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INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES
16. INCOME TAXES

Components of income tax expense (benefit) for the years ended December 31, 2025, 2024 and 2023 are presented below. The Company does not have pretax income from continuing foreign operations or foreign tax expense.

Year Ended December 31,
(Dollars in thousands)202520242023
Current expense:
Federal$29,299 $5,744 $5,538 
State6,993 112 1,404 
Total current36,292 5,856 6,942 
Deferred (benefit) expense:
Federal(12,576)6,800 9,300 
State(2,915)1,971 1,911 
Total deferred(15,491)8,771 11,211 
Provision for income taxes$20,801 $14,627 $18,153 

The table below provides the updated requirements of ASU 2023-09 for 2025. Income tax expense (benefit) for the periods presented differed from the "expected" tax expense (computed by applying the U.S. federal corporate tax rate of 21% for the years ended December 31, 2025, 2024 and 2023, to income before income taxes) for the following reasons. The Company does not have pretax income from continuing foreign operations or foreign tax expense.

Year Ended December 31,
202520242023
(Dollars in thousands)$%$%$%
U.S. Federal statutory tax rate$20,639 21.00 %$14,288 21.00 %$16,133 21.00 %
Effect of:
State and local income taxes, net of Federal income tax effect *3,221 3.28 %1,646 2.42 %2,619 3.41 %
Tax credits:
Amortization of low-income housing tax credit partnerships, net of tax benefits264 0.27 %880 1.29 %700 0.91 %
Other tax credits(663)(0.67)%(142)(0.21)%— — %
Nontaxable and nondeductible items:
Tax-exempt interest income(1,203)(1.22)%(868)(1.28)%(702)(0.91)%
Tax-exempt income from bank-owned life insurance(1,565)(1.59)%(1,370)(2.01)%(1,023)(1.33)%
Other92 0.09 %443 0.65 %293 0.38 %
Other adjustments16 — %(250)(0.36)%133 0.17 %
Total$20,801 21.16 %$14,627 21.50 %$18,153 23.63 %

* State taxes in Hawaii made up the majority (greater than 50 percent) of the tax effect in this category.
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below. Net deferred tax assets are included in other assets on the Company's consolidated balance sheets.

December 31,
(Dollars in thousands)20252024
Deferred tax assets  
Lease liability$6,839 $8,530 
Allowance for credit losses12,790 12,643 
Accrued expenses3,497 2,576 
Employee retirement benefits1,785 1,765 
Federal and state tax credit carryforwards— 1,590 
State net operating loss carryforwards2,986 2,890 
Deferred compensation4,836 4,207 
Premises and equipment4,173 4,460 
Other3,359 1,667 
Total deferred tax assets40,265 40,328 
Deferred tax liabilities 
Right-of-use lease asset6,644 8,210 
Intangible assets2,321 2,257 
Available-for-sale and held-to-maturity investment securities1,242 5,749 
Unamortized loan cost2,460 2,605 
Other607 575 
Total deferred tax liabilities13,274 19,396 
Less: Deferred tax valuation allowance3,374 3,106 
Net deferred tax assets$23,617 $17,826 

Income tax payments, net of refunds, by jurisdictions is as follows for the periods presented:

Year Ended December 31,
(Dollars in thousands)202520242023
Income tax payments, net of refunds, by jurisdiction:
Federal$20,466 $(8,712)$7,283 
Hawaii— (593)— 
Other886 92 30 
Total$21,352 $(9,213)$7,313 

Federal income tax payments in the table above includes a cash payment made to a third party for the purchase of transfer tax credits of $8.4 million in 2025. Federal income tax payments in 2024 and 2023 do not include any cash payments made to third parties for the purchase of transfer tax credits.

In assessing the realizability of our net DTA, management considers whether it is more likely than not that some portion or all of the DTA will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income and tax-planning strategies in making this assessment.

As of December 31, 2025, the valuation allowance on our net DTA totaled $3.4 million, which related to our DTA from net apportioned net operating loss ("NOL") carryforwards for California state income tax purposes as the state has suspended the
use of NOL carryforwards for tax years 2024 through 2026. The net change in the valuation allowance was an increase of $0.3 million in 2025, compared to a decrease of $1.3 million in 2024.

Net of this valuation allowance, the Company's net DTA totaled $23.6 million as of December 31, 2025, compared to a net DTA of $17.8 million as of December 31, 2024, and is included in other assets in the Company's consolidated balance sheets.

The U.S. Federal and most of the state NOL carryforwards, except for California, have been utilized as of December 31, 2025. At December 31, 2025, the Company had NOL carryforwards for California state income tax purposes of $34.9 million, which are available to offset future taxable income. The California state NOL carryforwards will begin to expire if not utilized beginning in 2031.

Utilization of the NOL carryforwards and credits may be subject to annual limitations due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitations may result in the expiration of net operating losses and credits before they are able to be utilized. The Company does not expect any previous ownership changes, as defined under Sections 382 and 383 of the Internal Revenue Code, to result in an ultimate limitation that will materially reduce the total amount of net operating loss carryforwards that can be utilized.

At December 31, 2025, the Company did not have any material unrecognized tax benefits that, if recognized would favorably affect the effective income tax rate in future periods.

The Company is subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. As of December 31, 2025, the Company’s federal tax returns for 2021 and prior years, and its state tax returns for 2020 and prior years, were no longer subject to examination by the respective taxing authorities. However, tax periods that are otherwise closed may still be subject to audit to the extent that tax attributes, such as net operating losses or tax credit carryforwards, are utilized in subsequent years.