Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

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 19.1

Year Ended December 31	2020		2019		2018
(in millions)
Current income taxes:
Federal taxes	$	71	$	47	$	41
State taxes	5		4		6
Total current income taxes	76		51		47
Deferred income taxes:
Federal taxes	(20)		30		32
State taxes	1		3		—
Total deferred income taxes	(19)		33		32
Total income taxes	$	57	$	84	$	79

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 19.2

Year Ended December 31	2020		2019		2018
Statutory federal tax rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit	1.6		1.1		1.1
Tax-exempt interest	(2.8)		(2.2)		(2.1)
Cash surrender value on BOLI	(0.8)		(0.5)		(0.5)
Tax credits	(6.3)		(4.2)		(2.8)
Affordable housing cost amortization, net of tax benefits	2.5		1.4		0.7
Tax Cuts and Jobs Act revaluation of net deferred tax assets	—		—		(0.4)
Other items	1.5		1.1		0.6
Effective tax rate	16.7	%	17.7	%	17.6	%

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 19.3

December 31	2020		2019
(in millions)
Deferred tax assets:
Allowance for credit losses	$	80	$	43
Discounts on loans acquired in a business combination	16		41
Net operating loss/tax credit carryforwards	38		38
Deferred compensation	12		11
Securities impairments	1		1
Pension and other defined benefit plans	2		3
Lease liability	30		29
Net unrealized securities losses	—		2
Other	14		8
Total	193		176
Valuation allowance	(33)		(28)
Total deferred tax assets	160		148
Deferred tax liabilities:
Loan costs	(6)		(15)
Depreciation	(12)		(19)
Prepaid expenses	(1)		(1)
Amortizable intangibles	(13)		(15)
Lease financing	(32)		(35)
Mortgage servicing rights	(8)		(9)
Lease ROU asset	(28)		(27)
Net unrealized securities gains	(7)		—
Other	(2)		(2)
Total deferred tax liabilities	(109)		(123)
Net deferred tax assets	$	51	$	25