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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Taxes [Abstract]  
Income Taxes
NOTE 19. INCOME TAXES
The components of income tax expense for the years ended December 31 were as follows:
202420232022
 (In millions)
Current income tax expense:
Federal$383 $417 $493 
State57 84 116 
Total current expense$440 $501 $609 
Deferred income tax expense (benefit):
Federal$1 $25 $26 
State20 7 (4)
Total deferred expense $21 $32 $22 
Total income tax expense$461 $533 $631 
Income tax expense does not reflect the tax effects of unrealized losses on securities transferred to held to maturity, unrealized gains and losses on securities available for sale, unrealized gains and losses on derivative instruments and the net change from defined benefit pension plans and other postretirement benefits. Refer to Note 14 for additional information on shareholders' equity and accumulated other comprehensive income (loss).
The Company accounts for investment tax credits from renewable energy sources using the deferral method. Investment tax credits generated totaled $179 million, $94 million and $67 million for 2024, 2023, and 2022, respectively.
Income taxes for financial reporting purposes differs from the amount computed by applying the statutory federal income tax rate of 21 percent as shown in the following table:
202420232022
 (Dollars in millions)
Tax on income computed at statutory federal income tax rate$494 $547 $604 
Increase (decrease) in taxes resulting from:
State income tax, net of federal tax effect62 72 88 
Affordable housing and economic development credits, net of amortization
(48)(42)(32)
Tax-exempt interest(39)(38)(33)
Non-deductible expenses29 33 34 
Bank-owned life insurance(24)(19)(16)
Other, net(13)(20)(14)
Income tax expense(1)
$461 $533 $631 
Effective tax rate19.6 %20.5 %22.0 %
_______
(1) Income tax expense includes gross amortization of affordable housing and economic development projects of $188 million, $166 million, and $149 million for 2024, 2023 and 2022, respectively. See Note 2 for additional information.
Significant components of the Company’s net deferred tax asset at December 31 are listed below:
20242023
 (In millions)
Deferred tax assets:
Unrealized losses included in shareholders' equity$976 $961 
Allowance for credit losses433 430 
Right of use liability123 129 
Accrued expenses48 87 
Other18 20 
Federal tax credit carryforwards27 — 
Federal and state net operating losses, net of federal tax effect28 31 
Total deferred tax assets1,653 1,658 
Less: valuation allowance(22)(21)
Total deferred tax assets less valuation allowance1,631 1,637 
Deferred tax liabilities:
Lease financing413 439 
Right of use asset116 121 
Mortgage servicing rights96 95 
Goodwill and intangibles126 112 
Fixed assets7 30 
Employee benefits and deferred compensation34 37 
Other64 62 
Total deferred tax liabilities856 896 
Net deferred tax asset $775 $741 
    
The following table provides details of the Company’s net operating loss and tax credit carryforwards at December 31, 2024, including the expiration dates and related valuation allowance:
Expiration DatesDeferred Tax Asset Balance Valuation
Allowance		Net Deferred Tax
Asset Balance
(In millions)
General business credits
2044$27 $— $27 
Net operating losses-federalNone8 — 8 
Net operating losses-states2025-202911 11 — 
Net operating losses-states2030-20363 3 — 
Net operating losses-states2037-20443 3 — 
Net operating losses-statesNone3 3 — 
$55 $20 $35 
The Company believes that a portion of the state net operating loss carryforwards will not be realized due to certain state statutory limitations. Accordingly, a valuation allowance has been established in the amount of $20 million against such benefits at December 31, 2024 compared to $19 million at December 31, 2023.
A reconciliation of the beginning and ending amount of UTB is as follows:
202420232022
 (In millions)
Balance at beginning of year$11 $8 $9 
Additions based on tax positions taken in a prior period— 3 — 
Additions based on tax positions taken in the current period1 — — 
Expiration of statute of limitations— — (1)
Balance at end of year$12 $11 $8 
The Company files U.S. federal, state, and local income tax returns. The Company is in the IRS’s Compliance Assurance Process program and examinations of the U.S federal consolidated income tax return for tax years through 2022 have been completed. With limited exceptions, the Company is no longer subject to state and local tax examinations for tax years prior to 2020. Currently, there are no material disputed tax positions with federal or state taxing authorities. Accordingly, the Company does not anticipate that any adjustments relating to federal or state tax examinations will result in material changes to its business, financial position, results of operations or cash flows.
It is reasonably possible that the liability for UTBs could decrease by as much as $8 million and be recognized due to the expiration of statute of limitations during the next twelve months.
As of December 31, 2024, 2023 and 2022, the balances of the Company’s UTBs that would reduce the effective tax rates, if recognized, were $12 million, $11 million and $8 million, respectively.
Interest and penalties related to UTBs are recorded in the provision for income taxes. For each of the years ended December 31, 2024, 2023 and 2022, the Company recognized an immaterial expense (benefit) for gross interest and penalties related to its UTBs. As of December 31, 2024 and 2023, the Company had an immaterial gross liability for interest and penalties related to UTBs.