9. Income Taxes

The income tax provision differs from the amounts determined by applying the statutory federal income tax rate of 34% to the income before income tax provision for the following reasons (dollars in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013		2012

Income tax provision at statutory rate	$	1,303		$	1,843		$	4,549	$	3,739
Increase (decrease) resulting from:
State income taxes, net of federal income tax	(86		)	137			122		208
Other	554			—			850		—
Valuation allowance	—			(2,174		)	—		(4,293		)

Income tax provision (benefit)	$	1,771		$	(194	)	$	5,521	$	(346	)

Through December 31, 2012, the Company maintained a full valuation allowance over its net deferred income tax assets. Based on consistent earnings after its 2010 emergence from Chapter 11 through December 31, 2012, the Company released its valuation allowance as of that date. For the three months and nine months ended September 30, 2012, the existence of the full valuation allowance resulted in an income tax benefit reflecting certain tax credits.

The Company evaluates its tax positions for liability recognition. As of September 30, 2013, the Company had no unrecognized tax benefits. No interest or penalties related to tax assessments were recognized in the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2013 or 2012. All tax years from 2009 remain open for both federal and Hawaii state purposes.

On September 13, 2013, the Treasury Department and the Internal Revenue Service issued regulations that provide guidance with respect to the treatment of materials and supplies, capitalization of amounts paid to acquire or produce tangible property, and the determination of whether an expenditure with respect to tangible property is a deductible repair or must be capitalized. The Company evaluated the impact of the new regulations and concluded that the new regulations will not have a significant impact on its consolidated financial statements.