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Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The following table presents the components of income tax expense for the years indicated:
Year Ended December 31,
202520242023
(In thousands)
Current Tax Expense:
Federal$46,763 $45,554 $34,219 
State1,611 1,156 3,387 
Total current tax expense48,374 46,710 37,606 
Deferred Tax (Benefit) Expense:
Federal5,518 (6,082)(238,865)
State30,210 1,138 (110,942)
Total deferred tax (benefit) expense 35,728 (4,944)(349,807)
Total income tax (benefit) expense$84,102 $41,766 $(312,201)
For the year ended December 31, 2025, the Company generated income before income taxes totaling $313 million, all of which was attributable to U.S. income. The Company does not have operations located outside the U.S.
In December 2023, the FASB issued ASU 2023-09, "Improvement to Income Tax Disclosure," which aims to enhance income tax disclosures with the intention to provide investors with better understanding of an entity’s global operations, effective tax rates and tax risks in making capital investment decisions. The new standard requires tax rate reconciliation to be segmented into eight standardized categories and to disaggregate items meeting or exceeding a 5% threshold.
Public business entities are required to adopt ASU 2023-09 for annual periods beginning after December 15, 2024, and should be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company adopted ASU 2023-09 in the calendar year beginning January 1, 2025, on a prospective basis.
The following table presents a reconciliation of the Company's income taxes for 2025:
Year Ended December 31, 2025
AmountPercent
(In thousands)
U.S federal statutory tax rate$65,746 21.0 %
State and local income taxes, net of federal benefits (1)
28,267 9.0 %
Tax credits:
Low income housing tax credits(5,527)(1.8)%
Changes in valuation allowances(982)(0.3)%
Nontaxable or nondeductible items:
Tax exempt interest income(16,643)(5.3)%
Disallowed interest expense9,233 3.0 %
Disallowed FDIC premium3,499 1.1 %
Other586 0.2 %
Changes in unrecognized tax benefits28 0.0 %
Other adjustments(105)0.0 %
Effective tax rate$84,102 26.9 %
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(1)    State taxes in California made up the majority (greater than 50%) of the tax effect in this category.
The following table presents income taxes paid (net of refunds received) for the year ended December 31, 2025:
Year Ended December 31, 2025
(In thousands)
U.S federal taxes$(7,760)
State and local taxes:
California14,611 
Other states694 
Total income taxes paid$7,545 
The following table presents a reconciliation of the recorded income tax expense to the amount of taxes computed by applying the applicable federal statutory income tax rates of 21% for 2024 and 2023 to earnings before income taxes:
Year Ended December 31,
20242023
(In thousands)
Computed expected income tax (benefit) expense at federal statutory rate$35,417 $(464,381)
State tax (benefit) expense, net of federal tax benefit12,657 (156,669)
Goodwill impairment— 286,811 
Tax‑exempt interest benefit(15,572)(12,518)
Increase in cash surrender value of life insurance(1,246)(1,455)
Low income housing tax credits, net of amortization(12,378)(8,574)
Nondeductible employee compensation1,683 3,947 
Nondeductible acquisition‑related expense— 5,456 
Nondeductible FDIC premiums9,377 18,973 
Change in unrecognized tax benefits40 443 
Valuation allowance change(2,115)(5,948)
Disallowed interest11,043 12,318 
Equity compensation shortfall (windfall)4,991 4,949 
State rate and apportionment changes(4,662)2,240 
Other, net2,531 2,207 
Recorded income tax (benefit) expense$41,766 $(312,201)
The Company recognized $54.3 million, $57.9 million, and $42.7 million of tax credits and other tax benefits associated with its investments in LIHTC partnerships for the years ended December 31, 2025, 2024, and 2023. The amount of amortization of such investments reported in income tax expense under the proportional amortization method of accounting was $45.0 million for 2025, $45.6 million for 2024, and $34.1 million for 2023.
As of December 31, 2025, for federal tax purposes, the Company had $151.7 million of LIHTC and solar tax credit carryforwards available to apply against future tax liability, expiring from 2042 to 2045. The Company had $12.7 million state LIHTC carryforwards, which can be carried forward indefinitely.
At December 31, 2025, we had $773.7 million of federal net operating loss carryforwards, almost all of which can be carried forward indefinitely, and approximately $1.33 billion of state net operating loss carryforwards available to be applied against future taxable income. A majority of the state net operating loss carryforwards will expire in varying amounts from 2026 through 2044. A portion of the state net operating loss carryforwards generated after December 31, 2017 can be carried forward indefinitely due to the state conformity to the federal net operating loss carryforward provisions as modified by the Tax Cuts and Jobs Act.
The following table presents the tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities as of the dates indicated:
December 31,
20252024
(In thousands)
Deferred Tax Assets:
Book allowance for loan losses in excess of tax specific charge-offs$78,989 $78,096 
Fair value mark on acquired loans43,637 65,100 
Interest on nonaccrual loans6,596 4,569 
Deferred compensation4,490 4,902 
Foreclosed assets valuation allowance86 335 
Net operating losses261,014 292,843 
Accrued liabilities88,077 102,232 
Unrealized loss from FDIC‑assisted acquisitions503 413 
Unrealized loss on securities available-for-sale54,454 79,977 
Unrealized loss on securities held-to-maturity51,006 62,162 
Tax mark-to-market on loans227 250 
Goodwill64,512 73,863 
Tax credits164,071 130,522 
Lease liability33,421 35,447 
FDIC indemnification asset1,779 7,028 
Other2,891 3,159 
Gross deferred tax assets855,753 940,898 
Valuation allowance(16,065)(19,015)
Deferred tax assets, net of valuation allowance839,688 921,883 
Deferred Tax Liabilities:
Core deposit and customer relationship intangibles20,367 27,292 
Deferred loan fees and costs861 2,193 
Unrealized gain on credit-linked notes1,706 1,452 
Premises and equipment, principally due to differences in depreciation2,181 5,710 
FHLB stock570 553 
Subordinated debt13,118 14,789 
Equity investments12,375 9,695 
Operating leases103,633 110,415 
ROU assets28,122 29,197 
Gross deferred tax liabilities182,933 201,296 
Total net deferred tax assets $656,755 $720,587 
Based upon our taxpaying history and estimates of taxable income over the years in which the items giving rise to the DTAs are deductible, management believes it is more likely than not the Company will realize the benefits of these DTAs. The Company's net DTAs decreased at December 31, 2025, compared to December 31, 2024 due primarily to a decrease in unrealized loss on AFS securities.
The Company had net income taxes receivable of $8.4 million and $18.0 million at December 31, 2025 and December 31, 2024.
As of December 31, 2025 and 2024, the Company had a valuation allowance of $16.1 million and $19.0 million against DTAs. Periodic reviews of the carrying amount of DTAs are made to determine if a valuation allowance is necessary. A valuation allowance is required, based on available evidence, when it is more likely than not that all or a portion of a DTA will not be realized due to the inability to generate sufficient taxable income in the period and/or of the character necessary to utilize the benefit of the DTA. All available evidence, both positive and negative, that may affect the realizability of the DTA is identified and considered in determining the appropriate amount of the valuation allowance. It is more likely than not that these DTAs subject to a valuation allowance will not be realized primarily due to their character and/or the expiration of the carryforward periods.
The net decrease of $3.0 million in the total valuation allowance during the year ended December 31, 2025 was primarily related to the expiration and the expected realization of state net operating losses DTA that were previously reserved.
The following table summarizes the activity related to the Company's unrecognized tax benefits for the years indicated:
Year Ended December 31,
Unrecognized Tax Benefits20252024
(In thousands)
Balance, beginning of year$645 $1,598 
Reductions for tax positions related to prior years— (953)
Reductions related to settlements(335)— 
Balance, end of year$310 $645 
Unrecognized tax benefits that would affect the effective tax rate if recognized$310 $645 
We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense.
For the year ended December 31, 2025, we reduced our accrual for interest expense and penalties by $0.1 million. For the year ended December 31, 2024,we reduced our accrual for interest expense and penalties by $0.4 million and recognized tax expense of $0.1 million. We had $0.1 million and $0.2 million accrued for the payment of interest and penalties as of December 31, 2025 and 2024, respectively.
We file federal and state income tax returns with the Internal Revenue Service (“IRS”) and various state and local jurisdictions and generally remain subject to examinations by these tax jurisdictions for tax years 2021 through 2024. We are currently under examination by the IRS and certain state and local jurisdictions for various tax years ranging between 2015 and 2022.