INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Components of Income Tax Expense (Benefit)

Income tax expense for the years ended December 31, 2012, 2011 and 2010 consisted of the following:

	2012			2011			2010
	(in thousands)
Current federal	$	15,181		$	15,845		$	16,346
Deferred federal		988			(1,993	)		(5,351	)
Current state		877			1,413			1,683
Deferred state		(51	)		(677	)		(798	)
Tax benefit of stock options		187			130			357
Total income tax expense	$	17,182		$	14,718		$	12,237

Differences In Taxes From Continuing Operations

The differences between financial statement tax expense and amounts computed by applying the statutory federal income tax rate of 35% for 2012, 2011 and 2010 to income before income taxes were as follows:

	2012			2011			2010
	(in thousands)
Income taxes at statutory federal rate of 35%	$	18,402		$	15,883		$	12,873
Increase (decrease) in taxes resulting from:
Tax exempt income		(1,122	)		(1,376	)		(958	)
Nondeductible expense		182			213			209
State income tax, net of federal tax effect		554			490			616
Net operating loss		0			0			(30	)
Tax credits		(253	)		(153	)		(127	)
Bank owned life insurance		(340	)		(348	)		(408	)
Reserve for unrecognized tax benefits		(45	)		22			22
Other		(196	)		(13	)		40
Total income tax expense	$	17,182		$	14,718		$	12,237

Deferred Tax Assets and Liabilities

The net deferred tax asset recorded in the consolidated balance sheets at December 31, 2012 and 2011 consisted of the following:

	2012				2011
	Federal		State		Federal		State
	(in thousands)
Deferred tax assets:
Bad debts	$	18,006	$	3,804	$	18,690	$	3,676
Pension and deferred compensation liability		756		160		491		97
Non-qualified stock options		479		102		288		57
Impairment of investment securities		0		0		125		25
Nonaccrual loan interest		1,403		297		1,264		249
Long-term incentive plan		857		181		771		151
Other		266		36		232		27
		21,767		4,580		21,861		4,282
Deferred tax liabilities:
Accretion		127		20		122		19
Depreciation		2,821		254		2,809		215
Loan servicing rights		1,010		213		825		162
State taxes		1,229		0		1,197		0
Leases		0		0		10		2
Deferred loan fees		38		8		46		9
Intangible assets		1,655		350		1,462		288
FHLB stock dividends		76		16		76		15
REIT spillover dividend		1,219		0		1,168		0
Prepaid expenses		700		148		266		52
		8,875		1,009		7,981		762
Valuation allowance		0		0		0		0
Net deferred tax asset	$	12,892	$	3,571	$	13,880	$	3,520

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits:

	2012			2011
	(in thousands)
Balance January 1,	$	134		$	112
Additions based on tax positions related to the current year		15			22
Additions for tax positions of prior years		0			0
Reductions for tax positions of prior years		0			0
Reductions due to the statute of limitations		(60	)		0
Settlements		0			0
Balance at December 31,	$	89		$	134