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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 20 — INCOME TAXES The provision (benefit) for income taxes for the year ended December 31, 2024, 2023 and 2022 is comprised of the following: Provision (Benefit) for Income Taxes
dollars in millions | Year Ended December 31
| 2024 |  | 2023 |  | 2022
Current U.S. federal income tax provision | $ | 649 |  |  | $ | 400 |  |  | $ | 58 |
Deferred U.S. federal income tax provision / (benefit) | 68 |  |  | 46 |  |  | 170 |
Total federal income tax provision | 717 |  |  | 446 |  |  | 228 |
Current state and local income tax provision | 157 |  |  | 372 |  |  | 4 |
Deferred state and local income tax (benefit) / provision | (71) |  |  | (222) |  |  | 23 |
Total state and local income tax provision | 86 |  |  | 150 |  |  | 27 |
Total non-U.S. income tax provision | 12 |  |  | 15 |  |  | 9 |
Total provision for income taxes | $ | 815 |  |  | $ | 611 |  |  | $ | 264 |
A reconciliation from the U.S. Federal statutory rate to BancShares’ actual effective income tax rate for the year ended December 31, 2024, 2023 and 2022 is presented below. Income tax expense (benefit) includes, if applicable, federal, state and foreign taxes. Percentage of Pretax Income
dollars in millions | Effective Income Tax Rate
| 2024 |  | 2023 |  | 2022
| Pretax Income |  | Income Tax Expense (Benefit) |  | Percentage of Pretax Income |  | Pretax Income |  | Income Tax Expense (Benefit) |  | Percentage of Pretax Income |  | Pretax Income |  | Income Tax Expense (Benefit) |  | Percentage of Pretax Income
Federal income taxes and rate | $ | 3,592 |  |  | $ | 754 |  |  | 21.0 | % |  | $ | 12,077 |  |  | $ | 2,536 |  |  | 21.0 | % |  | 1,362 |  |  | $ | 286 |  |  | 21.0 | %
Increase (decrease) due to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State and local income taxes, net of federal income tax benefit |  |  | 118 |  |  | 3.3 | % |  |  |  | 804 |  |  | 6.7 | % |  |  |  | 53 |  |  | 3.9 | %
Gain on acquisition |  |  | — |  |  | — | % |  |  |  | (2,703) |  |  | (22.4) | % |  |  |  | (105) |  |  | (7.7) | %
Tax credits |  |  | (44) |  |  | (1.2) | % |  |  |  | (26) |  |  | (0.2) | % |  |  |  | (20) |  |  | (1.5) | %
Effect of BOLI surrender |  |  | — |  |  | — | % |  |  |  | — |  |  | — | % |  |  |  | 48 |  |  | 3.5 | %
Adjustment to unrecognized tax benefits |  |  | 44 |  |  | 1.2 | % |  |  |  | 2 |  |  | — | % |  |  |  | — |  |  | — | %
Deferred tax liability adjustment |  |  | (78) |  |  | (2.2) | % |  |  |  | 11 |  |  | 0.1 | % |  |  |  | (8) |  |  | (0.6) | %
Difference in tax rates applicable to non-U.S. earnings |  |  | 1 |  |  | — | % |  |  |  | 1 |  |  | — | % |  |  |  | 1 |  |  | 0.1 | %
Valuation allowances |  |  | (11) |  |  | (0.3) | % |  |  |  | (40) |  |  | (0.3) | % |  |  |  | (5) |  |  | (0.4) | %
Other |  |  | 31 |  |  | 0.9 | % |  |  |  | 26 |  |  | 0.2 | % |  |  |  | 14 |  |  | 1.1 | %
Provision for income taxes and effective income tax rate |  |  | $ | 815 |  |  | 22.7 | % |  |  |  | $ | 611 |  |  | 5.1 | % |  |  |  | $ | 264 |  |  | 19.4 | %
BancShares permanently reinvested eligible earnings of certain foreign subsidiaries and, accordingly, does not accrue any U.S. or foreign taxes that would be due if those earnings were repatriated. As of December 31, 2024, this assertion resulted in an unrecognized net deferred tax liability of approximately $20 million on reinvested earnings of $698 million. The tax effects of temporary differences that give rise to deferred income tax assets and liabilities at December 31, 2024 and 2023 are presented below: Components of Deferred Income Tax Assets and Liabilities
dollars in millions | 2024 |  | 2023
Deferred Tax Assets: |  |  |
Allowance for loan and lease losses | $ | 500 |  |  | $ | 542 |
Net unrealized loss on investment securities available for sale | 226 |  |  | 235 |
Deferred compensation | 128 |  |  | 152 |
Capitalized costs | 110 |  |  | 75 |
Lease liabilities | 84 |  |  | 115 |
Tax credits | 79 |  |  | 21 |
Net operating loss carry forwards | 76 |  |  | 118 |
Accrued liabilities and reserves | 53 |  |  | 104 |
Other | 59 |  |  | 63 |
Total gross deferred tax assets | 1,315 |  |  | 1,425 |
Deferred Tax Liabilities: |  |  |
Basis difference in loans | (2,243) |  |  | (2,598) |
Operating leases | (1,847) |  |  | (1,729) |
Loans and direct financing leases | (329) |  |  | (260) |
Pension assets | (129) |  |  | (110) |
Right of use assets for operating leases | (73) |  |  | (110) |
Other | (149) |  |  | (169) |
Total deferred tax liabilities | (4,770) |  |  | (4,976) |
Total net deferred tax liability before valuation allowances | (3,455) |  |  | (3,551) |
Less: valuation allowances | (17) |  |  | (28) |
Net deferred tax liability after valuation allowances | $ | (3,472) |  |  | $ | (3,579) |
Net Operating Loss Carryforwards and Valuation Adjustments The SVBB Acquisition was an asset acquisition for tax purposes and is therefore considered a taxable transaction. The basis difference in loans in the table above reflects the largest component of the DTL related to the SVBB Acquisition. Deferred taxes were not recorded for the affordable housing tax credit investments in accordance with PAM. Refer to Note 2—Business Combinations for additional information on the DTL acquired in the SVBB Acquisition. As of December 31, 2024, BancShares has DTAs totaling $76 million on its global net operating losses (“NOLs”). This includes: (1) DTAs of $60 million (net of federal expense) relating to cumulative state NOLs of $1.28 billion, including amounts of reporting entities that file in multiple jurisdictions, (2) DTAs of $11 million relating to cumulative non-U.S. NOLs of $48 million, and (3) DTAs of $5 million relating to cumulative federal NOLs of $25 million. The U.S. federal NOLs were substantially utilized in 2023 and the remaining federal NOLs are limited under Internal Revenue Code Sec. 382 and begin to expire in 2030. State NOLs began to expire in 2024 and non-US NOLs will begin to expire in 2041. As of December 31, 2024, BancShares has DTAs of $79 million from its global tax credits. This includes: (1) DTAs of $62 million from federal tax credits, which BancShares has committed to purchase in 2025, (2) DTAs of $12 million (net of federal expense) from state tax credits, and (3) DTAs of $5 million from non-U.S. tax credits. The federal tax credits begin to expire in 2045, the state tax credits have an indefinite carryforward, and the non-U.S. credits begin to expire in 2035. During 2024, management updated BancShares’ forecast of future U.S. state taxable income. The updated forecast continues to support a valuation allowance of $17 million (net of federal benefit) on U.S. state DTAs relating to certain state NOLs as of December 31, 2024. BancShares’ ability to recognize DTAs is evaluated on a quarterly basis to determine if there are any significant events that would affect our ability to utilize existing DTAs. If events are identified that affect our ability to utilize our DTAs, changes to the valuation allowance may be required. Liabilities for Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of UTBs is as follows: Unrecognized Tax Benefits
| December 31, 2024 |  | December 31, 2023 |  | December 31, 2022
dollars in millions | Liabilities for Unrecognized Tax Benefits |  | Interest / Penalties |  | Total |  | Total |  | Total
Balance at beginning of period | $ | 28 |  |  | $ | 3 |  |  | $ | 31 |  |  | $ | 30 |  |  | $ | 31 |
Effect of CIT Merger | — |  |  | — |  |  | — |  |  | — |  |  | 6 |
Additions for tax positions related to current year | 8 |  |  | — |  |  | 8 |  |  | — |  |  | — |
Additions for tax positions related to prior years | 42 |  |  | 6 |  |  | 48 |  |  | 5 |  |  | 1 |
Reductions for tax positions of prior years | — |  |  | — |  |  | — |  |  | — |  |  | (2) |
Expiration of statutes of limitations | (1) |  |  | — |  |  | (1) |  |  | (2) |  |  | (1) |
Settlements | — |  |  | — |  |  | — |  |  | (2) |  |  | (5) |
Balance at end of period | $ | 77 |  |  | $ | 9 |  |  | $ | 86 |  |  | $ | 31 |  |  | $ | 30 |
BancShares recognizes tax benefits when it is more likely than not that the position will prevail, based solely on the technical merits under the tax law of the relevant jurisdiction. BancShares will recognize the tax benefit if the position meets this recognition threshold determined based on the largest amount of the benefit that is more than likely to be recognized. During the year ended December 31, 2024, BancShares recorded a net increase in UTBs, including interest and penalties. The net increase primarily related to additions for tax positions related to prior and current years and was partially offset by the expiration of statutes of limitations. As of December 31, 2024, the accrued liability for interest and penalties is $9 million. BancShares recognizes accrued interest and penalties on UTBs in income tax expense. BancShares has UTBs relating to uncertain state tax positions in various state jurisdictions resulting from tax filings submitted to the states. No tax benefit has been recorded for these uncertain tax positions in the consolidated financial statements. It is reasonably possible that these uncertain tax positions may be settled or resolved in the next twelve months. No reasonable estimate of the settlement or resolution can be made. The entire $86 million of UTBs including interest and penalties at December 31, 2024, would lower BancShares’ effective income tax rate, if realized. Management believes that it is reasonably possible the total potential liability before interest and penalties may be increased or decreased by $10 million within the next twelve months of the reporting date because of anticipated settlement with taxing authorities, resolution of open tax matters, and the expiration of various statutes of limitations. Income Tax Audits BancShares is subject to examinations by the U.S. Internal Revenue Service and other taxing authorities in jurisdictions where BancShares has significant business operations for the years ranging from 2015 through 2024. The tax years under examination vary by jurisdiction. BancShares does not expect completion of those audits to have a material impact on the firm’s financial condition, but it may be material to operating results for a particular period, depending, in part, on the operating results for that period. The table below presents the earliest tax years that remain subject to examination by major jurisdiction.
Jurisdiction | December 31, 2024
U.S. Federal | 2021
New York State and City | 2015
North Carolina | 2016
California | 2017
Canada | 2017

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