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Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | Note 12 — Income Taxes In accordance with the provisions of FASB ASC 740, the Company periodically reviews its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This review takes into consideration the status of current taxing authorities’ examinations of the Company’s tax returns, recent positions taken by the taxing authorities on similar transactions, if any, and the overall tax environment. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | Year Ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
|  | (In thousands) |
Unrecognized tax benefits at beginning of year |  | $ | 1,254 |  |  | $ | 1,254 |  |  | $ | 1,281 |
Gross increases for tax positions of prior years |  |  | 676 |  |  |  | — |  |  |  | 14 |
Gross decreases for tax positions of prior years |  |  | (165 | ) |  |  | — |  |  |  | — |
Lapse of statute of limitations |  |  | — |  |  |  | — |  |  |  | (41 | )
Unrecognized tax benefits at end of year |  | $ | 1,765 |  |  | $ | 1,254 |  |  | $ | 1,254 |
The total amount of unrecognized tax benefits that would affect our effective tax rate if recognized was $1.5 million, $1.0 million and $1.0 million as of December 31, 2014, 2013 and 2012, respectively. For the year ended December 31, 2014, unrecognized tax benefits increased by $676,000 related to California Enterprise Zone interest deduction, offset by a $165,000 decrease in connection with the tax position taken on expense related to non-qualified stock option. For the year ended December 31, 2013, there was no addition in unrecognized tax benefit except increases in accrued interest. For the year ended December 31, 2012, unrecognized tax benefits decreased by $27,000 in connection with the tax position taken on expense related to prior business acquisition cost. In 2014, 2013 and 2012, the Company accrued interest of $52,000, $45,000 and $41,000 for uncertain tax benefits, respectively. As of December 31, 2014, 2013 and 2012, the total amounts of accrued interest related to uncertain tax positions were $366,000, $403,000 and $360,000, respectively. We account for interest and penalties related to uncertain tax positions as part of our provision for federal and state income taxes. Accrued interest and penalties are included within the related tax liability line on the Consolidated Balance Sheets. Unrecognized tax benefits primarily include state exposures from California Enterprise Zone interest deductions and income tax treatment for prior business acquisition costs, and dividend income from FRB stock. We believe that it is reasonably possible that certain remaining unrecognized tax positions, each of which are individually insignificant, may be recognized by the end of 2015 because of a lapse of the statute of limitations. We do not anticipate any material change in the total amount of unrecognized tax benefits to occur within the next twelve months. As of December 31, 2014, the Company was subject to examination by various federal and state tax authorities for the years ended December 31, 2004 through 2013. As of December 31, 2014, the Company was subjected to audit or examination by Internal Revenue Service for the 2009 tax year and California FTB for the 2008 and 2009 tax years. Management does not anticipate any material changes in our financial statements due to the result of the audits. A summary of the provision (benefit) for income taxes was as follows:
|  | Year Ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
|  | (In thousands) |
Current expense: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 21,037 |  |  | $ | 12,711 |  |  | $ | 5,680 |
State |  |  | 5,753 |  |  |  | 463 |  |  |  | 35 |
Total current expense |  |  | 26,790 |  |  |  | 13,174 |  |  |  | 5,715 |
Deferred expense: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (3,597 | ) |  |  | 8,197 |  |  |  | (25,911 | )
State |  |  | (333 | ) |  |  | 1,401 |  |  |  | (26,501 | )
Total deferred expense |  |  | (3,830 | ) |  |  | 9,598 |  |  |  | (52,412 | )
Provision (benefit) for income taxes |  | $ | 22,860 |  |  | $ | 22,772 |  |  | $ | (46,697 | )
Deferred tax assets and liabilities were as follows:
|  | Year Ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
|  | (In thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |
Credit loss provision |  | $ | 47,829 |  |  | $ | 27,607 |  |  | $ | 29,995 |
Depreciation |  |  | 3,855 |  |  |  | 1,180 |  |  |  | 1,253 |
Net operating loss carryforward |  |  | 33,659 |  |  |  | 31,140 |  |  |  | 33,875 |
Unrealized loss on securities available for sale, interest-only strips |  |  | 287 |  |  |  | 7,641 |  |  |  | — |
Tax credit |  |  | 6,777 |  |  |  | 5,661 |  |  |  | 5,426 |
Other |  |  | 5,563 |  |  |  | 2,831 |  |  |  | 3,766 |
Total deferred tax assets |  |  | 97,970 |  |  |  | 76,060 |  |  |  | 74,315 |
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Mark to market |  |  | (7,040 | ) |  |  | (10,112 | ) |  |  | (5,562 | )
Purchase accounting |  |  | (3,981 | ) |  |  | (3,083 | ) |  |  | (3,217 | )
Unrealized gain on securities available for sale, interest-only strips |  |  | — |  |  |  | — |  |  |  | (3,096 | )
State taxes |  |  | (11,316 | ) |  |  | (8,832 | ) |  |  | (9,408 | )
Indemnified assets |  |  | (3,263 | ) |  |  | — |  |  |  | — |
Other |  |  | (2,220 | ) |  |  | (2,145 | ) |  |  | (1,963 | )
Total deferred tax liabilities |  |  | (27,820 | ) |  |  | (24,172 | ) |  |  | (23,247 | )
Valuation allowance |  |  | — |  |  |  | — |  |  |  | — |
Net deferred tax assets |  | $ | 70,150 |  |  | $ | 51,888 |  |  | $ | 51,069 |
As of December 31, 2014 net deferred tax assets, which were primarily the results of allowance for loan losses and net operating loss carryforwards, increased by $18.3 million due mainly to the acquisition of CBI. As of December 31, 2013, the Company’s net deferred tax assets were primarily the result of net operating loss carryforwards, allowance for loan losses and unrealized loss on securities available for sale. For the year ended December 31, 2012, the Company recorded a net valuation allowance release of $62.6 million based on management’s reassessment of the amount of its deferred tax assets that are more likely than not to be realized. As of each reporting date, management considers the realization of deferred tax assets based on management’s judgment of various future events and uncertainties, including the timing and amount of future income, as well as the implementation of various tax planning strategies to maximize realization of deferred tax assets. A valuation allowance is provided when it is more likely than not that some portion of deferred tax assets will not be realized. As of December 31, 2014, management determined that no valuation allowance for deferred tax assets is required, as management believes it is more likely than not that deferred tax assets will be realized principally through future reversals of existing taxable temporary differences. Management further believes that future taxable income will be sufficient to realize the benefits of temporary deductible differences that cannot be realized through carry-back to prior years or through the reversal of future temporary taxable differences. As of December 31, 2014, the Company had net operating loss carryforwards of $20.9 million and $245.8 million for federal and state income tax purposes, respectively, which are available to offset future taxable income, if any, through 2033. Reconciliation between the federal statutory income tax rate and the effective tax rate is shown in the following table:
|  | Year Ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Federal statutory income tax rate |  |  | 35.00 | % |  |  | 35.00 | % |  |  | 35.00 | %
State taxes, net of federal tax benefits |  |  | 5.86 | % |  |  | 4.40 | % |  |  | 0.11 | %
Tax-exempt municipal securities |  |  | -0.07 | % |  |  | -0.16 | % |  |  | -0.32 | %
Tax credit - federal |  |  | -2.27 | % |  |  | -1.88 | % |  |  | -2.90 | %
Bargain purchase gain |  |  | -7.03 | % |  |  | 0.00 | % |  |  | 0.00 | %
Other |  |  | -0.01 | % |  |  | -0.99 | % |  |  | -0.35 | %
Valuation allowance |  |  | 0.00 | % |  |  | 0.00 | % |  |  | -138.58 | %
Effective tax rate |  |  | 31.48 | % |  |  | 36.37 | % |  |  | -107.04 | %

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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