Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Summary of Income Tax Expense Allocated Based on Separate Tax Return Basis

Federal and state income tax expense consist of the following:

TABLE 18.1

Year Ended December 31	2019		2018		2017
(in millions)
Current income taxes:
Federal taxes	$	47	$	41	$	26
State taxes	4		6		2
Total current income taxes	51		47		28
Deferred income taxes:
Federal taxes	30		32		128
State taxes	3		—		1
Total deferred income taxes	33		32		129
Total income taxes	$	84	$	79	$	157

Summary of Reconciliation Between the Statutory Tax Rate and Actual Effective Tax Rate

The following table provides a reconciliation between the statutory tax rate and the actual effective tax rate:

TABLE 18.2

Year Ended December 31	2019		2018		2017
Statutory federal tax rate	21.0	%	21.0	%	35.0	%
State taxes, net of federal benefit	1.1		1.1		0.5
Tax-exempt interest	(2.2	)	(2.1	)	(3.3	)
Cash surrender value on BOLI	(0.5	)	(0.5	)	(1.1	)
Tax credits	(4.2	)	(2.8	)	(2.6	)
Affordable housing cost amortization, net of tax benefits	1.4		0.7		0.2
Tax Cuts and Jobs Act revaluation of net deferred tax assets	—		(0.4	)	15.2
Other items	1.1		0.6		0.2
Effective tax rate	17.7	%	17.6	%	44.1	%

Summary of Income Tax Expense Related to Net Gains on Sale of Securities

Income tax expense related to net gains on the sale of securities is presented in the following table:

TABLE 18.3

Year Ended December 31	2019		2018		2017
(in millions)
Income tax expense related to net gains on sale of securities	$	—	$	—	$	2

Summary of Deferred Tax Assets and Liabilities from Tax Effects of Temporary Differences

The following table presents the tax effects of significant temporary differences that give rise to federal and state DTAs and DTLs:

TABLE 18.4

December 31	2019			2018
(in millions)
Deferred tax assets:
Allowance for credit losses	$	43		$	40
Discounts on loans acquired in a business combination	41			51
Net operating loss/tax credit carryforwards	38			43
Deferred compensation	11			10
Securities impairments	1			1
Pension and other defined benefit plans	3			5
Lease liability	29			—
Net unrealized securities losses	2			12
Other	8			9
Total	176			171
Valuation allowance	(28		)	(26		)
Total deferred tax assets	148			145
Deferred tax liabilities:
Loan costs	(15		)	(14		)
Depreciation	(19		)	(17		)
Prepaid expenses	(1		)	(1		)
Amortizable intangibles	(15		)	(16		)
Lease financing	(35		)	(18		)
Mortgage servicing rights	(9		)	(8		)
Lease ROU asset	(27		)	—
Other	(2		)	(4		)
Total deferred tax liabilities	(123		)	(78		)
Net deferred tax assets	$	25		$	67