Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income tax expense for the years ended December 31, 2015, 2014 and 2013 consisted of the following:



	2015			2014			2013
	(in thousands)
Current expense (benefit):
Federal	$	7,978		$	25,156		$	13,203
State	(493		)	(5,549		)	3,447
	7,485			19,607			16,650
Deferred expense:
Federal and State	16,453			11,455			30,329
Total income tax expense	$	23,938		$	31,062		$	46,979

Summary of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that gave rise to the significant portions of the deferred tax assets and liabilities as of December 31, 2015 and 2014 are as follows:



	2015		2014
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	44,382	$	42,574
Depreciation	15,661		15,082
Employee benefits	16,104		17,893
Investment securities, including other-than-temporary impairment losses	18,697		15,972
Net operating loss carryforwards	57,722		39,462
Purchase accounting	40,585		31,327
Other	21,310		18,138
Total deferred tax assets	214,461		180,448
Deferred tax liabilities:
Pension plans	18,861		13,081
Other investments	15,720		14,662
Other	21,449		21,127
Total deferred tax liabilities	56,030		48,870
Net deferred tax asset (included in other assets)	$	158,431	$	131,578

Summary of Income Tax Reconciliation

Reconciliation between the reported income tax expense and the amount computed by multiplying consolidated income before taxes by the statutory federal income tax rate of 35 percent for the years ended December 31, 2015, 2014 and 2013 were as follows:



	2015			2014			2013
	(in thousands)
Federal income tax at expected statutory rate	$	44,413		$	51,532		$	62,629
(Decrease) increase due to:
Tax-exempt interest, net of interest incurred to carry tax-exempt securities	(4,864		)	(4,406		)	(4,876		)
Bank owned life insurance	(2,385		)	(2,237		)	(2,087		)
State income tax expense, net of federal tax effect	15,274			12,866			9,904
Tax credits from securities and other investments	(28,988		)	(20,555		)	(17,408		)
Reduction in reserve for uncertainties	—			(6,971		)	(1,821		)
Other, net	488			833			638
Income tax expense	$	23,938		$	31,062		$	46,979

Summary of Reconciliation of Gross Unrecognized Tax Benefits

A reconciliation of Valley’s gross unrecognized tax benefits for 2015, 2014 and 2013 are presented in the table below:



	2015		2014			2013
	(in thousands)
Beginning balance	$	18,647	$	30,713		$	31,052
Additions based on tax positions related to prior years	1,245		1,408			1,482
Settlements with taxing authorities	—		(9,050		)	(1,216		)
Reductions due to expiration of statute of limitations	—		(4,424		)	(605		)
Ending balance	$	19,892	$	18,647		$	30,713