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Income Taxes
 12 Months Ended
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)202420232022
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)20242023
Deferred tax assets:
Net unrealized losses on securities available-for-sale$12,624 $22,241 
Allowance for credit losses on loans and unfunded loan commitments9,327 7,775 
Operating and finance lease liabilities6,404 6,860 
Deferred compensation and salary continuation plans3,137 3,289 
Net operating loss carryforwards4,353 1,136 
Accrued but unpaid expenses1,644 1,709 
Stock-based compensation643 632 
Interest received on non-accrual loans639 44 
Fair value adjustment on acquired loans396 695 
Depreciation and disposals on premises and equipment81 179 
State franchise tax— 593 
Other269 30 
  Total gross deferred tax assets39,517 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:
202420232022
Federal statutory income tax rate21.0 %21.0 %21.0 %
Increase (decrease) due to:
California franchise tax, net of federal tax benefit9.7 %7.9 %8.3 %
Tax exempt interest on municipal securities and loans4.9 %(3.1)%(1.9)%
Tax exempt earnings on bank owned life insurance2.6 %(1.5)%(0.4)%
Non-deductible acquisition related expenses— %— %— %
Non-deductible executive compensation— %— %— %
Other1.0 %(0.7)%(0.4)%
Effective Tax Rate39.2 %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.