Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

11. INCOME TAXES

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

	Year Ended December 31,
	2020			2019		2018
	(Dollars in thousands)
Current provision:
Federal	$	48,328		$	51,564	$	31,055
State		28,469			29,487		20,546
		76,797			81,051		51,601
Deferred provision:
Federal		(2,997	)		486		5,158
State		(1,439	)		1,710		2,353
		(4,436	)		2,196		7,511
Total		$72,361		$	83,247	$	59,112

Income tax asset consists of the following.

	December 31,
	2020		2019
	(Dollars in thousands)
Current:
Federal	$	5,408	$	5,890
State		2,610		3,456
		8,018		9,346
Deferred:
Federal		14,779		17,580
State		6,743		8,661
		21,522		26,241
Total	$	29,540	$	35,587

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,
	2020		2019
	(Dollars in thousands)
Deferred tax assets:
Bad debt and credit loss deduction	$	32,671	$	24,282
Net operating loss carryforward		10		75
Deferred compensation		6,607		6,942
PCI loans		663		2,299
California franchise tax		4,584		4,281
Accrued expense		4,662		4,831
Acquired loan discounts		9,709		15,180
Lease liability		6,369		6,175
Other, net		3,865		1,453
Gross deferred tax asset		69,140		65,518
Deferred tax liabilities:
Depreciation		2,675		3,895
Intangibles - acquisitions		15,376		16,941
FHLB Stock		2,525		2,525
Deferred income		3,544		3,055
Right of use asset		6,080		5,893
Unrealized gain on investment securities, net		17,418		6,968
Gross deferred tax liability		47,618		39,277
Net deferred tax asset	$	21,522	$	26,241

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,
	2020						2019						2018
	Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Federal income tax at statutory rate	$	52,399			21.0	%	$	61,126			21.0	%	$	44,334			21.0	%
State franchise taxes, net of federal benefit		20,950			8.4	%		24,430			8.4	%		17,905			8.5	%
Tax-exempt income		(3,191	)		(1.3	%)		(3,081	)		(1.1	%)		(2,991	)		(1.4	%)
Tax credits		(1,946	)		(0.8	%)		(2,153	)		(0.7	%)		(1,451	)		(0.7	%)
Other, net		4,149			1.7	%		2,925			1.0	%		1,315			0.6	%
Provision for income taxes	$	72,361			29.0	%	$	83,247			28.6	%	$	59,112			28.0	%

There were no significant unrecognized tax benefits at December 31, 2020 and 2019. 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 2020 are open to audit by the federal authorities and our California state tax returns for the years ended December 31, 2015 through 2020 are open to audit by state authorities.