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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The components of income tax expense from continuing operations were as follows:
For the Years Ended December 31,
(amounts in thousands)202120202019
Current
Federal$50,971 $30,158 $10,902 
State18,215 10,825 5,850 
Total current expense69,186 40,983 16,752 
Deferred
Federal14,957 4,882 8,263 
State2,797 852 1,377 
Total deferred expense17,754 5,734 9,640 
Income tax expense$86,940 $46,717 $26,392 
Effective tax rates differ from the federal statutory rate of 21% at December 31, 2021, December 31, 2020, and 2019, which was applied to income before income tax expense, due to the following:
For the Years Ended December 31,
202120202019
(dollars in thousands)Amount% of pretax incomeAmount% of pretax incomeAmount% of pretax income
Federal income tax at statutory rate$92,654 21.00 %$39,849 21.00 %$22,634 21.00 %
State income tax, net of federal benefit16,863 3.82 9,225 4.86 5,709 5.30 
Tax-exempt interest, net of disallowance(670)(0.15)(492)(0.26)(385)(0.36)
Bank-owned life insurance(1,927)(0.44)(1,579)(0.83)(1,677)(1.56)
Tax credits, net of basis reduction(11,284)(2.92)(1,062)(0.61)(446)(0.41)
Equity-based compensation(8,237)(1.87)185 0.10 132 0.12 
Non-deductible executive compensation3,195 0.72 454 0.24 440 0.41 
Unrecorded basis difference in foreign subsidiaries— — (304)(0.16)(144)(0.13)
Recorded basis difference in foreign subsidiaries(4,217)(1.00)— — — — 
Other563 0.54 441 0.28 129 0.12 
Effective income tax rate$86,940 19.70 %$46,717 24.62 %$26,392 24.49 %
At December 31, 2021 and 2020, 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, 2021 and 2020:
December 31,
(amounts in thousands)20212020
Deferred tax assets
Allowance for credit losses on loans and leases$36,111 $37,503 
Net operating losses825 916 
Compensation and benefits8,356 8,564 
Cash flow hedge— 10,703 
Lease liability3,806 4,683 
Net unrealized losses on securities1,748 — 
Accrued severance4,740 — 
Other3,080 2,830 
Total deferred tax assets58,666 65,199 
Deferred tax liabilities
Net deferred loan fees and costs(6,405)(2,335)
Tax qualified lease adjustments(50,605)(38,527)
Right of use asset(3,321)(4,312)
Net unrealized gains on securities— (8,194)
Other(1,173)(1,284)
Total deferred tax liabilities(61,504)(54,652)
Net deferred tax asset/(liability) (1)
$(2,838)$10,547 
(1) Excludes net deferred tax asset (liability) of BMT included in assets or liabilities of discontinued operations.
The net deferred tax asset (liability) is recorded in other assets or accrued interest payable and other liabilities at December 31, 2021 and 2020.
Customers had approximately $3.9 million of federal and state net operating loss carryovers subject to the annual limitation under Internal Revenue code Section 382 at December 31, 2021, that begin to expire in 2027.
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, 2018. Customers is currently under audit by New York for the 2015-2017 tax years and by New York City for the 2016-2017 tax years. Customers believes that the resolution of these examinations will not have a material effect on the consolidated financial statements.