14.	Income Taxes

The reconciliation of the federal statutory rate and the Company’s effective income tax rate is as follows (in thousands):

	For the Three Months Ended June 30,
	2018						2017
	Amount			% of Pretax Income			Amount			% of Pretax Income
Provision at statutory rate	$	806			24.2	%	$	751			34.0	%
Income from bank-owned life insurance		(61	)		(2.2	%)		(88	)		(4.8	%)
Tax-exempt income		(112	)		(4.0	%)		(210	)		(11.4	%)
Low-income housing credits		(53	)		(1.9	%)		(25	)		(1.4	%)
Tax rate change		(98	)		(3.5	%)					0.0	%
Other, net		18			0.6	%		20			1.0	%
Actual tax expense and effective rate	$	500			13.3	%	$	448			17.5	%

	For the Nine Months Ended June 30,
	2018						2017
	Amount			% of Pretax Income			Amount			% of Pretax Income
Provision at statutory rate	$	2,077			24.2	%	$	2,168			34.0	%
Income from bank-owned life insurance		(183	)		(3.5	%)		(264	)		(6.3	%)
Tax-exempt income		(381	)		(7.3	%)		(642	)		(15.4	%)
Low-income housing credits		(96	)		(1.8	%)		(148	)		(3.6	%)
Tax rate change		3,682			70.2	%		—			0.0	%
Other, net		23			0.4	%		(63	)		(1.5	%)
Actual tax expense and effective rate	$	5,122			82.3	%	$	1,051			7.2	%

On December 22, 2017, the U.S. Government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"). The Tax Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. For businesses, the Tax Act reduces the corporate federal tax rate from a maximum of 35% to a flat 21% rate. The corporate tax rate reduction was effective January 1, 2018. Because the Company has a fiscal year end of September 30, the reduced corporate tax rate will result in the application of a blended federal statutory tax rate for its fiscal year 2018 and then a flat 21% thereafter. As a result, the carrying value of net deferred tax assets was reduced in December 2017, which increased income tax expense by $3.7 million.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. These calculations are based on many complex factors including estimates of the timing of reversals of temporary differences, the interpretation of federal income tax laws, and a determination of the differences between the tax and the financial reporting basis of assets and liabilities. Actual results could differ significantly from the estimates and interpretations used in determining the current and deferred income tax assets and liabilities.

Under GAAP, a valuation allowance is required to be recognized if it is “more likely than not” that a portion of the deferred tax asset will not be realized. Our policy is to evaluate our deferred tax assets on a quarterly basis and record a valuation allowance for our deferred tax asset if we do not have sufficient positive evidence indicating that it is more likely than not that some or all of the deferred tax asset will be realized. Each quarter, we consider positive evidence, which may include taxes paid in carryback years, reversing timing differences, available tax planning strategies, and projected taxable income and weigh it against negative evidence, which may include cumulative losses in the most recent three year period and uncertainty regarding short-term future earnings, among other items. At June 30, 2018, management determined that no valuation allowance on the deferred tax asset was required. This determination was based on sufficient positive evidence associated with our profitability, demonstrated through consecutive earnings over the recent three year period, and our projections for future taxable income.