Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.22.4
INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES

15. INCOME TAXES

The Company files income tax returns in the U.S., the Commonwealth of Virginia, and other states. With few exceptions, the Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years prior to 2019.

Net deferred tax assets and liabilities consist of the following components as of December 31, 2022 and 2021 (dollars in thousands):

​

​

​

​

​

​

​

​

    

2022

    

2021

Deferred tax assets:

 

​

  

 

​

  

Credit losses

​

$

33,714

​

$

30,132

Benefit plans

​

 

3,290

​

 

4,016

Acquisition accounting

​

 

3,866

​

 

5,711

Lease right-of-use asset

​

​

11,982

​

​

12,889

Stock grants

​

 

2,449

​

 

2,642

Foreclosed and former bank owned property

​

 

2,955

​

 

6,110

Securities available for sale

​

 

97,572

​

 

—

Prime loan swap

​

​

14,517

​

​

—

Net operating losses

​

 

30,911

​

 

41,573

Nonaccrual loans

​

 

589

​

 

733

Other

​

 

2,845

​

 

4,760

Total deferred tax assets

​

$

204,690

​

$

108,566

Deferred tax liabilities:

​

 

  

​

 

  

Acquisition accounting

​

$

10,992

​

$

13,252

Lease right-of-use liability

​

​

8,846

​

​

10,105

Premises and equipment

​

 

59,341

​

 

47,832

Securities available for sale

​

 

—

​

 

5,157

Other

​

 

1,346

​

 

1,193

Total deferred tax liabilities

​

 

80,525

​

 

77,539

Net deferred tax asset

​

$

124,165

​

$

31,027

​

At December 31, 2022, the Company had federal net operating loss carryforwards of approximately $50 million, of which approximately $29 million under pre-2018 law can be carried forward 20 years, and $21 million that can be carried forward indefinitely. The Company also had state net operating loss carryforwards of approximately $485 million at December 31, 2022, of which approximately $210 million will begin to expire after 2026, and $275 million that can be carried forward indefinitely. In assessing the ability to realize deferred tax assets, the Company considers the scheduled reversal of temporary differences, projected future taxable income, and tax planning strategies in accordance with ASC 740-10-30. Based on its latest analysis, at December 31, 2022, the Company concluded that it is more likely than not that the Company would be able to fully realize its deferred tax asset.

The Company has analyzed the tax positions taken or expected to be taken in its tax returns and concluded it has no liability related to uncertain tax positions in accordance with applicable ASC 740, Income Taxes.

The income tax expense for the years ended December 31, 2022, 2021, and 2020 consists of the following (dollars in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

    

2022

    

2021

    

2020

Current tax expense

​

$

20,389

​

$

11,330

​

$

25,376

Deferred tax expense

​

 

25,055

​

 

43,512

​

 

2,690

Income tax expense

​

$

45,444

​

$

54,842

​

$

28,066

​

The income tax expense differs from the amount of income tax determined by applying the U.S. federal income tax rate to pre-tax income for the years ended December 31, 2022, 2021, and 2020 due to the following (dollars in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

2022

    

2021

    

2020

Computed "expected" tax expense

​

$

58,790

​

$

66,939

​

$

39,122

(Decrease) in taxes resulting from:

​

 

  

​

 

  

​

 

  

Tax-exempt interest income, net

​

 

(11,615)

​

 

(9,820)

​

 

(8,844)

State income tax expense(benefit)

​

​

880

​

​

(1,039)

​

​

(310)

Other, net

​

 

(2,611)

​

 

(1,238)

​

 

(1,902)

Income tax expense

​

$

45,444

​

$

54,842

​

$

28,066

​

For the years ended December 31, 2022, 2021, and 2020, the effective tax rates were 16.2%, 17.2% and 15.1%, respectively, and tax credits totaled approximately $4.0 million, $3.6 million and $3.0 million, respectively.