v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax expense consisted of the following for the year ended December 31, 2025. The Company does not have pretax income from continuing foreign operations or foreign tax expense.

202520242023
(Dollars in thousands)
Currently tax expense:
Federal$14,797 $9,639 $15,888 
State8,424 6,029 9,241 
Total current tax23,221 15,668 25,129 
Deferred tax expense (benefit):
Federal(2,199)582 616 
State(1,063)(104)231 
Total deferred tax (3,262)478 847 
Income tax expense$19,959 $16,146 $25,976 
The effective tax rate differs from the Federal statutory rate for the years ended December 31, as follows:
202520242023
(Dollars in thousands)
AmountPercentAmountPercentAmountPercent
Income before income tax expense$67,789 N/A$56,674 N/A$90,419 N/A
Income tax expense components:
   Statutory Federal income tax rate14,235 21.0 %11,902 21.0 %18,988 21.0 %
   State income taxes, net of federal tax benefit (1)
5,818 8.6 %4,675 8.3 %7,478 8.3 %
Tax credits:
    Low income housing credits, net of investment losses(197)(0.3)%(124)(0.2)%(139)(0.2)%
Nontaxable or nondeductible items:
   Merger related costs424 0.6 %— — %— — %
   Non-taxable interest income(165)(0.2)%(177)(0.3)%(187)(0.2)%
   Increase in cash surrender value of life insurance(465)(0.7)%(440)(0.8)%(426)(0.5)%
   Stock option/restricted stock windfall tax benefit(77)(0.1)%280 (0.2)%54 0.1 %
Other, net386 0.5 %30 0.7 %208 0.2 %
       Income tax expense and effective tax rate$19,959 29.4 %$16,146 28.5 %$25,976 28.7 %
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(1)State taxes in California made up the majority (greater than 50 percent) of the tax effect in this category).
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Income taxes paid, net of refunds received, for the year ended December 31 were as follows:
2025
2024
(Dollars in thousands)
Federal
$13,700 $7,800 
State and local:
    California
7,650 5,100 
    Other states
108319
    Total income tax expense
$21,458 $13,219 
Deferred tax assets and liabilities that result from the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes at December 31, are as follows:
20252024
(Dollars in thousands)
Deferred tax assets:
Allowance for credit losses on loans$14,687 $14,380 
Lease accounting8,363 8,979 
Defined postretirement benefit obligation7,583 7,451 
Accrued expenses5,510 3,241 
State income taxes1,688 1,266 
Stock compensation1,427 1,647 
Premises and equipment1,230 1,267 
California net operating loss carryforwards986 986 
Federal net operating loss carryforwards894 1,148 
Split-dollar life insurance benefit plan79 75 
Nonaccrual interest59 97 
Securities available-for-sale— 1,483 
Other225 296 
Total deferred tax assets42,731 42,316 
Deferred tax liabilities:
Lease accounting(8,363)(8,979)
Loan fees(2,385)(2,265)
Intangible liabilities(1,002)(1,337)
Prepaid expenses(757)(1,531)
Securities available-for-sale(159)— 
FHLB stock(156)(156)
I/O strips(5)(19)
Other(213)(212)
Total deferred tax liabilities(13,040)(14,499)
Net deferred tax assets$29,691 $27,817 
At December 31, 2025, the Company's federal net operating loss (“NOL”) carryforwards were $4,256,000 and the Company's California net operating loss carryforwards were $11,505,000. These amounts are attributable to the prior merger transactions. The realization of these NOL carryforwards for Federal and State tax purposes are limited on the amount of net operating losses that can be utilized annually under the current tax law. The above NOL carryforwards are presented net of the losses that will expire unutilized under current tax law. Since the NOL carryforwards are already presented net of the amounts that will expire by operation of current tax law, there is no need for a valuation allowance as the Company fully expects to utilize the amounts disclosed.
Under generally accepted accounting principles, a valuation allowance is required if it is “more likely than not” that a deferred tax asset will not be realized. The determination of the realizability of the deferred tax assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, including forecasts of future income, cumulative losses, applicable tax planning strategies, and assessments of current and future economic and business conditions. At December 31, 2025 and 2024 the Company recorded amount of uncertain tax positions was not considered significant for financial reporting and the Company does not expect this amount to significantly increase or decrease.
At December 31, 2025 and December 31, 2024 the Company had net deferred tax assets of $29,691,000 and $27,817,000, respectively. At December 31, 2025 and December 31, 2024, management determined that a valuation allowance for deferred tax assets was not necessary.
The Company and its subsidiaries are subject to U.S. Federal income tax as well as income tax of the State of California. The Company is no longer subject to examination by Federal and state taxing authorities for years before 2022, and by the State of California taxing authority for years before 2021.
The following table reflects the carrying amounts of the low income housing investments included in accrued interest receivable and other assets, and the future commitments included in accrued interest payable and other liabilities for the periods indicated:
December 31,
2025		December 31,
2024
(Dollars in thousands)
Low income housing investments$4,709 $2,201 
Future commitments$2,695 $475 
The Company expects $874,000 of the future commitments to be paid in 2026, and $1,219,000 in 2027 through 2028.
For tax purposes, the Company recognized low income housing tax credits of $399,000 and $563,000 for the years ended December 31, 2025 and December 31, 2024, respectively, and low income housing investment expense of $905,000 and $594,000, respectively. The Company recognizes low income housing investment expenses as a component of income tax expens