The provision for income taxes for the years ended December 31, 2017, 2016 and 2015 consisted of the following (dollars in thousands):
| Federal | State | Total | ||||||||||
| 2017 | ||||||||||||
| Current | $ | 1,397 | $ | 608 | $ | 2,005 | ||||||
| Deferred | 1,222 | 25 | 1,247 | |||||||||
| Provision for income taxes | $ | 2,619 | $ | 633 | $ | 3,252 | ||||||
| 2016 | ||||||||||||
| Current | $ | 2,701 | $ | 974 | $ | 3,675 | ||||||
| Deferred | (308 | ) | 25 | (283 | ) | |||||||
| Provision for income taxes | $ | 2,393 | $ | 999 | $ | 3,392 | ||||||
| 2015 | ||||||||||||
| Current | $ | 1,482 | $ | 719 | $ | 2,201 | ||||||
| Deferred | 409 | 64 | 473 | |||||||||
| Provision for income taxes | $ | 1,891 | $ | 783 | $ | 2,674 | ||||||
Deferred tax assets (liabilities) consisted of the following (dollars in thousands):
| December 31, | ||||||||
| 2017 | 2016 | |||||||
| Deferred tax assets: | ||||||||
| Allowance for loan and lease losses | $ | 1,458 | $ | 2,207 | ||||
| Unrealized gains on available-for-sale investment securities | 135 | — | ||||||
| Deferred compensation | 1,945 | 2,688 | ||||||
| Future state tax deduction | 132 | 347 | ||||||
| Other | 108 | 197 | ||||||
| Total deferred tax assets | 3,778 | 5,439 | ||||||
| Deferred tax liabilities: | ||||||||
| Future liability of state deferred tax assets | (237 | ) | (392 | ) | ||||
| Unrealized gains on available-for-sale investment securities | — | (372 | ) | |||||
| Deferred loan costs | (146 | ) | (229 | ) | ||||
| Federal Home Loan Bank stock dividends | (150 | ) | (211 | ) | ||||
| Other real estate owned | (55 | ) | (77 | ) | ||||
| Premises and equipment | (45 | ) | (38 | ) | ||||
| Total deferred tax liabilities | (633 | ) | (1,319 | ) | ||||
| Net deferred tax assets | $ | 3,145 | $ | 4,120 | ||||
The Company and its subsidiaries file income tax returns in the United States and California jurisdictions. There are currently no pending federal, state or local income tax examinations by tax. Furthermore, with few exceptions, the Company is no longer subject to the examination by federal taxing authorities for the years ended before December 31, 2014 and by state and local taxing authorities for years before December 31, 2013. The unrecognized tax benefits and changes therein and the interest and penalties accrued by the Company as of December 31, 2017 were not significant.
The provision for income taxes differs from amounts computed by applying the statutory Federal income tax rate of 34% in 2017, 2016 and 2015 to income before income taxes. The significant items comprising these differences consisted of the following:
| Year Ended December 31, | ||||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| Federal income tax statutory rate | 34.0 | % | 34.0 | % | 34.0 | % | ||||||
| State franchise tax, net of Federal tax effect | 6.5 | % | 7.1 | % | 6.5 | % | ||||||
| Effect of Federal rate reduction on deferred tax assets | 19.0 | % | — | — | ||||||||
| Tax benefit of interest on loans to/investments in states and political subdivisions | (6.1 | )% | (4.7 | )% | (4.5 | )% | ||||||
| Tax-exempt income from life insurance policies | (1.7 | )% | (1.1 | )% | (1.3 | )% | ||||||
| Equity compensation expense | 0.1 | % | 0.1 | % | 0.1 | % | ||||||
| Other | (1.4 | )% | (0.8 | )% | (1.1 | )% | ||||||
| Effective tax rate | 50.4 | % | 34.6 | % | 33.7 | % | ||||||