INCOME TAXES

The provision for (benefit from) income taxes for the years ended December 31, 2016, 2015, and 2014 consisted of the following (in thousands):



	Federal			State			Total
2016
Current	$	3,720		$	605		$	4,325
Deferred	1,100			1,492			2,592
Provision for income taxes	$	4,820		$	2,097		$	6,917
2015
Current	$	2,945		$	570		$	3,515
Deferred	(1,208		)	275			(933		)
Provision for (benefit) from income taxes	$	1,737		$	845		$	2,582
2014
Current	$	(125	)	$	(37	)	$	(162	)
Deferred	(397		)	(11		)	(408		)
Provision for (benefit from) income taxes	$	(522	)	$	(48	)	$	(570	)

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. Thus, Management concludes no valuation allowance is necessary against deferred tax assets,

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



	December 31,
	2016			2015
Deferred tax assets:
Allowance for credit losses	$	3,267		$	3,823
Deferred compensation	5,304			5,038
Unrealized loss on available-for-sale investment securities	375			—
Net operating loss carryovers	3,816			75
Bank premises and equipment	—			351
Mark-to-market adjustment	167			96
Other deferred	338			313
Other-than-temporary impairment	273			267
Loan and investment impairment	1,285			721
State Enterprise Zone credit carry-forward	209			1,067
Alternative minimum tax credit	2,438			3,525
Partnership income	114			87
State taxes	297			266
Total deferred tax assets	17,883			15,629
Deferred tax liabilities:
Finance leases	(474		)	(921		)
Unrealized gain on available-for-sale investment securities	—			(3,076		)
Core deposit intangible	(582		)	(421		)
FHLB stock	(327		)	(319		)
Loan origination costs	(918		)	(664		)
Bank premises and equipment	(71		)	—
Total deferred tax liabilities	(2,372		)	(5,401		)
Net deferred tax assets	$	15,511		$	10,228

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, 2016, 2015, and 2014 consisted of the following:



	2016		2015		2014
Federal income tax, at statutory rate	35.0	%	34.0	%	34.0	%
State taxes, net of Federal tax benefit	7.0	%	4.1	%	(0.7	)%
Tax exempt investment security income, net	(10.3	)%	(15.9	)%	(42.2	)%
Bank owned life insurance, net	(1.1	)%	(2.5	)%	(3.9	)%
Change in uncertain tax positions	0.1	%	0.8	%	—	%
Other	0.6	%	(1.4	)%	0.8	%
Effective tax rate	31.3	%	19.1	%	(12.0	)%

As of December 31, 2016, the Company had Federal and California net operating loss (“NOL”) carry-forwards of $9,001,000 and $9,442,000, respectively. These NOLs were acquired through business combinations and are subject to IRC 382 and begin expiring in 2028 and 2017, for federal and California purposes, respectively. While they are subject to IRC Section 382, management has determined that all of the NOLs are more than likely than not to be utilized.

At December 31, 2016, the Company had a Federal Alternative Minimum Tax credit of approximately $2,438,000 which does not expire. The Company had Enterprise Zone Credits of approximately $316,000 which begin expiring in 2023.

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. There are no pending U.S. federal or California Franchise Tax Board 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, 2013 and by the state and local taxing authorities for the years ended before December 31, 2012.

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



	December 31,
	2016			2015
Balance, beginning of year	$	286		$	180
Additions based on tax positions related to prior years	44			106
Reductions for tax positions of prior years	(32		)	—
Balance, end of year	$	298		$	286

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 expect the amount of unrecognized tax benefits to decrease in the next 12 months due to closure of statues of limitation s in the taxing jurisdictions.

During the years ended December 31, 2016 and 2015, the Company recorded $44,000 and $106,000, respectively, in interest or penalties related to uncertain tax positions. During the year ended December 31, 2014, the Company did not recognize any interest or penalties related to uncertain tax positions.