Note 16.

Income Taxes

Income tax expense is comprised of current and deferred, federal and state income taxes on the Company’s pre-tax earnings. The following table presents the components of income tax expense in the periods indicated:


	Year Ended December 31,
(Amounts in thousands)	2014		2013			2012
Current tax expense:
Federal	$	7,234	$	12,819		$	13,733
State		1,325		1,743			1,291

Total current tax expense		8,559		14,562			15,024
Deferred tax expense (benefit):
Federal		2,971		(3,136	)		(1,501	)
State		794		(518	)		605

Total deferred tax expense (benefit)		3,765		(3,654	)		(896	)

Total income tax expense	$	12,324	$	10,908		$	14,128

Deferred taxes derived from continuing operations reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for tax purposes. The following table presents the significant components of the net deferred tax asset as of the dates indicated:


	December 31,
	2014		2013
(Amounts in thousands)
Deferred tax assets:
Allowance for loan losses	$	7,519	$	9,209
Unrealized losses on available-for-sale securities		2,560		8,184
Unrealized asset losses		4,477		8,018
Purchase accounting		5,343		6,796
FDIC assisted transactions		6,582		6,753
Intangible assets		7,584		6,384
Deferred compensation assets		4,421		4,224
Alternative minimum tax credit		—		1,849
Other deferred tax assets		6,427		2,670

Total deferred tax assets		44,913		54,087

Deferred tax liabilities:
FDIC indemnification asset		12,548		12,155
Fixed assets		2,453		2,199
Odd days interest deferral		2,007		1,958
Other		442		1,066

Total deferred tax liabilities		17,450		17,378

Net deferred tax asset	$	27,463	$	36,709

The Company’s effective tax rate, defined as income tax expense divided by pre-tax income, may vary significantly from the statutory rate due to permanent differences and available tax credits. Permanent differences are income and expense items excluded by law in the calculation of taxable income. The Company’s most significant permanent differences include income on municipal securities, which are exempt from federal income tax, income on bank-owned life insurance, and tax credits generated by investments in low income housing and rehabilitation of historic structures. The following table reconciles the federal statutory tax rate to the Company’s effective tax rate from continuing operations in the periods indicated:


	Year Ended December 31,
	2014			2013			2012
(Amounts in thousands)
Federal statutory tax rate		35.00	%		35.00	%		35.00	%
Reduction resulting from:
Tax-exempt interest		(4.35	)		(5.14	)		(4.16	)
State income taxes, net of federal benefit		2.66			2.35			2.35
Other, net		(0.72	)		(0.33	)		(0.11	)

Effective tax rate		32.59	%		31.88	%		33.08	%