11. INCOME TAXES

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


	Year Ended March 31,
	2020		2019		2018
Current	$	5,404	$	5,157	$	4,087
Deferred		(574)		(11)		3,668
Total	$	4,830	$	5,146	$	7,755

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, 2020		March 31, 2019
Deferred tax assets:
Deferred compensation	$	63	$	45
Allowance for loan losses		3,143		2,862
Accrued expenses		137		131
Accumulated depreciation and amortization		935		797
Deferred gain on sale		129		167
Purchase accounting		123		141
Net unrealized loss on investment securities available for sale		—		829
Operating lease liabilities		971		—
Other		352		242
Total deferred tax assets		5,853		5,214
Deferred tax liabilities:
FHLB stock dividend		(38)		(97)
Prepaid expenses		(84)		(148)
Operating lease right-of-use assets		(947)		—
Net unrealized gain on investment securities available for sale		(663)		—
Loan fees/costs		(844)		(774)
Total deferred tax liabilities		(2,576)		(1,019)
Deferred tax assets, net	$	3,277	$	4,195

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,
	2020		2019		2018
Statutory federal income tax rate	21.0	%	21.0	%	30.8	%
State and local income tax rate	3.0		3.0		2.5
Revaluation of net deferred tax assets due to Tax Act	—		—		11.4
ESOP market value adjustment	(0.1)		(0.1)		—
BOLI	(1.0)		(0.8)		(1.5)
Other, net	0.6		(0.1)		(0.1)
Effective federal income tax rate	23.5	%	23.0	%	43.1	%

For the fiscal years ended 2020 and 2019, the Company utilized a federal corporate income tax rate of 21.0%. On December 22, 2017, the federal government enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made 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 year ended March 31, 2018. 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. 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 assets to account for the future impact of the decrease in the federal corporate income tax rate. In addition, during the year ended March 31, 2018, the Company 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.

The Bank’s retained earnings at both March 31, 2020 and 2019 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 both March 31, 2020 and 2019 was $517,000. This represents the balance of the allowance for loan losses created for tax purposes as of December 31, 1987. This amount is 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, 2020 and 2019, 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, 2020 or 2019. It is the Company’s policy to recognize potential accrued interest and penalties related to income tax matters as a component of the provision for income taxes. The Company is subject to U.S. federal and State of Oregon income taxes. The years 2017 to 2019 remain open to examination for federal income taxes, and the years 2016 to 2019 remain open to State of Oregon examination.