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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | 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) | 2023 | 2022 | 2021
Current tax provision |  |  |
Federal | $ | 3,234 |  | $ | 10,670 |  | $ | 6,627 |
State | 2,823 |  | 6,687 |  | 4,815 |
Total current tax provision | 6,057 |  | 17,357 |  | 11,442 |
Deferred tax provision (benefit) |  |  |
Federal | 319 |  | (441) |  | 274 |
State | (235) |  | 7 |  | (58) |
Total deferred tax provision (benefit) | 84 |  | (434) |  | 216 |
Total income tax provision | $ | 6,141 |  | $ | 16,923 |  | $ | 11,658 |
The following table shows the tax effect of our cumulative temporary differences as of December 31:
(in thousands) | 2023 | 2022
Deferred tax assets: |  |
Net unrealized losses on securities available-for-sale | $ | 20,993 |  | $ | 29,458 |
Allowance for credit losses on loans and unfunded loan commitments | 7,775 |  | 7,229 |
Operating and finance lease liabilities | 6,860 |  | 8,002 |
Deferred compensation and salary continuation plans | 3,289 |  | 3,481 |
Accrued but unpaid expenses | 1,709 |  | 1,751 |
Net operating loss carryforwards | 1,136 |  | 1,239 |
Fair value adjustment on acquired loans | 695 |  | 905 |
Stock-based compensation | 632 |  | 697 |
State franchise tax | 593 |  | 1,396 |
Depreciation and disposals on premises and equipment | 179 |  | 236 |
Other | 74 |  | 194 |
Total gross deferred tax assets | 43,935 |  | 54,588 |
Deferred tax liabilities: |  |
Operating and finance lease right-of-use assets | (6,092) |  | (7,465) |
Deferred loan origination costs and fees | (1,435) |  | (1,476) |
Core deposit intangible assets | (1,113) |  | (1,512) |
Other | (226) |  | (279) |
Total gross deferred tax liabilities | (8,866) |  | (10,732) |
Net deferred tax assets | $ | 35,069 |  | $ | 43,856 |
As of December 31, 2023, California net operating loss carryforwards ("NOLs") of $13.3 million corresponded to the total $1.1 million deferred tax asset above. If not fully utilized, the California NOLs will begin to expire in 2031. 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 that we will realize the benefit of the remaining deferred tax assets. Accordingly, no valuation allowance has been established as of December 31, 2023 or 2022. The effective tax rate for 2023, 2022 and 2021 differs from the current federal statutory income tax rate as follows:
| 2023 | 2022 | 2021
Federal statutory income tax rate | 21.0 | % | 21.0 | % | 21.0 | %
Increase (decrease) due to: |  |  |
California franchise tax, net of federal tax benefit | 7.9 | % | 8.3 | % | 8.4 | %
Tax exempt interest on municipal securities and loans | (3.1) | % | (1.9) | % | (2.5) | %
Tax exempt earnings on bank owned life insurance | (1.5) | % | (0.4) | % | (1.0) | %
Non-deductible acquisition related expenses | — | % | — | % | 0.6 | %
Non-deductible executive compensation | — | % | — | % | 0.4 | %
Low income housing and qualified zone academy bond tax credits | (0.6) | % | (0.2) | % | (0.4) | %
Stock-based compensation and excess tax deficiencies (benefits) | 0.2 | % | — | % | (0.1) | %
Other | (0.3) | % | (0.2) | % | (0.4) | %
Effective Tax Rate | 23.6 | % | 26.6 | % | 26.0 | %
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 time of the issuance of this report. We are no longer subject to examinations by tax authorities for years before 2020 for federal income tax and before 2019 for California. At December 31, 2023 and 2022, there were no unrecognized tax benefits, and neither the Bank nor Bancorp had accruals for interest and penalties related to unrecognized tax benefits.

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