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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income tax expense (benefit) for the years ended December 31, 2023, 2022, and 2021 are as follows:
($ in thousands)202320222021
Current - Federal$24,750 35,616 25,742 
  - State3,857 4,477 3,733 
Deferred  - Federal(481)(1,658)(4,247)
  - State(301)(152)(553)
Total
$27,825 38,283 24,675 
The following is a reconciliation of federal income tax expense at the statutory rate of 21% at December 31, 2023, December 31, 2022, and December 31, 2021, to the income tax provision reported in the financial statements.
($ in thousands)202320222021
Tax provision at statutory rate$27,711 38,896 25,266 
Increase (decrease) in income taxes resulting from:
Tax-exempt interest income(2,175)(1,976)(1,589)
Low income housing and other tax credits(630)(669)(1,229)
Bank-owned life insurance income(920)(1,511)(589)
Non-deductible interest expense241 26 14 
State income taxes, net of federal benefit2,809 3,369 2,472 
Nondeductible merger expenses489 107 242 
Change in valuation allowance(13)(20)(10)
Nondeductible compensation274 97 27 
Other, net39 (36)71 
Total$27,825 38,283 24,675 
The sources and tax effects of temporary differences that give rise to significant portions of the deferred tax assets, which are included in Other Assets on the consolidated balance sheets are as follows at December 31, 2023 and 2022:
($ in thousands)20232022
Deferred tax assets:  
Allowance for credit losses on loans$25,431 20,900 
Allowance for credit losses on unfunded commitments2,632 3,057 
Excess book over tax pension plan cost403 365 
Deferred compensation1,453 638 
Federal & state net operating loss and tax credit carryforwards188 197 
Accruals, book versus tax3,462 4,404 
Pension23 — 
Unrealized losses on securities available for sale92,767 102,046 
Foreclosed real estate— 3 
Basis differences in assets acquired in FDIC transactions46 — 
Purchase accounting adjustments4,691 2,982 
Equity compensation1,524 768 
Partnership investments773 652 
Leases178 151 
SBA servicing asset31 77 
Gross deferred tax assets133,602 136,240 
Less: Valuation allowance(17)(30)
Net deferred tax assets133,585 136,210 
Deferred tax liabilities:
Loan fees(2,952)(3,102)
Depreciable basis of fixed assets(7,070)(5,493)
Amortizable basis of intangible assets(15,523)(10,047)
Basis differences in assets acquired in FDIC transactions— (108)
Trust preferred securities(388)(416)
Pension— (12)
Gross deferred tax liabilities(25,933)(19,178)
Net deferred tax asset$107,652 117,032 
The valuation allowances for 2023 and 2022 related to state net operating loss carryforwards. The realization of the remaining net deferred tax assets is determined to be more likely than not. The Company had no significant uncertain tax positions, and thus no reserve for uncertain tax positions has been recorded. Additionally, the Company determined that it has no material unrecognized tax benefits that if recognized would affect the effective tax rate. The Company’s general policy is to record tax penalties and interest as a component of “other operating expenses.”
The Company is subject to routine audits of its tax returns by the Internal Revenue Service and various state taxing authorities. The Company’s tax returns are subject to income tax audit by federal and state agencies beginning with the year 2020. There are no indications of any material adjustments relating to any examination currently being conducted by any taxing authority.
Retained earnings at December 31, 2023 and 2022 included approximately $6.9 million representing pre-1988 tax bad debt reserve base year amounts for which no deferred income tax liability has been provided since these reserves are not expected to reverse or may never reverse. Circumstances that would require an accrual of a portion or all of this unrecorded tax liability are a reduction in qualifying loan levels relative to the end of 1987, failure to meet the definition of a bank, dividend payments in excess of accumulated tax earnings and profits, or other distributions in dissolution, liquidation or redemption of the Bank’s stock.