Net Deferred Tax Asset and Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Expense (Benefit) [Abstract]

Net Deferred Tax Asset and Income Taxes

Net Deferred Tax Asset and Income Taxes

The components of income tax expense were as follows:

(Dollars in thousands)
Years ended December 31,	2012		2011			2010
Current tax expense:
Federal		$13,937		$13,227			$10,576
State	533		558			414
Total current tax expense	14,470		13,785			10,990
Deferred tax expense (benefit):
Federal	1,310		(789		)	(628		)
State	18		(74		)	(60		)
Total deferred tax expense (benefit)	1,328		(863		)	(688		)
Total income tax expense		$15,798		$12,922			$10,302

Total income tax expense varied from the amount determined by applying the Federal income tax rate to income before income taxes.  The reasons for the differences were as follows:

(Dollars in thousands)
Years ended December 31,	2012			2011			2010
Tax expense at Federal statutory rate		$17,805			$14,926			$12,024
(Decrease) increase in taxes resulting from:
Tax-exempt income	(1,220		)	(1,220		)	(1,145		)
Dividends received deduction	(12		)	(32		)	(48		)
BOLI	(857		)	(678		)	(660		)
Federal tax credits	(364		)	(364		)	(231		)
State income tax expense, net of federal income tax benefit	358			315			229
Other	88			(25		)	133
Total income tax expense		$15,798			$12,922			$10,302

The approximate tax effects of temporary differences that give rise to gross deferred tax assets and gross deferred tax liabilities at December 31, 2012 and 2011 are as follows:

(Dollars in thousands)
December 31,	2012			2011
Gross deferred tax assets:
Allowance for loan losses		$11,037			$10,642
Defined benefit pension obligations	11,462			10,969
Losses on write-downs of securities to fair value	1,500			1,695
Deferred compensation	2,174			1,900
Deferred loan origination fees	1,432			1,203
Stock based compensation	1,555			868
Other	2,680			2,530
Gross deferred tax assets	31,840			29,807
Gross deferred tax liabilities:
Net unrealized gains on securities available for sale	(4,318		)	(6,136		)
Amortization of intangibles	(2,207		)	(2,459		)
Deferred loan origination costs	(3,176		)	(2,885		)
Other	(2,255		)	(1,899		)
Gross deferred tax liabilities	(11,956		)	(13,379		)
Net deferred tax asset		$19,884			$16,428

The Corporation has determined that a valuation allowance is not required for any of the deferred tax assets since it is more likely than not that these assets will be realized primarily through future reversals of existing taxable temporary differences, carryback to taxable income in prior years or by offsetting projected future taxable income.

The Corporation had no unrecognized tax benefits as of December 31, 2012 and 2011.

The Corporation files income tax returns in the U.S. federal jurisdiction and various state jurisdictions.  The Corporation is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2009.  In 2010, a state income tax examination commenced for the tax years 2007 through 2008 and was settled.  As a result, previously unrecognized tax benefits of $127 thousand were recognized in 2010.