(11) Income Taxes

The provision (benefit) for income taxes for the years ended December 31, 2011, 2010 and 2009 consists of the following (in thousands):


	Years Ended December 31,
	2011			2010			2009

Current:
Federal	$	12,452		$	13,618		$	9,636
State		1,834			1,333			1,474

Total current		14,286			14,951			11,110

Deferred:
Federal		(2,151	)		(3,055	)		(1,780	)
State		(662	)		(1,495	)		(175	)

Total deferred		(2,813	)		(4,550	)		(1,955	)

	$	11,473		$	10,401		$	9,155

Included in other comprehensive income is income tax expense attributable to net unrealized gains on securities available for sale arising during the year in the amount of $2,135,000, $3,478,000 and $1,300,000 for the years ended December 31, 2011, 2010 and 2009, respectively. Included in stockholders' equity is income tax benefit (expense) attributable to stock plans in the amount of $1,303,000, $(23,000) and $150,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

A reconciliation between the provision for income taxes and the expected amount computed by multiplying income before the provision for income taxes times the applicable statutory Federal income tax rate for the years ended December 31, 2011, 2010 and 2009 is as follows (in thousands):


	Years Ended December 31,
	2011			2010			2009
Income before provision for income taxes	$	32,214		$	30,779		$	24,808
Applicable statutory
Federal income tax rate		35.0	%		35.0	%		35.0	%
Computed "expected" Federal income tax expense	$	11,275		$	10,773		$	8,683
Increase (decrease) in Federal income tax expense resulting from:
ESOP		56			43			41
ESOP dividends		(232	)		(238	)		(374	)
Earnings on life insurance		(410	)		(295	)		(292	)
State income taxes net of Federal benefit		762			921			844
Reversal of valuation allowance on state deferred tax benefit		—			(922	)		—
Other items, net		22			119			253

	$	11,473		$	10,401		$	9,155

Included in other assets at December 31, 2011 and 2010 is a net deferred tax asset of $13,501,000 and $12,823,000, respectively.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2011 and 2010 are presented in the following table (in thousands):


	December 31,
	2011			2010
Deferred tax assets:
Allowance for loan losses	$	9,853		$	8,047
Reserve for repurchased loans		288			330
Valuation allowances for repurchased loans		77			94
Reserve for uncollected interest		1,371			1,030
Other-than-temporary impairment loss on investment securities		52			—
Incentive compensation		1,183			1,059
Deferred compensation		726			749
Other reserves		64			40
Stock plans		1,082			1,049
ESOP		30			—
Unrealized loss on securities available for sale		1,705			3,840
Intangible assets		175			241
Lease termination costs		—			284
Real estate owned		162			185
State alternative minimum tax		1,160			1,160

Total gross deferred tax assets		17,928			18,108
Less valuation allowance		—			—

Deferred tax assets, net		17,928			18,108

Deferred tax liabilities:
Excess servicing on sale of mortgage loans		(339	)		(607	)
Investments, discount accretion		(469	)		(434	)
Deferred loan and commitment costs, net		(1,741	)		(2,004	)
ESOP		—			(24	)
Premises and equipment, differences in depreciation		(811	)		(715	)
Undistributed REIT income		(1,067	)		(1,501	)

Total deferred tax liabilities		(4,427	)		(5,285	)

Net deferred tax assets	$	13,501		$	12,823

At December 31, 2009, the Company determined that a valuation allowance should be established for state deferred tax assets other than the alternative minimum tax as it was considered more likely than not that the Bank, based on anticipated changes to its corporate structure, would not have sufficient earnings to realize the benefit. At December 31, 2010, the Company determined that it was "more likely than not" that the state deferred tax assets will be realized through future reversals of existing taxable temporary differences, future taxable income and tax planning strategies. The change in status from 2009 to 2010 resulted from a year-end 2010 dividend from OceanFirst REIT Holdings, Inc. to the Bank which utilized all existing net operating losses created by stock option exercises. There was no tax benefit recognized relating to the utilization of these net operating losses. The recognition of cumulative deferred state tax assets which existed at the beginning of the year provided the Company with a tax benefit of $922,000 for the year ended December 31, 2010. At December 31, 2001, 2010 and 2009 the Company determined that it is not required to establish a valuation reserve for the remaining net deferred tax asset since it is "more likely than not" that the net deferred tax assets will be realized through future reversals of existing taxable temporary differences, future taxable income and tax planning strategies. The conclusion that it is "more likely than not" that the remaining net deferred tax assets will be realized is based on the history of earnings and the prospects for continued growth. Management will continue to review the tax criteria related to the recognition of deferred tax assets.

Retained earnings at December 31, 2011 includes approximately $10,750,000 for which no provision for income tax has been made. This amount represents an allocation of income to bad debt deductions for tax purposes only. Events that would result in taxation of these reserves include failure to qualify as a bank for tax purposes, distributions in complete or partial liquidation, stock redemptions and excess distributions to shareholders. At December 31, 2011 the Company had an unrecognized deferred tax liability of $4,391,000 with respect to this reserve.

There were no unrecognized tax benefits for the years ended December 31, 2011, 2010 and 2009. The tax years that remain subject to examination by the Federal government include the year ended December 31, 2008 and forward. The tax years that remain subject to examination by the States of New Jersey and New York include the years ended December 31, 2007 and forward.