INCOME TAXES

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

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 14.1

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2020			2019			2020			2019
Current income taxes:
Federal taxes	$	39		$	9		$	46		$	27
State taxes	3			1			5			3
Total current income taxes	42			10			51			30
Deferred income taxes:
Federal taxes	(26)			13			(24)			15
State taxes	—			1			—			1
Total deferred income taxes	(26)			14			(24)			16
Total income taxes	$	16		$	24		$	27		$	46
Statutory tax rate	21.0		%	21.0		%	21.0		%	21.0		%
Effective tax rate	16.0		%	19.7		%	17.0		%	19.5		%

The effective tax rate for the six months ended June 30, 2020 and June 30, 2019 was lower than the statutory tax rate of 21% due to tax benefits resulting from tax-exempt income on investments and loans, tax credits and income from BOLI. The lower effective tax rate in 2020 compared to 2019 is primarily due to lower pre-tax income levels and the impact from renewable energy investment tax credits realized in the second quarter of 2020.

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 $55.0 million and $25.1 million at June 30, 2020 and December 31, 2019, respectively.