INCOME TAXES

12 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The provision for income taxes is as follows:

	At June 30,
(Dollars in thousands)	2022		2021		2020
Current:
Federal	$	64,800	$	61,827	$	51,893
State	43,843		37,037		33,852
	108,643		98,864		85,745
Deferred:
Federal	(5,600)		(5,562)		(3,814)
State	(3,800)		(3,266)		(2,737)
	(9,400)		(8,828)		(6,551)
Total	$	99,243	$	90,036	$	79,194

The differences between the statutory federal income tax rate and the effective tax rates are summarized as follows:

	At June 30,
	2022		2021		2020
Statutory federal tax rate	21.00	%	21.00	%	21.00	%
Increase (decrease) resulting from:
State taxes—net of federal tax benefit	9.13	%	8.70	%	9.27	%
Cash surrender value	(0.26)	%	(0.01)	%	(0.02)	%
Deferred tax asset write-off	—	%	—	%	0.77	%
Tax credits	(0.44)	%	(0.59)	%	(0.77)	%
Non-taxable income	(0.09)	%	(0.09)	%	(0.10)	%
Excess benefit RSU vesting	(1.31)	%	(0.64)	%	(0.05)	%
Other	1.16	%	1.08	%	0.05	%
Effective tax rate	29.19	%	29.45	%	30.15	%

The components of the net deferred tax asset are as follows:

	At June 30,
(Dollars in thousands)	2022		2021
Deferred tax assets:
Allowance for credit losses	$	59,045	$	51,663
State taxes	949		903
Stock-based compensation expense	5,101		4,891
Unrealized net losses on securities	1,261		—
Accrued compensation	2,533		3,388
Securities impaired	270		266
Non-accrual loan interest income	2,608		4,182
Lease liability	24,626		22,730
Net operating loss carryforward	1,273		1,811
Other liabilities – accruals	3,116		—
Total deferred tax assets	100,782		89,834
Deferred tax liabilities:
FHLB stock dividend	(842)		(830)
Other assets—prepaids	(2,083)		(2,717)
Depreciation and amortization	(8,838)		(9,998)
Operating lease right-of-use asset	(22,757)		(20,771)
Unrealized net gains on securities	—		(1,155)
Total deferred tax liabilities	(34,520)		(35,471)
Net deferred tax asset1	$	66,262	$	54,363

1 Net deferred tax asset is included in the other assets line on the consolidated balance sheet.

The Company records deferred tax assets for net operating losses when the benefit is more likely than not to be realized. As of June 30, 2022, the Company had federal net operating loss carryforwards of approximately $5.1 million. The annual 382 limitation is approximately $2.3 million for federal purposes. The Company also had state net operating loss carryforwards of $1.7 million. Of this amount, $1.6 million is subject to an annual 382 limitation of approximately $0.1 million for state purposes. These carryforwards begin to expire in 2034 and 2035 for federal and state purposes, respectively.

The Company establishes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of June 30, 2022, relating to a $2.4 million state net operating loss, the Company recognized a tax effected valuation allowance of $0.2 million. As of June 30, 2022 and 2021, the Company forecasts sufficient future consolidated earnings to realize its remaining deferred tax asset and has not provided for an additional allowance.

The following is a reconciliation of the beginning and ending amount of unrecognized tax positions for the periods presented:

(Dollars in thousands)	2022		2021		2020
Balance—beginning of period	$	3,369	$	813	$	1,084
Additions—current year tax positions	690		355		115
Additions—prior year tax positions	481		2,205		31
Reductions—prior year tax positions	(233)		(4)		(417)
Total liability for unrecognized tax positions—end of period	$	4,307	$	3,369	$	813

The Company is subject to federal income tax and income tax of state taxing authorities. The Company’s federal income tax returns for the years ended June 30, 2019, 2020, and 2021 and its state taxing authorities income tax returns for the years ended June 30, 2018, 2019, 2020 and 2021 are open to audit under the statutes of limitations by the Internal Revenue Service and state taxing authorities.

The Company received federal and state tax credits for the years ended June 30, 2022, 2021, and 2020, respectively. These tax credits reduced the effective tax rate by approximately 0.44%, 0.59%, and 0.77% respectively.