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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The components of income tax expense were as follows:
| For the Years Ended December 31, |  |  |  |
(amounts in thousands) | 2019 |  | 2018 |  | 2017
Current |  |  |  |  |  |  |  |
Federal | $ | 2,973 |  |  | $ | 4,509 |  |  | $ | 24,258 |
State | 5,304 |  |  | 5,547 |  |  | 5,666 |
Total current expense | 8,277 |  |  | 10,056 |  |  | 29,924 |
Deferred |  |  |  |  |  |  |  |
Federal | 13,175 |  |  | 9,702 |  |  | 14,885 |
State | 1,341 |  |  | (399) |  |  | 233 |
Total deferred expense | 14,516 |  |  | 9,303 |  |  | 15,118 |
Income tax expense | $ | 22,793 |  |  | $ | 19,359 |  |  | $ | 45,042 |
Effective tax rates differ from the federal statutory rate of 21% at December 31, 2019 and December 31, 2018, and 35% at December 31, 2017, which was applied to income before income tax expense, due to the following:
| For the Years Ended December 31, |  |  |  |  |  |  |  |  |  |
| 2019 |  |  |  | 2018 |  |  |  | 2017 |  |
(amounts in thousands) | Amount |  | % of pretax income |  | Amount |  | % of pretax income |  | Amount |  | % of pretax income
Federal income tax at statutory rate | $ | 21,445 |  |  | 21.00 | % |  | $ | 19,121 |  |  | 21.00 | % |  | $ | 43,357 |  |  | 35.00 | %
State income tax, net of federal benefit | 5,249 |  |  | 5.14 |  |  | 4,067 |  |  | 4.47 |  |  | 3,835 |  |  | 3.10 |
Tax-exempt interest, net of disallowance | (385) |  |  | (0.38) |  |  | (360) |  |  | (0.40) |  |  | (381) |  |  | (0.31) |
Bank-owned life insurance | (1,677) |  |  | (1.64) |  |  | (1,547) |  |  | (1.70) |  |  | (2,675) |  |  | (2.16) |
Tax credits | (1,266) |  |  | (1.24) |  |  | (444) |  |  | (0.49) |  |  | — |  |  | — |
Equity-based compensation | 132 |  |  | 0.13 |  |  | (547) |  |  | (0.60) |  |  | (10,741) |  |  | (8.67) |
Non-deductible executive compensation | 440 |  |  | 0.43 |  |  | 230 |  |  | 0.25 |  |  | 654 |  |  | 0.53 |
Unrecorded basis difference in foreign subsidiaries | (144) |  |  | (0.14) |  |  | 343 |  |  | 0.38 |  |  | 4,527 |  |  | 3.65 |
Enactment of federal tax reform | — |  |  | — |  |  | (21) |  |  | (0.02) |  |  | 5,505 |  |  | 4.44 |
Other | (1,001) |  |  | (0.98) |  |  | (1,483) |  |  | (1.63) |  |  | 961 |  |  | 0.78 |
Effective income tax rate | $ | 22,793 |  |  | 22.32 | % |  | $ | 19,359 |  |  | 21.26 | % |  | $ | 45,042 |  |  | 36.36 | %
At December 31, 2019 and 2018, Customers had no ASC 740-10 unrecognized tax benefits. Customers does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months. Customers recognizes interest and penalties on unrecognized tax benefits in other expense. Deferred income taxes reflect temporary differences in the recognition of revenue and expenses for tax reporting and financial statement purposes, principally because certain items are recognized in different periods for financial reporting and tax return purposes. The following represents Customers' deferred tax asset and liabilities as December 31, 2019 and 2018:
| December 31, |  |
(amounts in thousands) | 2019 |  | 2018
Deferred tax assets |  |  |
Allowance for loan and lease losses | $ | 14,616 |  |  | $ | 10,449 |
Net unrealized losses on securities | — |  |  | 7,639 |
Net operating losses | 1,494 |  |  | 1,212 |
Compensation and benefits | 5,839 |  |  | 6,234 |
Cash flow hedge | 5,557 |  |  | 324 |
Section 197 intangibles | 1,196 |  |  | 923 |
Deferred income | 1,182 |  |  | 640 |
Lease liability | 5,523 |  |  | — |
Other | 1,307 |  |  | 2,766 |
Total gross deferred tax assets | 36,714 |  |  | 30,187 |
Less: valuation allowance | (486) |  |  | — |
Net deferred tax assets | 36,228 |  |  | 30,187 |
Deferred tax liabilities |  |  |
Fair value adjustments on acquisitions | (506) |  |  | (569) |
Bank premises and equipment | (6,074) |  |  | (884) |
Tax qualified lease adjustments | (30,496) |  |  | (17,786) |
Right of use asset | (5,232) |  |  | — |
Net unrealized gains on securities | (5,020) |  |  | — |
Other | (640) |  |  | (746) |
Total deferred tax liabilities | (47,968) |  |  | (19,985) |
Net deferred tax asset/(liability) | $ | (11,740) |  |  | $ | 10,202 |
The net deferred tax liability at December 31, 2019 is recorded in other liabilities and the net deferred tax asset at December 31, 2018 is recorded in other assets. Customers had approximately $4.8 million of federal and state net operating loss carryovers subject to the annual limitation under Internal Revenue code Section 382 at December 31, 2019, that begin to expire in 2027. Customers also has state net operating loss carryovers for some states that begin to expire in 2037. Customers believes it is more likely than not the benefit of these state net operating loss carryovers generated by BankMobile Technologies, Inc. will not be realized. As such, there is a valuation allowance on the deferred tax assets of the jurisdictions in which the net operating losses relate. Customers is subject to U.S. federal income tax as well as income tax in various state and local taxing jurisdictions. Generally, Customers is no longer subject to examination by federal, state, and local taxing authorities for years prior to the year ended December 31, 2016

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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