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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 current and deferred components of the income tax provision for each of the three years ended December 31 are as follows:
(in thousands) | 2024 | 2023 | 2022
Current tax(benefit) provision |  |  |
Federal | $ | (214) |  | $ | 3,234 |  | $ | 10,670 |
State | (60) |  | 2,823 |  | 6,687 |
Total current tax (benefit) provision | (274) |  | 6,057 |  | 17,357 |
Deferred tax (benefit) provision |  |  |
Federal | (3,520) |  | 319 |  | (441) |
State | (1,632) |  | (235) |  | 7 |
Total deferred tax (benefit) provision | (5,152) |  | 84 |  | (434) |
Total income tax (benefit) provision | $ | (5,426) |  | $ | 6,141 |  | $ | 16,923 |
The following table shows the tax effect of our cumulative temporary differences as of December 31:
(in thousands) | 2024 | 2023
Deferred tax assets: |  |
Net unrealized losses on securities available-for-sale | $ | 12,624 |  | $ | 22,241 |
Allowance for credit losses on loans and unfunded loan commitments | 9,327 |  | 7,775 |
Operating and finance lease liabilities | 6,404 |  | 6,860 |
Deferred compensation and salary continuation plans | 3,137 |  | 3,289 |
Net operating loss carryforwards | 4,353 |  | 1,136 |
Accrued but unpaid expenses | 1,644 |  | 1,709 |
Stock-based compensation | 643 |  | 632 |
Interest received on non-accrual loans | 639 |  | 44 |
Fair value adjustment on acquired loans | 396 |  | 695 |
Depreciation and disposals on premises and equipment | 81 |  | 179 |
State franchise tax | — |  | 593 |
Other | 269 |  | 30 |
Total gross deferred tax assets | 39,517 |  | 45,183 |
Deferred tax liabilities: |  |
Operating and finance lease right-of-use assets | (5,669) |  | (6,092) |
Deferred loan origination costs and fees | (1,685) |  | (1,435) |
Core deposit intangible assets | (825) |  | (1,113) |
Purchase accounting adjustments | (488) |  | (1,248) |
Other | (245) |  | (226) |
Total gross deferred tax liabilities | (8,912) |  | (10,114) |
Net deferred tax assets | $ | 30,605 |  | $ | 35,069 |
As of December 31, 2024, the Bank had net operating loss carryforwards ("NOLs") for federal income tax purposes of $12.5 million. This NOL is carried forward indefinitely but is limited to 80% of taxable income. In addition, as of December 31, 2024, the Bank had California net operating loss carryforwards of $20.3 million. If not fully utilized, the California NOLs will begin to expire in 2032. 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, 2024 or 2023. The effective tax rate for 2024, 2023 and 2022 differs from the current federal statutory income tax rate as follows:
| 2024 | 2023 | 2022
Federal statutory income tax rate | 21.0 | % | 21.0 | % | 21.0 | %
Increase (decrease) due to: |  |  |
California franchise tax, net of federal tax benefit | 9.7 | % | 7.9 | % | 8.3 | %
Tax exempt interest on municipal securities and loans | 4.9 | % | (3.1) | % | (1.9) | %
Tax exempt earnings on bank owned life insurance | 2.6 | % | (1.5) | % | (0.4) | %
Non-deductible acquisition related expenses | — | % | — | % | — | %
Non-deductible executive compensation | — | % | — | % | — | %
Other | 1.0 | % | (0.7) | % | (0.4) | %
Effective Tax Rate | 39.2 | % | 23.6 | % | 26.6 | %
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 2021 for federal income tax and before 2020 for California. At December 31, 2024 and 2023, 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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