Income Tax

12 Months Ended

Dec. 31, 2020

The components of income tax expense are as follows:


	Years Ended December 31,
	2020		2019		2018
	(in thousands)
Current expense:
Federal	$	44,094	$	40,471	$	33,400
State	7,822		6,359		5,446
Total current tax expense	$	51,916	$	46,830	$	38,846
Deferred tax expense (benefit):
Federal	$	(12,078)	$	60	$	(291)
State	(1,690)		270		399
Total deferred tax expense (benefit)	(13,768)		330		108
Total	$	38,148	$	47,160	$	38,954

Significant components of the Company’s deferred tax assets and liabilities are as follows:


	December 31,
	2020		2019
	(in thousands)
Deferred tax assets:
ACL	$	36,906	$	20,489
Lease liability	15,823		14,776
Deferred compensation	11,658		11,079
Stock options and restricted stock	2,599		2,016
OREO	16		—
Nonaccrual interest	102		112


Net operating losses and credit carryforwards	3,304		4,136

Other	278		245
Total deferred tax assets	70,686		52,853
Deferred tax liabilities:
Asset purchase tax basis difference	(6,590)		(7,888)
Right of use asset	(14,501)		(13,415)
FHLB stock dividends	(789)		(789)
Deferred loan fees	(5,695)		(4,097)
Unrealized gain on investment securities	(49,837)		(10,091)
Unrealized gain on equity securities	(3,147)		—
Purchase accounting	(7,526)		(8,946)
Depreciation	(2,427)		(3,152)
Cash flow hedge	(7,591)		(3,452)
Other	(112)		(100)
Total deferred tax liabilities	(98,215)		(51,930)
Net deferred tax asset (liability)	$	(27,529)	$	923

A reconciliation of the Company’s effective income tax rate with the federal statutory tax rate is as follows:


	Years Ended December 31,
	2020				2019				2018
	Amount		Percent		Amount		Percent		Amount		Percent
	(dollars in thousands)
Income tax based on statutory rate	$	40,402	21	%	$	50,738	21	%	$	44,485	21	%
Increase (decrease) resulting from:

Tax exempt instruments	(5,987)		(3)	%	(6,771)		(3)	%	(6,423)		(3)	%
Bank owned life insurance	(1,348)		(1)	%	(1,963)		(1)	%	(1,261)		(1)	%


State income tax, net of federal benefit	4,844		3	%	5,134		2	%	4,931		2	%
Other, net	237		—	%	22		1	%	(2,778)		(1)	%
Income tax provision	$	38,148	20	%	$	47,160	20	%	$	38,954	18	%

As of December 31, 2020 and 2019, we had no unrecognized tax benefits. Our policy is to recognize interest and penalties on unrecognized tax benefits in “Provision for income taxes” in the Consolidated Statements of Income. There were no amounts related to interest and penalties recognized for the years ended December 31, 2020 and 2019. As a result of past acquisitions, the Company has net operating loss carryforwards in the federal, Idaho and Oregon jurisdictions of $12.7 million, $11.5 million and $85 thousand, respectively, which begin to expire in 2024.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company has evaluated the impact of the CARES Act and determined that none of the changes would result in a material income tax benefit to the Company.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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