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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The components of income tax expense (benefit) for the years ended December 31, are as follows:
| Year ended December 31,
($ in thousands) | 2022 |  | 2021 |  | 2020
Current: |  |  |  |  |
Federal | $ | 42,718 |  |  | $ | 29,835 |  |  | $ | 25,132 |
State and local | 11,505 |  |  | 5,198 |  |  | 5,009 |
Total current | 54,223 |  |  | 35,033 |  |  | 30,141 |
Deferred: |  |  |  |  |
Federal | 1,853 |  |  | 870 |  |  | (10,651) |
State and local | 341 |  |  | (325) |  |  | (1,927) |
Total deferred | 2,194 |  |  | 545 |  |  | (12,578) |
Total income tax expense | $ | 56,417 |  |  | $ | 35,578 |  |  | $ | 17,563 |
A reconciliation of expected income tax expense, computed by applying the statutory federal income tax rate to income before income taxes reflected in the Consolidated Statements of Income is as follows:
| Year ended December 31,
($ in thousands) | 2022 |  | 2021 |  | 2020
Income tax expense at statutory rate | $ | 54,487 |  |  | $ | 35,413 |  |  | $ | 19,309 |
Increase (reduction) in income tax resulting from: |  |  |  |  |
Tax-exempt interest income, net | (4,351) |  |  | (3,198) |  |  | (2,010) |
State and local income taxes, net | 9,767 |  |  | 4,936 |  |  | 3,254 |
Bank-owned life insurance | (545) |  |  | (713) |  |  | (778) |
Non-deductible expenses | 926 |  |  | 1,090 |  |  | 637 |
Tax benefit of low-income housing tax credit ("LIHTC") investments, net | (195) |  |  | (132) |  |  | (444) |
Excess tax benefits | (68) |  |  | 146 |  |  | (175) |
Federal tax credits | (3,661) |  |  | (1,136) |  |  | (1,327) |
Non-taxable donation to charitable foundation | — |  |  | (263) |  |  | — |
Other, net | 57 |  |  | (565) |  |  | (903) |
Total income tax expense | $ | 56,417 |  |  | $ | 35,578 |  |  | $ | 17,563 |
The net amount recognized as a component of tax expense for tax credits, other tax benefits, and amortization from LIHTC investments recognized per the table above was $0.2 million, $0.1 million and $0.4 million for the years ended December 31, 2022, 2021, and 2020 respectively. As of December 31, 2022 and 2021, the carrying value of the investments related to low-income housing tax credits was $7.3 million and $7.6 million, respectively. No impairment losses have been recognized from forfeiture or ineligibility of tax credits or other circumstances during the life of any of the investments. A net deferred income tax asset of $89.0 million and $40.9 million is included in other assets in the consolidated balance sheets at December 31, 2022 and 2021, respectively. The tax effect of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities is as follows:
| Year ended December 31,
($ in thousands) | 2022 |  | 2021
Deferred tax assets: |  |  |
Allowance for loan losses | $ | 34,507 |  |  | $ | 36,550 |
Loans held-for-sale | 5,917 |  |  | 6,971 |
Other real estate | 179 |  |  | 305 |
Deferred compensation | 3,527 |  |  | 2,704 |
Accrued compensation | 6,294 |  |  | 5,881 |
Unrealized losses on securities, net | 44,094 |  |  | — |
Net operating losses and tax credits | 5,829 |  |  | 6,061 |
Lease liability accrual | 4,545 |  |  | 3,747 |
Other investments | 4,293 |  |  | 3,169 |
Other deferred tax assets | 6,463 |  |  | 5,594 |
Total deferred tax assets | 115,648 |  |  | 70,982 |
Deferred tax liabilities: |  |  |
Acquired loans | 2,212 |  |  | 1,709 |
Unrealized gains on securities, net | — |  |  | 6,171 |
Intangible assets | 8,676 |  |  | 8,789 |
Right of use asset | 4,374 |  |  | 3,670 |
Other investments | 7,530 |  |  | 5,646 |
Other deferred tax liabilities | 1,065 |  |  | 1,277 |
Total deferred tax liabilities | 23,857 |  |  | 27,262 |
Net deferred tax asset before valuation allowance | 91,791 |  |  | 43,720 |
Less: valuation allowance | 2,830 |  |  | 2,830 |
Net deferred tax asset | $ | 88,961 |  |  | $ | 40,890 |
As part of an acquisition in 2019, the company acquired net operating loss, tax credit, and capital loss deferred tax assets. Net operating losses originated in the years 2012, 2014-2017, and 2019 and will expire in the years between 2032-2037. Tax credit carryforwards originated in years 2010-2015 and will expire in the years between 2030-2035. A valuation allowance is provided on deferred tax assets when it is more likely than not that some portion of the assets will not be realized. The company determined it was more likely than not that some of the acquired note operating loss and tax credit assets would not be realized and has recognized a valuation allowance of $2.8 million at both December 31, 2022 and 2021, respectively. The Company and its subsidiaries file income tax returns in the federal jurisdiction and in thirty-one states. The Company is no longer subject to federal, state or local income tax audits by tax authorities for years before 2017, with the exception of 2016 being an open year by one state taxing authority. Net operating losses generated prior to 2016 that are utilized going forward would still be subject to examination. As of December 31, 2022, the gross amount of unrecognized tax benefits was $2.7 million and the total amount of net unrecognized tax benefits that would impact the effective tax rate, if recognized, was $2.2 million. As of December 31, 2021 and 2020, the total amount of the net unrecognized tax benefits that would impact the effective tax rate, if recognized, was $2.5 million and $3.1 million, respectively. The Company believes it is reasonably possible the gross amount of unrecognized benefits will be reduced by approximately $0.4 million as a result of a lapse of statute of limitations in the next 12 months. The Company is under audit by the state of Missouri, and while the Company has concluded it has adequately provided for uncertain tax positions, the outcome of such audits are always uncertain and could result in additional tax expense, though immaterial. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense and classifies such interest and penalties in the liability for unrecognized tax benefits. The amount accrued for interest and penalties was $0.6 million as of December 31, 2022, $0.5 million for 2021, and $0.9 million for 2020. The activity in the gross liability for unrecognized tax benefits was as follows:
($ in thousands) | 2022 |  | 2021 |  | 2020
Balance at beginning of year | $ | 2,697 |  |  | $ | 3,157 |  |  | $ | 1,497 |
Additions based on tax positions related to the current year | 683 |  |  | 563 |  |  | 395 |
Additions for tax positions of prior years | 47 |  |  | 436 |  |  | 1,556 |
Settlements for tax positions of prior years | (82) |  |  | (1,289) |  |  | — |
Settlements or lapse of statute of limitations | (621) |  |  | (170) |  |  | (291) |
Balance at end of year | $ | 2,724 |  |  | $ | 2,697 |  |  | $ | 3,157 |

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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=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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