12.	INCOME TAXES

Provision for income taxes consisted of the following for the periods indicated (in thousands):

	Year Ended March 31,
	2018		2017		2016
Current	$	4,087	$	284	$	251
Deferred		3,668		3,103		3,175
Total	$	7,755	$	3,387	$	3,426

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows at the dates indicated (in thousands):

	March 31, 2018		March 31, 2017
Deferred tax assets:
Deferred compensation	$	77	$	150
Allowance for loan losses		2,643		3,875
Accrued expenses		127		217
Accumulated depreciation and amortization		753		1,017
Deferred gain on sale		201		361
Net operating loss carryforwards		-		1,134
Purchase accounting		150		228
Net unrealized loss on investment securities available for sale		1,458		929
Alternative Minimum Tax ("AMT") credit		-		471
Other		236		332
Total deferred tax assets		5,645		8,714

Deferred tax liabilities:
FHLB stock dividend		(95	)		(143	)
Prepaid expenses		(109	)		(158	)
Loan fees/costs		(628	)		(803	)
Total deferred tax liabilities		(832	)		(1,104	)
Deferred tax assets, net	$	4,813		$	7,610

A reconciliation of the Company's effective income tax rate with the federal statutory tax rate is as follows for the years indicated:

	Year Ended March 31,
	2018		2017		2016
Statutory federal income tax rate	30.8	%	34.0	%	34.0	%
State and local income tax rate	2.5		1.5		1.5
Revaluation of net deferred tax assets due to Tax Act	11.4		-		-
ESOP market value adjustment	-		(0.1	)	(0.1	)
BOLI	(1.5	)	(3.8	)	(2.8	)
Other, net	(0.1	)	(0.2	)	2.2
Effective federal income tax rate	43.1	%	31.4	%	34.8	%

On December 22, 2017, the federal government enacted the Tax Act. The Tax Act makes significant changes to the U.S. tax law including, among other things: a reduction in the federal corporate income tax rate from a maximum of 35.0% to 21.0% effective January 1, 2018; changes to the tax treatment of net operating loss carryforwards and carrybacks; and a repeal of the corporate alternative minimum tax. The Tax Act reduced the Company's federal corporate income tax rate from 34.0% to a blended federal corporate income tax rate of 30.8% for the fiscal year ended March 31, 2018. As a result of using a blended tax rate, the Company recognized a $422,000 benefit for income taxes during the quarter ended December 31, 2017. Beginning in fiscal year 2019, the Company will utilize a federal corporate income tax rate of 21.0%. Also as a result of the Tax Act, the reduction of the corporate tax rate required the Company to remeasure its deferred tax assets and liabilities based upon the lower federal tax rate of 21.0%. Accordingly, during the year ended March 31, 2018, the Company recorded a one-time $2.1 million charge to the provision for income taxes in conjunction with remeasuring its net deferred tax asset to account for the future impact of the decrease in the corporate income tax rate. While no provisional amounts were used in calculating the tax effects of the Tax Act, certain amounts may be subject to change as future guidance is issued. Additionally, the state impacts resulting from the Tax Act have been calculated based upon existing laws and may be subject to change as states issue new guidance or legislation related to the Tax Act. In addition, the Company has made an adjustment between retained earnings and AOCI related to the stranded tax effects due to the change in the federal corporate tax rate applied to the net unrealized losses on available for sale investment securities (see discussion of ASU 2018-02 in Note 1).

The Bank's retained earnings at both March 31, 2018 and 2017 include a base year allowance for loan losses, which amounted to $2.2 million, for which no federal income tax liability has been recognized. The related unrecognized deferred tax liability at March 31, 2018 and 2017 was $517,000 and $781,000, respectively. This represents the balance of the allowance for loan losses created for tax purposes as of December 31, 1987. These amounts are subject to recapture in the unlikely event that the Company's banking subsidiaries (1) make distributions in excess of current and accumulated earnings and profits, as calculated for federal tax purposes, (2) redeem their stock, or (3) liquidate. Management does not expect this temporary difference to reverse in the foreseeable future. At March 31, 2018, the Company had no deferred tax assets for federal and state net operating loss carryforwards.

At March 31, 2018 and 2017, the Company had no unrecognized tax benefits or uncertain tax positions. In addition, the Company had no accrued interest or penalties related to income tax matters as of March 31, 2018 or 2017. It is the Company's policy to recognize potential accrued interest and penalties related to income tax matters as a component of provision for income taxes. The Company is subject to U.S. federal and State of Oregon income taxes. The years 2015 to 2018 remain open to examination for federal income taxes, and the years 2014 to 2018 remain open to State of Oregon examination.