NOTE 14 - INCOME TAXES

The components of the Company’s income tax expense (benefit) as of December 31 (in thousands):


	2019		2018
Current:
Federal	$	3,076	$	(118)
State and local		323		87
Total current tax expense (benefit)		3,399		(31)
Deferred:
Federal	$	(1,338)	$	1,567
State and local		122		239
Total deferred tax expense (benefit)		(1,216)		1,806
Income tax expense	$	2,183	$	1,775

The following is a reconciliation of income taxes reflected on the statements of income for the years ended December 31 with income tax expense computed by applying the United States federal income tax rate of 21% to income before income taxes (in thousands):


	2019			2018
Income tax expense computed at 21% statutory rate	$	2,140		$	1,558
Differences:
Permanent differences		(30)			(89)
State taxes, net of federal expense		394			258
Other, net		(321)	(1)		48
Income tax expense	$	2,183		$	1,775

(1)

Includes the impact of R&D tax credits.

The following were the principal components of the Company’s deferred tax items as of December 31 (in thousands):


	2019		2018
Deferred tax assets:
Net operating loss carryforwards	$	545	$	995
Allowance for loan losses		1,925		1,921
Deferred rent		797		960
Stock-based compensation		1,400		1,277
Allowance for losses on other real estate owned		438		461
Other intangible assets		723		747
Unrealized losses on securities		55		530
Accrued Bonuses		474		127
Loan fees		352		245
Other		685		310
Total deferred tax assets		7,394		7,573
Deferred tax liabilities:
Goodwill	$	(1,354)	$	(1,772)
Depreciation		(961)		(980)
Other		(32)		(515)
Total deferred tax liabilities		(2,347)		(3,267)
Net deferred tax asset	$	5,047	$	4,306

The net operating loss ("NOL") carryforwards expire in tax years 2028 through 2032. As of December 31, 2019, the Company has $0.7 million of California NOLs available for utilization. In general, a corporation’s ability to utilize its NOL carryforwards may be substantially limited due to ownership changes that have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), as well as similar state provisions. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income and tax. In general, an "ownership change," as defined by Section 382 of the Code, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percent of the capital (as defined) of a company by certain stockholders or public groups.

The Company identified no 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 2016 and forward. There are no federal or state tax examinations currently in progress.