Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Components of Income Tax Expense

The components of income tax expense were:

Year Ended December 31 (Dollars in Millions)	2012		2011		2010
Federal
Current	$	1,853	$	907	$	1,105
Deferred		45		689		(339	)
Federal income tax		1,898		1,596		766
State
Current		334		186		200
Deferred		4		59		(31	)
State income tax		338		245		169
Total income tax provision	$	2,236	$	1,841	$	935

Reconciliation of Expected Income Tax Expense at Federal Statutory Rate of 35 Percent to Company's Applicable Income Tax Expense

A reconciliation of expected income tax expense at the federal statutory rate of 35 percent to the Company’s applicable income tax expense follows:

Year Ended December 31 (Dollars in Millions)	2012			2011			2010
Tax at statutory rate	$	2,704		$	2,320		$	1,470
State income tax, at statutory rates, net of federal tax benefit		220			159			110
Tax effect of
Tax credits, net of related expenses		(479	)		(458	)		(462	)
Tax-exempt income		(219	)		(226	)		(214	)
Noncontrolling interests		55			29			18
Other items		(45	)		17			13
Applicable income taxes	$	2,236		$	1,841		$	935

Reconciliation of Changes in Federal, State and Foreign Unrecognized Tax Position Balances

A reconciliation of the changes in the federal, state and foreign unrecognized tax position balances are summarized as follows:

Year Ended December 31 (Dollars in Millions)	2012			2011			2010
Balance at beginning of period	$	479		$	532		$	440
Additions for tax positions taken in prior years		73			24			116
Additions for tax positions taken in the current year		5			2			30
Exam resolutions		(245	)		(70	)		–
Statute expirations		(10	)		(9	)		(54	)
Balance at end of period	$	302		$	479		$	532

Significant Components of Company's Net Deferred Tax Asset (Liability)

The significant components of the Company’s net deferred tax asset (liability) as of December 31 were:

(Dollars in Millions)	2012			2011
Deferred Tax Assets
Allowance for credit losses		1,756		$	1,872
Pension and postretirement benefits		523			281
Accrued expenses		476			399
Stock compensation		183			203
Federal, state and foreign net operating loss carryforwards		60			26
Securities available-for-sale and financial instruments		–			85
Partnerships and other investment assets		395			571
Other deferred tax assets, net		180			96
Gross deferred tax assets		3,573			3,533
Deferred Tax Liabilities
Leasing activities		(2,792	)		(3,048	)
Goodwill and other intangible assets		(565	)		(517	)
Mortgage servicing rights		(490	)		(522	)
Securities available-for-sale and financial instruments		(232	)		–
Loans		(168	)		(175	)
Fixed assets		(201	)		(169	)
Other deferred tax liabilities, net		(361	)		(176	)
Gross deferred tax liabilities		(4,809	)		(4,607	)
Valuation allowance		(84	)		(51	)
Net Deferred Tax Asset (Liability)	$	(1,320	)	$	(1,125	)