INCOME TAXES

The provision for (benefit from) income taxes for the years ended December 31, 2015, 2014, and 2013 consisted of the following (in thousands):



	Federal			State			Total
2015
Current	$	2,945		$	570		$	3,515
Deferred	(1,208		)	275			(933		)
Provision for income taxes	$	1,737		$	845		$	2,582
2014
Current	$	(125	)	$	(37	)	$	(162	)
Deferred	(397		)	(11		)	(408		)
Benefit from income taxes	$	(522	)	$	(48	)	$	(570	)
2013
Current	$	2,217		$	(445	)	$	1,772
Deferred	(645		)	220			(425		)
Provision for (benefit from) income taxes	$	1,572		$	(225	)	$	1,347

The determination of the amount of deferred income tax assets which are more likely than not to be realized is primarily dependent on projections of future earnings, which are subject to uncertainty and estimates that may change given economic conditions and other factors. The realization of deferred income tax assets is assessed and a valuation allowance is recorded if it is more likely than not that all or a portion of the deferred tax asset will not be realized. More likely than not is defined as greater than a 50% chance. All available evidence, both positive and negative is considered to determine whether, based on the weight of the evidence, a valuation allowance is needed. The Company established a deferred tax valuation allowance in the amount $20,000 as of December 31, 2014 for California capital loss carry-forwards. The California capital loss carry-forward expired in 2015 unutilized; thus, the deferred balance as well as the related valuation allowance was written off as of December 31, 2015.

Deferred tax assets (liabilities) consisted of the following (in thousands):



	December 31,
	2015			2014
Deferred tax assets:
Allowance for credit losses	$	3,823		$	3,188
Deferred compensation	5,038			4,979
Net operating loss carryovers	75			698
Bank premises and equipment	351			186
Mark-to-market adjustment	96			98
Other deferred	313			511
Other-than-temporary impairment	267			267
Loan and investment impairment	721			887
State Enterprise Zone credit carry-forward	1,067			1,444
State capital loss carry-forward	—			20
Alternative minimum tax credit	3,525			3,338
Partnership income	87			70
State taxes	266			1
Total deferred tax assets	15,629			15,687
Valuation allowance	—			(20		)
Net deferred tax asset after valuation allowance	15,629			15,667
Deferred tax liabilities:
Finance leases	(921		)	(1,871		)
Unrealized gain on available-for-sale investment securities	(3,076		)	(3,661		)
Core deposit intangible	(421		)	(553		)
FHLB stock	(319		)	(319		)
Loan origination costs	(664		)	(553		)
Total deferred tax liabilities	(5,401		)	(6,957		)
Net deferred tax assets	$	10,228		$	8,710

The provision for income taxes differs from amounts computed by applying the statutory Federal income tax rates to operating income before income taxes. The significant items comprising these differences for the years ended December 31, 2015, 2014, and 2013 consisted of the following:



	2015		2014		2013
Federal income tax, at statutory rate	34.0	%	34.0	%	34.0	%
State taxes, net of Federal tax benefit	4.1	%	(0.7	)%	0.4	%
Tax exempt investment security income, net	(15.9	)%	(42.2	)%	(20.5	)%
Bank owned life insurance, net	(2.5	)%	(3.9	)%	(1.8	)%
Solar credits	(0.7	)%	(2.4	)%	(1.4	)%
Change in uncertain tax positions	0.8	%	—	%	(1.4	)%
Change in prior year estimates	(3.1	)%	0.1	%	1.4	%
Other	2.4	%	3.1	%	3.4	%
Effective tax rate	19.1	%	(12.0	)%	14.1	%

At December 31, 2015, the Company had no Federal net operating loss (“NOL”) carry-forwards. At December 31, 2015, the Company had a Federal Alternative Minimum Tax credit of approximately $3,525,000 which does not expire, and a California NOL of $1,046,000, from prior business combinations that is subject to Internal Revenue Code (IRC) Sec. 382 annual limitations. The California NOL will begin to expire in 2027. The Company had Enterprise Zone Credits of approximately $1,596,000 which begin expiring in 2023. In addition, the Company had a California capital loss carry-forward of $282,000 which expired at the end of 2015 unutilized. As such, the deferred balance as well as the related valuation allowance for this carry-forward was written off as of December 31, 2015.

The Company and its Subsidiary file income tax returns in the U.S. federal and California jurisdictions. The Company conducts all of its business activities in the State of California. At December 31, 2015, the Company had one state income tax examination in process by the California Franchise Tax Board for the years ended December 31, 2011 and 2012. The outcome of the examination is not settled. There are no pending U.S. federal or local income tax examinations by those taxing authorities. The Company is no longer subject to the examination by U.S. federal taxing authorities for the years ended before December 31, 2012 and by the state and local taxing authorities for the years ended before December 31, 2011.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):



	December 31,
	2015		2014
Balance, beginning of year	$	180	$	180
Additions based on tax positions related to prior years	106		—
Reductions for tax positions of prior years	—		—
Balance, end of year	$	286	$	180

This represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. The Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months.

During the year ended December 31, 2015, the Company recorded $106,000 in interest or penalties related to uncertain tax positions. During the years ended December 31, 2014 and 2013, the Company did not recognize any interest or penalties related to uncertain tax positions.