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INCOME TAXES
3 Months Ended
Mar. 31, 2023
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)20232022
Current income taxes:
Federal taxes$31 $
State taxes2 
Total current income taxes33 
Deferred income taxes:
Federal taxes2 
Total deferred income taxes2 
Total income taxes$35 $14 
Statutory federal tax rate21.0 %21.0 %
Effective tax rate19.5 20.9 
Income tax expense was higher in 2023 due to higher pre-tax earnings as we had merger-related expenses from the Howard and Union acquisitions in 2022. The decrease in the effective tax rate for the three months ended March 31, 2023 compared to 2022 was primarily driven by higher deduction levels from employee stock compensation vesting.
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 $133.7 million and $147.7 million at March 31, 2023 and December 31, 2022, respectively.