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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income tax expense (benefit) for the years ended December 31, 2022, 2021 and 2020 is summarized as follows:
|  | Years Ended December 31,
(In thousands) |  | 2022 |  | 2021 |  | 2020
Current income taxes: |  |  |  |  |  |
Federal |  | $ | 116,976 |  |  | $ | 118,723 |  |  | $ | 75,154 |
State |  | 48,633 |  |  | 48,847 |  |  | 19,194 |
Foreign |  | 3,207 |  |  | 6,936 |  |  | 6,501 |
Total current income taxes |  | $ | 168,816 |  |  | $ | 174,506 |  |  | $ | 100,849 |
Deferred income taxes: |  |  |  |  |  |
Federal |  | $ | 18,560 |  |  | $ | 794 |  |  | $ | 284 |
State |  | (1,183) |  |  | (3,597) |  |  | (2,834) |
Foreign |  | 4,680 |  |  | (58) |  |  | (1,508) |
Total deferred income taxes |  | $ | 22,057 |  |  | $ | (2,861) |  |  | $ | (4,058) |
Total income tax expense |  | $ | 190,873 |  |  | $ | 171,645 |  |  | $ | 96,791 |
The Company’s income before income taxes in 2022, 2021 and 2020 includes $27.7 million, $23.1 million and $15.4 million, respectively, of foreign income attributable to its Canadian subsidiary. The tax effects of certain transactions are recorded directly to shareholders’ equity rather than income tax expense. The tax effect of fair value adjustments on securities available-for-sale and derivative instruments in cash flow hedges are recorded directly to shareholders’ equity as part of other comprehensive income (loss) and are reflected on the Consolidated Statements of Comprehensive Income. The tax effect of unrealized gains and losses on certain foreign currency transactions is also recorded in shareholders’ equity as part of other comprehensive income (loss). A reconciliation of the differences between taxes computed using the statutory Federal income tax rate and actual income tax expense is as follows:
|  | Years Ended December 31,
(Dollars in thousands) |  | 2022 |  | 2021 |  | 2020
Income tax expense using the statutory Federal income tax rate of 21% on income before taxes |  | $ | 147,117 |  |  | $ | 133,937 |  |  | $ | 81,854 |
Increase (decrease) in tax resulting from: |  |  |  |  |  |
Tax-exempt interest, net of interest expense disallowance |  | (3,936) |  |  | (2,605) |  |  | (2,970) |
State taxes, net of federal tax benefit |  | 37,328 |  |  | 35,747 |  |  | 20,098 |
Income earned on bank owned life insurance |  | (102) |  |  | (1,169) |  |  | (956) |
(Excess) deficient tax benefits on share based compensation |  | (2,278) |  |  | (1,906) |  |  | 466 |
Meals, entertainment and related expenses |  | 1,506 |  |  | 1,208 |  |  | 992 |
FDIC insurance expense |  | 6,014 |  |  | 5,676 |  |  | 4,605 |
Non-deductible compensation expense |  | 2,361 |  |  | 1,799 |  |  | 398 |
Foreign subsidiary, net |  | 2,376 |  |  | 2,011 |  |  | 2,080 |
Tax benefits related to tax credits, net |  | (338) |  |  | (1,145) |  |  | (1,902) |
Release of state uncertain tax positions |  | — |  |  | — |  |  | (7,173) |
Other, net |  | 825 |  |  | (1,908) |  |  | (701) |
Income tax expense |  | $ | 190,873 |  |  | $ | 171,645 |  |  | $ | 96,791 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2022 and 2021 are as follows:
(In thousands) |  | 2022 |  | 2021
Deferred tax assets: |  |  |  |
Net unrealized losses on securities included in other comprehensive income |  | $ | 140,002 |  |  | $ | — |
Allowance for credit losses |  | 95,389 |  |  | $ | 79,879 |
Right-of-use liability |  | 44,277 |  |  | 47,312 |
Deferred compensation |  | 26,411 |  |  | 26,301 |
Stock-based compensation |  | 11,196 |  |  | 5,762 |
Federal net operating loss carryforward |  | 1,003 |  |  | 1,870 |
Nonaccrued interest |  | 875 |  |  | 1,098 |
Loans |  | 819 |  |  | 1,344 |
Other |  | 4,497 |  |  | 4,652 |
Total gross deferred tax assets |  | 324,469 |  |  | 168,218 |
Deferred tax liabilities: |  |  |  |
Equipment leasing |  | 138,198 |  |  | 122,711 |
Premises and equipment |  | 51,058 |  |  | 56,377 |
Right-of-use asset |  | 36,484 |  |  | 38,973 |
Capitalized servicing rights |  | 59,928 |  |  | 37,528 |
Goodwill and intangible assets |  | 12,636 |  |  | 10,577 |
Deferred loan fees and costs |  | 5,061 |  |  | 967 |
Net unrealized gains on derivatives included in other comprehensive income |  | 2,364 |  |  | 9,836 |
Net unrealized gains on securities included in other comprehensive income |  | — |  |  | 3,169 |
Other |  | 1,387 |  |  | 3,835 |
Total gross deferred tax liabilities |  | 307,116 |  |  | 283,973 |
Net deferred tax assets (liabilities) |  | $ | 17,353 |  |  | $ | (115,755) |
Management has determined that a valuation allowance is not required for the deferred tax assets at December 31, 2022 because it is more likely than not that these assets could be realized through future reversals of existing taxable temporary differences, tax planning strategies and future taxable income. This conclusion is based on the Company’s historical earnings, its current level of earnings and prospects for continued growth and profitability. The Company has Federal net operating loss (“NOL”) carryforwards of $4.8 million that begin to expire in 2029 through 2037 and are subject to IRC Section 382 annual limitation. The NOL carryforwards were a result of acquisitions. The Company accounts for uncertainties in income taxes in accordance with ASC 740, Income Taxes. The following table provides a reconciliation of the beginning and ending amounts of gross unrecognized tax benefits:
|  | Years Ended December 31,
(In thousands) |  | 2022 |  | 2021 |  | 2020
Unrecognized tax benefits at beginning of year |  | $ | — |  |  | $ | — |  |  | $ | 10,840 |
Gross increases for tax positions taken in current period |  | — |  |  | — |  |  | — |
Gross decreases for positions taken in prior periods |  | — |  |  | — |  |  | (10,571) |
Settlements with taxing authorities |  | — |  |  | — |  |  | (269) |
Unrecognized tax benefits at end of year |  | $ | — |  |  | $ | — |  |  | $ | — |
At December 31, 2022 and December 31, 2021, the Company had no unrecognized tax benefits related to uncertain tax positions that, if recognized, would impact the effective tax rate. Interest and penalties on unrecognized tax positions are recorded in income tax expense. There was no interest income accrued on unrecognized tax benefits at December 31, 2022 or December 31, 2021. Interest and penalties are included in the liability for uncertain tax positions, but are not included in the unrecognized tax benefits rollforward presented above. As of December 31, 2022, the Company does not expect the total amount of unrecognized tax benefits to significantly increase in the next 12 months. The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in numerous state jurisdictions and in Canada. In the ordinary course of business, we are routinely subject to audit by the taxing authorities of these jurisdictions. Currently, the Company’s U.S. federal income tax returns are open and subject to audit for the 2019 tax return year forward, and in general, the Company’s state income tax returns are open and subject to audit from the 2019 tax return year forward, subject to individual state statutes of limitation. The Company has extended the statute of limitations on certain state income tax returns for tax years 2015 through 2018 due to an ongoing audit. The Company’s Canadian subsidiary’s Canadian income tax returns are also subject to audit for the 2019 tax return year forward.

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