Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income tax expense for the years ended December 31, 2019, 2018 and 2017 consisted of the following:



	2019		2018			2017
	(in thousands)
Current expense:
Federal	$	95,317	$	51,147		$	8,483
State	36,457		28,898			5,500
	131,774		80,045			13,983
Deferred expense (benefit):
Federal	10,444		(17,463		)	49,169
State	4,784		5,683			27,679
	15,228		(11,780		)	76,848
Total income tax expense	$	147,002	$	68,265		$	90,831

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, 2019 and 2018 were as follows:



	2019		2018
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	44,486	$	42,882
Depreciation	—		19,111
Employee benefits	28,263		13,301
Investment securities, including other-than-temporary impairment losses	—		13,222
Net operating loss carryforwards	19,768		21,570
Purchase accounting	41,857		33,629
Other	19,904		22,104
Total deferred tax assets	154,278		165,819
Deferred tax liabilities:
Pension plans	19,686		18,786
Depreciation	4,527		—
Investment securities, including other-than-temporary impairment losses	2,319		—
Other investments	7,731		17,758
Core deposit intangibles	16,620		14,223
Other	13,665		8,858
Total deferred tax liabilities	64,548		59,625
Valuation Allowance	916		733
Net deferred tax asset (included in other assets)	$	88,814	$	105,461

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 21 percent for the years ended December 31, 2019 and 2018, and 35 percent for the year ended December 31, 2017 were as follows:



	2019			2018			2017
	(in thousands)
Federal income tax at expected statutory rate	$	95,927		$	69,235		$	88,458
Increase (decrease) due to:
State income tax expense, net of federal tax effect	32,581			23,851			21,046
Tax-exempt interest, net of interest incurred to carry tax-exempt securities	(3,118		)	(3,974		)	(5,245		)
Bank owned life insurance	(1,637		)	(1,734		)	(2,568		)
Tax credits from securities and other investments	(11,636		)	(20,798		)	(27,037		)
FDIC insurance premium	2,507			3,318			—
Impact of the Tax Act	—			(2,274		)	15,441
Addition to reserve for uncertainties	31,123			—			—
Other, net	1,255			641			736
Income tax expense	$	147,002		$	68,265		$	90,831

Summary of Reconciliation of Gross Unrecognized Tax Benefits

A reconciliation of Valley’s gross unrecognized tax benefits for 2019, 2018 and 2017 are presented in the table below:



	2019		2018			2017
	(in thousands)
Beginning balance	$	—	$	4,238		$	16,144
Additions based on tax positions related to prior years	31,918		—			1,121
Settlements with taxing authorities	—		—			(13,027		)
Reductions due to expiration of statute of limitations	—		(4,238		)	—
Ending balance	$	31,918	$	—		$	4,238