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Income Taxes
 12 Months Ended
Sep. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Under generally accepted accounting principles, the Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to reverse.
The table below provides a summary of the Company's tax assets and liabilities, including deferred tax assets and deferred tax liabilities by major source. Deferred tax balances represent temporary differences between the financial statement and corresponding tax treatment of income, gains, losses, deductions or credits. With the completion of the Merger, the deferred tax amounts now include a number of deferred tax items carried over from LBC, as well as new deferred tax items created as a consequence of the purchase accounting process and post-merger asset sales. In particular, deferred tax assets now include significant new items for loan purchase discount and loss carryover.
September 30, 2024September 30, 2023
 (In thousands)
Deferred tax assets
Allowance for credit losses$53,227 $46,191 
REO reserves480 300 
Non-accrual loan interest3,124 1,797 
Accrued bonus and deferred compensation7,815 2,901 
Stock based compensation4,696 3,089 
Lease liability9,626 5,367 
Loan purchase discount48,064 — 
Loss carryover68,483 — 
Other1,739 2,804 
Total deferred tax assets197,254 62,449 
Deferred tax liabilities
FHLB stock dividends6,171 9,741 
Net unrealized gain on available-for-sale securities and cash flow hedges13,758 13,933 
Loan origination fees and costs11,777 11,471 
Premises and equipment16,390 18,155 
Lease right-of-use assets9,304 4,841 
Equity investments3,700 4,244 
Acquired intangibles12,824 4,798 
Other184 483 
Total deferred tax liabilities74,108 67,666 
Net deferred tax asset (liability)123,146 (5,217)
Current tax asset (liability)(3,898)13,696 
Net tax asset (liability)$119,248 $8,479 
At the end of the fiscal year, the Company has about $290 million of ordinary tax loss to be carried to future years. The loss carryover amount is based in large part from the tax loss realized from the portfolio loan sale following the Luther Burbank merger. Because of the annual loss limitation rules under Section 382 of the Internal Revenue Code, it will take about 17 years for the Company to utilize all that loss carryover against its future taxable income. However, there is no applicable time limit in this case, and therefore Company does not anticipate any expiration of the loss carryover amount.
In its deferred tax assets at the end of the fiscal year, the Company also has about $1.2 million of remaining Oregon tax credits that the Company previously purchased as part of its community investments to support Oregon farmworkers housing. That remaining Oregon tax credit will be fully utilized under an installment schedule over the next two years.
The table below presents a reconciliation of the statutory federal income tax rate to the Company's effective income tax rate.

Year ended September 30,202420232022
Statutory income tax rate21.0 %21.0 %21.0 %
State income tax2.3 1.7 1.9 
Tax-exempt interest income(2.1)(1.2)(0.9)
Interest expense disallowance1.2 0.5 0.1 
Low-income housing investments(1.1)(1.3)(0.9)
Other differences0.6 0.1 — 
Effective income tax rate21.9 %20.8 %21.2 %

The following table summarizes the Company's income tax expense (benefit) for the respective periods.
Year ended September 30,202420232022
(In thousands)
Federal:
Current$54,817 $58,667 $50,854 
Deferred(4,767)3,334 7,187 
50,050 62,001 58,041 
State:
  Current7,837 4,425 6,600 
  Deferred(1,872)1,224 (934)
5,965 5,649 5,666 
Total
  Current62,654 63,092 57,454 
  Deferred(6,639)4,558 6,253 
$56,015 $67,650 $63,707 

The Company does not have a liability for uncertain tax positions as of September 30, 2024 or September 30, 2023.
The Company's federal income tax returns are open and subject to potential examination by the IRS for fiscal years 2021 and later. State income tax returns are generally subject to examination for a period of three to five years after filing. The state impact of any federal changes remains subject to examination by various states for a period of up to two years after formal notification to the states.