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Income taxes | 9 Months Ended
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Sep. 30, 2020
Income Tax Disclosure [Abstract] |
Income taxes | Income taxes: An allocation of federal and state income taxes between current and deferred portions is presented below:
|  | Three Months Ended September 30, |  |
|  | 2020 |  |  | 2019 |  |  |
Current |  | $ | 13,123 |  |  | $ | 9,167 |  |  |
Deferred |  | (15,163) |  |  | (1,449) |  |  |
Total |  | $ | (2,040) |  |  | $ | 7,718 |  |  |
|  | Nine Months Ended September 30,
|  | 2020 |  |  | 2019 |  |  |
Current |  | $ | 37,038 |  |  | $ | 25,907 |  |  |
Deferred |  | (31,543) |  |  | (5,900) |  |  |
Total |  | $ | 5,495 |  |  | $ | 20,007 |  |  |
The following table presents a reconciliation of federal income taxes at the statutory federal rate of 21% to the Company's effective tax rates for the three and nine months ended September 30, 2020 and 2019:
|  | Three Months Ended September 30, |  |  |
|  | 2020 |  |  | 2019 |  |  |
Federal taxes calculated at statutory rate |  | $ | (1,604) |  | 21.0 | % |  | $ | 6,653 |  | 21.0 | % |  |  |
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |
State taxes, net of federal benefit |  | 100 |  | (1.3) | % |  | 1,512 |  | 4.7 | % |  |  |
Benefit from equity based compensation |  | (7) |  | 0.1 | % |  | (275) |  | (0.9) | % |  |  |
Municipal interest income, net of interest disallowance |  | (422) |  | 5.5 | % |  | (211) |  | (0.7) | % |  |  |
Bank owned life insurance |  | (55) |  | 0.7 | % |  | (11) |  | 0.1 | % |  |  |
Merger costs |  | 126 |  | (1.6) | % |  | — |  | — | % |  |  |
Other |  | (177) |  | 2.3 | % |  | 50 |  | 0.2 | % |  |  |
Income tax (benefit) expense, as reported |  | $ | (2,040) |  | 26.7 | % |  | $ | 7,718 |  | 24.4 | % |  |  |
|  | Nine Months Ended September 30,
|  | 2020 |  |  | 2019 |  |  |
Federal taxes calculated at statutory rate |  | $ | 4,938 |  | 21.0 | % |  | $ | 17,272 |  | 21.0 | % |  |  |
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |
State taxes, net of federal benefit |  | 1,266 |  | 5.4 | % |  | 3,855 |  | 4.7 | % |  |  |
Expense (benefit) from equity based compensation |  | 154 |  | 0.7 | % |  | (668) |  | (0.8) | % |  |  |
Municipal interest income, net of interest disallowance |  | (996) |  | (4.2) | % |  | (650) |  | (0.8) | % |  |  |
Bank owned life insurance |  | (90) |  | (0.4) | % |  | (38) |  | 0.1 | % |  |  |
Merger costs |  | 289 |  | 1.2 | % |  | — |  | — | % |  |  |
Other |  | (65) |  | (0.3) | % |  | 236 |  | 0.3 | % |  |  |
Income tax expense, as reported |  | $ | 5,495 |  | 23.4 | % |  | $ | 20,007 |  | 24.3 | % |  |  |
As of September 30, 2020, the Company acquired $8,346 of net operating losses from Franklin. The net operating loss carryforwards can be used to offset taxable income in future periods and reduce income tax liabilities in those future periods. It is possible that net operating losses acquired will be subject to limitation under IRC Section 382. The net operating loss carryforward is set to expire as of December 31, 2030. The components of the net deferred tax assets (liabilities) at September 30, 2020 and December 31, 2019, are as follows:
|  | September 30, |  | December 31
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |
Allowance for credit losses |  | $ | 51,869 |  |  | $ | 8,113 |
Operating lease liabilities |  | 14,892 |  |  | 9,373 |
Federal net operating loss |  | 1,753 |  |  | — |
Amortization of core deposit intangibles |  | — |  |  | 1,386 |
Deferred compensation |  | 8,250 |  |  | 5,231 |
Unrealized loss on debt securities |  | — |  |  | 54 |
Unrealized loss on equity securities |  | 41 |  |  | 60 |
Unrealized loss on cash flow hedges |  | 347 |  |  | — |
Other |  | 6,684 |  |  | 2,388 |
Subtotal |  | 83,836 |  |  | 26,605 |
Deferred tax liabilities: |  |  |  |
FHLB stock dividends |  | $ | (561) |  |  | $ | (550) |
Operating leases - right of use assets |  | (13,863) |  |  | (8,641) |
Depreciation |  | (5,689) |  |  | (5,078) |
Amortization of core deposit intangibles |  | (668) |  |  | — |
Unrealized gain on cash flow hedges |  | — |  |  | (203) |
Unrealized gain on debt securities |  | (12,116) |  |  | (3,051) |
Mortgage servicing rights |  | (18,557) |  |  | (19,678) |
Goodwill |  | (10,691) |  |  | (8,859) |
Other |  | 200 |  |  | (1,035) |
Subtotal |  | (61,945) |  |  | (47,095) |
Net deferred tax assets (liabilities) |  | $ | 21,891 |  |  | $ | (20,490) |

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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