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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

10. INCOME TAXES

The current and deferred amounts of income tax expense consist of the following.

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

 

 

(Dollars in thousands)

 

Current provision:

 

 

 

 

 

 

 

 

 

Federal

 

$

44,514

 

 

$

48,328

 

 

$

51,564

 

State

 

 

27,526

 

 

 

28,469

 

 

 

29,487

 

 

 

 

72,040

 

 

 

76,797

 

 

 

81,051

 

Deferred provision:

 

 

 

 

 

 

 

 

 

Federal

 

 

8,782

 

 

 

(2,997

)

 

 

486

 

State

 

 

4,305

 

 

 

(1,439

)

 

 

1,710

 

 

 

 

13,087

 

 

 

(4,436

)

 

 

2,196

 

Total

 

$

85,127

 

 

$

72,361

 

 

$

83,247

 

 

 

Income tax asset consists of the following.

 

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in thousands)

 

Current:

 

 

 

 

 

 

Federal

 

$

5,452

 

 

$

5,408

 

State

 

 

2,150

 

 

 

2,610

 

 

 

 

7,602

 

 

 

8,018

 

Deferred:

 

 

 

 

 

 

Federal

 

 

16,500

 

 

 

14,779

 

State

 

 

8,501

 

 

 

6,743

 

 

 

 

25,001

 

 

 

21,522

 

Total

 

$

32,603

 

 

$

29,540

 

 

 

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,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in thousands)

 

Deferred tax assets:

 

 

 

 

 

 

Bad debt and credit loss deduction

 

$

23,228

 

 

$

32,671

 

Net operating loss carryforward

 

 

—

 

 

 

10

 

Deferred compensation

 

 

6,367

 

 

 

6,607

 

PCI loans

 

 

657

 

 

 

663

 

California franchise tax

 

 

3,873

 

 

 

4,584

 

Accrued expense

 

 

5,071

 

 

 

4,662

 

Unrealized loss on investment securities, net

 

 

423

 

 

 

—

 

Acquired loan discounts

 

 

5,863

 

 

 

9,709

 

Lease liability

 

 

6,472

 

 

 

6,369

 

Other, net

 

 

1,784

 

 

 

3,865

 

Gross deferred tax asset

 

 

53,738

 

 

 

69,140

 

Deferred tax liabilities:

 

 

 

 

 

 

Depreciation

 

 

3,443

 

 

 

2,675

 

Intangibles - acquisitions

 

 

12,812

 

 

 

15,376

 

FHLB Stock

 

 

2,525

 

 

 

2,525

 

Deferred income

 

 

3,825

 

 

 

3,544

 

Right of use asset

 

 

6,132

 

 

 

6,080

 

Unrealized gain on investment securities, net

 

 

—

 

 

 

17,418

 

Gross deferred tax liability

 

 

28,737

 

 

 

47,618

 

Net deferred tax asset

 

$

25,001

 

 

$

21,522

 

 

 

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,

 

 

 

2021

 

 

2020

 

 

2019

 

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

 

 

(Dollars in thousands)

 

Federal income tax at statutory rate

 

$

62,506

 

 

 

21.0

%

 

$

52,399

 

 

 

21.0

%

 

$

61,126

 

 

 

21.0

%

State franchise taxes, net of federal benefit

 

 

24,600

 

 

 

8.3

%

 

 

20,950

 

 

 

8.4

%

 

 

24,430

 

 

 

8.4

%

Tax-exempt income

 

 

(3,165

)

 

 

(1.1

)%

 

 

(3,191

)

 

 

(1.3

)%

 

 

(3,081

)

 

 

(1.1

)%

Tax credits

 

 

(1,640

)

 

 

(0.6

)%

 

 

(1,946

)

 

 

(0.8

)%

 

 

(2,153

)

 

 

(0.7

)%

Other, net

 

 

2,826

 

 

 

1.0

%

 

 

4,149

 

 

 

1.7

%

 

 

2,925

 

 

 

1.0

%

Provision for income taxes

 

$

85,127

 

 

 

28.6

%

 

$

72,361

 

 

 

29.0

%

 

$

83,247

 

 

 

28.6

%

 

There were no significant unrecognized tax benefits at December 31, 2021 and 2020. 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, 2015 through 2021 are open to audit by the federal authorities and our California state tax returns for the years ended December 31, 2015 through 2021 are open to audit by state authorities.