(12) Income Taxes

The significant components of income tax expense attributable to operations are:

	Years ended December 31,
(In thousands)	2014		2013		2012
Current
Federal	$	26,059	$	23,536	$	21,011
State		2,823		2,316		1,815
		28,882		25,852		22,826

Deferred
Federal		6,648		2,334		(13	)
State		1,699		10		3
		8,347		2,344		(10	)
Total income tax expense	$	37,229	$	28,196	$	22,816

Not included in the above table are items that were recorded to stockholders’ equity of approximately $(1.1) million, $7.0 million, and $(0.1) million for 2014, 2013, and 2012, respectively, relating to deferred taxes on the unrealized (gain) loss on available for sale securities, tax benefits recognized with respect to stock options exercised, and deferred taxes related to pension plans.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

	December 31,
(In thousands)	2014			2013
Deferred tax assets
Allowance for loan losses	$	25,689		$	26,729
Deferred compensation		8,744			7,931
Postretirement benefit obligation		2,377			2,596
Unrealized losses on securities available for sale		-			5,900
Accrued liabilities		1,778			3,265
Stock-based compensation expense		6,457			7,862
Equipment leasing		1,416			1,661
Other		1,325			2,125
Total deferred tax assets		47,786			58,069
Deferred tax liabilities
Pension and executive retirement		12,192			17,417
Fair value adjustments from acquisitions		1,243			2,070
Unrealized gains on securities available for sale		1,331			-
Premises and equipment, primarily due to accelerated depreciation		2,491			2,270
Deferred loan costs		1,460			1,624
Intangible amortization		14,162			12,007
Other		390			892
Total deferred tax liabilities		33,269			36,280
Net deferred tax asset at year-end		14,517			21,789
Net deferred tax asset at beginning of year		21,789			11,115
(Decrease) Increase in net deferred tax asset	$	(7,272	)	$	10,674

Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the available carryback period. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Based on available evidence, gross deferred tax assets will ultimately be realized and a valuation allowance was not deemed necessary at December 31, 2014 and 2013.

At December 31, 2014, 2013, and 2012 the Company had no ASC 740-10 unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months. During 2012 there was a reduction of reserves for Federal tax benefits for expiration of the statute of limitations of prior years’ tax filings. As a result, unrecognized tax benefits were reduced $0.9 million for 2012 with a reduction of tax expense of $0.8 million in 2012.

The Company is no longer subject to U.S. Federal tax examination by tax authorities for years prior to 2010 and New York State for years prior to 2010. The Company recognizes interest expense penalties related to unrecognized tax benefits, if any, in income tax expense.

The following is a reconciliation of the provision for income taxes to the amount computed by applying the applicable Federal statutory rate of 35 % to income before taxes:

	Years ended December 31
(In thousands)	2014			2013			2012
Federal income tax at statutory rate	$	39,306		$	31,482		$	27,081
Tax exempt income		(2,250	)		(2,433	)		(2,536	)
Net increase in CSV of life insurance		(1,734	)		(1,166	)		(908	)
Low income housing tax credits		(880	)		(819	)		(629	)
State taxes, net of federal tax benefit		2,939			1,512			1,182
Other, net		(152	)		(380	)		(1,374	)
Income tax expense	$	37,229		$	28,196		$	22,816