Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income tax expense for the years ended December 31, 2013, 2012, and 2011 consisted of the following:


	2013		2012		2011
	(in thousands)
Current expense:
Federal	$	13,203	$	35,684	$	52,207
State		3,447		2,666		26,610

		16,650		38,350		78,817
Deferred expense (benefit):
Federal and State		30,329		28,398		(16,111	)

Total income tax expense	$	46,979	$	66,748	$	62,706

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, 2013 and 2012 are as follows:


	2013		2012
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	48,042	$	53,407
Depreciation		13,327		4,972
Deferred compensation		—		5,075
Employee benefits		14,325		11,775
Investment securities, including other-than-temporary impairment losses		24,735		24,196
Net operating loss carryforwards		53,926		62,053
Purchase accounting		6,863		14,251
Accrued interest		—		12,515
Other		21,063		23,416

Total deferred tax assets		182,281		211,660
Deferred tax liabilities:
Pension plans		21,774		—
Other investments		11,096		11,182
Deferred income		—		15,886
Other		17,811		13,353

Total deferred tax liabilities		50,681		40,421

Net deferred tax asset (included in other assets)	$	131,600	$	171,239

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, 2013, 2012, and 2011 were as follows:


	2013			2012			2011
	(in thousands)
Federal income tax at expected statutory rate	$	62,629		$	73,631		$	68,326
(Decrease) increase due to:
Tax-exempt interest, net of interest incurred to carry tax-exempt securities		(4,876	)		(4,478	)		(3,736	)
Bank owned life insurance		(2,087	)		(2,399	)		(2,583	)
State income tax expense, net of federal tax effect		9,904			8,204			12,727
Tax credits		(17,408	)		(10,070	)		(12,760	)
Other, net		(1,183	)		1,860			732

Income tax expense	$	46,979		$	66,748		$	62,706

Summary of Reconciliation of Gross Unrecognized Tax Benefits

A reconciliation of Valley’s gross unrecognized tax benefits for 2013, 2012, and 2011 are presented in the table below:


	2013			2012			2011
	(in thousands)
Beginning balance	$	31,052		$	33,000		$	21,142
Additions based on tax positions related to prior years		1,482			4,195			13,366
Settlements with taxing authorities		(1,216	)		(5,038	)		—
Reductions due to expiration of statute of limitations		(605	)		(1,105	)		(1,508	)

Ending balance	$	30,713		$	31,052		$	33,000