XML 32 R19.htm IDEA: XBRL DOCUMENT v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
 
The provision for income taxes for the years ended December 31, 2022, 2021, and 2020 consisted of the following (in thousands):
FederalStateTotal
2022
Current$4,827 $3,445 $8,272 
Deferred80 144 224 
Provision for income taxes$4,907 $3,589 $8,496 
2021
Current$4,687 $3,464 $8,151 
Deferred1,002 463 1,465 
Provision for income taxes$5,689 $3,927 $9,616 
2020
Current$4,915 $3,050 $7,965 
Deferred(656)(395)(1,051)
Provision for income taxes$4,259 $2,655 $6,914 
 
Deferred tax assets (liabilities) consisted of the following (in thousands):
 December 31,
20222021
Deferred tax assets:  
Allowance for credit losses$3,207 $2,838 
Deferred compensation4,204 4,588 
Unrealized loss on available-for-sale investment securities34,093 — 
Net operating loss carryovers1,907 2,048 
Mark-to-market adjustment497 74 
Other deferred tax assets84 101 
Other-than-temporary impairment30 192 
Loan and investment impairment376 530 
Operating lease liabilities3,385 2,354 
Partnership income52 111 
State taxes777 736 
Total deferred tax assets48,612 13,572 
Deferred tax liabilities:  
Operating lease right-of-use assets(3,142)(2,160)
Finance leases(668)(749)
Unrealized gain on available-for-sale investment securities— (3,203)
Core deposit intangible(20)(154)
FHLB stock(191)(191)
Loan origination costs(829)(450)
Bank premises and equipment(385)(360)
Total deferred tax liabilities(5,235)(7,267)
Net deferred tax assets$43,377 $6,305 
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 as of December 31, 2022 and 2021.
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, 2022, 2021, and 2020 consisted of the following:
 202220212020
Federal income tax, at statutory rate21.0 %21.0 %21.0 %
State taxes, net of Federal tax benefit8.1 %8.2 %7.7 %
Tax exempt investment security income, net(4.0)%(3.1)%(1.5)%
Bank owned life insurance, net(0.8)%(0.5)%(1.2)%
Compensation - Stock Compensation(0.2)%(0.1)%(0.2)%
Other0.1 %(0.2)%(0.4)%
Effective tax rate24.2 %25.3 %25.4 %
 
As of December 31, 2022, the Company had Federal and California net operating loss (“NOL”) carry-forwards of $6,137,000 and $7,214,000, respectively. These NOLs were acquired through business combinations and are subject to IRC 382 will begin expiring at various dates between 2029 and 2035, for federal purposes and various dates between 2030 and 2036 for 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 before they expire.
    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 state 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, 2019 and by the state taxing authorities for the years ended before December 31, 2018.
As of December 31, 2022, the Company has no unrecognized tax benefits and does not expect any material changes in the next 12 months.
During the years ended December 31, 2022 and 2021, the Company recorded no interest or penalties related to uncertain tax positions.