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INCOME TAXES
12 Months Ended
Dec. 31, 2020
INCOME TAXES  
INCOME TAXES

​

NOTE 14 - INCOME TAXES

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

​

​

​

​

​

​

​

​

​

    

2020

    

2019

Current:

 

​

  

 

​

  

Federal

​

$

7,970

​

$

3,076

State and local

​

 

1,859

​

 

323

Total current tax expense

​

 

9,829

​

 

3,399

Deferred:

​

​

​

​

​

​

Federal

​

​

(1,392)

​

​

(1,338)

State and local

​

 

(280)

​

 

122

Valuation allowance

​

 

372

​

 

—

Total deferred (benefit) tax

​

 

(1,300)

​

 

(1,216)

Income tax expense

​

$

8,529

​

$

2,183

​

The following is a reconciliation of income taxes reflected on the Consolidated Statements of Income for the years ended December 31, 2020 and 2019 with income tax expense computed by applying the United States federal income tax rate of 21% to income before income taxes (in thousands):

​

​

​

​

​

​

​

​

​

    

2020

    

2019

Income tax expense computed at 21% statutory rate

​

$

6,943

​

$

2,140

Differences:

​

 

  

​

 

  

Permanent differences

​

 

(57)

​

 

(30)

State taxes, net of federal expense

​

 

1,150

​

 

394

Low income housing investment

​

​

(36)

​

​

—

Valuation allowance

​

​

372

​

​

—

Other, net(1)

​

 

157

​

 

(321)

Income tax expense

​

$

8,529

​

$

2,183

(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):

​

​

​

​

​

​

​

​

​

    

2020

    

2019

Deferred tax assets:

 

​

  

 

​

  

Net operating loss carryforwards

​

$

577

​

$

545

Allowance for loan losses

​

 

3,054

​

 

1,925

Deferred rent

​

 

635

​

 

797

Stock-based compensation

​

 

1,613

​

 

1,400

Provision on other real estate owned

​

 

484

​

 

438

Other intangible assets

​

 

615

​

 

723

Unrealized losses on securities, net

​

 

—

​

 

55

Accrued bonuses

​

 

898

​

 

474

Loan fees

​

 

244

​

 

352

Other

​

 

553

​

 

685

Total deferred tax assets

​

 

8,673

​

 

7,394

Deferred tax liabilities:

​

 

  

​

 

  

Goodwill

​

​

(1,013)

​

​

(1,354)

Depreciation

​

​

(904)

​

​

(961)

Unrealized gains on securities, net

​

​

(236)

​

​

—

Other

​

 

(92)

​

 

(32)

Total deferred tax liabilities

​

 

(2,245)

​

 

(2,347)

Net operating loss valuation allowance

​

​

(372)

​

​

—

Net deferred tax asset

​

$

6,056

​

$

5,047

​

The net operating loss ("NOL") carryforwards expire in tax years 2028 through 2032. As of December 31, 2020, the Company has $6.5 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.

During 2020, as a result of divestitures, the Company did not expect to realize the full NOL. As such, the Company recorded a $0.4 million valuation allowance related to the California NOLs. 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 2017 and forward. There are no federal or state tax examinations currently in progress.