Income Taxes And Tax-Related Items Income Taxes And Tax-Related Items (Tables)

12 Months Ended

Dec. 31, 2019

Current and Deferred Components of the Provision for Income Taxes

The current and deferred components of the provision for income taxes were as follows:



(in millions)
December 31	2019			2018			2017
Current:
Federal	$	267		$	227		$	371
Foreign	7			10			5
State and local	48			39			36
Total current	322			276			412
Deferred:
Federal	16			29			(26		)
State and local	(4		)	3			(2		)
Remeasurement of deferred taxes	—			(8		)	107
Total deferred	12			24			79
Total	$	334		$	300		$	491

Reconciliation of Expected Income Tax Expense at the Federal Statutory Rate to the Provision for Income Taxes

A reconciliation of expected income tax expense at the federal statutory rate to the Corporation’s provision for income taxes and effective tax rate follows:



(dollar amounts in millions)	2019					2018					2017
Years Ended December 31	Amount			Rate		Amount			Rate		Amount			Rate
Tax based on federal statutory rate	$	322		21.0	%	$	323		21.0	%	$	432		35.0	%
State income taxes	33			2.2		35			2.3		22			1.8
Employee stock transactions	(12		)	(0.8	)	(23		)	(1.5	)	(35		)	(2.8	)
Capitalization and recovery positions (a)	—			—		(17		)	(1.1	)	—			—
Affordable housing and historic credits	(11		)	(0.7	)	(12		)	(0.8	)	(21		)	(1.7	)
Bank-owned life insurance	(9		)	(0.6	)	(9		)	(0.6	)	(16		)	(1.3	)
Remeasurement of deferred taxes	—			—		(8		)	(0.5	)	107			8.7
FDIC insurance expense (b)	5			0.3		8			0.5		—			—
Other changes in unrecognized tax benefits	—			—		4			0.3		—			—
Tax-related interest and penalties	2			0.1		(3		)	(0.2	)	4			0.3
Lease termination transactions	—			—		—			—		(2		)	(0.2	)
Other	4			0.2		2			0.1		—			—
Provision for income taxes	$	334		21.7	%	$	300		19.5	%	$	491		39.8	%


(a)	Tax benefits from the review of tax capitalization and recovery positions related to software and fixed assets included in the 2017 tax return.

(b)

Beginning January 1, 2018, FDIC insurance expense is no longer deductible as a result of the enactment of the Tax Cuts and Jobs Act.

Reconciliation of Beginning and Ending Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of net unrecognized tax benefits follows:



(in millions)	2019			2018			2017
Balance at January 1	$	14		$	10		$	15
Increase as a result of tax positions taken during a prior period	4			9			4
Decrease related to settlements with tax authorities	(1		)	(4		)	(8		)
Other	—			(1		)	(1		)
Balance at December 31	$	17		$	14		$	10

Tax Years Remaining Open for Examination for Significant Tax Jurisdictions

The following tax years for significant jurisdictions remain subject to examination as of December 31, 2019:



Jurisdiction	Tax Years
Federal	2014-2018
California	2006-2017

Principal Components of Deferred Tax Assets and Liabilities

The principal components of deferred tax assets and liabilities were as follows:



(in millions)
December 31	2019			2018
Deferred tax assets:
Allowance for loan losses	$	134		$	141
Deferred compensation	61			68
Deferred loan origination fees and costs	8			9
Net unrealized losses on investment securities available-for-sale	—			42
Operating lease liability	77			—
Other temporary differences, net	49			42
Total deferred tax asset before valuation allowance	329			302
Valuation allowance	(3		)	(3		)
Total deferred tax assets	326			299
Deferred tax liabilities:
Lease financing transactions	(73		)	(74		)
Defined benefit plans	(91		)	(41		)
Allowance for depreciation	(21		)	(18		)
Hedging gains and losses	(10		)	—
Leasing right of use asset	(69		)	—
Net unrealized gains on investment securities available-for-sale	(20		)	—
Total deferred tax liabilities	(284		)	(133		)
Net deferred tax asset	$	42		$	166