(12) INCOME TAXES

The components of the Company’s income tax expense (benefit) are as follows:

	Year Ended December 31,
	2014			2013			2012
	(Dollars in thousands)
Current taxes:
Federal	$	28,258		$	23,326		$	24,928
State		2,709			3,682			2,865
Deferred taxes		(3,683	)		(483	)		(689	)
Total income taxes	$	27,284		$	26,525		$	27,104

Income tax expense applicable to securities transactions approximated $574,000, $147,000and $1,720,000 for the years ended December 31, 2014, 2013 and 2012, respectively.

A reconciliation of tax expense at the federal statutory tax rate applied to income before taxes is presented in the following table:

	Year Ended December 31,
	2014			2013			2012
	(Dollars in thousands)
Tax expense at the federal statutory tax rate	$	31,910		$	28,295		$	27,651
Increase (decrease) in tax expense from:
Tax-exempt income, net		(571	)		(621	)		(783	)
Modified endowment life contracts		(755	)		(812	)		(870	)
State tax expense, net of federal tax benefit		1,469			2,303			2,374
Federal tax credits		(6,479	)		(4,132	)		(2,455	)
Other, net		1,710			1,492			1,187
Total tax expense	$	27,284		$	26,525		$	27,104

The net deferred tax asset consisted of the following and is reported in other assets:

	December 31,
	2014			2013
	(Dollars in thousands)
Provision for loan losses	$	15,814		$	13,662
Write-downs of other real estate owned		1,297			962
Deferred compensation		2,652			2,237
Stock-based compensation		3,190			2,934
Investments in partnership interests		1,966			1,170
Other		306			1,479
Gross deferred tax assets		25,225			22,444
Unrealized net gains on securities		(2,644	)		(2,103	)
Premium on securities of banks acquired		(715	)		(800	)
Intangibles		(2,917	)		(2,561	)
Basis difference related to tax credits		(1,977	)		(1,620	)
Depreciation		(5,504	)		(5,975	)
Leveraged lease		(1,964	)		(2,282	)
Other		(89	)		(257	)
Gross deferred tax liabilities		(15,810	)		(15,598	)
Net deferred tax asset	$	9,415		$	6,846

The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if applicable, in income tax expense. During the years ended December 31, 2014, 2013 and 2012, the Company did not recognize or accrue any interest and penalties related to unrecognized tax benefits. Federal and various state income tax statutes dictate that tax returns filed in any of the previous three reporting periods remain open to examination which includes the years 2012 to 2014. The Company has no open examinations with either the Internal Revenue Service or any state agency.

Management performs an analysis of the Company’s tax position annually and believes it is more likely than not that all of its tax positions will be utilized in future years.