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INCOME TAXES | 12 Months Ended
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Jun. 30, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The provision for income taxes is as follows:
| Fiscal Year Ended
| At June 30,
(Dollars in thousands) | 2025 |  | 2024 |  | 2023
Current: |  |  |  |  |
Federal | $ | 130,062 |  |  | $ | 98,814 |  |  | $ | 89,839 |
State | 78,381 |  |  | 53,525 |  |  | 54,326 |
| 208,443 |  |  | 152,339 |  |  | 144,165 |
Deferred: |  |  |  |  |
Federal | (25,702) |  |  | 17,501 |  |  | (13,084) |
State | (2,254) |  |  | 15,633 |  |  | (6,502) |
| (27,956) |  |  | 33,134 |  |  | (19,586) |
Total | $ | 180,487 |  |  | $ | 185,473 |  |  | $ | 124,579 |
The differences between the statutory federal income tax rate and the effective tax rates are summarized as follows:
| Fiscal Year Ended
| At June 30,
| 2025 |  | 2024 |  | 2023
Statutory federal tax rate | 21.00 | % |  | 21.00 | % |  | 21.00 | %
Increase (decrease) resulting from: |  |  |  |  |
State taxes—net of federal tax benefit | 8.86 | % |  | 8.90 | % |  | 9.04 | %
Tax credits | (0.43) | % |  | (0.58) | % |  | (0.45) | %
Non-taxable income | (0.15) | % |  | (0.08) | % |  | (0.03) | %
Excess benefit RSU vesting | (0.97) | % |  | (0.42) | % |  | (0.41) | %
Uncertain tax positions | 1.29 | % |  | 0.88 | % |  | 0.39 | %
Other | (0.18) | % |  | (0.51) | % |  | (0.69) | %
Effective tax rate | 29.42 | % |  | 29.19 | % |  | 28.85 | %
The components of the net deferred tax asset are as follows:
| At June 30,
(Dollars in thousands) | 2025 |  | 2024
Deferred tax assets: |  |  |
Allowance for credit losses | $ | 91,922 |  |  | $ | 96,275 |
Lease liability | 16,650 |  |  | 21,400 |
Accrued compensation | 3,306 |  |  | 9,783 |
Stock-based compensation expense | 8,134 |  |  | 8,282 |
Litigation accrual | — |  |  | 5,324 |
Nonaccrual loan interest income | 8,419 |  |  | 9,034 |
Unrealized net losses on securities | — |  |  | 1,079 |
Depreciation and amortization | 5,090 |  |  | — |
Net operating loss carryforward | 1,021 |  |  | 1,160 |
State taxes | 5,967 |  |  | 4,282 |
Securities impaired | 236 |  |  | 273 |
Other DTA | 37 |  |  | — |
Total deferred tax assets | $ | 140,782 |  |  | $ | 156,892 |
Deferred tax liabilities: |  |  |
Basis difference in acquired loans | (43,773) |  |  | (78,034) |
Operating lease right-of-use asset | (15,002) |  |  | (19,406) |
Unrealized net gain securities | (160) |  |  | — |
Depreciation and amortization | — |  |  | (4,679) |
Other assets—prepaids | (2,532) |  |  | (2,183) |
FHLB stock dividend | (738) |  |  | (852) |
Total deferred tax liabilities | $ | (62,205) |  |  | $ | (105,154) |
Net deferred tax asset | 78,577 |  |  | 51,738 |
Valuation allowance | (70) |  |  | (70) |
Net deferred tax asset, net of valuation allowance 1 | $ | 78,507 |  |  | $ | 51,668 |
1 Net deferred tax asset, net of valuation allowance, is included in “Other Assets” in the Consolidated Balance Sheets. In June 2025, the State of California adopted its fiscal year 2026 budget, which, among other things, changed the way financial institutions’ multi-state income is apportioned to the State of California. The change, which now requires the use of a single sales factor versus the previously required three-factor apportionment formula, required the Company to remeasure its California deferred tax asset and resulted in revaluation of $5.5 million recognized in the fiscal year ended June 30, 2025. On July 4, 2025, President Trump signed into law the legislation formally titled “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” and commonly referred to as the One Big Beautiful Bill (“the Act”). The Company is currently evaluating income tax implications of the Act. The Company does not expect the Act to have a material impact on the Company’s financial statements. 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, 2025, the Company had a federal net operating loss carryforward of approximately $3.5 million, all of 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 $3.0 million. Of this amount, only $0.7 million is subject to an annual Section 382 limitation of $0.1 million. 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, 2025, relating to a $0.7 million state net operating loss, the Company recognized a valuation allowance of $0.1 million. As of June 30, 2025 and 2024, 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 are as follows:
(Dollars in thousands) | 2025 |  | 2024 |  |
Balance—beginning of period | $ | 14,089 |  |  | $ | 6,924 |  |  |
Additions—current year tax positions | 11,156 |  |  | 8,709 |  |  |
Additions—prior year tax positions | — |  |  | — |  |  |
Reductions—prior year tax positions | (1,633) |  |  | (1,544) |  |  |
Total liability for unrecognized tax positions—end of period | $ | 23,612 |  |  | $ | 14,089 |  |  |
As of June 30, 2025 and 2024, unrecognized tax benefits totaled $19.6 million and $11.6 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. During the fiscal years ended June 30, 2025 and 2024, the Company recognized an expense of $0.1 million and a benefit of $0.1 million, respectively, in interest and penalties. The Company had approximately $0.6 million and $0.5 million for the payment of interest and penalties accrued at June 30, 2025, and 2024, respectively. The Company will occasionally file amended returns to capture additional tax refunds. An amended return was filed to preserve a claim for refund. Due to the uncertainty involved in this claim, management recognized a 100% reserve against it during the fiscal years ended June 30, 2024 and 2025. The Company is subject to federal income tax and income tax of state taxing authorities. The Company’s federal income tax returns for the fiscal years ended June 30, 2024, 2023 and, 2022 and its state taxing authorities income tax returns for the fiscal years ended June 30, 2024, 2023, 2022 and 2021 are open to audit under the statutes of limitations by the Internal Revenue Service and state taxing authorities.

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