Income Taxes

The reported income tax expense and effective tax rate in the Consolidated Statements of Income differs from the amounts computed by applying the statutory corporate tax rate as follows for the years ended December 31:



	2013					2012					2011
(Dollars in thousands)	Amount			Rate		Amount			Rate		Amount			Rate
Income tax computed at statutory federal tax rate	$	10,179		35.0	%	$	10,469		35.0	%	$	5,890		34.3	%
Differences in rate resulting from:
Tax-exempt interest income	(645		)	(2.2	)%	(565		)	(1.9	)%	(574		)	(3.4	)%
Investments in tax credit funds	(314		)	(1.1	)%	(387		)	(1.3	)%	(497		)	(2.9	)%
Bank owned life insurance	2,183			7.5	%	(14		)	(0.1	)%	(44		)	(0.3	)%
Other, net	107			0.4	%	22			0.1	%	(179		)	(0.9	)%
Total income tax expense	$	11,510		39.6	%	$	9,525		31.8	%	$	4,596		26.8	%

Peoples' reported income tax expense consisted of the following for the years ended December 31:



(Dollars in thousands)	2013		2012		2011
Current income tax	$	6,883	$	5,004	$	4,134
Deferred income tax	4,627		4,521		462
Total income tax expense	$	11,510	$	9,525	$	4,596

The significant components of Peoples' deferred tax assets and liabilities consisted of the following at December 31:



(Dollars in thousands)	2013		2012
Deferred tax assets:
Allowance for loan losses	$	8,014	$	7,526
Tax credit carryforward	—		4,607
Available-for-sale securities	5,257		—
Investments	3,536		3,632
Accrued employee benefits	2,108		3,421
Other	769		516
Total deferred tax assets	$	19,684	$	19,702
Deferred tax liabilities:
Purchase accounting adjustments	6,442		5,460
Available-for-sale securities	—		3,711
Bank premises and equipment	1,968		1,536
Deferred loan income	1,769		1,442
Other	691		1,830
Total deferred tax liabilities	$	10,870	$	13,979
Net deferred tax asset	$	8,814	$	5,723

The tax credit carryforward at December 31, 2012 was fully utilized in 2013. No valuation allowance for deferred tax assets was required at December 31, 2013, as it is more likely than not that all of the deferred tax assets will be realized in future periods. The related federal income tax expense on securities transactions approximated $171,000 in 2013, $1,241,000 in 2012 and $166,000 in 2011.

Peoples' income tax returns are subject to review and examination by federal and state taxing authorities. Peoples is currently open to audit under the applicable statutes of limitations by the Internal Revenue Service for the year ended December 31, 2012. The years open to examination by state taxing authorities vary by jurisdiction.