Income Taxes

The current and deferred components of income tax expense on the consolidated statements of income were as follows:



	2013			2012		2011
Current:
Federal	$	11,853		$	5,107	$	11,301
State	400			457		463
	12,253			5,564		11,764
Deferred:
Federal	(121		)	5,318		17
Income tax expense	$	12,132		$	10,882	$	11,781

The income tax expense differs from the amount computed by applying the statutory federal income tax rate as a result of the following:



	2013			2012			2011
Computed tax expense	$	12,220		$	12,008		$	13,285
Increase (reduction) in income taxes resulting from:
Tax exempt income	(510		)	(623		)	(753		)
State taxes, net of federal benefit	260			297			301
Goodwill impairment	991			—			18
Income from life insurance	(459		)	(484		)	(760		)
Low income housing credits	(299		)	(328		)	(393		)
Other	(71		)	12			83
Income tax expense	$	12,132		$	10,882		$	11,781

Temporary differences between the financial statements carrying amounts and the tax bases of assets and liabilities gave rise to the following deferred tax assets and liabilities:



	2013				2012
	Asset		Liability		Asset		Liability
Allowance for possible losses on loans	$	7,564	$	—	$	8,081	$	—
Net unrealized losses and gains on available-for-sale securities	4,288		—		—		6,969
Pension and other benefits	3,900		—		3,715		—
Net unrealized losses on derivative instruments	1,369		—		3,879		—
Net unrealized losses on postretirement plans	992		—		1,476		—
Deferred compensation and benefits	963		—		904		—
Purchase accounting and deposit premium	321		—		—		147
Allowance for OTTI of investments	71		—		71		—
Allowance for OREO valuation	59		—		149		—
Depreciation	—		1,765		—		2,073
Deferred loan origination fees	—		1,390		—		1,256
Prepaid expenses	—		766		—		683
Mortgage servicing rights	—		254		—		190
Other	695		—		706		—
	$	20,222	$	4,175	$	18,981	$	11,318

The related income taxes have been calculated using a rate of 35%. No valuation allowance is deemed necessary for the deferred tax assets.

Although not currently under review, income tax returns for the years ended December 31, 2010 through 2012 are open to audit by federal and Maine authorities. If the Company, as a result of an audit, were assessed interest and penalties, the amounts would be recorded through other non-interest expense on the consolidated statements of income.