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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes and Investment Tax Credits Income Taxes and Investment Tax Credits
The following table presents the components of income tax provision for the years ended December 31, 2024, 2023, and 2022:
(in thousands)202420232022
Current Expense:
Federal$114,932 $72,224 $70,982 
State39,304 37,365 28,461 
Total current tax expense$154,236 $109,589 $99,443 
Deferred tax expense:
Federal$21,284 $6,794 $11,636 
State9,555 6,101 2,747 
Total deferred tax expense30,839 12,895 14,383 
Total$185,075 $122,484 $113,826 

The following table presents a reconciliation of income taxes computed at the federal statutory rate to the actual effective rate for the years ended December 31, 2024, 2023, and 2022:
(in thousands)202420232022
Statutory federal income tax rate21.0 %21.0 %21.0 %
State tax, net of federal benefit5.8 %6.2 %5.8 %
Non-deductible FDIC premiums1.0 %1.7 %0.4 %
Net tax-exempt interest income(1.2)%(2.2)%(1.5)%
Other(0.9)%(0.7)%(0.4)%
Effective income tax rate25.7 %26.0 %25.3 %

The following table reflects the effects of temporary differences that give rise to the components of the net deferred tax asset as of December 31, 2024 and 2023:
(in thousands)20242023
Deferred tax assets:
Net unrealized losses on investment securities$317,213 $303,465 
Acquired loans116,099 146,315 
Allowance for credit losses111,357 115,777 
Accrued severance and deferred compensation36,243 39,904 
Other79,947 88,137 
Total gross deferred tax assets660,859 693,598 
Deferred tax liabilities:
Other intangible assets125,297 155,642 
Direct financing leases36,416 42,825 
Deferred loan fees and costs33,630 34,402 
Operating lease right-of-use asset28,922 30,117 
Residential mortgage servicing rights28,736 31,259 
Premises and equipment19,153 20,579 
Other29,280 31,571 
Total gross deferred tax liabilities301,434 346,395 
Net deferred tax assets$359,425 $347,203 
As of December 31, 2024 and 2023, the Company's gross deferred tax assets included $1.9 million and $2.4 million, respectively, of NOL carryforwards expiring in tax years 2030-2032. As of December 31, 2024, the Company has determined there is sufficient positive evidence to conclude that it is more likely than not that the benefit from certain of its federal and state NOL and tax carryforwards will be realized. The Company has determined that no valuation allowance for the deferred tax assets is required as management believes it is more likely than not that future taxable income will be sufficient to realize the remaining gross deferred tax assets of $660.9 million and $693.6 million at December 31, 2024 and 2023, respectively.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, as well as the majority of states. The Company is no longer subject to U.S. income tax examinations for years prior to 2021 and is no longer subject to state income tax examinations for years prior to 2020.

The Company periodically reviews its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This review takes into consideration the status of current taxing authorities' examinations of the Company's tax returns, recent positions taken by the taxing authorities on similar transactions, if any, and the overall tax environment.

The Company had no gross unrecognized tax benefits as of December 31, 2024 and 2023. Interest on unrecognized tax benefits is reported by the Company as a component of tax expense. There were no amounts related to interest and penalties recognized for the years ended December 31, 2024 and 2023.

Investment Tax Credits

The Company is involved in various entities that are considered to be variable interest entities, which are primarily related to investments promoting affordable housing and trust preferred securities. The Company is not required to consolidate variable interest entities in which it has concluded it does not have a controlling financial interest, and thus not the primary beneficiary. In such cases, the Company does not have both the power to direct the entities' most significant activities and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the variable interest entity. The maximum exposure to loss in the LIHTC is the amount of equity invested and credit extended by the Company. Refer to Note 14 – Junior and Other Subordinated Debentures for further discussion of junior subordinated debentures.

Affordable Housing Tax Credit Investments

The Company makes certain equity investments in various limited partnerships that sponsor affordable housing projects; the purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants.

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. These tax credits and deductions are recognized as a reduction to income tax expense.

The Company records the investments in affordable housing partnerships as a component of other assets on the Consolidated Balance Sheets and uses the proportional amortization method to account for the investments. Amortization related to these investments is recorded as a component of the provision for income taxes on the Consolidated Statements of Income. The Company's unfunded capital commitments to these investments is included in other liabilities on the Consolidated Balance Sheets.

In 2023, the Company recorded $47.2 million of affordable housing investments and $40.9 million of related unfunded capital commitments associated with the Merger.
The following table presents the Company's tax credit investments, which consisted entirely of affordable housing tax credit investments and related unfunded capital commitments as of December 31, 2024 and 2023:
(in thousands) December 31, 2024December 31, 2023
Other Assets:
Affordable housing tax credit investments$220,954 $210,873 
Other Liabilities:
Unfunded affordable housing tax credit commitments$95,280 $114,082 

The following table presents other information relating to the Company's affordable housing tax credit investments for the years ended December 31, 2024, 2023, and 2022:
(in thousands) 202420232022
Proportional amortization$19,778 $16,777 $12,026 
Tax credit investment credits and tax benefits$25,067 $20,932 $14,553 

There was no impairment recognized for the years ended December 31, 2024, 2023, and 2022.