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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes |
11. | INCOME TAXES
New tax legislation, referred to as the Tax Reform Act, was enacted on December 22, 2017. ASC 740, Accounting for Income Taxes, requires companies to recognize the effect of tax law changes in the period of enactment. Beginning in 2018, the Tax Reform Act reduces the federal tax rate for corporations from 35% to 21% and changes or limits certain tax deductions. During the fourth quarter of 2017, a $13.2 million one-time charge to income tax expense was recorded due to the tax rate reduction and re-measurement of our deferred taxes assets (“DTA”). The current and deferred amounts of income tax expense consist of the following.
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (Dollars in thousands) |
Current provision: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 51,564 |  |  | $ | 31,055 |  |  | $ | 44,153 |
State |  |  | 29,487 |  |  |  | 20,546 |  |  |  | 17,151 |
|  |  | 81,051 |  |  |  | 51,601 |  |  |  | 61,304 |
Deferred provision: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 486 |  |  |  | 5,158 |  |  |  | 20,926 |
State |  |  | 1,710 |  |  |  | 2,353 |  |  |  | 2,154 |
|  |  | 2,196 |  |  |  | 7,511 |  |  |  | 23,080 |
Total |  | $ | 83,247 |  |  | $ | 59,112 |  |  | $ | 84,384 |
Income tax asset consists of the following.
|  | December 31, |
|  | 2019 |  |  | 2018 |
|  | (Dollars in thousands) |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | 5,890 |  |  | $ | 12,303 |
State |  |  | 3,456 |  |  |  | 6,800 |
|  |  | 9,346 |  |  |  | 19,103 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | 17,580 |  |  |  | 27,334 |
State |  |  | 8,661 |  |  |  | 15,737 |
|  |  | 26,241 |  |  |  | 43,071 |
Total |  | $ | 35,587 |  |  | $ | 62,174 |
Temporary differences between the amounts reported in the financial statements and the tax bases of assets and liabilities resulted in deferred taxes. The components of the net deferred tax asset are as follows.
|  | December 31, |
|  | 2019 |  |  | 2018 |
|  | (Dollars in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Bad debt and credit loss deduction |  | $ | 24,282 |  |  | $ | 22,402 |
Net operating loss carryforward |  |  | 75 |  |  |  | 141 |
Deferred compensation |  |  | 6,942 |  |  |  | 6,109 |
PCI loans |  |  | 2,299 |  |  |  | 2,556 |
California franchise tax |  |  | 4,281 |  |  |  | 837 |
Accrued expense |  |  | 4,831 |  |  |  | 4,865 |
Unrealized loss on investment securities, net |  |  | - |  |  |  | 7,508 |
Acquired loan discounts |  |  | 15,180 |  |  |  | 25,555 |
Lease liability |  |  | 6,175 |  |  |  | - |
Other, net |  |  | 1,453 |  |  |  | 2,624 |
Gross deferred tax asset |  |  | 65,518 |  |  |  | 72,597 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation |  |  | 3,895 |  |  |  | 4,440 |
Intangibles - acquisitions |  |  | 16,941 |  |  |  | 19,843 |
FHLB Stock |  |  | 2,525 |  |  |  | 2,527 |
Deferred income |  |  | 3,055 |  |  |  | 2,716 |
Right of use asset |  |  | 5,893 |  |  |  | - |
Unrealized gain on investment securities, net |  |  | 6,968 |  |  |  | - |
Gross deferred tax liability |  |  | 39,277 |  |  |  | 29,526 |
Net deferred tax asset |  | $ | 26,241 |  |  | $ | 43,071 |
Annual Effective Tax Rate The annual consolidated effective tax rate for the periods presented, is reconciled to the U.S. statutory income rate as follows.
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |
|  | (Dollars in thousands) |
Federal income tax at statutory rate |  | $ | 61,126 |  |  |  | 21.0 | % |  | $ | 44,334 |  |  |  | 21.0 | % |  | $ | 66,078 |  |  |  | 35.0 | %
State franchise taxes, net of federal benefit |  |  | 24,430 |  |  |  | 8.4 | % |  |  | 17,905 |  |  |  | 8.5 | % |  |  | 12,903 |  |  |  | 6.9 | %
Tax-exempt income |  |  | (3,081 | ) |  |  | (1.1 | % ) |  |  | (2,991 | ) |  |  | (1.4 | %) |  |  | (4,450 | ) |  |  | (2.4 | %)
Tax credits |  |  | (2,153 | ) |  |  | (0.7 | % ) |  |  | (1,451 | ) |  |  | (0.7 | %) |  |  | (1,096 | ) |  |  | (0.6 | %)
Deferred tax asset revaluation adjustment |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 13,208 |  |  |  | 7.0 | %
Other, net |  |  | 2,925 |  |  |  | 1.0 | % |  |  | 1,315 |  |  |  | 0.6 | % |  |  | (2,259 | ) |  |  | (1.2 | %)
Provision for income taxes |  | $ | 83,247 |  |  |  | 28.6 | % |  | $ | 59,112 |  |  |  | 28.0 | % |  | $ | 84,384 |  |  |  | 44.7 | %
There were no unrecognized tax benefits at December 31, 2019 and 2018. 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, 201 5 through 2019 are open to audit by the federal authorities and our California state tax returns for the years ended December 31, 2013 through 2019 are open to audit by state authorities.

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- References No definition available. + Details
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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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