XML 90 R18.htm IDEA: XBRL DOCUMENT
v3.20.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2019
Income Taxes |
Income Taxes | Note 12 – Income Taxes The Company and its subsidiary are subject to U.S. federal and state income taxes. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Income tax (benefit) expense was as follows:
|  | 2019 |  | 2018
|  | (In thousands)
Current |  |  |  |  |  |
Federal |  | $ | (66) |  | $ | (110)
State |  |  | 5 |  |  | 12
Deferred |  |  |  |  |  |
Federal |  |  | (225) |  |  | 68
State |  |  | (59) |  |  | 86
Change in valuation allowance |  |  | — |  |  | —
Total |  | $ | (345) |  | $ | 56
Effective tax rates differ from the federal statutory rate of 21% applied to income before income taxes due to the following:
|  | 2019 |  | 2018
|  | (In thousands)
Federal statutory rate times financial statement net (loss) income |  | $ | (115) |  | $ | 183
Effect of: |  |  |  |  |  |
State taxes, net of federal benefit |  |  | (45) |  |  | 77
Change in federal rate |  |  | — |  |  | —
Earnings from bank owned life insurance |  |  | (11) |  |  | (16)
Low income housing credits |  |  | (198) |  |  | (212)
Change in valuation allowance |  |  | — |  |  | —
Other, net |  |  | 24 |  |  | 24
Total |  | $ | (345) |  | $ | 56
Year-end deferred tax assets and liabilities were due to the following:
|  | 2019 |  | 2018
|  | (In thousands)
Deferred tax assets: |  |  |  |  |  |
Allowance for loan losses |  | $ | 897 |  | $ | 799
Real estate owned |  |  | — |  |  | 65
Accrued liabilities |  |  | 137 |  |  | 150
State income taxes |  |  | 36 |  |  | 34
Stock compensation |  |  | 202 |  |  | 165
Net operating loss carryforward |  |  | 3,614 |  |  | 3,887
Non-accrual loan interest |  |  | 1 |  |  | 3
Partnership investment |  |  | 173 |  |  | 140
General business credit |  |  | 1,859 |  |  | 1,661
Alternative minimum tax credit |  |  | 94 |  |  | 151
Unrealized appreciation AFS |  |  | — |  |  | 50
Other |  |  | 34 |  |  | 28
Total deferred tax assets |  |  | 7,047 |  |  | 7,133
Deferred tax liabilities: |  |  |  |  |  |
Section 481 Adjustments to bad debts |  |  | (660) |  |  | (980)
Deferred loan fees/costs |  |  | (797) |  |  | (775)
Basis difference on fixed assets |  |  | (15) |  |  | (35)
Net unrealized appreciation on available-for-sale securities |  |  | (59) |  |  | —
FHLB stock dividends |  |  | (266) |  |  | (266)
Mortgage servicing rights |  |  | (3) |  |  | (5)
Prepaid expenses |  |  | (27) |  |  | (27)
Total deferred tax liabilities |  |  | (1,827) |  |  | (2,088)
Net deferred tax assets |  | $ | 5,220 |  | $ | 5,045
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization of deferred tax assets, management evaluated both positive and negative evidence, the amount of taxes paid in available carry-back years, and the forecasts of future income and tax planning strategies. Based on this analysis, the Company determined that, as of December 31, 2019 and 2018, no valuation allowance was required on its deferred tax assets, which totaled $5.2 million and $5.0 million, respectively. As of December 31, 2019, the Company has federal net operating loss carryforwards of $7.2 million and California net operating loss carryforwards of $24.5 million, which begin expiring in 2031 through 2037 and 2031 through 2036, respectively. The Company also has federal general business credits of $1.8 million, expiring beginning in 2030 through 2037, and alternative minimum tax credit carryforwards of $59 thousand, which can be carried forward indefinitely. Prior to 2018, the Company computed its bad debt deduction for income tax purposes under the reserve method. In 2018, the Company requested, and the IRS consented to, a change in accounting method used for computing its tax bad debt deduction from the reserve method to the charge-off method as defined under Internal Revenue Code Section 166. As a result, the Company computes its tax bad debt deduction under the new method and is recapturing its excess tax bad debt reserve of $4.3 million into taxable income evenly over a 4 year period starting in 2018. At December 31, 2019 and 2018, the Company had $475 thousand in unrecognized tax benefits. This amount, if recognized, would favorably affect the income tax provision in future periods. The Company expects that the total amount of unrecognized tax benefits may decrease significantly within the next twelve months due to expected settlement with the state taxing authorities. During 2019 and 2018, $8 thousand and $5 thousand were accrued during each period for potential interest related to these unrecognized tax benefits. Federal tax years 2016 through 2019 remain open for the assessment of Federal income tax. Except for the issues under protest for the years listed below, California tax years 2015 through 2019 remain open for the assessment of California income tax. The Company is currently under examination by the California Franchise Tax Board (“FTB”) for the 2009, 2010, and 2011 tax years. The FTB has proposed adjustments to the Company’s California net operating loss carryforwards for items which the Company has established an unrecognized tax benefit. The Company has protested the FTB’s adjustments and does not expect that significant additional tax expense will result.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration