(17)	Income Taxes

The provision for income tax expense consisted of the following for the years ended December 31:

	2018			2017		2016
Current:
Federal	$	3,654		$	4,611	$	3,903
State		2,300			1,788		1,419

		5,954			6,399		5,322
Deferred:
Federal		(711	)		1,914		(354	)
State		(499	)		5		(83	)

		(1,210	)		1,919		(437	)

	$	4,744		$	8,318	$	4,885

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2018 and 2017 consisted of:

	2018		2017
Deferred tax assets:
Allowance for loan losses	$	4,027	$	3,543
Deferred compensation		116		125
Retirement compensation		1,313		1,273
Stock option compensation		127		67
Postretirement benefits		472		565
Current state franchise taxes		470		381
Non-accrual interest		118		41
Low income housing tax credit partnership		128		—
Other		282		129
Sale-Leaseback		100		124
Investment securities unrealized loss		1,560		1,209

Deferred tax assets		8,713		7,457

Deferred tax liabilities:
Fixed assets depreciation		1,478		1,461
FHLB dividends		187		187
Tax credit – loss on pass-through		—		176
Deferred loan costs		806		941
Mortgage servicing rights		142		129
Other		84		15

Total deferred tax liabilities		2,697		2,909

Net deferred tax assets (see Note 7)	$	6,016	$	4,548

Based upon the level of historical taxable income and projections for future taxable income over the periods during which the deferred tax assets are deductible, management believed it is more-likely-than-not the Company will realize the benefits of these deductible differences.

At December 31, 2018, the Company had no state net operating loss carry forwards and no federal tax credit carry forwards.

A reconciliation of income taxes computed at the federal statutory rate and the provision for income taxes for the years ended December 31, 2018, 2017 and 2016 is as follows:

	2018		2017		2016
Federal statutory income tax rate		21.0 %		34.0 %		34.0 %

Increase (decrease) in tax rate due to:
State franchise tax, net of federal benefit		8.2%		6.9%		6.8%
Reduction for tax exempt interest		(0.8)%		(0.6)%		(0.9)%
Cash surrender value of life insurance		(0.5)%		(0.9)%		(1.2)%
Tax rate change		0.0%		9.8%		0.0%
Other tax credits		(0.5)%		(1.1)%		(1.1)%
Other		0.0%		0.6%		0.1%

Effective income tax rate		27.4%		48.7%		37.7%

Accounting for Uncertainty in Income Taxes

The Company had no unrecognized tax benefits for the years ended December 31, 2018 and December 31, 2017, respectively. The Company recognized a change in unrecognized tax benefits during 2018 and 2017 of $0 and $5 due to the expiration of a statute of limitations and other gross decreases. The Company had no significant uncertain tax positions as of December 31, 2018. The Company does not anticipate any significant increase or decrease in unrecognized tax benefits during 2019.

The Company classifies interest and penalties as a component of the provision for income taxes. At December 31, 2018, there were no unrecognized interest and penalties. The tax years ended December 31, 2017, 2016, and 2015 remain subject to examination by the Internal Revenue Service. The tax years ended December 31, 2017, 2016, 2015, and 2014 remain subject to examination by the California Franchise Tax Board. The deductibility of these tax positions will be determined through examination by the appropriate tax authorities or the expiration of the tax statute of limitations.