Note 10 - Income Taxes

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 10: Income Taxes

Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the amounts reported in the financial statements of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Amounts for the current year are based upon estimates and assumptions as of the date of these financial statements and could vary significantly from amounts shown on the tax returns as filed. Net deferred tax assets are included with other assets in the consolidated balance sheets.

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

	At December 31,
	2023		2022
	(In thousands)
Deferred tax asset
Allowance for credit losses	$	4,853	$	5,858
Securities available for sale		79,865		107,493
State franchise taxes		4,816		3,805
Deferred compensation		3,828		4,091
Purchased assets and assumed liabilities		321		229
Post-retirement benefits		367		405
Employee benefit accruals		3,454		3,096
VISA Class B shares		343		507
Accrued liabilities		1,172		840
Premises and equipment		1,175		1,193
Lease liability		5,413		4,548
Other		69		99
Total deferred tax asset		105,676		132,164
Deferred tax liability
Net deferred loan costs		-		193
Right-of-use asset		5,413		4,548
Intangible assets		451		453
Limited partnership investments		305		1,830
Total deferred tax liability		6,169		7,024
Net deferred tax asset	$	99,507	$	125,140

Based on Management’s judgment, a valuation allowance is not needed to reduce the gross deferred tax asset because it is more likely than not that the gross deferred tax asset will be realized through recoverable taxes or future taxable income. Net deferred tax assets are included with other assets in the consolidated balance sheets.

The provision for federal and state income taxes consists of amounts currently payable and amounts deferred as follows:

	For the Years Ended December 31,
	2023			2022			2021
	(In thousands)
Current income tax expense:
Federal	$	38,075		$	26,785		$	15,299
State		23,731			16,075			11,320
Total current		61,806			42,860			26,619
Deferred income tax (benefit) expense:
Federal		(1,197	)		(1,349	)		1,281
State		(798	)		2,046			842
Total deferred		(1,995	)		697			2,123
Provision for income taxes
Federal		-			-			(472	)
State		-			-			2,248
Total change in valuation reserve		-			-			1,776
Provision for income taxes	$	59,811		$	43,557		$	30,518

The provision for income taxes differs from the provision computed by applying the statutory federal income tax rate to income before taxes, as follows:  

	For the Years Ended December 31,
	2023			2022			2021
	(In thousands)
Federal income taxes due at statutory rate	$	46,532		$	34,774		$	24,576
(Reductions) additions in income taxes resulting from:
Interest on state and municipal securities and loans not taxable for federal income tax purposes		(1,188	)		(1,484	)		(2,070	)
State franchise taxes, net of federal income tax benefit		18,117			14,315			9,757
Change in valuation reserve		-			-			1,776
Stock compensation deduction less than (in excess of) book expense		3			30			-
Tax credits		(2,943	)		(3,439	)		(2,621	)
Dividend received deduction		(66	)		(56	)		(48	)
Cash value life insurance		(597	)		(421	)		(389	)
Other		(47	)		(162	)		(463	)
Provision for income taxes	$	59,811		$	43,557		$	30,518

At December 31, 2023 and December 31, 2022, the Company had no uncertain tax positions related to previous years’ tax returns which were under examination.

The Company classifies interest and penalties as a component of the provision for income taxes. For tax years 2023 and 2022, no interest or penalties were recognized as a component of the provision for income taxes. At December 31, 2023, the tax years ended December 31, 2022, 2021 and 2020 remain subject to examination by the Internal Revenue Service and the tax years ended December 31, 2022, 2021, 2020 and 2019 remain subject to examination by the California Franchise Tax Board.