Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of Components of Income Tax Expense

The provision (benefit) for income taxes for the year ended December 31, 2022, 2021 and 2020 is comprised of the following:

Provision (Benefit) for Income Taxes


dollars in millions	Year ended December 31
	2022		2021		2020
Current U.S. federal income tax provision	$	58	$	140	$	137
Deferred U.S. federal income tax provision / (benefit)	170		(6)		(29)
Total federal income tax provision	228		134		108
Current state and local income tax provision	4		21		15
Deferred state and local income tax provision / (benefit)	23		(1)		3
Total state and local income tax provision	27		20		18
Total non-U.S. income tax provision	9		—		—
Total provision for income taxes	$	264	$	154	$	126

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation from the U.S. Federal statutory rate to BancShares’ actual effective income tax rate for the year ended December 31, 2022, 2021 and 2020 is the following:

Percentage of Pretax Income


dollars in millions	Effective Tax Rate
	2022						2021						2020
	Pretax Income		Income Tax Expense (Benefit)		Percentage of Pretax Income		Pretax Income		Income Tax Expense (Benefit)		Percentage of Pretax Income		Pretax Income		Income Tax Expense (Benefit)		Percentage of Pretax Income
Federal income taxes and rate	$	1,362	$	286	21.0	%	$	701	$	147	21.0	%	$	618	$	130	21.0	%
Increase (decrease) due to:
State and local income taxes, net of federal income tax benefit			53		3.9	%			16		2.2	%			14		2.2	%
Non-taxable bargain purchase gain (1)			(105)		(7.7)	%			—		—	%			—		—	%
Domestic tax credits			(20)		(1.5)	%			(5)		(0.7)	%			(5)		(0.9)	%
Effect of BOLI surrender (1)			48		3.5	%			—		—	%			—		—	%
Deferred tax liability adjustment			(8)		(0.6)	%			—		—	%			—		—	%
Difference in tax rates applicable to non-U.S. earnings			1		0.1	%			—		—	%			—		—	%
Repayment of claim of right income			—		—	%			(2)		(0.3)	%			(14)		(2.2)	%
Valuation allowances			(5)		(0.4)	%			—		—	%			—		—	%
Other			14		1.1	%			(2)		(0.2)	%			1		0.3	%
Provision for income taxes and effective tax rate			$	264	19.4	%			$	154	22.0	%			$	126	20.4	%

(1) Income tax expense (benefit) includes, if applicable, federal, state, foreign and penalty taxes.

Schedule of Components of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to deferred income tax assets and liabilities at December 31, 2022 and 2021 are presented below:

Components of Deferred Income Tax Assets and Liabilities


dollars in millions	2022		2021
Deferred Tax Assets:
Net operating loss (NOL) carry forwards	$	358	$	8
Basis difference in loans	57		—
Allowance for credit losses	252		40
Accrued liabilities and reserves	37		6
Deferred compensation	51		19
Right of use - lease liability	92		14
Domestic tax credits	176		—
Mark to market adjustments	28		—
Capitalized costs	15		—
Unrealized net loss on securities AFS	275		5
Other	48		17
Total gross deferred tax assets	1,389		109
Deferred Tax Liabilities:
Operating leases	(1,311)		—
Right of use - lease asset	(86)		(14)
Loans and direct financing leases	(43)		(8)
Deferred BOLI Gain	(15)		—
Pension	(54)		(64)
Prepaid expenses	(14)		—
Market discount accretion	(35)		—
Other	(47)		(56)
Total deferred tax liabilities	(1,605)		(142)
Total net deferred tax liability before valuation allowances	(216)		(33)
Less: valuation allowances	(70)		—
Net deferred tax liability after valuation allowances	$	(286)	$	(33)

Schedule of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits ("UTBs") is as follows:

Unrecognized Tax Benefits (1)


dollars in millions	Liabilities for Unrecognized Tax Benefits		Interest / Penalties		Total
Balance at December 31, 2021	$	30	$	1	$	31
Effect of CIT Merger	4		2		6
Additions for tax positions related to prior years	1		—		1
Reductions for tax positions of prior years	(2)		—		(2)
Expiration of statutes of limitations	(1)		—		(1)
Settlements	(5)		—		(5)

Balance at December 31, 2022	$	27	$	3	$	30

(1) Tabular rollforward does not present the comparable data for the prior years, as activity in the prior years was not material.

Summary of Income Tax Audits

The table below presents the earliest tax years that remain subject to examination by major jurisdiction.


Jurisdiction			December 31, 2022
U.S. Federal			2019
New York State and City			2015
North Carolina			2019
California			2017
Canada			2015