	—	​
Income tax credits	​		(14,038)	​		(14,253)	​		(13,667)	​
Non-deductible FDIC premiums	​	​	5,189	​	​	5,330	​	​	3,287	​
Non-deductible executive compensation	​	​	3,455	​	​	4,745	​	​	4,319	​
Other, net	​		(2,874)	​		1,741	​		1,395	​
​	​	$	165,465	​	$	136,544	​	$	137,313	​

​

The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

​

The components of the net deferred tax asset are as follows:

​

​	​	​	​	​	​	​	​
​	​	December 31,
(Dollars in thousands)	​	2024		​	2023
Allowance for credit losses		$	123,147		$	123,496	​
Share-based compensation	​		9,719	​		10,425	​
Pension plan and post-retirement benefits	​		377	​		371	​
Deferred compensation	​		13,926	​		14,039	​
Purchase accounting adjustments	​		—	​		1,439	​
Capitalized research and development costs	​	​	7,715	​	​	4,524	​
Accrued expenses	​	​	7,974	​	​	14,470	​
FDIC special assessment	​	​	4,802	​	​	6,168	​
Net operating loss and tax credit carryforwards	​		16,573	​		20,263	​
Nonaccrual interest	​	​	3,383	​	​	1,773	​
Lease liability	​	​	25,028	​	​	26,076	​
Unrealized losses on investment securities available for sale	​	​	146,995	​	​	142,543	​
Other	​		1,197	​		2,201	​
Total deferred tax assets	​		360,836	​		367,788	​
Depreciation	​		12,613	​		10,439	​
Intangible assets	​		13,091	​		17,764	​
Net deferred loan costs	​		19,913	​		16,468	​
Right of use assets	​	​	23,093	​	​	24,161	​
Prepaid expense	​		193	​		809	​
Mark to market liabilities	​	​	68,027	​	​	92,505	​
Tax deductible goodwill	​		15,613	​		12,398	​
Mortgage servicing rights	​	​	21,777	​	​	20,863	​
Other real estate owned	​	​	130	​	​	192	​
Purchase accounting adjustments	​	​	143	​	​	—	​
Other	​		3,294	​		3,950	​
Total deferred tax liabilities	​		177,887	​		199,549	​
Net deferred tax assets before valuation allowance	​		182,949	​		168,239	​
Less, valuation allowance	​		(3,065)	​		(3,885)	​
Net deferred tax assets	​	$	179,884	​	$	164,354	​

​

​

The Company had federal NOL and realized built-in loss carryforwards of $48.9 million and $61.0 million for the years ended December 31, 2024 and 2023, respectively, which expire in varying amounts between 2026 to 2036. All of the Company's loss carryforwards are subject to Section 382 of the Internal Revenue Code, which places an annual limitation on the amount of federal net operating loss carryforwards which the Company may utilize after a change in control, and also limits the Company's ability to utilize certain tax deductions (realized built-in losses or RBIL) due to the existence of a Net Unrealized Built-in Loss (NUBIL) at the time of the change in control. In total, the allowable deduction for all loss carryforwards on an annual basis is $11.8 million as of December 31, 2024. The Company is allowed to carry forward any such limited RBIL under terms similar to those related to NOLs. The Company also has an immaterial amount of credit carryforwards, which it expects to fully utilize within the carryforward period.

​

The Company also has acquired state net operating losses in Georgia and Florida. These are also subject to annual limitations under Section 382, similar to the federal NOLs. The company expects all state Section 382 limited carryforwards to be realized within the applicable carryforward period.

​

The Company has state net operating loss carryforwards of $110.9 million and $115.4 million for the years ended December 31, 2024 and 2023, respectively, most of which expire in varying amounts through 2040. There is a valuation allowance of $3.1 million on $96.2 million of state operating loss carryforwards at the parent company for which realizability is uncertain.

​

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible.  Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in carryback years, and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deferred tax assets, net of the valuation allowance at December 31, 2024.

​

A reconciliation of the beginning balance and ending amount of unrecognized tax benefits is as follows:

​

​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
(Dollars in thousands)	​	2024		​	2023
Balance at beginning of year		$	13,045		$	—	​
Increases related to prior year tax positions	​		1,260	​		12,352	​
Decreases related to prior year tax positions	​	​	(13,045)	​	​	—	​
Increases related to current year tax positions	​	​	—	​	​	693	​
Balance at end of year	​	$	1,260	​	$	13,045	​

​

Accrued interest and penalties on unrecognized tax benefits totaled $309,000 and $1.7 million as of December 31, 2024, and 2023, respectively. Interest and penalties related to unrecognized tax benefits are recorded in interest expense and penalties. Unrecognized tax benefits as of December 31, 2024, and December 31, 2023, that, if recognized, would impact the effective tax rate totaled $1.3 million and $0 for each period.

​

The Company's unrecognized tax benefit relates to income tax exposure on an ongoing state tax examination that the Company expects to conclude during the period ended December 31, 2025. Upon conclusion of the examination the Company expects the above amounts to reverse in their entirety.

​

Generally, the Company's federal and state income tax returns are no longer subject to examination by taxing authorities for years prior to 2021.

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The entire disclosure for income tax.

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