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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Note 16 - Income Taxes The components of income tax expense (benefit) included on the consolidated statements of income for the years ended December 31, 2023, 2022, and 2021 are presented below:
(in thousands) | 2023 |  | 2022 |  | 2021
Current |  |  |  |  |
Federal | $ | 107,445 |  |  | $ | 167,255 |  |  | $ | 153,911 |
State | 29,739 |  |  | 28,152 |  |  | 29,982 |
Total current income tax expense | 137,184 |  |  | 195,407 |  |  | 183,893 |
Deferred |  |  |  |  |
Federal | 13,124 |  |  | 11,570 |  |  | 28,873 |
State | 3,713 |  |  | (702) |  |  | 16,127 |
Total deferred income tax expense (benefit) | 16,837 |  |  | 10,868 |  |  | 45,000 |
Total income tax expense | $ | 154,021 |  |  | $ | 206,275 |  |  | $ | 228,893 |
Income tax expense as shown on the consolidated statements of income differed from the federal statutory rate for the years ended December 31, 2023, 2022, and 2021. A reconciliation of the differences is presented below:
| Years Ended December 31,
(dollars in thousands) | 2023 |  | 2022 |  | 2021
Income tax expense at statutory federal income tax rate | $ | 146,194 |  |  | $ | 202,477 |  |  | $ | 207,765 |
Increase (decrease) resulting from: |  |  |  |  |
State income tax expense, net of federal income tax benefit | 28,415 |  |  | 21,981 |  |  | 38,452 |
Tax credits and related benefits, net of amortization (as applicable) | (21,037) |  |  | (9,629) |  |  | (8,717) |
Income not subject to tax | (10,477) |  |  | (9,346) |  |  | (10,455) |
FDIC premiums | 8,589 |  |  | 5,517 |  |  | 4,111 |
Executive compensation | 3,575 |  |  | 2,152 |  |  | 1,096 |
Excess tax benefit from share-based compensation | (1,416) |  |  | (3,153) |  |  | (3,084) |
Other, net | 178 |  |  | (3,724) |  |  | (275) |
Total income tax expense | $ | 154,021 |  |  | $ | 206,275 |  |  | $ | 228,893 |
Effective tax rate | 22.1 | % |  | 21.4 | % |  | 23.1 | %
The components of the Company's deferred tax assets and liabilities at December 31, 2023 and 2022 are presented below:
(in thousands) | 2023 |  | 2022 |
Deferred tax assets |  |  |  |
Net unrealized losses on investment securities available for sale and cash flow hedges | $ | 348,712 |  |  | $ | 455,744 |  |
Allowance for credit losses | 130,205 |  |  | 121,941 |  |
Lease liability | 120,534 |  |  | 107,818 |  |
Employee benefits and deferred compensation | 40,601 |  |  | 42,746 |  |
Net operating loss carryforwards | 32,126 |  |  | 23,590 |  |
Tax credit carryforwards | 15,532 |  |  | 14,553 |  |
FDIC Special Assessment | 12,058 |  |  | — |  |
Unrealized losses on fair value hedges | 7,480 |  |  | 11,101 |  |
Non-performing loan interest | 5,877 |  |  | 2,695 |  |
Miscellaneous accrued expenses | 5,659 |  |  | 5,125 |  |
Fair value of investment securities and loans | 1,422 |  |  | 2,019 |  |
Other | 7,423 |  |  | 6,585 |  |
Total gross deferred tax assets | 727,629 |  |  | 793,917 |  |
Less valuation allowance | (26,184) |  |  | (19,114) |  |
Total deferred tax assets | 701,445 |  |  | 774,803 |  |
Deferred tax liabilities |  |  |  |
Right-of-use asset | (114,529) |  |  | (102,945) |  |
Purchase accounting intangibles | (23,276) |  |  | (15,224) |  |
Excess tax over financial statement depreciation | (20,457) |  |  | (23,762) |  |
Deferred loan costs | (16,810) |  |  | (15,901) |  |
Unrealized gain on hedged liabilities | (7,480) |  |  | (11,101) |  |
Prepaid expense | (6,917) |  |  | (4,947) |  |
Other properties held for sale | (1,434) |  |  | (2,828) |  |
Other | (3,640) |  |  | (2,778) |  |
Total gross deferred tax liabilities | (194,543) |  |  | (179,486) |  |
Net deferred tax asset | $ | 506,902 |  |  | $ | 595,317 |  |
Synovus believes the realization of net deferred tax assets (after valuation allowance) at December 31, 2023 is more likely than not based on its history of cumulative profitability as well as expectations of future taxable income, including reversals of taxable temporary differences, in the jurisdictions in which it operates. Synovus expects that a portion of its $32.1 million of federal and state NOLs as well as a portion of the $15.5 million of federal and state tax credit carryforwards, which have carryforward periods ending in tax years 2024 through 2043, will not be realized before their carryforward period lapses and the Company has accordingly established a valuation allowance in the amount of $26.2 million at December 31, 2023. Federal and state NOLs and tax credit carryforwards as of December 31, 2023 are summarized in the following table on a tax effected basis.
Tax Carryforwards | As of December 31, 2023
(in thousands) | Expiration Dates |  | Deferred Tax Asset, Before Valuation Allowance |  | Valuation Allowance |  | Net Deferred Tax Asset Balance
Net operating losses - federal(1) | 2027-2037 |  | $ | 25,240 |  |  | $ | (19,703) |  |  | $ | 5,537 |
Net operating losses - states(1) | 2027-2043 |  | 6,886 |  |  | (5,316) |  |  | 1,570 |
Tax credits - federal | 2034-2041 |  | 460 |  |  | (460) |  |  | — |
Tax credits - states(1) | 2024-2038 |  | 15,072 |  |  | (705) |  |  | 14,367 |
(1) Included in this balance are tax attributes that can be carried forward indefinitely and have no expiration date. Synovus is subject to income taxation in the U. S. and various state and local taxing jurisdictions. Generally, Synovus is no longer subject to income tax examinations by the IRS for years before 2020 and by state and local income tax authorities for years before 2015. Although Synovus is unable to determine the ultimate outcome of current and future examinations, Synovus believes that the resolution of these examinations will not have a material effect on the consolidated financial statements. A reconciliation of the beginning and ending amount of unrecognized income tax benefits is as follows (unrecognized state income tax benefits are not adjusted for the federal income tax impact).
| Years Ended December 31,
(in thousands) | 2023 |  | 2022 |  | 2021
Balance at January 1, | $ | 22,400 |  |  | $ | 25,104 |  |  | $ | 20,250 |
Additions based on income tax positions related to current year | 719 |  |  | 649 |  |  | 3,754 |
Additions for income tax positions of prior years(1) | 186 |  |  | 247 |  |  | 1,379 |
Reductions for income tax positions of prior years | (122) |  |  | (1,215) |  |  | (200) |
Statute of limitation expirations | (871) |  |  | (2,002) |  |  | (79) |
Settlements | — |  |  | (383) |  |  | — |
Balance at December 31, | $ | 22,312 |  |  | $ | 22,400 |  |  | $ | 25,104 |
(1) Includes deferred tax benefits that could reduce future tax liabilities. Accrued interest and penalties related to unrecognized income tax benefits are recognized as a component of income tax expense, and totaled $4.8 million, $3.2 million, and $3.3 million as of December 31, 2023, 2022, and 2021, respectively. Unrecognized income tax benefits as of December 31, 2023, 2022, and 2021 that, if recognized, would affect the effective income tax rate totaled $22.5 million, $20.9 million and $23.5 million (net of the federal benefit on state income tax issues), respectively. It is reasonably possible that significant changes in the balance of unrecognized tax benefits may occur within the next 12 months. At this time, Synovus expects that $1.7 million of uncertain income tax positions will be either settled or resolved during the next twelve months.

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