INCOME TAXES

12 Months Ended

Dec. 31, 2015

INCOME TAXES

INCOME TAXES

11. INCOME TAXES

The components of income tax expense are as follows:

Years Ended December 31,	2015			2014		2013
(In thousands)
Current:
Federal	$	8,248		$	3,926	$	5,500
State		1,230			507		664
		9,478			4,433		6,164
Deferred:
Federal		1,457			2,187		403
State		(157	)		619		102
		1,300			2,806		505
Income tax expense	$	10,778		$	7,239	$	6,669

The reconciliation of the expected Federal income tax expense at the statutory tax rate to the actual provision follows:

Years Ended December 31,	2015						2014						2013
(Dollars in thousands)	Amount			Percentage of Pre-tax Earnings			Amount			Percentage of Pre-tax Earnings			Amount			Percentage of Pre-tax Earnings
Federal income tax expense computed by applying the statutory rate to income before income taxes	$	11,161			35	%	$	7,141			34	%	$	6,828			34	%
Tax exempt interest		(927	)		(3	)		(665	)		(3	)		(740	)		(4	)
State taxes, net of federal income tax benefit		1,087			3			743			4			502			3
Other		(543	)		(1	)		20			—			79			1
Income tax expense	$	10,778			34	%	$	7,239			35	%	$	6,669			34	%

Deferred tax assets and liabilities are comprised of the following:

December 31,	2015			2014
(In thousands)
Deferred tax assets:
Allowance for loan losses	$	9,034		$	7,311
Net unrealized losses on securities		3,224			2,177
Restricted stock awards		1,435			1,003
Purchase accounting fair value adjustments		15,942			8,321
Net change in pension liability		2,811			2,985
Net operating loss carryforward		1,955			2,063
Net loss on cash flow hedge		524			374
Other		792			351
Total		35,717			24,585
Deferred tax liabilities:
Pension and SERP expense		(4,142	)		(3,765	)
Depreciation		(1,828	)		(1,832	)
REIT undistributed net income		(482	)		(628	)
Net deferred loan costs and fees		(1,416	)		(981	)
Other		(1,541	)		(707	)
Total		(9,409	)		(7,913	)
Net deferred tax asset	$	26,308		$	16,672

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of the State and City of New York and the State of New Jersey. The Company is no longer subject to examination by taxing authorities for years before 2012. There are no unrecorded tax benefits and the Company does not expect the total amount of unrecognized income tax benefits to significantly increase in the next twelve months.

Tax laws were enacted in 2014 and 2015 that changed the manner in which financial institutions and their affiliates are taxed in New York State and New York City, effective January 1, 2015. The initial impact of enactment of these law changes on the carrying amount of the Company’s deferred tax assets and liabilities were immaterial to the consolidated financial statements.

In connection with the acquisitions of HSB and FNBNY, the Company acquired net operating loss (“NOL”) carryfowards subject to Internal Revenue Code Section 382. The Company recorded a deferred tax asset that it expects to realize within the carryfoward period. At December 31, 2015, the remaining NOL carryforward was $4.5 million.