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INCOME TAXES | 9 Months Ended
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Sep. 30, 2025
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 September 30, |  | Nine Months Ended September 30,
(dollars in millions) | 2025 |  | 2024 |  | 2025 |  | 2024
Current income taxes: |  |  |  |  |  |  |
Federal taxes | $ | 29 |  |  | $ | 27 |  |  | $ | 82 |  |  | $ | 74 |
State taxes | 3 |  |  | 2 |  |  | 8 |  |  | 6 |
Total current income taxes | 32 |  |  | 29 |  |  | 90 |  |  | 80 |
Deferred income taxes: |  |  |  |  |  |  |
Federal taxes | 8 |  |  | 1 |  |  | 16 |  |  | 15 |
State taxes | — |  |  | — |  |  | 1 |  |  | 3 |
Total deferred income taxes | 8 |  |  | 1 |  |  | 17 |  |  | 18 |
Total income taxes | $ | 40 |  |  | $ | 30 |  |  | $ | 107 |  |  | $ | 98 |
Statutory federal tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Effective tax rate | 21.3 |  |  | 21.4 |  |  | 21.2 |  |  | 21.5 |
Income tax expense was higher for the nine months ended September 30, 2025, primarily due to higher pre-tax income, partially offset by increased net LIHTC. Legislative Update On July 4, 2025, the One Big Beautiful Bill (the Act) was signed into law in the U.S. We have evaluated the impacts of the Act on our Consolidated Financial Statements. We adopted the provisions allowing for 100% bonus depreciation on qualified property placed in service on or after January 20, 2025. The Act also includes other provisions that are effective for tax years beginning after December 31, 2025. While these provisions are not yet effective, we are evaluating their future impact and will recognize the effects of these provisions in the period they become effective or when they materially impact our Consolidated Financial Statements. 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 $15.2 million and $57.9 million at September 30, 2025 and December 31, 2024, respectively. The decline was primarily driven by lower unrealized losses on investment securities available for sale and the effects of 100% bonus depreciation as enacted under the Act.

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