Income Taxes

12 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes charged to operations consists of the following for the fiscal years ended September 30, 2020, 2019 and 2018.

	Fiscal Years Ended September 30,
	2020		2019		2018
	(dollars in thousands)
Currently paid or payable
Federal	$	18,511	$	30,779	$	42,261
State	3,733		9,327		10,556
Total	22,244		40,106		52,817
Deferred tax (benefit) expense
Federal	(39,563)		7,507		20,205
State	(8,191)		617		1,097
Total	(47,754)		8,124		21,302
Total (benefit from) provision for income taxes	$	(25,510)	$	48,230	$	74,119

The income tax provision differs from the amount of income tax determined by applying a U.S. federal income tax rate of 21.0% for fiscal years 2020 and 2019, and a blended U.S. federal income tax rate of 24.5% for fiscal year 2018 to pretax income due to the following.

	Fiscal Years Ended September 30,
	2020		2019		2018
	(dollars in thousands)
Income tax expense computed at the statutory rate	$	(148,327)	$	45,275	$	56,915
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal benefit	(3,521)		7,855		8,795
Tax exempt interest income	(5,515)		(5,193)		(5,778)
Tax impact of stock-based compensation plans	83		(91)		(424)
Tax impact of goodwill impairment	131,051		—		—
Impact of enacted federal income tax rate reduction	—		—		13,709
Other	719		384		902
Income tax expense, as reported	$	(25,510)	$	48,230	$	74,119

Net deferred tax assets (liabilities) consist of the following components at September 30, 2020 and 2019.

	September 30,
	2020		2019
	(dollars in thousands)
Deferred tax assets:
Allowance for loan and lease losses	$	36,177	$	17,214
Compensation	3,547		4,017
Securities available for sale	—		—
Other real estate owned	3,067		574
Core deposit intangible and other fair value adjustments	2,554		3,868
Excess tax basis of FDIC indemnification asset and clawback liability	—		4,095
Excess tax basis of loans acquired over carrying value	2,059		2,656
Other reserves	9,245		2,926
Goodwill and other intangibles	11,075		—
Lease liability	5,805		—
Other	7,268		6,350
Total deferred tax assets	80,797		41,700

	September 30,
	2020		2019
Deferred tax liabilities:
Goodwill and other intangibles	—		(15,064)
Securities available for sale	(11,749)		(4,419)
Premises and equipment	(7,167)		(5,869)
Deferred REIT income	(8,522)		(8,783)
Right of use asset	(5,399)		—
Other	(251)		(279)
Total deferred tax liabilities	(33,088)		(34,414)
Net deferred tax assets	$	47,709	$	7,286

At September 30, 2020 and 2019, the Company had an income tax receivable from the IRS of $10.8 million and $8.4 million, respectively, which is included in other assets on the consolidated balance sheets. The Company is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before 2016.

On December 22, 2017, the Tax Reform Act was enacted into law. Beginning in 2018, the Tax Reform Act reduced the federal tax rate for corporations from 35% to 21% and changed or limited certain tax deductions. Because of the Company's September 30 fiscal year end, a blended statutory rate of 24.5% was applied to all net income before taxes generated during fiscal year 2018 . The new blended statutory rate reduced the provision for income taxes by approximately $19.7 million for the fiscal year ended September 30, 2018. Another result of the lower corporate tax rate was the Company's recording of a $13.6 million revaluation adjustment in the first quarter of fiscal year 2018, reducing net deferred tax assets and increasing the provision for income taxes. Differences between the actual impact of revaluing deferred taxes for the full fiscal year and the preliminary estimate were immaterial.

The Bank's effective tax rate for the fiscal years ended September 30, 2020 and 2019 was 3.6% and 22.4%, respectively.

Management has determined a valuation reserve is not required for the deferred tax assets as of September 30, 2020 and 2019 because it is more-likely-than-not these assets could be realized through carryback offsets to taxable income in prior years, future reversals of existing taxable temporary differences, and future taxable income. Uncertain tax positions were not significant at September 30, 2020 or 2019.