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Income Taxes | 9 Months Ended
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Sep. 30, 2025
Income Tax Disclosure [Abstract] |
Income Taxes and Investment Tax Credits | Income Taxes and Investment Tax Credits The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, as well as in the majority of states. The Company acquired a $94 million net deferred tax asset before purchase accounting adjustments in the acquisition of Pacific Premier, including $3 million of federal and state NOL. The acquisition triggered an "ownership change" as defined in Section 382 of the Internal Revenue Code and the Company is evaluating the effects. However, the Company believes it is more likely than not that it will be able to fully realize the benefit of its federal and state NOL and tax carryforwards and has not provided a valuation allowance against its deferred tax assets. As of September 30, 2025, the Company had a net deferred tax asset of $392 million, which includes $5 million of federal and state NOL carry-forwards that will begin to expire in 2027. The Company recorded income tax expense of $111 million and $136 million for the nine months ended September 30, 2025 and 2024, respectively, representing effective tax rates of 24.9% and 25.8%, respectively. The effective tax rates differed from the statutory rate principally because of state taxes, non-deductible compensation, non-deductible FDIC assessments, and income on tax-exempt investment securities and loans. The change to the effective tax rate for the nine months ended September 30, 2025, as compared to the corresponding period in the prior year, was primarily attributable to a benefit recorded for the revaluation of the net deferred tax asset due to the effects of the acquisition of Pacific Premier. Investment Tax Credits The Company is involved in various entities that are considered to be variable interest entities, which are primarily related to investments promoting affordable housing and trust preferred securities. The Company is not required to consolidate variable interest entities in which it has concluded it does not have a controlling financial interest, and thus not the primary beneficiary. In such cases, the Company does not have both the power to direct the entities' most significant activities and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the variable interest entity. The maximum exposure to loss in the LIHTC is the amount of equity invested and credit extended by the Company. Affordable Housing Tax Credit Investments The Company makes certain equity investments in various limited partnerships that sponsor affordable housing projects; the purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants. The Company's investments in these entities generate a return primarily through the realization of federal income tax credits and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods. These tax credits and deductions are recognized as a reduction to income tax expense. The Company records the investments in affordable housing partnerships of $328 million and $221 million as of September 30, 2025 and December 31, 2024, respectively, as a component of other assets on the Condensed Consolidated Balance Sheets and uses the proportional amortization method to account for the investments. The Company's unfunded capital commitments to these investments were $143 million and $95 million as of September 30, 2025 and December 31, 2024, respectively, which are recorded as a component of other liabilities on the Condensed Consolidated Balance Sheets. With its acquisition of Pacific Premier, the Company acquired $75 million in affordable housing partnership assets and $29 million in unfunded capital commitments related to these investments. Amortization related to these investments is recorded as a component of the provision for income taxes on the Condensed Consolidated Statements of Income.

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