Note 16 - Income Taxes

At December 31, 2012 and 2011, the Company had $1.4 million in total taxes receivable, respectively. The Company realized $896,000, $879,000, and $841,000 in tax credits related to its investments in low income housing tax credit partnerships for 2012, 2011, and 2010 respectively. Additionally, in 2012 and 2011, the Company purchased and utilized $398,000 and $500,000, respectively, in Alaska film tax credits from the State of Alaska.

Components of the provision for income taxes are as follows:



(In Thousands)	Current Tax Expense (Benefit)		Deferred (Benefit)		Total Expense
2012:
Federal	$	4,169	$	750	$	4,919
State		1,106		131		1,237
Total	$	5,275	$	881	$	6,156
2011:
Federal	$	4,941	$	(816)	$	4,125
State		891		(143)		748
Total	$	5,832	$	(959)	$	4,873
2010:
Federal	$	(1,655)	$	4,918	$	3,263
State		(204)		859		655
Total	$	(1,859)	$	5,777	$	3,918

The actual expense for 2012, 2011, and 2010, differs from the “expected” tax expense (computed by applying the U.S. Federal Statutory Tax Rate of 35% for the year ended December 31, 2012, 2011, and 2010) as follows:



(In Thousands)	2012		2011		2010
Computed “expected” income tax expense	$	6,864	$	5,695	$	4,545
State income taxes, net		803		486		426
Low income housing credits		(896)		(879)		(841)
Other		(617)		(429)		(212)
Total	$	6,156	$	4,873	$	3,918

The components of the net deferred tax asset are as follows:



(In Thousands)	2012		2011		2010
Deferred Tax Asset:
Allowance for loan losses	$	6,650	$	6,750	$	5,912
Loan fees, net of costs		1,411		1,247		1,304
Depreciation and amortization		537		636		698
Other real estate owned		1,381		1,159		932
Deferred Compensation		1,973		2,059		1,888
Other		1,531		1,597		1,855
Total Deferred Tax Asset	$	13,483	$	13,448	$	12,589

Deferred Tax Liability:
Unrealized gain on available-for-sale
investment securities	$	(955)	$	(197)	$	(452)
Intangible amortization		(1,807)		(1,675)		(1,789)
Other		(730)		(704)		(690)
Total Deferred Tax Liability	$	(3,492)	$	(2,576)	$	(2,931)
Net Deferred Tax Asset	$	9,991	$	10,872	$	9,658

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. The primary source of recovery of the deferred tax asset will be future taxable income. Management believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax asset. The deferred tax asset is included in other assets.

As of December 31, 2012, the Company had no unrecognized tax benefits. Our policy is to recognize interest and penalties on unrecognized tax benefits in “Provision for income taxes” in the Consolidated Statements of Income. There were no amounts related to interest and penalties recognized for the years ended December 31, 2012, 2011, and 2010. The tax years subject to examination by federal and state taxing authorities are the years ending December 31, 2011, 2010 and 2009.