INCOME TAXES (Tables)

12 Months Ended

Sep. 30, 2022

The Company and its subsidiaries file a consolidated federal income tax return on a fiscal year basis. The provision for income taxes were as follows:


	Fiscal Year Ended September 30,
(Dollars in thousands)	2022		2021		2020
Federal:
Current	$	5,657	$	6,402	$	3,148
Deferred	12,900		(3,909)		(4,505)
	18,557		2,493		(1,357)
State:
Current	4,720		5,938		4,860
Deferred	4,687		2,270		2,158
	9,407		8,208		7,018
Income tax expense (benefit)	$	27,964	$	10,701	$	5,661

Components of Net Deferred Tax Asset (Liability)

The tax effects of the Company's temporary differences that give rise to significant portions of its deferred tax assets and liabilities were:


	At September 30,
(Dollars in thousands)	2022		2021
Deferred tax assets:
Bad debts	$	10,636	$	15,946
Deferred compensation	2,652		3,733
Stock based compensation	3,521		3,314



Valuation adjustments	3,047		4,111
General business credits(1)	52,684		49,196
Accrued expenses	1,948		2,780
Lease liability	8,074		9,206
Net unrealized losses on securities available for sale	71,336		—
Other assets	2,662		4,253
	156,560		92,539
Deferred tax liabilities:
Premises and equipment	(3,148)		(3,328)
Intangibles	(4,099)		(3,032)
Net unrealized gains on securities available for sale	—		(2,471)

Leased assets	(58,592)		(46,355)
Right-of-use assets	(7,758)		(8,877)
Other liabilities	(1,170)		(3,303)
	(74,767)		(67,366)
Net deferred tax assets	$	81,793	$	25,173

(1) The general business credits are investment tax credits generated from qualified solar energy property placed in service during the fiscal years ended September 30, 2022 and 2021. These credits expire on September 30, 2042 and 2041, respectively.

Reconciliation of Total Income Tax Expense

The Company's effective tax rate is calculated by dividing income tax expense by income before income tax expense.


	Fiscal Year Ended September 30,
	2022				2021				2020
(Dollars in thousands)	Amount		Rate		Amount		Rate		Amount		Rate
Statutory federal income tax expense and rate	$	38,714	21.0	%	$	32,854	21.0	%	$	24,151	21.0	%
Change in tax rate resulting from:
State income taxes net of federal benefits	7,413		4.0	%	6,452		4.1	%	5,444		4.7	%
162(m) disallowance	1,125		0.4	%	686		0.4	%	1,129		1.0	%
Tax exempt income	(743)		(0.4)	%	(835)		(0.5)	%	(1,212)		(1.0)	%

General business credits	(17,589)		(9.5)	%	(26,945)		(17.2)	%	(22,284)		(19.4)	%


Other, net	(956)		(0.3)	%	(1,511)		(1.0)	%	(1,567)		(1.4)	%
Income tax expense	$	27,964	15.2	%	$	10,701	6.8	%	$	5,661	4.9	%

Reconciliation of Liabilities Associated with Unrecognized Tax Benefits

A reconciliation of the beginning and ending balances for liabilities associated with unrecognized tax benefits follows:


	At September 30,
(Dollars in thousands)	2022		2021
Balance at beginning of fiscal year	$	777	$	1,091



Additions (reductions) for tax positions related to prior years	(132)		(314)
Balance at end of fiscal year	$	645	$	777