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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES:
Income tax expense consisted of the following: 
 Years Ended December 31,
(in thousands)202220212020
Current expense
Federal$2,829 $20,074 $27,166 
State and local1,633 3,191 4,804 
Deferred (benefit) expense
Federal7,304 4,325 (11,076)
State and local1,545 511 (1,596)
Tax credit investment amortization4,809 3,166 2,606 
Total$18,120 $31,267 $21,904 


Income tax expense differed from amounts computed at the federal income tax statutory rate as follows: 
 Years Ended December 31,
202220212020
(in thousands, except rate)RateAmountRateAmountRateAmount
Income before taxes$84,660 $146,689 $101,894 
Federal tax statutory rate21.00 %17,779 21.00 %30,805 21.00 %21,398 
State tax - net of federal tax benefit3.44 %2,912 2.20 %3,220 2.54 %2,587 
Tax-exempt investments(4.62)%(3,908)(1.40)%(2,049)(1.81)%(1,849)
Stock-based compensation expense0.14 %121 (0.77)%(1,132)(0.16)%(159)
Other1.44 %1,216 0.29 %423 (0.07)%(73)
Total21.40 %$18,120 21.32 %$31,267 21.50 %$21,904 
The following is a summary of the Company's deferred tax assets and liabilities: 
At December 31,
(in thousands)20222021
Deferred tax assets
Provision for credit losses$10,501 $11,477 
Unrealized loss on investments AFS31,431 — 
Federal and state net operating loss carryforwards628 628 
Accrued liabilities2,536 2,268 
Other investments572 471 
Lease liabilities10,877 12,028 
Nonaccrual interest513 213 
Stock based compensation737 969 
Loan valuation311 289 
Other694 1,744 
   Total58,800 30,087 
Deferred tax liabilities
Mortgage servicing rights(25,725)(22,221)
Deferred loan fees and costs(9,565)(7,336)
Lease right-of-use assets(8,415)(8,572)
Unrealized gain on investments AFS — (5,630)
Premises and equipment(2,486)(1,843)
Intangibles(694)(742)
Other(14)(54)
   Total(46,899)(46,398)
Net deferred tax asset (liability)$11,901 $(16,311)

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to fully utilize the existing deferred tax assets. As of December 31, 2022, management determined that sufficient evidence exists to support the future utilization of all of the Company's deferred tax assets.

The Company has state net operating loss carryforwards of $7.5 million and $12.1 million as of December 31, 2022 and 2021 that will expire at various dates from 2027 to 2036. Utilization of net operating loss carryforwards may be subject to an annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986, as amended.

Retained earnings at December 31, 2022 and 2021 include approximately $12.7 million in tax basis bad debt reserves for which no income tax liability has been recorded. This represents the balance of bad debt reserves created for tax purposes as of December 31, 1987. These amounts are subject to recapture (i.e., included in taxable income) if certain events occur, such as in the event HomeStreet Bank ceases to be a bank. In the event of recapture, the Company will incur both federal and state tax liabilities on this pre-1988 bad debt reserve balance at the then prevailing corporate tax rates.

The Company had no recorded unrecognized tax position as of December 31, 2022 or 2021.

We are currently under examination, or subject to examination, by various U.S. federal and state taxing authorities. The Company is no longer subject to federal income tax examinations for tax years prior to 2019 or state income tax examination for tax years prior to 2018, generally.