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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Note 11 — Income Taxes In accordance with the provisions of 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, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (in thousands) |
Unrecognized tax benefits at beginning of year |  | $ | — |  |  | $ | 73 |  |  | $ | 202 |
Gross decreases for tax positions of prior years |  |  | — |  |  |  | (73 | ) |  |  | (202 | )
Gross increase for new tax positions |  |  | 258 |  |  |  | — |  |  |  | 73 |
Unrecognized tax benefits at end of year |  | $ | 258 |  |  | $ | — |  |  | $ | 73 |
The total amount of unrecognized tax benefits that would affect our effective tax rate if recognized was $258,000, $0 and $73,000 as of December 31, 2021, 2020 and 2019, respectively. For the year ended December 31, 2021, unrecognized tax benefits increased by $258,000 related to California Enterprise Zone hiring credits. For the year ended December 31, 2020, unrecognized tax benefits decreased by $73,000 related to the filing of state income tax returns for open tax years and jurisdictions in which the Company had nexus. For the year ended December 31, 2019, unrecognized tax benefits decreased by $129,000 related to state taxes, primarily in connection with the settlement of the California Franchise Tax Board 2008 and 2009 examinations. 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 accrued expenses and liabilities on the Consolidated Balance Sheets. As of December 31, 2021, the Company is subject to examination by federal and various state tax authorities for certain years ending December 31, 2017 through 2020. A summary of the provision for income taxes was as follows:
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (in thousands) |
Current expense: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 21,805 |  |  | $ | 10,565 |  |  | $ | 18,737 |
State |  |  | 10,901 |  |  |  | 6,310 |  |  |  | 9,377 |
Total current expense |  |  | 32,706 |  |  |  | 16,875 |  |  |  | 28,114 |
Deferred expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 4,914 |  |  |  | 663 |  |  |  | (10,515 | )
State |  |  | (803 | ) |  |  | (239 | ) |  |  | (3,039 | )
Total deferred expense |  |  | 4,111 |  |  |  | 424 |  |  |  | (13,554 | )
Income tax expense |  | $ | 36,817 |  |  | $ | 17,299 |  |  | $ | 14,560 |
Deferred tax assets and liabilities were as follows:
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |
Provision for credit losses |  | $ | 21,671 |  |  | $ | 26,883 |  |  | $ | 18,401 |
Purchase accounting |  |  | 3,360 |  |  |  | 3,902 |  |  |  | 3,912 |
Net operating loss carryforward |  |  | 15,316 |  |  |  | 15,342 |  |  |  | 15,453 |
Unrealized loss on securities available for sale |  |  | 3,421 |  |  |  | — |  |  |  | — |
Mark to market |  |  | — |  |  |  | — |  |  |  | 261 |
Lease liability |  |  | 14,712 |  |  |  | 15,562 |  |  |  | 10,716 |
Tax credits |  |  | — |  |  |  | — |  |  |  | 198 |
State taxes |  |  | 2,318 |  |  |  | 1,223 |  |  |  | 1,739 |
Other |  |  | 4,032 |  |  |  | 3,669 |  |  |  | 3,766 |
Total deferred tax assets |  |  | 64,830 |  |  |  | 66,581 |  |  |  | 54,446 |
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Mark to market |  |  | (3,531 | ) |  |  | (1,660 | ) |  |  | — |
Depreciation |  |  | (1,292 | ) |  |  | (631 | ) |  |  | (388 | )
Unrealized gain loss on securities available for sale |  |  | — |  |  |  | (1,247 | ) |  |  | (1,370 | )
Leases - right of use assets |  |  | (13,738 | ) |  |  | (15,044 | ) |  |  | (10,517 | )
Other |  |  | (2,650 | ) |  |  | (2,228 | ) |  |  | (532 | )
Total deferred tax liabilities |  |  | (21,211 | ) |  |  | (20,810 | ) |  |  | (12,807 | )
Valuation allowance |  |  | (1,644 | ) |  |  | (4,352 | ) |  |  | (4,852 | )
Net deferred tax assets |  | $ | 41,975 |  |  | $ | 41,418 |  |  | $ | 36,787 |
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, 2021, management determined that a valuation allowance of $1.6 million was appropriate against certain state net operating losses. For all other deferred tax assets, management believes it was more likely than not that these deferred tax assets will be realized principally through future taxable income and reversal of existing taxable temporary differences. As of December 31, 2020, management determined a valuation allowance of $4.4 million was appropriate against certain state net operating losses and certain state tax credits. As of December 31, 2021, the Company had net operating loss carryforwards of $12.3 million and $214.5 million for federal and state income tax purposes, respectively. The federal net operating loss carryforwards of $12.3 million expire at various dates from 2034 to 2035. The state net operating loss carryforwards include California of $152.3 million, which expire at various dates from 2031 to 2035, and Illinois of $62.1 million, which expire at various dates from 2035 to 2036. Management determined that a partial valuation allowance was required against the Illinois net operating loss carryforwards. As of December 31, 2021, the Company had zero state low income housing tax credit carryforwards. Reconciliation between the federal statutory income tax rate and the effective tax rates is shown in the following table:
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Federal statutory income tax rate |  |  | 21.00 | % |  |  | 21.00 | % |  |  | 21.00 | %
State taxes, net of federal tax benefits |  |  | 5.81 | % |  |  | 7.86 | % |  |  | 9.39 | %
Tax credit - federal |  |  | (1.16 | )% |  |  | (2.68 | )% |  |  | (3.49 | )%
Low-income housing amortization |  |  | 1.37 | % |  |  | 3.02 | % |  |  | 4.17 | %
Other |  |  | 0.16 | % |  |  | (0.12 | )% |  |  | (0.32 | )%
Effective tax rate |  |  | 27.18 | % |  |  | 29.08 | % |  |  | 30.75 | %
The CARES Act includes provisions for tax payment relief, significant business incentives, and certain corrections to the 2017 Tax Cuts and Jobs Act or the Tax Act. The tax relief measures for entities includes a five-year net operating loss carry back, increases in interest expense deduction limits, accelerates alternative minimum tax credit refunds, provides payroll tax relief, and provides a technical correction to allow accelerated deductions for qualified improvement property. ASC Topic 740, Income Taxes, requires the effect of changes in tax law be recognized in the period in which new legislation is enacted. The enactment of the CARES Act was not material to the Company’s income taxes for the year ended December 31, 2021. On December 27, 2020, the U.S. enacted the Consolidated Appropriations Act, 2021 (the “Act”) that provides additional tax relief to individuals and businesses affected by the coronavirus pandemic. The provisions of the Act do not have a material impact on the overall income taxes.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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