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INCOME TAXES | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | 16. INCOME TAXES Components of income tax expense (benefit) for the years ended December 31, 2023, 2022 and 2021 were as follows:
| Year Ended December 31,
(Dollars in thousands) | 2023 |  | 2022 |  | 2021
Current expense (benefit): |  |  |  |  |
Federal | $ | 5,538 |  |  | $ | 996 |  |  | $ | 11,304 |
State | 1,404 |  |  | (1,965) |  |  | 3,626 |
Total current | 6,942 |  |  | (969) |  |  | 14,930 |
Deferred expense: |  |  |  |  |
Federal | 9,300 |  |  | 18,854 |  |  | 8,654 |
State | 1,911 |  |  | 6,956 |  |  | 2,174 |
Total deferred | 11,211 |  |  | 25,810 |  |  | 10,828 |
Provision for income taxes | $ | 18,153 |  |  | $ | 24,841 |  |  | $ | 25,758 |
Income tax expense (benefit) for the periods presented differed from the "expected" tax expense (computed by applying the U.S. federal corporate tax rate of 21% for the years ended December 31, 2023, 2022 and 2021, to income before income taxes) for the following reasons:
| Year Ended December 31,
(Dollars in thousands) | 2023 |  | 2022 |  | 2021
Computed "expected" tax expense | $ | 16,133 |  |  | $ | 20,741 |  |  | $ | 22,187 |
Increase (decrease) in taxes resulting from: |  |  |  |  |
Tax-exempt interest income | (702) |  |  | (692) |  |  | (526) |
Other tax-exempt income | (1,023) |  |  | (392) |  |  | (734) |
Low-income housing tax credits | (508) |  |  | (530) |  |  | (365) |
State income taxes, net of Federal income tax effect, excluding impact of deferred tax valuation allowance | 3,827 |  |  | 4,982 |  |  | 5,377 |
Change in the valuation allowance for deferred tax assets allocated to income tax expense | 1,048 |  |  | 39 |  |  | (39) |
Other, net | (622) |  |  | 693 |  |  | (142) |
Total | $ | 18,153 |  |  | $ | 24,841 |  |  | $ | 25,758 |
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
| December 31,
(Dollars in thousands) | 2023 |  | 2022
Deferred tax assets |  |  |
Lease liability | $ | 8,162 |  |  | $ | 9,598 |
Allowance for credit losses | 13,643 |  |  | 13,534 |
Accrued expenses | 1,804 |  |  | 3,737 |
Employee retirement benefits | 1,926 |  |  | 1,941 |
Federal and state tax credit carryforwards | 2,208 |  |  | — |
Federal net operating loss carryforwards | 1,644 |  |  | 16,363 |
State net operating loss carryforwards | 4,503 |  |  | 7,583 |
Deferred compensation | 3,976 |  |  | 2,930 |
Premises and equipment | 4,161 |  |  | 4,717 |
Other | 5,679 |  |  | 6,962 |
Total deferred tax assets | 47,706 |  |  | 67,365 |
Deferred tax liabilities |  |  |
Right-of-use lease asset | 7,918 |  |  | 9,356 |
Intangible assets | 2,317 |  |  | 2,427 |
Other | 3,489 |  |  | 3,647 |
Total deferred tax liabilities | 13,724 |  |  | 15,430 |
Less: Deferred tax valuation allowance | 4,446 |  |  | 3,398 |
Net deferred tax assets | $ | 29,536 |  |  | $ | 48,537 |
In assessing the realizability of our net DTA, management considers whether it is more likely than not that some portion or all of the DTA will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income and tax-planning strategies in making this assessment. As of December 31, 2023, the valuation allowance on our net DTA totaled $4.4 million, which related to our DTA from net apportioned net operating loss ("NOL") carryforwards for California state income tax purposes as the Company does not expect to generate sufficient income in California to utilize the DTA. The net change in the valuation allowance was an increase of $1.0 million in 2023, compared to an increase of $39 thousand in 2022. Net of this valuation allowance, the Company's net DTA totaled $29.5 million as of December 31, 2023, compared to a net DTA of $48.5 million as of December 31, 2022, and is included in other assets in the Company's consolidated balance sheets. At December 31, 2023, the Company had NOL carryforwards for U.S. Federal income tax purposes of $7.8 million and state income tax purposes of $83.5 million, which are available to offset future taxable income. The U.S. Federal NOL carryforwards can be carried forward indefinitely to offset future federal taxable income. The Hawaii NOL carryforwards can also be carried forward indefinitely, while the other state NOL carryforwards will begin to expire if not utilized beginning in 2028. In addition, the Company has low-income housing tax credit carryforwards of approximately $0.7 million and $1.9 million for U.S. Federal and Hawaii state income tax purposes, respectively. If not utilized, the U.S. Federal tax credit carryforwards will begin to expire in 2042. The Hawaii state credit can be carried forward indefinitely. Utilization of the NOL carryforwards and credits may be subject to annual limitations due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitations may result in the expiration of net operating losses and credits before they are able to be utilized. The Company does not expect any previous ownership changes, as defined under Sections 382 and 383 of the Internal Revenue Code, to result in an ultimate limitation that will materially reduce the total amount of net operating loss carryforwards that can be utilized. At December 31, 2023, the Company did not have any material unrecognized tax benefits that, if recognized would favorably affect the effective income tax rate in future periods. The Company does not expect our unrecognized tax benefits to change significantly over the next 12 months. The Company is subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. As of December 31, 2023, the Company’s federal tax returns for 2016 and earlier, as well as 2019, were no longer subject to examination by the taxing authorities. The state tax returns for 2019 and earlier were no longer subject to examination by the taxing authorities. However, tax periods closed in a prior period may be subject to audit and re-examination by tax authorities for which tax carryforwards are utilized in subsequent years.

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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/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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