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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The provision for income taxes for the years ended December 31, 2024, 2023, and 2022 consisted of the following (in thousands):
|  | Federal |  | State |  | Total
2024 |  |  |  |  |  |
Current |  | $ | 2,706 |  |  | $ | 1,493 |  |  | $ | 4,199 |
Deferred |  | (463) |  |  | (404) |  |  | (867) |
Provision for income taxes |  | $ | 2,243 |  |  | $ | 1,089 |  |  | $ | 3,332 |
2023 |  |  |  |  |  |
Current |  | $ | 4,692 |  |  | $ | 3,502 |  |  | $ | 8,194 |
Deferred |  | 176 |  |  | (66) |  |  | 110 |
Provision for income taxes |  | $ | 4,868 |  |  | $ | 3,436 |  |  | $ | 8,304 |
2022 |  |  |  |  |  |
Current |  | $ | 4,827 |  |  | $ | 3,445 |  |  | $ | 8,272 |
Deferred |  | 80 |  |  | 144 |  |  | 224 |
Provision for income taxes |  | $ | 4,907 |  |  | $ | 3,589 |  |  | $ | 8,496 |
Deferred tax assets (liabilities) consisted of the following (in thousands):
|  | December 31,
|  | 2024 |  | 2023
Deferred tax assets: |  |  |  |
Unrealized loss on available-for-sale investment securities |  | $ | 23,132 |  |  | $ | 27,716 |
Purchase accounting fair value adjustment |  | 11,218 |  |  | — |
Allowance for credit losses |  | 7,970 |  |  | 4,643 |
Deferred compensation |  | 4,081 |  |  | 4,152 |
Net operating loss carryovers |  | 3,175 |  |  | 1,754 |
Operating lease liabilities |  | 3,049 |  |  | 2,696 |
Low income housing tax credit carry-forward |  | 942 |  |  | — |
Other deferred tax assets |  | 848 |  |  | 302 |
Mark-to-market adjustment |  | 411 |  |  | 301 |
State taxes |  | 253 |  |  | 718 |
Loan and investment impairment |  | 133 |  |  | 280 |
Partnership income |  | 128 |  |  | 74 |
Other-than-temporary impairment |  | 30 |  |  | 30 |
Bank premises and equipment |  | — |  |  | 229 |
Total deferred tax assets |  | 55,370 |  |  | 42,895 |
Deferred tax liabilities: |  |  |  |
Core deposit intangible |  | (2,814) |  |  | — |
Operating lease right-of-use assets |  | (2,811) |  |  | (2,457) |
Loan origination costs |  | (1,643) |  |  | (1,166) |
Bank premises and equipment |  | (920) |  |  | — |
Finance leases |  | (570) |  |  | (625) |
FHLB stock |  | (191) |  |  | (191) |
Total deferred tax liabilities |  | (8,949) |  |  | (4,439) |
Net deferred tax assets |  | $ | 46,421 |  |  | $ | 38,456 |
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, 2024 and 2023. 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, 2024, 2023, and 2022 consisted of the following:
| 2024 |  | 2023 |  | 2022
Federal income tax, at statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State taxes, net of federal tax benefit | 7.8 | % |  | 8.0 | % |  | 8.1 | %
Tax exempt investment security income, net | (4.0) | % |  | (3.5) | % |  | (3.7) | %
Bank owned life insurance, net | (2.4) | % |  | (0.6) | % |  | (0.8) | %
Compensation - stock compensation | (0.6) | % |  | — | % |  | (0.2) | %
Low income housing tax credits | (2.2) | % |  | (0.6) | % |  | (0.3) | %
Nondeductible employee compensation | 1.0 | % |  | — | % |  | — | %
Nondeductible acquisition‑related expense | 3.8 | % |  | — | % |  | — | %
Other | 5.9 | % |  | 0.2 | % |  | 0.1 | %
Effective tax rate | 30.3 | % |  | 24.5 | % |  | 24.2 | %
As of December 31, 2024, the Company had federal and California net operating loss (“NOL”) carry-forwards of $9,670,000 and $13,366,000, respectively. These NOLs were acquired through business combinations and are subject to Section 382 of the Internal Revenue Code of 1986, as amended (“IRC 382”). Approximately $4,490,000 of federal NOLs that were generated after 2017 do not expire. Remaining federal and California NOLs begin to expire at various dates between 2033 and 2044, if not used. While they are subject to IRC 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, 2021 and by the state taxing authorities for the years ended before December 31, 2020. The Company's investments, including amortization, in low income housing tax credit funds were $18,630,000 and $10,655,000 as of December 31, 2024 and 2023. The Company had gross commitments of $24,526,000 and $14,526,000 at December 31, 2024 and 2023, respectively of which $9,289,000 and $4,371,000 were unfunded as of December 31, 2024 and 2023, respectively. These investments are included in other assets on the consolidated balance sheets and the unfunded commitments are included in other liabilities. The Company recognized tax credits and other income tax benefits of $2,216,000 and $1,323,000 for the year ended December 2024 and 2023, respectively. Amortization of the investments recorded for the same periods were $1,976,000 and $1,114,000, respectively. As of December 31, 2024, 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, 2024 and 2023, the Company recorded no interest or penalties related to uncertain tax positions.

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