Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income tax expense for the years ended December 31, 2017, 2016 and 2015 consisted of the following:



	2017		2016		2015
	(in thousands)
Current expense (benefit):
Federal	$	8,483	$	25,176	$	7,978
State	5,500		12,904		(493		)
	13,983		38,080		7,485
Deferred expense (benefit):
Federal	49,169		10,658		(7,539		)
State	27,679		16,496		23,992
	76,848		27,154		16,453
Total income tax expense	$	90,831	$	65,234	$	23,938

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, 2017 and 2016 are as follows:



	2017		2016
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	34,885	$	47,485
Depreciation	8,336		12,432
Employee benefits	10,596		16,121
Investment securities, including other-than-temporary impairment losses	5,021		17,272
Net operating loss carryforwards	30,658		46,667
Purchase accounting	18,819		33,172
Other	21,930		22,183
Total deferred tax assets	130,245		195,332
Deferred tax liabilities:
Pension plans	18,912		24,575
Other investments	13,234		20,831
Deferred income	37,952		—
Other	12,651		20,418
Total deferred tax liabilities	82,749		65,824
Net deferred tax asset (included in other assets)	$	47,496	$	129,508

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, 2017, 2016 and 2015 were as follows:



	2017			2016			2015
	(in thousands)
Federal income tax at expected statutory rate	$	88,458		$	81,683		$	44,413
Increase (decrease) due to:
State income tax expense, net of federal tax effect	21,046			19,197			15,274
Tax-exempt interest, net of interest incurred to carry tax-exempt securities	(5,245		)	(5,308		)	(4,864		)
Bank owned life insurance	(2,568		)	(2,343		)	(2,385		)
Tax credits from securities and other investments	(27,037		)	(25,954		)	(28,988		)
Impact of the Tax Act	15,441			—			—
Other, net	736			(2,041		)	488
Income tax expense	$	90,831		$	65,234		$	23,938

Summary of Reconciliation of Gross Unrecognized Tax Benefits

A reconciliation of Valley’s gross unrecognized tax benefits for 2017, 2016 and 2015 are presented in the table below:



	2017			2016			2015
	(in thousands)
Beginning balance	$	16,144		$	19,892		$	18,647
Additions based on tax positions related to prior years	1,121			3,958			1,245
Settlements with taxing authorities	(13,027		)	(4,820		)	—
Reductions due to expiration of statute of limitations	—			(2,886		)	—
Ending balance	$	4,238		$	16,144		$	19,892