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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The current and deferred amounts of income tax expense (benefit) were as follows:
| Years Ended December 31,
($ in thousands) | 2024 | 2023 | 2022
Current |  |  |
Federal | $ | 38,353 |  | $ | 29,319 |  | $ | 58,982 |
State | 9,436 |  | 5,283 |  | 22,092 |
Total current | 47,789 |  | 34,602 |  | 81,074 |
Deferred |  |  |
Federal | (30,701) |  | (8,371) |  | 12,531 |
State | (5,775) |  | (3,135) |  | (97) |
Total deferred | (36,475) |  | (11,506) |  | 12,434 |
Total income tax expense | $ | 11,314 |  | $ | 23,097 |  | $ | 93,508 |
Temporary differences between the amounts reported on the financial statements and the tax bases of assets and liabilities resulted in deferred taxes. DTAs and liabilities, included in other assets and accrued expenses and other liabilities on the consolidated balance sheets, respectively, were as follows:
($ in thousands) | December 31, 2024 | December 31, 2023
Deferred tax assets |  |
Allowance for loan losses | $ | 89,295 |  | $ | 83,378 |
Allowance for other losses | 9,840 |  | 8,933 |
Accrued liabilities | 26,109 |  | 14,089 |
Deferred compensation | 30,404 |  | 28,429 |
Federal tax credits carryforward | 18,160 |  | 8,849 |
Benefit of state tax losses and credit carryforwards | 4,187 |  | 9,068 |
Capital loss | 29,325 |  | — |
Nonaccrual interest | 1,269 |  | 901 |
Partnerships | 37,781 |  | 2,365 |
Lease liability | 8,881 |  | 6,785 |
Net unrealized losses on AFS securities | 16,228 |  | 48,632 |
Net unrealized losses on pension and postretirement benefits | 7,995 |  | 8,506 |
Other | 3,353 |  | 9,403 |
Total deferred tax assets | $ | 282,828 |  | $ | 229,338 |
Valuation allowance for deferred tax assets | (32,702) |  | — |
Total deferred tax assets after valuation allowance | $ | 250,126 |  | $ | 229,338 |
Deferred tax liabilities |  |
Prepaid expenses | $ | 83,251 |  | $ | 66,381 |
Goodwill | 22,376 |  | 22,161 |
Mortgage banking activities | 21,877 |  | 20,799 |
Deferred loan fee income | 7,836 |  | 8,097 |
State deferred taxes | — |  | 1,387 |
Lease financing | 13,213 |  | 15,297 |
Bank premises and equipment | 30,534 |  | 20,389 |
Purchase accounting | 6,246 |  | 7,898 |
Basis difference from equity securities and other investments | 3,104 |  | 7,593 |
Other | — |  | 1,207 |
Total deferred tax liabilities | $ | 188,437 |  | $ | 171,209 |
Net deferred tax assets | $ | 61,689 |  | $ | 58,129 |
At December 31, 2024, the valuation allowance for DTAs was related to capital loss carryovers. The changes in the valuation allowance were as follows:
($ in thousands) | 2024 | 2023
Valuation allowance for deferred tax assets, beginning of year | $ | — |  | $ | — |
(Increase) in current year | (32,702) |  | — |
Valuation allowance for deferred tax assets, end of year | $ | (32,702) |  | $ | — |
At December 31, 2024, the Corporation had state net operating loss carryforwards of $117 million (of which $2 million was acquired from various acquisitions) that will begin expiring in 2025. The effective income tax rate differs from the statutory federal tax rate. The major reasons for this difference were as follows:
| 2024 | 2023 | 2022
Federal income tax rate at statutory rate | 21.0 | % | 21.0 | % | 21.0 | %
Increases (decreases) resulting from: |  |  |
Tax-exempt interest and dividends | (10.6) | % | (7.4) | % | (3.4) | %
State income taxes (net of federal benefit) | 2.2 | % | 0.3 | % | 4.2 | %
Bank owned life insurance | (2.1) | % | (1.1) | % | (0.5) | %
Tax effect of tax credits and benefits, net of related expenses | (7.9) | % | (4.7) | % | (1.6) | %
Net tax (benefit) from stock-based compensation | (0.2) | % | — | % | (0.2) | %
Net tax (benefit) of portfolio reallocation and legal entity rationalization plan(a) | (25.7) | % | — | % | — | %
Changes in valuation allowance | 24.3 | % | — | % | — | %
FDIC premium | 4.8 | % | 3.0 | % | 0.7 | %
Other nondeductible expenses | 2.3 | % | — | % | — | %
Changes in unrecognized tax benefits | 0.4 | % | — | % | — | %
Prior year return to provision | (0.5) | % | — | % | — | %
Other | 0.4 | % | 0.1 | % | 0.1 | %
Effective income tax rate | 8.4 | % | 11.2 | % | 20.3 | %
(a) Related to the previously announced strategic reallocation of the investment portfolio and adoption of a legal entity rationalization plan in the second quarter of 2024. Savings banks acquired by the Corporation in 1997 and 2004 qualified under provisions of the Internal Revenue Code that permitted them to deduct from taxable income an allowance for bad debts that differed from the provision for such losses charged to income for financial reporting purposes. Accordingly, no provision for income taxes has been made for $100 million of retained income at December 31, 2024. If income taxes had been provided, the deferred tax liability would have been approximately $25 million. Management does not expect this amount to become taxable in the future; therefore, no provision for income taxes has been made. The Corporation and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Corporation’s federal income tax returns are open and subject to examination from the 2021 tax return year and forward. The years open to examination by state and local government authorities varies by jurisdiction. A reconciliation of the beginning and ending amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was as follows:
($ in thousands) | 2024 | 2023
Balance at beginning of year | $ | 2,227 |  | $ | 2,233 |
Changes for tax positions related to prior years | 83 |  | (441) |
Changes for tax positions related to current year | 462 |  | 435 |
Balance at end of year | $ | 2,772 |  | $ | 2,227 |
The Corporation recognizes interest and penalties accrued related to unrecognized tax benefits in the income tax expense line on the consolidated statements of income. Interest and penalty benefits, as well as accrued interest and penalties, were immaterial at both December 31, 2024 and 2023. At December 31, 2024 and 2023, the Corporation believes it has appropriately accounted for any unrecognized tax benefits. Management does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next twelve months.

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