INCOME TAXES

The following table presents the components of the provision for income tax (benefit) expense included in the Consolidated Statement of Operations for the years ended December 31, 2013, 2012 and 2011 (in thousands):



	Years Ended December 31
	2013		2012			2011
Current	$	12,121	$	10,759		$	—
Deferred	10,407		841			(3,322		)
Increase (decrease) in valuation allowance	—		(36,385		)	3,322
Provision for (benefit from) income taxes	$	22,528	$	(24,785	)	$	—

The following tables present the reconciliation of the provision for income taxes computed at the federal statutory rate to the actual effective rate for the years ended December 31, 2013, 2012 and 2011 (dollars in thousands):



	Years Ended December 31
	2013			2012			2011
Provision for (benefit from) income taxes computed at federal statutory rate	$	24,179		$	14,034		$	1,910
Increase (decrease) in taxes due to:
Tax-exempt interest	(1,633		)	(1,710		)	(1,616		)
Investment in life insurance	(707		)	(894		)	(663		)
State income taxes (benefit), net of federal tax offset	824			539			(2,260		)
Tax credits	(636		)	(788		)	(840		)
Valuation allowance	—			(36,385		)	3,322
Other	501			419			147
Provision for (benefit from) income taxes	$	22,528		$	(24,785	)	$	—



	Years Ended December 31
	2013		2012		2011
Federal income tax statutory rate	35.0	%	35.0	%	35.0	%
Increase (decrease) in tax rate due to:
Tax-exempt interest	(2.4	)	(4.3	)	(29.6	)
Investment in life insurance	(1.0	)	(2.2	)	(12.1	)
State income taxes (benefit), net of federal tax offset	1.2		1.3		(41.5	)
Tax credits	(0.9	)	(2.0	)	(15.4	)
Valuation allowance	—		(90.7	)	60.9
Other	0.7		1.1		2.7
Effective income tax rate	32.6	%	(61.8	)%	—	%

The following table reflects the effect of temporary differences that gave rise to the components of the net deferred tax asset as of December 31, 2013 and 2012 (in thousands):



	December 31
	2013			2012
Deferred tax assets:
REO and loan loss reserves	$	17,326		$	24,615
Deferred compensation	7,305			6,122
Net operating loss carryforward	27,639			26,959
Low income housing tax credits	3,676			4,767
State net operating losses	957			1,081
Other	1,235			689
Total deferred tax assets	58,138			64,233
Deferred tax liabilities:
FHLB stock dividends	(5,875		)	(6,187		)
Depreciation	(4,074		)	(4,061		)
Deferred loan fees, servicing rights and loan origination costs	(6,444		)	(5,608		)
Intangibles	(833		)	(1,544		)
Financial instruments accounted for under fair value accounting	(15,118		)	(10,632		)
Total deferred tax liabilities	(32,344		)	(28,032		)
Deferred income tax asset	25,794			36,201
Unrealized loss (gain) on securities available-for-sale	1,685			(1,194		)
Deferred tax asset, net	$	27,479		$	35,007

At December 31, 2013, the Company has federal and state net operating loss carryforwards of approximately $79.0 million and $20.4 million, respectively, which will expire, if unused, by the end of 2033. The Company has federal general business credit carryforwards of $2.7 million, which will expire, if unused, by the end of 2031. The Company also has alternative minimum tax credit carryforwards of approximately $900,000, which are available to reduce future federal regular income taxes, if any, over an indefinite period. At December 31, 2012, the Company had federal and state net operating loss carryforwards of approximately $77.0 million and $22.8 million, respectively, and federal general business credits and state tax credit carryforwards of $3.3 million and and $600,000, respectively. The Company also had alternative minimum tax credit carryforwards of approximately $1.5 million as of December 31, 2012.

As a consequence of our capital raise in June 2010, the Company experienced a change in control within the meaning of Section 382 of the Internal Revenue code of 1986, as amended. Section 382 limits the ability of a corporate taxpayer to use net operating loss carryforwards, general business credit, and recognized built-in-losses incurred prior to the change in control against income earned after the change in control. As a result of the Section 382 limitation, the Company expects it will be able to utilize approximately $6.9 million of net operating loss carryforwards on an annual basis. Based on its analysis, the Company does not believe the change in control will impact its ability to utilize all of the available net operating loss carryforwards, general business credit, and recognized built-in-losses.

Retained earnings (accumulated deficits) at December 31, 2013 and 2012 include approximately $5.4 million in tax basis bad debt reserves for which no income tax liability has been booked. In the future, if this tax bad debt reserve is used for purposes other than to absorb bad debts or the Company no longer qualifies as a bank or is completely liquidated, the Company will incur a federal tax liability at the then-prevailing corporate tax rate, established as $1.9 million at December 31, 2013.

As of December 31, 2013, the Company's tax receivables included $9.8 million related to a refund due from amended federal income tax returns filed for 2005, 2006, 2008, and 2009. In addition, $450,000 of interest was recognized as miscellaneous income. The tax receivable represents the finalization of the Internal Revenue Service's review that began in 2011 and which ended with the signing, during 2013, of a closing agreement between the IRS and the Company related to these amended federal income tax returns.