INCOME TAXES

3 Months Ended

Mar. 31, 2022

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 March 31,
(dollars in millions)	2022			2021
Current income taxes:
Federal taxes	$	7		$	21
State taxes	2			2
Total current income taxes	9			23
Deferred income taxes:
Federal taxes	5			(1)
Total deferred income taxes	5			(1)
Total income taxes	$	14		$	22
Statutory tax rate	21.0		%	21.0		%
Effective tax rate	20.9			18.9

The increase in the effective tax rate for the three months ended March 31, 2022 compared to 2021 was primarily due to higher state income taxes and nondeductible merger-related expenses resulting from the Howard acquisition.

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 $103.5 million and $43.4 million at March 31, 2022 and December 31, 2021, respectively. The increase is due to the acquisition of net deferred taxes from Howard, as well as increases in the deferred tax asset related to unrealized losses on debt securities.