INCOME TAXES

6 Months Ended

Jun. 30, 2019

Income Tax Expense

Federal and state income tax expense and the statutory tax rate and the actual effective tax rate consist of the following:

TABLE 12.1



	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2019			2018			2019			2018
Current income taxes:
Federal taxes	$	9		$	6		$	27		$	23
State taxes	1			1			3			3
Total current income taxes	10			7			30			26
Deferred income taxes:
Federal taxes	13			13			15			15
State taxes	1			1			1			1
Total deferred income taxes	14			14			16			16
Total income taxes	$	24		$	21		$	46		$	42
Statutory tax rate	21.0		%	21.0		%	21.0		%	21.0		%
Effective tax rate	19.7		%	19.4		%	19.5		%	19.5		%

The effective tax rate for the six months ended June 30, 2019 and June 30, 2018 was lower than the statutory tax rate of 21% due to tax benefits resulting from tax-exempt income on investments, loans, tax credits and income from BOLI. The higher effective tax rate in 2019 is partially due to the impact from non-vesting stock compensation awards in the second quarter of 2019.

Deferred Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and tax purposes. Deferred tax assets and liabilities are measured based on the enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Net deferred tax assets were $41.9 million and $67.5 million at June 30, 2019 and December 31, 2018, respectively.