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Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax expense is substantially due to Federal income taxes as the provision for the state of Oregon income taxes is insignificant and the state of Washington does not charge an income tax in lieu of a business and occupation tax. Income tax expense for the years ended December 31, 2020, 2019 and 2018 consisted of the following:
 Year Ended December 31,
 202020192018
 (In thousands)
Current tax expense$15,186 $12,504 $9,866 
Deferred tax expense(8,576)984 1,372 
Income tax expense$6,610 $13,488 $11,238 

The CARES Act, among other things, permitted net operating loss carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allowed net operating loss carrybacks incurred in 2018, 2019 and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. During the year ended December 31, 2020, the Company recorded a tax benefit from net operating loss carryback related to prior acquisitions of $967,000.
The effective tax rate was 12.4% for the year ended December 31, 2020 compared to an effective tax rate of 16.6% and 17.5% for the years ended December 31, 2019 and 2018, respectively. The decrease in the effective tax rate during the year ended December 31, 2020 was due primarily to the tax benefit of the recognized net operating loss carryback mentioned above. A reconciliation of the Company's effective income tax rate with the Federal statutory income tax rate of 21% for the years ended December 31, 2020, 2019 and 2018 is as follows:
 Year Ended December 31,
 202020192018
 (In thousands)
Income tax expense at Federal statutory rate$11,168 $17,020 $13,710 
Tax-exempt instruments(1,785)(1,745)(1,879)
Non-deductible acquisition costs— — 336 
Federal tax credits and other benefits (1)
(1,928)(1,961)(515)
Effects of BOLI(827)(368)(330)
Tax benefit of CARES Act carryback(967)— — 
Other, net949 542 (84)
Income tax expense$6,610 $13,488 $11,238 
(1) Federal tax credits are provided for under the NMTC and LIHTC programs as described in Note (1) Description of Business, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Pronouncements. Gross tax credits related to the Company's NMTC totaling $9.8 million were utilized during the seven year period ending December 31, 2020.
The following table presents major components of the deferred income tax asset (liability) resulting from differences between financial reporting and tax basis:
 December 31, 2020December 31, 2019
 (In thousands)
Deferred tax assets:
Allowance for credit losses$15,883 $7,389 
Accrued compensation2,988 3,058 
Stock compensation642 904 
Market discount on purchased loans1,062 621 
Foregone interest on nonaccrual loans1,456 914 
Net operating loss carryforward acquired207 228 
ROU lease liability4,161 5,227 
Other deferred tax assets160 134 
Total deferred tax assets26,559 18,475 
Deferred tax liabilities:
Deferred loan fees, net(2,643)(3,328)
Premises and equipment(2,680)(2,510)
FHLB stock(569)(569)
Goodwill and other intangible assets(2,186)(2,807)
New market tax credit(2,048)(1,781)
Junior subordinated debentures(1,050)(1,113)
Other deferred tax liabilities(264)(239)
ROU lease asset(3,879)(4,956)
Net unrealized gains on investment securities(6,805)(2,753)
Total deferred tax liabilities(22,124)(20,056)
Deferred tax asset (liability), net$4,435 $(1,581)

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. A valuation allowance is required to be recognized for the portion of the deferred tax asset that will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. As of December 31, 2020, based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management expects to realize the benefits of these deductible differences.
At December 31, 2020 and December 31, 2019, the Company had a net operating loss carryforward of $986,000 and $1.1 million, respectively, that will begin to expire in 2024. The Company is limited to the amount of the net operating loss carryforward that it can deduct each year under Section 382. Due to sufficient earnings history and other positive evidence, management has not recorded a valuation allowance as of December 31, 2020 and December 31, 2019.
As of December 31, 2020 and December 31, 2019, the Company had an insignificant amount of unrecognized tax benefits, none of which would materially affect its effective tax rate if recognized. The Company does not anticipate that the amount of unrecognized tax benefits will significantly increase or decrease in the next 12 months. The amount of interest and penalties accrued as of December 31, 2020 and December 31, 2019 and recognized during the years ended December 31, 2020, 2019 and 2018 were immaterial.
The Company has qualified under provisions of the Internal Revenue Code to compute income taxes after deductions of additions to the bad debt reserves when it was registered as a Savings Bank. At December 31, 2020, the Company had a taxable temporary difference of approximately $2.8 million that arose before 1988 (base-year amount). In accordance with FASB ASC 740, a deferred tax liability of an estimated $588,000 has not been recognized for the temporary difference. Management does not expect this temporary difference to reverse in the foreseeable future.
The Company and its subsidiary file a United States consolidated federal income tax return and an Oregon State income tax return, and the tax years subject to examination by the Internal Revenue Service are the years ended December 31, 2020, 2019, 2018 and 2017.