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Income Taxes
 12 Months Ended
Dec. 31, 2024
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)202420232022
Current:
Federal$41,477 $40,471 $42,718 
State and local8,022 9,616 11,505 
Total current49,499 50,087 54,223 
Deferred:
Federal(2,535)283 1,853 
State and local(986)2,097 341 
Total deferred(3,521)2,380 2,194 
Total income tax expense$45,978 $52,467 $56,417 

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)202420232022
Income tax expense at statutory rate$48,561 $51,770 $54,487 
Increase (reduction) in income tax resulting from:
Tax-exempt interest income, net(5,124)(4,942)(4,351)
State and local income taxes, net7,334 9,445 9,767 
Bank-owned life insurance(892)(888)(545)
Non-deductible expenses1,524 2,059 926 
Tax benefit of low-income housing tax credit ("LIHTC") investments, net285 (56)(195)
Excess tax benefits28 (251)(68)
Federal tax credits(5,619)(4,364)(3,661)
Other, net(119)(306)57 
       Total income tax expense$45,978 $52,467 $56,417 

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 immaterial for the years ended December 31, 2024 and December 31, 2023, and $0.2 million for the year ended December 31, 2022. As of December 31, 2024 and 2023, the carrying value of the investments related to low-income housing tax credits was $16.7 million and $17.2 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 $85.4 million and $76.7 million is included in other assets in the consolidated balance sheets at December 31, 2024 and 2023, respectively. The tax effect of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities is as follows:
Year ended December 31,
($ in thousands)20242023
Deferred tax assets:
Allowance for loan losses$34,212 $33,423 
Loans held-for-sale3,304 4,463 
Other real estate39 — 
Deferred compensation5,209 4,746 
Accrued compensation6,265 6,047 
Unrealized losses on securities, net38,734 33,687 
Net operating losses and tax credits5,299 5,544 
Lease liability accrual6,485 7,101 
Other investments5,587 5,341 
Research and experimental expenses1,473 1,944 
Fixed assets2,802 2,341 
Deferred expenses3,021 1,158 
Other deferred tax assets3,248 3,665 
Total deferred tax assets115,678 109,460 
Deferred tax liabilities:
Acquired loans1,922 2,388 
Intangible assets8,756 8,576 
Right of use asset5,644 6,301 
Other investments10,233 11,834 
Other deferred tax liabilities951 841 
Total deferred tax liabilities27,506 29,940 
Net deferred tax asset before valuation allowance88,172 79,520 
Less: valuation allowance2,812 2,812 
Net deferred tax asset$85,360 $76,708 

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 net operating loss and tax credit assets would not be realized and has recognized a valuation allowance of $2.8 million at December 31, 2024 and 2023, respectively.

The Company and its subsidiaries file income tax returns in the federal jurisdiction and in thirty-one states and localities. The Company is no longer subject to federal, state or local income tax audits by tax authorities for years before 2019, with the exception of 2016 and 2017 being open years by state taxing authorities. Net operating losses generated prior to 2016 that are utilized going forward would still be subject to examination.

As of December 31, 2024, the gross amount of unrecognized tax benefits was $5.0 million and the total amount of net unrecognized tax benefits that would impact the effective tax rate, if recognized, was $4.0 million compared to $2.4 million and $2.2 million as of December 31, 2023 and 2022, respectively. The Company believes it is
reasonably possible the gross amount of unrecognized benefits will be reduced by approximately $0.3 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 California, Missouri, and Texas, 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 $2.1 million as of 2024, $1.0 million as of 2023, and $0.6 million as of 2022.

The activity in the gross liability for unrecognized tax benefits was as follows:
($ in thousands)202420232022
Balance at beginning of year$3,077 $2,724 $2,697 
Additions based on tax positions related to the current year1,212 727 683 
Additions for tax positions of prior years1,128 24 47 
Settlements for tax positions of prior years— — (82)
Settlements or lapse of statute of limitations(401)(398)(621)
Balance at end of year$5,016 $3,077 $2,724