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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Taxes [Abstract] |
Income Taxes | Note L—Income Taxes The Company operates in the United States and is subject to corporate net income taxes for federal and state purposes. The components of income tax expense included in the statements of continuing operations are as follows:
|  | For the years ended
|  | December 31,
|  | 2024 |  | 2023 |  | 2022
|  |  | (Dollars in thousands)
Current tax provision |  |  |  |  |  |  |  |  |
Federal |  | $ | 54,569 |  | $ | 55,314 |  | $ | 29,994
State |  |  | 17,730 |  |  | 14,845 |  |  | 11,837
|  |  | 72,299 |  |  | 70,159 |  |  | 41,831
Deferred tax provision (benefit) |  |  |  |  |  |  |  |  |
Federal |  |  | 2,272 |  |  | (4,925) |  |  | 5,206
State |  |  | 45 |  |  | (756) |  |  | 664
|  |  | 2,317 |  |  | (5,681) |  |  | 5,870
|  | $ | 74,616 |  | $ | 64,478 |  | $ | 47,701
The differences between applicable income tax expense (benefit) from continuing operations and the amounts computed by applying the statutory federal income tax rate of 21% for 2024, 2023 and 2022, are as follows:
|  | For the years ended
|  | December 31,
|  | 2024 |  | 2023 |  | 2022
|  |  | (Dollars in thousands)
Computed tax expense at statutory rate |  | $ | 61,353 |  | $ | 53,923 |  | $ | 37,410
State taxes |  |  | 12,011 |  |  | 10,885 |  |  | 9,499
Tax-exempt interest income |  |  | (766) |  |  | (459) |  |  | (480)
Meals and entertainment |  |  | 57 |  |  | 82 |  |  | 6
Civil money penalty |  |  | — |  |  | — |  |  | 368
Other net nondeductible (deductible) items |  |  | 1,281 |  |  | (49) |  |  | (22)
Other |  |  | 680 |  |  | 96 |  |  | 920
|  | $ | 74,616 |  | $ | 64,478 |  | $ | 47,701
Deferred income taxes are provided for the temporary difference between the financial reporting basis and the tax basis of the Company’s assets and liabilities. Cumulative temporary differences recognized in the financial statement of position are as follows:
|  | For the years ended
|  | December 31,
|  | 2024 |  | 2023
|  |  | (Dollars in thousands)
Deferred tax assets: |  |  |  |  |  |
Allowance for credit losses |  | $ | 8,526 |  | $ | 9,874
Non-accrual interest |  |  | 1,993 |  |  | 3,408
Deferred compensation |  |  | 747 |  |  | 734
Nonqualified stock options |  |  | 1,623 |  |  | 1,523
Capital loss limitations |  |  | 5,701 |  |  | 6,280
Tax deductible goodwill |  |  | 682 |  |  | 713
Operating lease liabilities |  |  | 5,515 |  |  | 4,618
Unrealized losses on investment securities available-for-sale |  |  | 5,909 |  |  | 6,509
Fair value adjustment to investments |  |  | 44 |  |  | 802
Deferred income |  |  | 225 |  |  | —
Other |  |  | 1,000 |  |  | 178
Total gross deferred tax assets |  |  | 31,965 |  |  | 34,639
Federal and state valuation allowance |  |  | (5,701) |  |  | (6,280)
Deferred tax liabilities: |  |  |  |  |  |
Depreciation |  |  | 2,140 |  |  | 2,771
Right of use asset |  |  | 5,250 |  |  | 4,369
Total deferred tax liabilities |  |  | 7,390 |  |  | 7,140
Net deferred tax asset |  | $ | 18,874 |  | $ | 21,219
Management assesses all available positive and negative evidence to determine whether it is more likely than not that the Company will be able to recognize the existing deferred tax assets. If that threshold is not met, a valuation allowance is established against the deferred tax asset. The federal and state valuation allowance at December 31, 2024 and 2023, respectively, was $5.7 million and $6.3 million and resulted from Walnut Street assets, primarily because related capital losses will likely be non-deductible. Walnut Street reflected the Bank’s prior investment in an entity through which a portion of its discontinued loan portfolio was sold. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | For the years ended
|  | December 31,
|  | 2024 |  | 2023 |  | 2022
|  | (in thousands)
Beginning balance at January 1 |  | $ | — |  | $ | — |  | $ | 338
Decreases in tax provisions for prior years |  |  | — |  |  | — |  |  | (338)
Gross unrecognized tax benefits at December 31 |  | $ | — |  | $ | — |  | $ | —
Management does not believe these amounts will significantly increase or decrease within 12 months of December 31, 2024. The total amount of unrecognized tax benefits, if recognized, will impact the effective tax rate. Tax years after 2021 remain subject to examination by the federal authorities, and 2020 and after remain subject to examination by most state tax authorities. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax expense for all periods presented. To date, no amounts of interest or penalties relating to unrecognized tax benefits have been recorded.

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