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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The provision for income taxes for the years ended December 31, 2018, 2017, and 2016 consisted of the following (in thousands):
|  | Federal |  | State |  | Total
2018 |  |  |  |  |  |
Current |  | $ | 3,995 |  |  | $ | 2,689 |  |  | $ | 6,684 |
Deferred |  | (140 | ) |  | 76 |  |  | (64 | )
Provision for income taxes |  | $ | 3,855 |  |  | $ | 2,765 |  |  | $ | 6,620 |
2017 |  |  |  |  |  |
Current |  | $ | 1,188 |  |  | $ | 1,224 |  |  | $ | 2,412 |
Deferred |  | 3,328 |  |  | 518 |  |  | 3,846 |
Re-measurement resulting from Tax Act |  | 3,535 |  |  | — |  |  | 3,535 |
Provision for income taxes |  | $ | 8,051 |  |  | $ | 1,742 |  |  | $ | 9,793 |
2016 |  |  |  |  |  |
Current |  | $ | 3,720 |  |  | $ | 605 |  |  | $ | 4,325 |
Deferred |  | 1,100 |  |  | 1,492 |  |  | 2,592 |
Provision for income taxes |  | $ | 4,820 |  |  | $ | 2,097 |  |  | $ | 6,917 |
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,
|  | 2018 |  | 2017
Deferred tax assets: |  |  |  |  |  |
Allowance for credit losses |  | $ | 2,380 |  |  | $ | 2,100 |
Deferred compensation |  | 4,347 |  |  | 4,415 |
Unrealized loss on available-for-sale investment securities |  | 1,850 |  |  | — |
Net operating loss carryovers |  | 2,407 |  |  | 2,549 |
Mark-to-market adjustment |  | 53 |  |  | 87 |
Other deferred tax assets |  | 445 |  |  | 386 |
Other-than-temporary impairment |  | 192 |  |  | 192 |
Loan and investment impairment |  | 1,450 |  |  | 1,793 |
Partnership income |  | 55 |  |  | 68 |
State taxes |  | 575 |  |  | 375 |
Total deferred tax assets |  | 13,754 |  |  | 11,965 |
Deferred tax liabilities: |  |  |  |  |  |
Finance leases |  | (173 | ) |  | (365 | )
Unrealized gain on available-for-sale investment securities |  | — |  |  | (1,186 | )
Core deposit intangible |  | (760 | ) |  | (895 | )
FHLB stock |  | (234 | ) |  | (234 | )
Loan origination costs |  | (891 | ) |  | (783 | )
Bank premises and equipment |  | (513 | ) |  | (478 | )
Total deferred tax liabilities |  | (2,571 | ) |  | (3,941 | )
Net deferred tax assets |  | $ | 11,183 |  |  | $ | 8,024 |
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, 2018, 2017, and 2016 consisted of the following:
| 2018 |  | 2017 |  | 2016
Federal income tax, at statutory rate | 21.0 | % |  | 35.0 | % |  | 35.0 | %
State taxes, net of Federal tax benefit | 7.8 | % |  | 4.8 | % |  | 6.2 | %
Tax exempt investment security income, net | (2.7 | )% |  | (10.1 | )% |  | (10.3 | )%
Bank owned life insurance, net | (0.6 | )% |  | (0.8 | )% |  | (1.1 | )%
Compensation - Stock Compensation | (0.6 | )% |  | (2.8 | )% |  | — | %
Re-measurement resulting from Tax Act | — | % |  | 14.8 | % |  | — | %
Change in uncertain tax positions | (0.3 | )% |  | (0.9 | )% |  | 0.1 | %
Other | (0.9 | )% |  | 1.1 | % |  | 1.4 | %
Effective tax rate | 23.7 | % |  | 41.1 | % |  | 31.3 | %
As of December 31, 2018, the Company had Federal and California net operating loss (“NOL”) carry-forwards of $8,049,000 and $8,372,000, respectively. These NOLs were acquired through business combinations and are subject to IRC 382 and begin expiring in 2028, for federal and California purposes. 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. As a result of the enactment of the Tax Cuts and Jobs Act (the “ Tax Act”) on December 22, 2017, the federal tax rate applied to the Company’s net deferred tax assets were re-measured to reflect the 2018 tax rates (the rates at which the deferred tax items are expected to reverse). The change to the tax rates (including the rate change applied to deferred taxes reflected in other comprehensive income and certain tax-advantaged investments as reflected in other assets) resulted in an increase to the Company’s 2017 tax provision of $3,535,000. As part of the Tax Act for tax years beginning after December 31, 2017, alternative minimum tax credit carryforwards are and not dependent on future income. As such, they have been classified as a current tax receivable rather than a deferred tax asset. As of December 31, 2018, the alternative minimum tax credit carryforwards have been fully utilized. ASU 2016-09, “Compensation-Stock Compensation (718) Improvements to Employee Share-Based Payment Accounting” requires the Company to recognize all excess tax benefits or tax deficiencies through the income statement as income tax expense/benefit. A tax benefit of $165,000 was recognized during the year ended December 31, 2018 and a benefit of $853,000 was recognized during the year ended December 31, 2017. 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, 2015 and by the state and local taxing authorities for the years ended before December 31, 2014. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| December 31,
| 2018 |  | 2017
Balance, beginning of year | $ | 83 |  |  | $ | 298 |
Additions based on tax positions related to prior years | — |  |  | — |
Reductions due to the statute of limitations for tax positions of prior years | (83 | ) |  | (215 | )
Balance, end of year | $ | — |  |  | $ | 83 |
As of December 31, 2018, the Company has no unrecognized tax benefits and does not expect this to change in the next 12 months. During the years ended December 31, 2018 and 2017, the Company recorded no interest or penalties related to uncertain tax positions.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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