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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The following presents a summary of income tax provision for the years ended December 31:
| Current |  | Deferred |  | Total
| (Dollars in thousands)
2024 |  |  |  |  |
Federal | $ | 14,475 |  |  | $ | 3,760 |  |  | $ | 18,235 |
State | 13,576 |  |  | 1,523 |  |  | 15,099 |
| $ | 28,051 |  |  | $ | 5,283 |  |  | $ | 33,334 |
2023 |  |  |  |  |
Federal | $ | 22,076 |  |  | $ | 3,158 |  |  | $ | 25,234 |
State | 17,998 |  |  | 982 |  |  | 18,980 |
| $ | 40,074 |  |  | $ | 4,140 |  |  | $ | 44,214 |
2022 |  |  |  |  |
Federal | $ | 52,676 |  |  | $ | (6,366) |  |  | $ | 46,310 |
State | 34,050 |  |  | (2,589) |  |  | 31,461 |
| $ | 86,726 |  |  | $ | (8,955) |  |  | $ | 77,771 |
A reconciliation of the difference between the federal statutory income tax rate and the effective tax rate is shown in the following table for the years indicated:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
Statutory tax rate | 21.00 | % |  | 21.00 | % |  | 21.00 | %
State taxes-net of federal tax effect | 8.74 | % |  | 8.79 | % |  | 8.58 | %
Nondeductible transaction costs | 0.60 | % |  | — | % |  | — | %
Tax credits and benefits, net of amortization expenses | (7.25) | % |  | (4.67) | % |  | (2.99) | %
Bank owned life insurance | (0.28) | % |  | (0.24) | % |  | (0.22) | %
Tax exempt municipal bonds and loans | (0.08) | % |  | (0.82) | % |  | (0.26) | %
State tax rate change | 0.93 | % |  | 0.02 | % |  | 0.15 | %
Changes in uncertain tax positions | 0.21 | % |  | (0.59) | % |  | (0.23) | %
Other | 1.20 | % |  | 1.37 | % |  | 0.24 | %
Effective income tax rate | 25.07 | % |  | 24.86 | % |  | 26.27 | %
Deferred tax assets and liabilities at December 31, 2024 and 2023, were comprised of the following:
| December 31,
| 2024 |  | 2023
| (Dollars in thousands)
Deferred tax assets: |  |  |
Depreciation | $ | — |  |  | $ | 651 |
Statutory bad debt deduction less than financial statement provision | 47,626 |  |  | 50,402 |
Net operating loss carry-forward | 1,100 |  |  | 1,238 |
Investment security provision | 468 |  |  | 607 |
State tax deductions | 1,960 |  |  | 2,962 |
Accrued compensation | 21 |  |  | 28 |
Deferred compensation | 119 |  |  | 113 |
Mark to market on loans held for sale | 4 |  |  | 4 |
Nonaccrual loan interest | 4,753 |  |  | 4,246 |
Other real estate owned | — |  |  | 14 |
Non-qualified stock option and restricted share expense | 2,754 |  |  | 3,902 |
Lease liabilities | 13,945 |  |  | 16,734 |
Unrealized loss on securities AFS | 95,025 |  |  | 85,386 |
Other | 7,290 |  |  | 7,132 |
Total deferred tax assets | $ | 175,065 |  |  | $ | 173,419 |
Deferred tax liabilities: |  |  |
Purchase accounting fair value adjustment | $ | (8,331) |  |  | $ | (7,667) |
Depreciation | (95) |  |  | — |
FHLB stock dividends | (77) |  |  | (79) |
Deferred loan costs | (6,981) |  |  | (8,410) |
State taxes deferred and other | (3,376) |  |  | (3,660) |
Prepaid expenses | (2,834) |  |  | (2,228) |
Amortization of intangibles | (846) |  |  | (1,351) |
ROU assets | (12,481) |  |  | (14,809) |
Total deferred tax liabilities | $ | (35,021) |  |  | $ | (38,204) |
Net deferred tax assets | $ | 140,044 |  |  | $ | 135,215 |
Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. 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 bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. This analysis is updated quarterly and adjusted as necessary. Based on the analysis, the Company has determined that a valuation allowance for deferred tax assets was not required at December 31, 2024 and 2023. A summary of the Company’s net operating loss carry-forwards at December 31, 2024 and 2023, is as follows:
| Federal |  | State
| Remaining Amount |  | Expires |  | Annual Limitation |  | Remaining Amount |  | Expires |  | Annual Limitation
| (Dollars in thousands)
2024 |  |  |  |  |  |  |  |  |  |  |
Saehan Bank (acquired by Wilshire) | $ | 1,357 |  |  | 2030 |  | $ | 226 |  |  | $ | 1,809 |  |  | 2032 |  | $ | 226 |
Pacific International Bank | 3,150 |  |  | 2032 |  | 420 |  |  | — |  |  | N/A |  | — |
Total | $ | 4,507 |  |  |  |  | $ | 646 |  |  | $ | 1,809 |  |  |  |  | $ | 226 |
2023 |  |  |  |  |  |  |  |  |  |  |
Saehan Bank (acquired by Wilshire) | $ | 1,583 |  |  | 2030 |  | $ | 226 |  |  | $ | 2,035 |  |  | 2032 |  | $ | 226 |
Pacific International Bank | 3,570 |  |  | 2032 |  | 420 |  |  | — |  |  | N/A |  | — |
Total | $ | 5,153 |  |  |  |  | $ | 646 |  |  | $ | 2,035 |  |  |  |  | $ | 226 |
In 2020, the California Assembly Bill 85 (A.B. 85) was signed into law. A.B. 85 suspends the use of the net operating loss (“NOL”) for the 2020, 2021, and 2022 tax years. For NOL incurred in tax years before 2020 for which a deduction is denied, the carryover period is extended by three years. On February 9, 2022, Senate Bill 113 (“S.B. 113”) was signed into law, and among other changes, S.B. reinstates the California NOL deductions for tax years beginning in 2022, in effect shortening the suspension period for NOL deductions from A.B. 85 by one year. The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of the state of California and various other states. The statute of limitations for the assessment of taxes for the consolidated Federal income tax return is closed for all tax years up to and including 2020. The expiration of the statute of limitations for the assessment of taxes for the various state income and franchise tax returns for the Company and subsidiaries varies by state. The Company is currently under examination by the New York City Department of Finance for the 2016, 2017 and 2018 tax years. While the outcome of the examination is unknown, the Company expects no material adjustments. In 2023, the Company was contacted by the California Franchise Tax Board (“FTB”) regarding an examination of the Company’s 2018 tax year. While the outcome of the examination is unknown, the Company expects no material adjustments. A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2024 and 2023, is as follows:
| Year Ended December 31,
| 2024 |  | 2023
| (Dollars in thousands)
Balance at January 1, | $ | 469 |  |  | $ | 2,951 |
Additions based on tax positions related to prior years | 311 |  |  | 169 |
Settlement of tax positions related to prior years | — |  |  | (1,234) |
Expiration of statute of limitations | (84) |  |  | (1,417) |
Balance at December 31, | $ | 696 |  |  | $ | 469 |
The total amount of unrecognized tax benefits was $696 thousand at December 31, 2024, and $469 thousand at December 31, 2023. The total amount of tax benefits, if recognized, would favorably impact the effective tax rate by $707 thousand and $434 thousand at December 31, 2024 and 2023, respectively. Management believes it is reasonably possible that the unrecognized tax benefits may decrease by approximately $214 thousand within the next twelve months due to an anticipated settlement with a state tax authority and the expiration of statute of limitations.

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