Entity information:

8. Income Taxes

The provision for income taxes consists of the following for the years ended March 31:

 

     (In thousands)  
     2017      2016      2015  

Current:

         

Federal

    $ 4,563      $ 6,964      $ 7,688  

State

      724        1,054        1,196  
  

 

 

     

 

 

     

 

 

  

Total current

      5,287        8,018        8,884  
  

 

 

     

 

 

     

 

 

  

Deferred:

         

Federal

      (1,688 )       (254 )       308  

State

      (268 )       (38 )       48  
  

 

 

     

 

 

     

 

 

  

Total deferred

      (1,956 )       (292 )       356  
  

 

 

     

 

 

     

 

 

  

Income tax expense

    $ 3,331      $ 7,726      $ 9,240  
  

 

 

     

 

 

     

 

 

  

The net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes are reflected in deferred income taxes. Significant components of the Company’s deferred tax assets consist of the following as of March 31:

 

     (In thousands)  
     2017      2016  

Allowance for credit losses not currently deductible for tax purposes

    $ 7,742      $ 5,918  

Share-based compensation

      487        491  

Interest rate swap agreements

      (6 )       78  

Other items

      282        128  
  

 

 

     

 

 

  

Deferred income taxes

    $ 8,505      $ 6,615  
  

 

 

     

 

 

  

The provision for income taxes reflects an effective U.S tax rate, which differs from the corporate tax rate for the following reasons:

 

     (In thousands)  
     2017      2016      2015  

Provision for income taxes at Federal statutory rate

    $ 3,059      $ 7,037      $ 9,134  

Increase (decrease) resulting from:

         

State income taxes, net of Federal benefit

      297        660        809  

Transaction costs

      —          —          (734 ) 

Other

      (25 )       29        31  
  

 

 

     

 

 

     

 

 

  

Income tax expense

    $ 3,331      $ 7,726      $ 9,240  
  

 

 

     

 

 

     

 

 

  

The Company’s effective tax rate decreased to 38.11% in fiscal 2017 from 38.43% in fiscal 2016. The effective rate was 35.41% in fiscal 2015. The Company had approximately $2.1 million of previously non-deductible expenses associated with the potential sale of the Company in 2014. Since the sale of the Company was not consummated, the $2.1 million became deductible in 2015 creating a favorable effective tax rate.