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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Income tax expense consisted of the following:
Years Ended December 31,
(Dollars in thousands)202120202019
Income tax expense:
Current$37,812 $22,766 $12,971 
Deferred(5,832)(2,080)3,908 
Change in valuation allowance for deferred tax asset— — 23 
Income tax expense$31,980 $20,686 $16,902 
Effective tax rates differ from federal statutory rates applied to income before income taxes due to the following:
Years Ended December 31,
(Dollars in thousands)202120202019
Tax provision computed at federal statutory rate$30,440 $17,789 $15,844 
Effect of:
State taxes, net3,335 2,919 1,704 
Stock-based compensation(1,778)(109)(23)
Bank-owned life insurance(332)(121)(114)
Tax exempt interest(201)(250)(442)
Change in valuation allowance for deferred tax asset— — 23 
Other516 458 (90)
Income tax expense$31,980 $20,686 $16,902 
Deferred income taxes reflect the net tax effects of temporary differences between the recorded amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:
(Dollars in thousands)20212020
Deferred tax assets
Federal net operating loss carryforwards$7,231 $4,067 
State net operating loss carryforwards1,458 459 
Stock-based compensation5,742 1,799 
Allowance for credit losses11,341 24,317 
Accrued liabilities4,465 2,675 
Lease liability8,348 4,598 
Other707 446 
Total deferred tax assets39,292 38,361 
Deferred tax liabilities
Goodwill and intangible assets9,449 2,452 
Fair value adjustment on junior subordinated debentures2,324 2,449 
Premises and equipment4,786 10,767 
Installment gain on sale of subsidiary626 1,049 
Lease right-of-use asset7,598 4,172 
Unrealized gain on securities available for sale1,023 1,601 
Derivative financial instruments1,475 193 
Indemnification asset1,123 8,575 
Acquired loan basis525 184 
Other62 214 
Total deferred tax liabilities28,991 31,656 
Net deferred tax asset before valuation allowance10,301 6,705 
Valuation allowance(278)(278)
Net deferred tax asset$10,023 $6,427 
The Company's federal and state net operating loss carryforwards as of December 31, 2021 were $34,433,000 and $24,157,000, respectively, which will expire at various dates from 2031 through 2035, with the exception of $16,268,000 of net operating loss carryforwards generated after 2017 that will not expire. The Company has a valuation allowance on certain net operating loss carryforwards that are not expected to be realized before expiration.
The Company's federal and state net operating loss carryforwards as of December 31, 2020 were $19,365,000 and $10,649,000, respectively.
An Internal Revenue Code Section 382 (“Section 382”) ownership change was triggered as part of previous acquisitions. A significant portion of the deferred tax asset relating to the Company's net operating loss carryforwards is subject to the annual limitation rules under Section 382. The utilization of tax carryforward attributes acquired from the EJ Financial Corp. (2010) acquisition is subject to an annual limitation of $341,000. The utilization of tax carryforward attributes acquired from the National Bancshares, Inc. (2013) acquisition is subject to an annual limitation of $2,040,000. The utilization of tax carryforward attributes acquired from HubTran, Inc. (2021) is subject to an annual limitation of $1,594,000.
The utilization of deferred tax assets related to the net operating loss and tax credit carryforwards acquired from the ColoEast (2016) stock acquisition are subject to an annual limitation of $1,906,000 under Section 382 rules.
At December 31, 2021 and 2020, the Company had no amounts recorded for uncertain tax positions and does not expect any material changes in uncertain tax benefits during the next 12 months. The Company recognizes interest and penalties related to income tax matters in income tax expense.
The Company is subject to U.S. federal income tax as well as income tax in various states. The Company is generally not subject to examination by taxing authorities for years prior to 2018.