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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

Note 11—Income Taxes

The following were the components of provision for income taxes for the years ended December 31, 2024, 2023, and 2022:

 

 

2024

 

 

2023

 

 

2022

 

Current tax expense (benefit):

 

 

 

 

 

 

 

 

 

Federal

 

$

30,663

 

 

$

6,349

 

 

$

(3,774

)

State and local

 

 

12,211

 

 

 

4,875

 

 

 

4,939

 

Total current tax expense

 

 

42,874

 

 

 

11,224

 

 

 

1,165

 

Deferred tax expense (benefit):

 

 

 

 

 

 

 

 

 

Federal

 

 

1,344

 

 

 

23,569

 

 

 

25,157

 

State and local

 

 

(3,898

)

 

 

3,009

 

 

 

407

 

Total deferred tax expense (benefit)

 

 

(2,554

)

 

 

26,578

 

 

 

25,564

 

Provision for income taxes

 

$

40,320

 

 

$

37,802

 

 

$

26,729

 

The following is a reconciliation between the statutory U.S. federal income tax rate of 21% for 2024, 2023, and 2022, and the effective tax rate:

 

 

2024

 

 

2023

 

 

2022

 

 

Calculated tax expense at statutory rate

 

 

21.0

 

%

 

21.0

 

%

 

21.0

 

%

Increase (decrease) in income taxes resulting from:

 

 

 

 

 

 

 

 

 

 

State taxes, net of federal income tax

 

 

5.3

 

 

 

5.4

 

 

 

4.8

 

 

Tax exempt income

 

 

(0.8

)

 

 

(0.8

)

 

 

(1.0

)

 

Share-based compensation

 

 

(0.8

)

 

 

(0.2

)

 

 

(1.7

)

 

Non-deductible expenses

 

 

0.3

 

 

 

0.5

 

 

 

0.2

 

 

Total income tax expense

 

 

25.0

 

%

 

25.9

 

%

 

23.3

 

%

The following were the significant components of the deferred tax assets and liabilities as of December 31, 2024 and 2023:

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Net operating losses

 

$

22,144

 

 

$

22,292

 

Interest on non-accrual loans

 

 

6,837

 

 

 

5,652

 

Allowance for credit losses - loans and leases and loan basis

 

 

32,693

 

 

 

38,204

 

Servicing assets

 

 

2,332

 

 

 

2,702

 

Premises and equipment

 

 

5,998

 

 

 

5,603

 

Other real estate owned

 

 

180

 

 

 

441

 

Net unrealized holding loss on securities available-for-sale

 

 

47,022

 

 

 

46,492

 

Accrued expenses

 

 

6,317

 

 

 

5,365

 

Other

 

 

5,670

 

 

 

5,761

 

Total deferred tax assets

 

 

129,193

 

 

 

132,512

 

Deferred tax liabilities:

 

 

 

 

 

 

Equipment leasing

 

 

(54,532

)

 

 

(59,218

)

Core deposit intangibles

 

 

(4,285

)

 

 

(5,807

)

Deposits

 

 

(43

)

 

 

(343

)

Trust preferred securities

 

 

(4,211

)

 

 

(4,413

)

Net unrealized holding gain on cash flow hedges

 

 

(7,643

)

 

 

(10,959

)

Other

 

 

(2,021

)

 

 

(1,714

)

Total deferred tax liabilities

 

 

(72,735

)

 

 

(82,454

)

Net deferred tax assets

 

$

56,458

 

 

$

50,058

 

 

Note 11—Income Taxes (continued)

The following were the gross carryforwards available to offset future taxable income as of December 31, 2024 and 2023:

 

 

2024

 

 

2023

 

Federal gross NOL carryforwards - begin to expire in 2030

 

$

6,804

 

 

$

7,560

 

Federal gross NOL carryforwards - with no expiration

 

 

200

 

 

 

2,468

 

Illinois gross NLD carryforwards - begin to expire in 2031

 

 

268,469

 

 

 

268,969

 

All other state gross NOL carryforwards - begin to expire in 2036

 

 

4,724

 

 

 

—

 

All other state gross NOL carryforwards - with no expiration

 

 

5,790

 

 

 

—

 

Pursuant to Sections 382 and 383 of the Internal Revenue Code, annual use of net operating loss ("NOL") and credit carryforwards may be limited in the event a cumulative change in ownership of more than 50 percent occurs within a three‑year period. The Company has determined that such an ownership change occurred as of June 28, 2013 as a result of our recapitalization. This ownership change resulted in estimated annual limitations on the utilization of tax attributes, including net operating loss carryforwards. Approximately $756,000 of the restricted Federal net operating losses will become available each year related to Federal net operating losses generated prior to the 2013 recapitalization. In connection with the Company’s acquisition of Oak Park River Forest, the Company acquired $4.3 million of additional Federal net operating losses that are subject to an annual Section 382 limitation of approximately $781,000. In connection with the Company’s acquisition of Inland, the Company acquired $4.1 million of additional Federal net operating losses that are subject to an annual Section 382 limitation of approximately $4.2 million, which is pro-rated to $2.1 million for 2023 and the remainder utilized during 2024, based on the Inland acquisition date. The Federal net operating losses acquired in connection with the Oak Park River Forest and Inland acquisitions have no expiration.

During the second quarter of 2021, Illinois Senate Bill 2017 was passed which created a temporary limitation on Net Loss Deduction ("NLD") usage. For tax years 2022 and 2023, C Corporations are limited to applying a maximum of $100,000 of NLD to taxable income. During the second quarter of 2024, Illinois House Bill 4951 as enacted, which amends numerous Illinois tax law provisions, including a temporary limitation on NLD usage. For tax years 2024, 2025, and 206, C Corporations are limited to applying a maximum of $500,000 of NLD to taxable income. NLDs that are limited during these years have an extended expiration date for the years in which they are limited. The extended expiration of the Company’s NLD carryforwards are from December 31, 2031 to December 31, 2043.

The Company and the Bank file consolidated income tax returns. The Company and the Bank are no longer subject to United States federal income tax examinations for years before 2021 and state income tax examinations for years before 2020.