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INCOME TAXES
 12 Months Ended
Jun. 30, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The provision for income taxes is as follows:
At June 30,
(Dollars in thousands)202320222021
Current:
Federal$89,839 $64,800 $61,827 
State54,326 43,843 37,037 
144,165 108,643 98,864 
Deferred:
Federal(13,084)(5,600)(5,562)
State(6,502)(3,800)(3,266)
(19,586)(9,400)(8,828)
Total$124,579 $99,243 $90,036 
The differences between the statutory federal income tax rate and the effective tax rates are summarized as follows:
At June 30,
202320222021
Statutory federal tax rate21.00 %21.00 %21.00 %
Increase (decrease) resulting from:
State taxes—net of federal tax benefit9.04 %9.13 %8.70 %
Tax credits(0.45)%(0.44)%(0.59)%
Non-taxable income(0.03)%(0.09)%(0.09)%
Excess benefit RSU vesting(0.41)%(1.31)%(0.64)%
Other(0.30)%0.90 %1.07 %
Effective tax rate28.85 %29.19 %29.45 %
The components of the net deferred tax asset are as follows:
At June 30,
(Dollars in thousands)20232022
Deferred tax assets:
Allowance for credit losses$64,655 $59,045 
Lease liability22,654 24,626 
Accrued compensation7,564 2,533 
Stock-based compensation expense6,980 5,101 
Litigation accrual5,206 3,116 
Non-accrual loan interest income4,962 2,608 
Unrealized net losses on securities2,730 1,261 
Net operating loss carryforward1,484 1,503 
State taxes1,064 949 
Securities impaired267 270 
Total deferred tax assets117,566 101,012 
Deferred tax liabilities:
Operating lease right-of-use asset(20,681)(22,757)
Depreciation and amortization(7,533)(8,838)
Other assets—prepaids(2,342)(2,083)
FHLB stock dividend(833)(842)
Total deferred tax liabilities(31,389)(34,520)
Net deferred tax asset86,177 66,492 
Valuation allowance(277)(230)
Net deferred tax asset, net of valuation allowance1
$85,900 $66,262 
1 Net deferred tax asset, net of valuation allowance, is included in the other assets line on the consolidated balance sheet.
The Company records a deferred tax asset for net operating losses when the benefit is more likely than not to be realized. As of June 30, 2023, the Company had a federal net operating loss carryforward of approximately $3.7 million which is subject to an annual Section 382 limitation of $0.1 million. The federal net operating loss carryforward begins to expire in 2034.
The Company has state net operating loss carryforwards of $3.7 million. Of this amount, $1.6 million is subject to an annual Section 382 limitation of $0.1 million for state purposes. The state net operating loss carryforwards begin to expire in 2035.
The Company establishes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized. As of June 30, 2023, relating to a $3.0 million state net operating loss, the Company recognized a tax effected valuation allowance of $0.3 million. As of June 30, 2023 and 2022, the Company forecasts sufficient future consolidated earnings to realize its remaining deferred tax asset and has not provided for an additional allowance.
The reconciliation of the gross beginning and ending amount of unrecognized tax positions for the periods presented is:
(Dollars in thousands)20232022
Balance—beginning of period$4,975 $4,156 
Additions—current year tax positions1,603 703 
Additions—prior year tax positions518 347 
Reductions—prior year tax positions(172)(231)
Total liability for unrecognized tax positions—end of period$6,924 $4,975 
As of June 30, 2023 and 2022, unrecognized tax benefits totaled $6.0 million and $4.3 million, respectively, that, if recognized, would favorably impact the effective tax rate. The Company does not anticipate resolution of any unrecognized tax benefits within the next 12 months. The Company accounts for interest and penalties related to income tax liabilities as a component of income tax expense. As of June 30, 2023 and 2022, the amounts accrued for interest and penalties were not material.
The Company is subject to federal income tax and income tax of state taxing authorities. The Company’s federal income tax returns for the years ended June 30, 2022, 2021, and 2020 and its state taxing authorities income tax returns for the years ended June 30, 2022, 2021, 2020 and 2019 are open to audit under the statutes of limitations by the Internal Revenue Service and state taxing authorities.