Income Taxes

The current and deferred components of the income tax provision for each of the three years ended December 31 are as follows:



(in thousands)	2015		2014			2013
Current tax provision
Federal	$	7,097	$	8,523		$	6,717
State	2,931		3,195			2,574
Total current	10,028		11,718			9,291
Deferred tax provision (benefit)
Federal	382		(146		)	(873		)
State	80		126			(479		)
Total deferred	462		(20		)	(1,352		)
Total income tax provision	$	10,490	$	11,698		$	7,939

The following table shows the tax effect of our cumulative temporary differences as of December 31:



(in thousands)	2015			2014
Deferred tax assets:
Allowance for loan losses and off-balance sheet credit commitments	$	5,918		$	5,544
Net operating loss carryforwards from the NorCal Acquisition	4,090			4,598
Deferred compensation plan and salary continuation plan	1,619			1,499
Fair value adjustment on loans acquired from the NorCal Acquisition	1,197			1,647
Accrued but unpaid expenses	1,188			1,119
State franchise tax	1,005			1,100
Interest received on non-accrual loans	864			651
Deferred rent and other lease incentives	595			584
Other real estate owned	448			448
Stock-based compensation	273			231
Depreciation and disposals on premises and equipment	231			94
Accretion on loans and investment securities	110			630
Net unrealized loss on securities available-for-sale	59			—
Other	174			195
Total gross deferred tax assets	17,771			18,340

Deferred tax liabilities:
Deferred loan origination costs and fees	(2,567		)	(2,385		)
Core deposit intangible asset	(1,309		)	(1,569		)
Unaccreted discount on subordinated debentures from the NorCal Acquisition	(1,200		)	(1,288		)
Net unrealized gain on securities available-for-sale	—			(498		)
Total gross deferred tax liabilities	(5,076		)	(5,740		)

Net deferred tax assets	$	12,695		$	12,600

As of December 31, 2015, we had Federal and California net operating loss carryforwards ("NOLs") from the NorCal Acquisition of approximately $7.6 million and $21.3 million, respectively. If not fully utilized, the federal NOLs will begin to expire in 2029, and the California NOLs will begin to expire in 2028. The acquisition resulted in limitations on the annual utilization of these NOLs under section 382 of the Internal Revenue Code. Although we expect to fully utilize all of the federal NOLs prior to their expiration, $819 thousand of California NOLs are expected to expire unutilized in 2031. As a result, we wrote down $58 thousand of deferred tax assets associated with these California NOLs as part of the purchase accounting adjustments in 2013. Based upon the level of historical taxable income and projections for future taxable income over the periods during which the deferred tax assets are expected to be deductible, Management believes it is more likely than not we will realize the benefit of the remaining deferred tax assets. Accordingly, no other valuation allowance has been established as of December 31, 2015 or 2014.

The effective tax rate for 2015, 2014 and 2013 differs from the current Federal statutory income tax rate as follows:



	2015		2014		2013
Federal statutory income tax rate	35.0	%	35.0	%	35.0	%
Increase (decrease) due to:
California franchise tax, net of federal tax benefit	6.8	%	6.8	%	6.5	%
Tax exempt interest on municipal securities and loans	(4.2	)%	(3.3	)%	(4.0	)%
Tax exempt earnings on bank owned life insurance	(1.0	)%	(0.9	)%	(1.5	)%
Low income housing tax credits	(0.2	)%	(0.1	)%	(0.3	)%
Other	(0.1	)%	(0.3	)%	—	%
Effective Tax Rate	36.3	%	37.2	%	35.7	%

Bancorp and the Bank have entered into a tax allocation agreement which provides that income taxes shall be allocated between the parties on a separate entity basis. The intent of this agreement is that each member of the consolidated group will incur no greater tax liability than it would have incurred on a stand-alone basis.

We file a consolidated return in the U.S. Federal tax jurisdiction and a combined return in the State of California tax jurisdiction. There were no ongoing federal or state income tax examinations at the issuance of this report. In June 2015, the State of California completed its examination of the 2011 and 2012 corporate income tax returns, resulting in a minor adjustment. At December 31, 2015 and 2014, neither the Bank nor Bancorp had accruals for interest and penalties related to unrecognized tax benefits.