Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

A summary of income tax expense/(benefit) included in the Consolidated Statements of Income follows:

(dollars in thousands)	For the year ended December 31,
	2012		2011			2010
Current tax expense:
Federal	$	19,122		19,613			13,001
State		1,879		2,020			1,009
Total current tax expense		21,001		21,633			14,010
Deferred tax expense (benefit)		1,440		(2,336	)		581
Total income tax expense	$	22,441		19,297			14,591

Tax effects of temporary differences

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2012 and 2011, are as follows:

	December 31,
(dollars in thousands)	2012			2011
	Deductible			Deductible
	temporary			temporary
	differences			differences
Benefits and deferred remuneration	$	(4,736	)		(3,467	)
Difference in reporting the allowance for loan losses, net		22,710			22,389
Other income or expense not yet reported for tax purposes		2,582			2,321
Depreciable assets		(1,413	)		(1,288	)
Other items		801			1,429
Net deferred tax asset at end of year		19,944			21,384
Net deferred tax asset at beginning of year		21,384			19,048

Deferred tax expense (benefit)	$	1,440			(2,336	)

Effective income tax rate

The effective tax rates differ from the statutory federal income tax rate. The reasons for these differences are as follows:

	For the years ended
	December 31,
	2012			2011			2010
Statutory federal income tax rate		35.0	%		35.0			35.0
Increase/(decrease) in taxes resulting from:
Tax exempt income		(0.7	)		(1.6	)		(2.7	)
State income tax (including alternative minimum tax), net of federal tax benefit		2.3			2.0			1.3
Other items		0.8			1.4			(0.4	)
Effective income tax rate		37.4	%		36.8	%		33.2

Reconciliation of unrecognized tax benefits

For the years ended December 31, 2012 and 2011 the unrecognized tax benefits and change in those unrecognized tax benefits from the beginning of the year are as follows:

(dollars in thousands)


Balance January 1, 2011	$	905

Amount paid to taxing authorities and amount reducing tax expense for the twelve-month period ended December 31, 2011		-

Balance December 31, 2011		905

Decrease in prior unrecognized tax benefits		(342	)
Lapse of statute of limitations		(350	)

Balance December 31, 2012	$	213