Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income tax expense for the years ended December 31, 2014, 2013, and 2012 consisted of the following:



	2014			2013		2012
	(in thousands)
Current expense (benefit):
Federal	$	25,156		$	13,203	$	35,684
State	(5,549		)	3,447		2,666
	19,607			16,650		38,350
Deferred expense:
Federal and State	11,455			30,329		28,398
Total income tax expense	$	31,062		$	46,979	$	66,748

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, 2014 and 2013 are as follows:



	2014		2013
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	42,574	$	48,042
Depreciation	15,082		13,327
Employee benefits	17,893		14,325
Investment securities, including other-than-temporary impairment losses	15,972		24,735
Net operating loss carryforwards	39,462		53,926
Purchase accounting	31,327		6,863
Other	18,138		21,063
Total deferred tax assets	180,448		182,281
Deferred tax liabilities:
Pension plans	13,081		21,774
Other investments	14,662		11,096
Other	21,127		17,811
Total deferred tax liabilities	48,870		50,681
Net deferred tax asset (included in other assets)	$	131,578	$	131,600

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, 2014, 2013, and 2012 were as follows:



	2014			2013			2012
	(in thousands)
Federal income tax at expected statutory rate	$	51,532		$	62,629		$	73,631
(Decrease) increase due to:
Tax-exempt interest, net of interest incurred to carry tax-exempt securities	(4,406		)	(4,876		)	(4,478		)
Bank owned life insurance	(2,237		)	(2,087		)	(2,399		)
State income tax expense, net of federal tax effect	12,866			9,904			8,204
Tax credits	(20,555		)	(17,408		)	(10,070		)
Reduction in reserve for uncertainties	(6,971		)	(1,821		)	(1,105		)
Other, net	833			638			2,965
Income tax expense	$	31,062		$	46,979		$	66,748

Summary of Reconciliation of Gross Unrecognized Tax Benefits

A reconciliation of Valley’s gross unrecognized tax benefits for 2014, 2013, and 2012 are presented in the table below:



	2014			2013			2012
	(in thousands)
Beginning balance	$	30,713		$	31,052		$	33,000
Additions based on tax positions related to prior years	1,408			1,482			4,195
Settlements with taxing authorities	(9,050		)	(1,216		)	(5,038		)
Reductions due to expiration of statute of limitations	(4,424		)	(605		)	(1,105		)
Ending balance	$	18,647		$	30,713		$	31,052