Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.22.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES

17. 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 2018.

Net deferred tax assets and liabilities consist of the following components as of December 31, 2021 and 2020 (dollars in thousands):

​

​

​

​

​

​

​

​

    

2021

    

2020

Deferred tax assets:

 

​

  

 

​

  

Credit losses

​

$

30,132

​

$

48,505

Benefit plans

​

 

4,016

​

 

3,332

Acquisition accounting

​

 

5,711

​

 

10,038

Lease right-of-use asset

​

​

12,889

​

​

14,893

Stock grants

​

 

2,642

​

 

2,305

OREO

​

 

6,110

​

 

2,971

Securities available for sale

​

 

894

​

 

1,017

Net operating losses

​

 

41,573

​

 

47,463

Nonaccrual loans

​

 

733

​

 

2,011

Other

​

 

4,760

​

 

7,287

Total deferred tax assets

​

$

109,460

​

$

139,822

Deferred tax liabilities:

​

 

  

​

 

  

Acquisition accounting

​

$

13,252

​

$

16,271

Lease right-of-use liability

​

​

10,105

​

​

12,012

Premises and equipment

​

 

47,832

​

 

19,066

Securities available for sale

​

 

6,051

​

 

19,714

Other

​

 

1,193

​

 

674

Total deferred tax liabilities

​

 

78,433

​

 

67,737

Net deferred tax asset

​

$

31,027

​

$

72,085

​

At December 31, 2021, the Company had federal NOL carryforwards of approximately $105.8 million, of which approximately $84.8 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 NOL carryforwards of approximately $459.4 million, of which approximately $219 million will begin to expire after 2026, and $240.4 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, 2021, 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, Accounting for Uncertainty in Income Taxes.

The income tax expense for the years ended December 31, 2021, 2020, and 2019 consists of the following (dollars in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

    

2021

    

2020

    

2019

Current tax expense

​

$

11,330

​

$

25,376

​

$

22,500

Deferred tax expense

​

 

43,512

​

 

2,690

​

 

15,057

Income tax expense

​

$

54,842

​

$

28,066

​

$

37,557

​

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, 2021, 2020, and 2019 due to the following (dollars in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

2021

    

2020

    

2019

Computed "expected" tax expense

​

$

66,939

​

$

39,122

​

$

48,564

(Decrease) in taxes resulting from:

​

 

  

​

 

  

​

 

  

Tax-exempt interest income, net

​

 

(9,820)

​

 

(8,844)

​

 

(8,259)

State income tax benefit

​

​

(1,039)

​

​

(310)

​

​

(1,078)

Other, net

​

 

(1,238)

​

 

(1,902)

​

 

(1,670)

Income tax expense

​

$

54,842

​

$

28,066

​

$

37,557

​

For the years ended December 31, 2021, 2020, and 2019, the effective tax rates were 17.2%, 15.1% and 16.2%, respectively, and tax credits totaled approximately $3.6 million, $3.0 million and $2.9 million, respectively.