INCOME TAXES

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The following table presents the components of the Company’s income tax expense:

	December 31,
(dollars in thousands)	2024		2023
Current:
Federal	$	247	$	60
State and local	(264)		(281)
Total current tax benefit	(17)		(221)
Deferred:
Federal	2,766		1,844
State and local	357		213
Total deferred tax expense	3,123		2,057
Income tax expense	$	3,106	$	1,836

The following is a reconciliation of income taxes reflected on the Consolidated Statements of Income for the years ended December 31, 2024 and 2023, with income tax expense computed by applying the United States federal income tax rate of 21% to income before income taxes:

	December 31,
(dollars in thousands)	2024		2023
Income tax expense computed at 21% statutory rate	$	2,432	$	1,483
Differences:
Permanent differences	(76)		(106)
State taxes, net of federal expense	50		224
LIHTC investment tax credit	(485)		(441)
LIHTC investment proportional amortization	759		484
Other, net	426		192
Income tax expense	$	3,106	$	1,836

The following table presents the principal components of the Company’s deferred tax items:

	December 31,
(dollars in thousands)	2024		2023
Deferred tax assets:
Net operating loss carryforwards	$	472	$	472
Allowance for credit losses	4,327		6,194
Acquired loans fair market value adjustments	955		607
Loans accounted for under the fair value option	174		216
Lease liability	4,948		2,579
Stock-based compensation	840		1,423
Provision on other real estate owned	261		—
Other intangible assets	81		186
Unrealized losses on securities	250		383
Accrued bonuses	—		376
Loan fees	—		74
Accrued expenses	—		77
Other	383		184
Total deferred tax assets	12,691		12,771
Deferred tax liabilities:
Goodwill	(1,384)		(1,263)
Depreciation	(2,787)		(2,311)
Right-of-use asset	(4,523)		(2,113)
Acquired loans fair market value adjustments	(301)		(196)
FHLB Redemption	(98)		(33)
Loan costs	(71)		—
Total deferred tax liabilities	(9,164)		(5,916)
Net operating loss valuation allowance	(448)		(448)
Net deferred tax asset	$	3,079	$	6,407

Management believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the total deferred tax assets. The net operating loss ("NOL") carryforwards expire in tax years 2028 through 2032. As of December 31, 2024 and December 31, 2023, the Company had $5.5 million of California NOLs available for utilization. As of December 31, 2024, $5.2 million is recorded as a valuation allowance, resulting in a tax effected valuation allowance of $0.4 million. The Company identified no other material uncertain tax positions for which it is reasonably possible the total amount of unrecognized tax benefits will significantly increase or decrease within 12 months.

The Company and its subsidiaries file tax returns for the United States and for multiple states and localities. The United States federal income tax returns of the Company are eligible to be examined for the years 2021 and forward and for the years 2020 and forward for major state taxing jurisdictions. There are no federal or state tax examinations currently in progress.