(14) Income Taxes

The following table presents the components of income tax expense attributable to continuing operations included in the consolidated statements of income:

(dollars in thousands)	December 31,
	2012			2011		2010
Current tax expense	$	11,054		$	4,692	$	9,667
Deferred tax expense (benefit)		(3,198	)		2,419		2,130
Total	$	7,856		$	7,111	$	11,797

Reconciliation between the statutory federal income tax rate and the effective tax rate is as follows:

(dollars in thousands)	December 31,
	2012					2011					2010
Income tax expense at federal statutory rate	$	8,645		35.0	%	$	8,072		35.0	%	$	13,079		35.0	%
Federal tax credits		(480	)	(1.9	%)		(480	)	(2.1	%)		(480	)	(1.3	%)
Interest income on tax-exempt securities		(512	)	(2.1	%)		(471	)	(2.0	%)		(372	)	(1.0	%)
Other		203		0.8	%		(10	)	(0.1	%)		(430	)	(1.1	%)
Total	$	7,856		31.8	%	$	7,111		30.8	%	$	11,797		31.6	%

Federal tax credits are related to the New Markets Tax Credit program, whereby a subsidiary of the Bank has been awarded $3.1 million in future Federal tax credits which are available through 2012. Tax benefits related to these credits will be recognized for financial reporting purposes in the same periods that the credits are recognized in the Company's income tax returns. The Company believes that it has complied with the various regulatory provisions of the New Markets Tax Credit program for all years presented, and therefore has reflected the impact of these credits in its estimated annual effective tax rate for all years presented.

The following table presents major components of the net deferred income tax asset resulting from differences between financial reporting and tax basis:

(dollars in thousands)	December 31,
	2012		2011
Deferred tax assets
Covered assets	$	19,877	$	30,147
Allowance for loan losses		7,139		6,621
Deferred compensation		473		401
Other		848		974
Total deferred tax assets	$	28,337	$	38,143

Deferred tax liabilities
FDIC indemnification asset	$	13,943	$	24,566
Deferred loan fees		1,518		1,541
Premises and equipment		629		672
FHLB stock dividend		152		152
Investment in partnership		1,092		896
Prepaid expenses		217		163
Fair value adjustment of investment securities available for sale		2,531		1,704
Purchase accounting		6,451		8,993
Other		54		77
Total deferred tax liabilities		26,587		38,764
Deferred tax assets (liabilities), net	$	1,750	$	(621	)

There was no valuation allowance for deferred tax assets as of December 31, 2012 or 2011. The Company has determined that it is not required to establish a valuation allowance for the deferred tax assets as management believes it is more likely than not that the deferred tax asset will be realized in the normal course of business.