(18)	Income Taxes

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

	2019			2018			2017
Current:
Federal	$	3,056		$	3,654		$	4,611
State		2,164			2,300			1,788

		5,220			5,954			6,399
Deferred:
Federal		472			(711	)		1,914
State		(22	)		(499	)		5

		450			(1,210	)		1,919

	$	5,670		$	4,744		$	8,318

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2019 and 2018 consisted of:

	2019		2018
Deferred tax assets:
Allowance for loan losses	$	3,901	$	4,027
Deferred compensation		108		116
Retirement compensation		1,378		1,313
Stock option compensation		181		127
Postretirement benefits		576		472
Current state franchise taxes		457		470
Non-accrual interest		11		118
Low income housing tax credit partnership		—		128
Sale-leaseback		75		100
Lease liability		2,212		—
Investment securities unrealized loss		—		1,560
Other		160		282

Deferred tax assets		9,059		8,713

Deferred tax liabilities:
Fixed assets depreciation		1,455		1,478
FHLB dividends		187		187
Tax credit – loss on pass-through		210		—
Deferred loan costs		780		806
Mortgage servicing rights		164		142
Investment securities unrealized gain		630		—
Right of Use Asset		2,058		—
Other		94		84

Total deferred tax liabilities		5,578		2,697

Net deferred tax assets (see Note 7)	$	3,481	$	6,016

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, 2019, 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 is as follows:

	2019			2018			2017
Federal statutory income tax rate		21.0	%		21.0	%		34.0	%

Increase (decrease) in tax rate due to:
State franchise tax, net of federal benefit		8.3	%		8.2	%		6.9	%
Reduction for tax exempt interest		(1.2	)%		(0.8	)%		(0.6	)%
Cash surrender value of life insurance		(0.5	)%		(0.5	)%		(0.9	)%
Tax rate change		0.0	%		0.0	%		9.8	%
Other tax credits		(0.1	)%		(0.5	)%		(1.1	)%
Other		0.3	%		0.0	%		0.6	%

Effective income tax rate		27.8	%		27.4	%		48.7	%

Accounting for Uncertainty in Income Taxes

The Company had no unrecognized tax benefits for the years ended December 31, 2019 and 2018. The Company recognized no changes in unrecognized tax benefits during 2019 and 2018 due to the expiration of a statute of limitations. The Company had no significant uncertain tax positions as of December 31, 2019 and December 31, 2018. The Company does not currently anticipate any significant increase or decrease in unrecognized tax benefits during 2020.

The Company classifies interest and penalties as a component of the provision for income taxes. At December 31, 2019, there were no unrecognized interest and penalties. The tax years ended December 31, 2018, 2017, and 2016 remain subject to examination by the Internal Revenue Service. The tax years ended December 31, 2018, 2017, 2016, and 2015 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.