11. INCOME TAXES

The provision for income taxes follows (dollars in thousands):


	Year Ended December 31,
	2019		2018		2017
Federal:
Current	$	7,081	$	5,780	$	8,456
Effect of tax act		—		—		2,710
Deferred		(228)		179		(828)
		6,853		5,959		10,338
State:
Current		4,771		3,819		3,604
Deferred		133		129		(302)
		4,904		3,948		3,302
	$	11,757	$	9,907	$	13,640

The components of the net deferred tax asset, included in other assets, are as follows (dollars in thousands):


	December 31,
	2019		2018
Deferred tax assets:
Allowance for loan losses	$	2,934	$	2,882
Foreclosed assets		200		704
Deferred compensation		3,895		3,538
Accrued reserves		312		421
Non accrual loans		181		205
Net operating loss carryforward		1,909		2,131
Net unrealized loss on securities available-for-sale		—		2,798
Other		3,536		3,510
Total deferred tax assets		12,967		16,189
Deferred tax liabilities:
Premises and equipment		(324)		(833)
Deferred loan costs		(2,656)		(2,656)
Net unrealized gain on securities available-for-sale		(2,490)		—
Other		(4,034)		(4,046)
Total deferred tax liabilities		(9,504)		(7,535)
Net deferred tax assets	$	3,463	$	8,654

The expense for income taxes differs from amounts computed by applying the statutory Federal income tax rates to income before income taxes. The significant items comprising these differences consisted of the following (dollars in thousands):


	Year Ended December 31,
	2019		2018		2017
Income tax expense at federal statutory rate	$	10,021	$	8,313	$	11,613
Increase (decrease) resulting from:
State franchise tax expense, net of federal tax effect		3,872		3,390		2,363
Tax exempt municipal income		(952)		(852)		(1,299)
Affordable housing tax credits		(538)		(632)		(711)
Effect of the tax act		—		—		2,710
Excess tax benefit of stock-based compensation		(133)		(177)		(248)
Other		(513)		(135)		(788)
		11,757		9,907		13,640
Effective tax rate		24.6%		25.0%		41.1%

The Company is subject to federal income tax and income tax of the state of California. Our federal income tax returns for the years ended December 31, 2016, 2017 and 2018 are open to audit by the federal authorities and our California state tax returns for the years ended December 31, 2015, 2016, 2017 and 2018 are open to audit by the state authorities.

The Company has net operating loss carry forwards of approximately $6,288,000 for federal income and approximately $6,869,000 for California franchise tax purposes. Net operating loss carry forwards, to the extent not used will begin to expire in 2031. Net operating loss carry forwards available from acquisitions are substantially limited by Section 382 of the Internal Revenue Code and benefits not expected to be realized due to the limitation have been excluded from the deferred tax asset and net operating loss carry forward amounts noted above.

There were no recorded interest or penalties related to uncertain tax positions as part of income tax for the years ended December 31, 2019, 2018, and 2017, respectively. We do not expect the total amount of unrecognized tax benefits to significantly increase or decrease within the next twelve months.