INCOME TAXES

3 Months Ended

Mar. 31, 2024

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 13.1

	Three Months Ended March 31,
(dollars in millions)	2024			2023
Current income taxes:
Federal taxes	$	17		$	31
State taxes	2			2
Total current income taxes	19			33
Deferred income taxes:
Federal taxes	13			2
State taxes	2			—
Total deferred income taxes	15			2
Total income taxes	$	34		$	35
Statutory federal tax rate	21.0		%	21.0		%
Effective tax rate	21.5			19.5

Income tax expense was lower for the three months ended March 31, 2024 due to lower pre-tax earnings, partially offset by lower stock compensation vesting deductions and higher levels of proportional amortization for certain tax credit investments resulting from the adoption of FASB ASU 2023-02. The effective tax rate increased in the first quarter of 2024 as a result of these offsetting items.

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 $110.1 million and $120.8 million at March 31, 2024 and December 31, 2023, respectively.