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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes |
12. | INCOME TAXES
Income tax expense consists of the following.
|  | For the Year Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (Dollars in thousands) |
Current provision: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 41,195 |  |  | $ | 40,021 |  |  | $ | 38,957 |
State |  |  | 17,944 |  |  |  | 17,040 |  |  |  | 15,968 |
|  |  | 59,139 |  |  |  | 57,061 |  |  |  | 54,925 |
Deferred provision/(benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 1,208 |  |  |  | (3,443) |  |  |  | 2,534 |
State |  |  | 510 |  |  |  | (1,397) |  |  |  | 1,317 |
|  |  | 1,718 |  |  |  | (4,840) |  |  |  | 3,851 |
Total |  | $ | 60,857 |  |  | $ | 52,221 |  |  | $ | 58,776 |
Income tax asset consists of the following.
|  | As of December 31, |
|  | 2016 |  |  | 2015 |
|  | (Dollars in thousands) |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | 4,399 |  |  | $ | 7,414 |
State |  |  | 538 |  |  |  | 2,988 |
|  |  | 4,937 |  |  |  | 10,402 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | 31,566 |  |  |  | 28,799 |
State |  |  | 8,926 |  |  |  | 8,050 |
|  |  | 40,492 |  |  |  | 36,849 |
Total |  | $ | 45,429 |  |  | $ | 47,251 |
The components of the net deferred tax asset are as follows.
|  | As of December 31, |
|  | 2016 |  |  | 2015 |
Federal |  |  | (Dollars in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Bad debt and credit loss deduction |  | $ | 23,886 |  |  | $ | 23,180 |
Depreciation |  |  | - |  |  |  | 121 |
Net operating loss carryforward |  |  | 453 |  |  |  | 562 |
Deferred compensation |  |  | 4,044 |  |  |  | 3,642 |
PCI loans |  |  | 9,512 |  |  |  | 10,572 |
FDIC loss sharing asset |  |  | - |  |  |  | 210 |
California franchise tax |  |  | 3,269 |  |  |  | 2,613 |
Accrued expense |  |  | 4,046 |  |  |  | 3,005 |
Other, net |  |  | 1,563 |  |  |  | 892 |
Gross deferred tax asset |  |  | 46,773 |  |  |  | 44,797 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation |  |  | 2,207 |  |  |  | - |
Intangibles - acquisitions |  |  | 2,705 |  |  |  | 868 |
FHLB stock |  |  | 2,612 |  |  |  | 2,747 |
Deferred income |  |  | 3,130 |  |  |  | 2,745 |
Unrealized gain on investment securities, net |  |  | 4,553 |  |  |  | 9,638 |
Gross deferred tax liability |  |  | 15,207 |  |  |  | 15,998 |
Net deferred tax asset – federal |  | $ | 31,566 |  |  | $ | 28,799 |
State |  |  |  |  |  |  |  |
Deferred tax assets: |  |  |  |  |  |  |  |
Bad debt and credit loss deduction |  | $ | 7,398 |  |  | $ | 7,172 |
Depreciation |  |  | 39 |  |  |  | 440 |
Net operating loss carryforward |  |  | - |  |  |  | - |
Deferred compensation |  |  | 1,252 |  |  |  | 1,127 |
PCI loans |  |  | 2,635 |  |  |  | 3,242 |
FDIC loss sharing asset |  |  | - |  |  |  | 97 |
Accrued expense |  |  | 1,253 |  |  |  | 931 |
Other, net |  |  | 547 |  |  |  | 275 |
Gross deferred tax asset |  |  | 13,124 |  |  |  | 13,284 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangibles - acquistions |  |  | 838 |  |  |  | 269 |
FHLB stock |  |  | 809 |  |  |  | 851 |
Deferred income |  |  | 969 |  |  |  | 762 |
Unrealized gain on investment securities, net |  |  | 1,582 |  |  |  | 3,352 |
Gross deferred tax liability |  |  | 4,198 |  |  |  | 5,234 |
Net deferred tax asset – state |  | $ | 8,926 |  |  | $ | 8,050 |
A reconciliation of the statutory income tax rate to the consolidated effective income tax rate follows.
|  | For the Year Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |
|  | (Dollars in thousands) |
Federal income tax at statutory rate |  | $ | 56,800 |  |  |  | 35.0% |  |  | $ | 52,978 |  |  |  | 35.0% |  |  | $ | 56,979 |  |  |  | 35.0% |
State franchise taxes, net of federal benefit |  |  | 11,299 |  |  |  | 7.0% |  |  |  | 10,457 |  |  |  | 6.9% |  |  |  | 11,233 |  |  |  | 6.9% |
Tax-exempt income |  |  | (5,848) |  |  |  | (3.6%) |  |  |  | (7,619) |  |  |  | (5.0%) |  |  |  | (8,622) |  |  |  | (5.3%) |
Tax credits |  |  | (846) |  |  |  | (0.5%) |  |  |  | (1,014) |  |  |  | (0.7%) |  |  |  | (1,014) |  |  |  | (0.6%) |
Other, net |  |  | (548) |  |  |  | (0.4%) |  |  |  | (2,581) |  |  |  | (1.7%) |  |  |  | 200 |  |  |  | 0.1% |
Provision for income taxes |  | $ | 60,857 |  |  |  | 37.5% |  |  | $ | 52,221 |  |  |  | 34.5% |  |  | $ | 58,776 |  |  |  | 36.1% |
The change in unrecognized tax benefits in 2016 and 2015 follows.
|  | For the Year Ended December 31, |
|  | 2016 |  |  | 2015 |
|  | (Dollars in thousands) |
Balance, beginning of period |  | $ | 1,675 |  |  | $ | 3,016 |
Additions for tax positions related to prior years |  |  | - |  |  |  | - |
Reductions due to lapse of statue of limitations |  |  | - |  |  |  | (156) |
Settlement with tax authorities |  |  | - |  |  |  | (1,185) |
Balance, end of period |  | $ | 1,675 |  |  | $ | 1,675 |
The total amount of unrecognized tax benefits at December 31, 2016 of $1.7 million would, if recognized, affect the effective tax rate. The amount accrued for payment of interest as of December 31, 2016 was $212,000. The Company records interest and penalties related to uncertain tax positions as part of other operating expense. We do not expect the total amount of unrecognized tax benefits to significantly increase or decrease within the next twelve months. The Company is subject to federal income tax and franchise tax of the state of California. Our federal income tax returns for the years ended December 31, 2009 through 2015 are open to audit by the federal authorities and our California state tax returns for the years ended December 31, 2006 through 2015 are open to audit by state authorities.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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