Income Taxes

The current and deferred amounts of income tax expense (benefit) for the years ended December 31, 2015, 2014 and 2013 are as follows (in thousands):



	Years ended December 31,
	2015			2014	2013
Current:
Federal	$	33,778		27,577	27,667
State	2,337			542	2,168
Total current	36,115			28,119	29,835
Deferred:
Federal	(525		)	1,678	4,210
State	851			1,988	1,321
Total deferred	326			3,666	5,531
	$	36,441		31,785	35,366

The Company recorded, in accumulated other comprehensive income, deferred tax (benefit) expense of ($2,545,000), $7,075,000 and ($13,824,000) during 2015, 2014 and 2013, respectively, to reflect the tax effect of the unrealized gain on securities available for sale. The Company recorded, in accumulated other comprehensive income, a deferred tax expense (benefit) of $866,000, ($3,800,000) and $4,968,000 in 2015, 2014 and 2013, respectively, related to the amortization of post-retirement benefit obligations.

A reconciliation between the amount of reported total income tax expense and the amount computed by multiplying the applicable statutory income tax rate is as follows (in thousands):



	Years ended December 31,
	2015			2014		2013
Tax expense at statutory rate of 35%	$	42,057		36,896		37,065
Increase (decrease) in taxes resulting from:
State tax, net of federal income tax benefit	2,072			1,621		2,268
Tax-exempt interest income	(5,520		)	(4,916	)	(4,084	)
Bank-owned life insurance	(1,871		)	(1,972	)	(2,309	)
Non-qualified stock option expiration	—			—		2,746
Other, net	(297		)	156		(320	)
	$	36,441		31,785		35,366

The net deferred tax asset is included in other assets in the consolidated statements of financial condition. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2015 and 2014 are as follows (in thousands):



	2015		2014
Deferred tax assets:
Allowance for loan losses	$	23,778	24,160
Post-retirement benefit	10,869		10,658
Deferred compensation	2,825		3,009
Intangibles	481		499
Purchase accounting adjustments	1,464		387
Depreciation	3,868		3,963
SERP	941		949
ESOP	3,254		3,264
Stock-based compensation	5,791		5,734
Non-accrual interest	4,915		5,202
State NOL	139		430
Federal NOL	1,058		1,376
Pension liability adjustments	4,311		5,178
Other	2,048		1,073
Total gross deferred tax assets	65,742		65,882
Valuation Reserve	—		(242	)
Deferred tax liabilities:
Pension expense	10,124		9,925
Deferred loan costs	5,156		4,089
Investment securities, principally due to accretion of discounts	146		311
Originated mortgage servicing rights	347		395
Unrealized gain on securities	2,646		5,191
Total gross deferred tax liabilities	18,419		19,911
Net deferred tax asset	$	47,323	45,729

The 2014 deferred tax expense does not equal the change in net deferred tax assets as a result of deferred taxes recorded in connection with the Team Capital acquisition in the amount of $486,000.

Retained earnings at December 31, 2015 includes approximately $51,800,000 for which no provision for income tax has been made. This amount represents an allocation of income to bad debt deductions for tax purposes only. Events that would result in taxation of these reserves include the failure to qualify as a bank for tax purposes, distributions in complete or partial liquidation, stock redemptions and excess distributions to stockholders. At December 31, 2015, the Company had an unrecognized tax liability of $20,802,880 with respect to this reserve.

At December 31, 2014, the Company had a valuation allowance of $242,000 related to approximately $648,000 of capital loss carryforwards. At December 31, 2015, the Company did not require a valuation allowance as the statute of limitation on these capital loss carryforwards expired. As a result of the Beacon acquisition in 2011, the Company acquired federal net operating loss carryforwards. There are approximately $3,000,000 of NOL carryforwards available to offset future taxable income as of December 31, 2015. If not utilized, these carryforwards will expire in 2030. Also, the Company's New Jersey NOL carryforwards in the amount of $1,000,000 which are scheduled to expire in 2033 and Pennsylvania NOL carryforwards in the amount of $1,000,000, which are set to expire in 2016. The federal NOLs are subject to a combined annual Code Section 382 limitation in the amount of approximately $900,000. Management has determined that it is more likely than not that it will realize the net deferred tax asset based upon the nature and timing of the items listed above. In order to fully realize the net deferred tax asset, the Company will need to generate future taxable income. Management has projected that the Company will generate sufficient taxable income to utilize the net deferred tax asset; however, there can be no assurance that such levels of taxable income will be generated.

The Company’s policy is to report interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The Company did not have any liabilities for uncertain tax positions or any known unrecognized tax benefits at December 31, 2015 and 2014.

The Company and its subsidiaries file a consolidated U.S. Federal income tax return and each entity files a separate state income tax return. The Company's federal income tax returns are open for examination from 2012 and the state income tax returns are open for examination from 2011.