Income Taxes

The income tax expense (benefit) attributable to income from operations is summarized as follows:



(in thousands)	Current		Deferred		Total
2016
Federal	$	22,943	$	1,551	$	24,494
State	2,243		308		2,551
Total	$	25,186	$	1,859	$	27,045
2015
Federal	$	22,955	$	2,841	$	25,796
State	3,103		63		3,166
Total	$	26,058	$	2,904	$	28,962
2014
Federal	$	19,749	$	2,915	$	22,664
State	624		2,116		2,740
Total	$	20,373	$	5,031	$	25,404

The primary reasons for the differences between income tax expense and the amount computed by applying the statutory federal income tax rate to earnings are as follows:



	2016		2015		2014
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	1.9		2.4		2.3
Tax exempt income	(2.7	)	(2.5	)	(2.5	)
Excess benefits from equity-based compensation	(1.4	)	0.0		0.0
Bank-owned life insurance income	(0.8	)	(0.8	)	(0.8	)
Federal tax credit	(0.4	)	(0.8	)	(1.0	)
All other	(0.3	)	(0.2	)	(0.2	)
Total	31.3	%	33.1	%	32.8	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31 were as follows:



(in thousands)	2016			2015			2014
Deferred tax assets:
Allowance for loan and lease losses	$	13,737		$	12,411		$	11,276
Interest income on nonperforming loans	214			1,207			395
Compensation and benefits	14,504			14,032			13,081
Purchase accounting adjustments	527			1,920			3,538
Liabilities held at fair value	1			218			364
Tax credit carryforward	0			831			1,995
Other	3,088			2,546			2,347
Total	$	32,071		$	33,165		$	32,996
Deferred tax liabilities:
Prepaid pension	$	11,439		$	10,992		$	9,377
Depreciation	3,006			3,277			2,553
Intangibles	882			567			236
Other	2,901			2,144			1,741
Total deferred tax liabilities	$	18,228		$	16,980		$	13,907
Net deferred tax asset at year-end	$	13,843		$	16,185		$	19,089
Net deferred tax asset at beginning of year	$	16,185		$	19,089		$	24,120
Decrease in net deferred tax asset	(2,342		)	(2,904		)	(5,031		)
Purchase accounting adjustments, net	(483		)	0			0
Deferred tax expense	$	1,859		$	2,904		$	5,031

This analysis does not include recorded deferred tax assets (liabilities) of $5.1 million and $1.8 million as of December 31, 2016 and 2015, respectively, related to net unrealized holdings losses/(gains) in the available-for-sale securities portfolio. In addition, the analysis excludes the recorded deferred tax assets of $18.6 million and $18.1 million, as of December 31, 2016 and 2015, respectively, related to employee benefit plans.

Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the carry-back period. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management considers the scheduled reversal of the deferred tax liabilities, the level of historical taxable income, and the projected future taxable income over the periods in which the temporary differences comprising the deferred tax assets will be deductible. Based on its assessment, management determined that no valuation allowance is necessary at December 31, 2016 and 2015.

At December 31, 2016 and December 31, 2015, the Company had no ASC 740-10 unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months. The Company recognizes interest and penalties on unrecognized tax benefits in income tax expense in its Consolidated Statements of Income.

The Company is subject to U.S. federal income tax and income tax in various state jurisdictions. All tax years ending after December 31, 2011 are open to examination by the taxing authorities.