INCOME TAXES

12 Months Ended

Dec. 31, 2012

INCOME TAXES

NOTE 13. INCOME TAXES

The income tax (expense) benefit in the consolidated statements of operations consists of the following:

	For the Years Ended December 31,
	2012			2011			2010
	(Dollars in Thousands)
Current	$	(4,760	)	$	(2,506	)	$	1,407
Benefit (use) of operating loss carryforward		-			(2,958	)		2,958
Deferred		(2,525	)		(5,092	)		(1,170	)
	$	(7,285	)	$	(10,556	)	$	3,195

The Company’s income tax (expense) benefit differs from the amounts computed by applying the federal income tax statutory rates to income before income taxes. A reconciliation of the differences is as follows:

	For the Years Ended December 31,
	2012			2011			2010
	(Dollars in Thousands)
Tax at federal income tax rate	$	(7,602	)	$	(11,077	)	$	2,514
(Increase) decrease resulting from:
Tax-exempt interest		675			585			577
Other		(358	)		(64	)		104
Provision for income taxes	$	(7,285	)	$	(10,556	)	$	3,195

Net deferred income tax liabilities of $9,533,000 and $8,342,000 at December 31, 2012 and 2011, respectively, are included in other assets (liabilities). The components of deferred income taxes are as follows:

	December 31,
	2012			2011
	(Dollars in Thousands)
Deferred tax assets:
Allowance for loan losses	$	8,258		$	12,305
Deferred compensation		276			292
Deferred gain on interest rate swap		686			766
Unrealized loss on interest rate swap		1,042			711
Nonaccrual interest		891			175
Other real estate owned		3,803			2,711
Capitalized costs, deferred gains and other		1,155			558
		16,111			17,518
Deferred tax liabilities:
Depreciation and amortization		4,758			5,106
Intangible assets		60			340
Deferred gain on FDIC-assisted transactions		17,256			16,946
Unrealized gain on securities available for sale		3,570			3,468
		25,644			25,860
Net deferred tax asset (liability)	$	(9,533	)	$	(8,342	)