Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income tax expense for the years ended December 31, 2016, 2015 and 2014 consisted of the following:



	2016		2015			2014
	(in thousands)
Current expense (benefit):
Federal	$	25,176	$	7,978		$	25,156
State	12,904		(493		)	(5,549		)
	38,080		7,485			19,607
Deferred expense:
Federal	10,658		(7,539		)	(13,888		)
State	16,496		23,992			25,343
	27,154		16,453			11,455
Total income tax expense	$	65,234	$	23,938		$	31,062

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, 2016 and 2015 are as follows:



	2016		2015
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	47,485	$	44,382
Depreciation	12,432		15,661
Employee benefits	16,121		16,104
Investment securities, including other-than-temporary impairment losses	17,272		18,697
Net operating loss carryforwards	46,667		57,722
Purchase accounting	33,172		40,585
Other	22,183		21,310
Total deferred tax assets	195,332		214,461
Deferred tax liabilities:
Pension plans	24,575		18,861
Other investments	20,831		15,720
Other	20,418		21,449
Total deferred tax liabilities	65,824		56,030
Net deferred tax asset (included in other assets)	$	129,508	$	158,431

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, 2016, 2015 and 2014 were as follows:



	2016			2015			2014
	(in thousands)
Federal income tax at expected statutory rate	$	81,683		$	44,413		$	51,532
Increase (decrease) due to:
State income tax expense, net of federal tax effect	19,197			15,274			12,866
Tax-exempt interest, net of interest incurred to carry tax-exempt securities	(5,308		)	(4,864		)	(4,406		)
Bank owned life insurance	(2,343		)	(2,385		)	(2,237		)
Tax credits from securities and other investments	(25,954		)	(28,988		)	(20,555		)
Reduction in reserve for uncertainties	—			—			(6,971		)
Other, net	(2,041		)	488			833
Income tax expense	$	65,234		$	23,938		$	31,062

Summary of Reconciliation of Gross Unrecognized Tax Benefits

A reconciliation of Valley’s gross unrecognized tax benefits for 2016, 2015 and 2014 are presented in the table below:



	2016			2015		2014
	(in thousands)
Beginning balance	$	19,892		$	18,647	$	30,713
Additions based on tax positions related to prior years	3,958			1,245		1,408
Settlements with taxing authorities	(4,820		)	—		(9,050		)
Reductions due to expiration of statute of limitations	(2,886		)	—		(4,424		)
Ending balance	$	16,144		$	19,892	$	18,647