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Income Taxes
 12 Months Ended
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.