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,
	2013		2012			2011
Current tax expense	$	4,369	$	11,054		$	4,692
Deferred tax expense (benefit)	2,503		(3,198		)	2,419
Total	$	6,872	$	7,856		$	7,111

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



(dollars in thousands)	December 31,
	2013					2012					2011
Income tax expense at federal statutory rate	$	7,479		35.0	%	$	8,645		35.0	%	$	8,072		35.0	%
Federal tax credits	—			—	%	(480		)	(1.9	)%	(480		)	(2.1	)%
Interest income on tax-exempt securities	(588		)	(2.7	)%	(512		)	(2.1	)%	(471		)	(2.0	)%
Other	(19		)	(0.1	)%	203			0.8	%	(10		)	(0.1	)%
Total	$	6,872		32.2	%	$	7,856		31.8	%	$	7,111		30.8	%

Federal tax credits are related to the New Markets Tax Credit program, whereby a subsidiary of the Bank was awarded $3.1 million in future Federal tax credits which were available through 2012. Tax benefits related to these credits were recognized for financial reporting purposes in the same periods that the credits were 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,
	2013		2012
Deferred tax assets:
Covered assets	$	3,410	$	19,877
Allowance for loan losses	11,100		7,139
Fair value adjustment of investment securities available for sale	2,799		—
Deferred compensation	535		473
Other	1,199		848
Total deferred tax assets	$	19,043	$	28,337
Deferred tax liabilities:
FDIC indemnification asset	$	6,190	$	13,943
Deferred loan fees	1,600		1,518
Premises and equipment	590		629
FHLB stock dividend	144		152
Investment in partnership	1,092		1,092
Prepaid expenses	295		217
Fair value adjustment of investment securities available for sale	—		2,531
Purchase accounting	4,277		6,451
Other	278		54
Total deferred tax liabilities	14,466		26,587
Deferred tax assets (liabilities), net	$	4,577	$	1,750

There was no valuation allowance for deferred tax assets as of December 31, 2013 or 2012. 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.