Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense from continuing operations for the years ended December 31 were as follows:


	2020		2019		2018
	(In millions)
Current income tax expense:
Federal	$	312	$	279	$	175
State	66		62		29
Total current expense	$	378	$	341	$	204
Deferred income tax expense (benefit):
Federal	$	(142)	$	29	$	130
State	(16)		33		53
Total deferred expense (benefit)	$	(158)	$	62	$	183
Total income tax expense	$	220	$	403	$	387

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Note: The table above does not include total income tax expense from discontinued operations of zero, zero, and $80 million in 2020, 2019 and 2018, respectively. The deferred income tax expense reflected in discontinued operations was zero, zero and $43 million in 2020, 2019 and 2018, respectively.

Reconciliation Of Continuing Operations Effective Income Tax Rate Table

Income taxes from continuing operations for financial reporting purposes differs from the amount computed by applying the statutory federal income tax rate of 21 percent for the years ended December 31, 2020, 2019, and 2018, as shown in the following table:


	2020			2019			2018
	(Dollars in millions)
Tax on income from continuing operations computed at statutory federal income tax rate	$	276		$	417		$	410
Increase (decrease) in taxes resulting from:
State income tax, net of federal tax effect	39			75			65
Tax-exempt interest	(34)			(39)			(37)
Affordable housing investment amortization, net of tax benefits (excluding Tax Reform)	(31)			(34)			(37)
Other impacts of Tax Reform	—			—			(37)
Non-deductible expenses	22			19			28
Bank-owned life insurance	(22)			(19)			(16)
Impact of change in unrecognized tax benefits	(20)			20			—
Lease financing	5			5			11



Other, net	(15)			(41)			—
Income tax expense	$	220		$	403		$	387
Effective tax rate	16.8		%	20.3		%	19.8		%

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Note: Income tax expense includes amortization of affordable housing investments of $133 million, $131 million, and $137 million for 2020, 2019 and 2018, respectively.

Summary Of Significant Components Of Deferred Tax Assets And Liabilities

Significant components of the Company’s net deferred tax liability at December 31 are listed below:


	2020		2019
	(In millions)
Deferred tax assets:
Allowance for credit losses(1)	$	573	$	231
Right of use liability	137		124
Federal and State net operating losses, net of federal tax effect	58		50
Unrealized losses included in shareholder's equity	—		30
Accrued expenses	35		30
Federal tax credit carryforwards	—		12
Other	13		16
Total deferred tax assets	816		493
Less: valuation allowance	(31)		(32)
Total deferred tax assets less valuation allowance	785		461
Deferred tax liabilities:
Unrealized gains included in shareholder's equity	444		—
Lease financing	413		354
Right of use asset	128		115
Goodwill and intangibles	106		92
Employee benefits and deferred compensation	54		90
Fixed assets	54		42
Mortgage servicing rights	45		61
Other	46		35

Total deferred tax liabilities	1,290		789
Net deferred tax liability	$	(505)	$	(328)

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(1)Regions adopted CECL on January 1, 2020 and the impact resulted in an increase of $126 million in deferred tax assets. Prior to adoption, the deferred tax assets impact is for the allowance for loan losses.

Summary Of Details Of Tax Carryforwards Table

The following table provides details of the Company’s tax carryforwards at December 31, 2020, including the expiration dates, any related valuation allowance and the amount of pre-tax earnings necessary to fully realize each net deferred tax asset balance:


	Expiration Dates	Deferred Tax Asset Balance (2)		Valuation Allowance		Net Deferred Tax Asset Balance		Pre-Tax Earnings Necessary to Realize (1)
	(In millions)
Net operating losses-federal	2037	$	18	$	—	$	18	$	87
Net operating losses-federal	None	7		—		7		N/A
Net operating losses-states	2021-2025	14		14		—		—
Net operating losses-states	2026-2032	13		12		1		8
Net operating losses-states	2033-2040	4		3		1		23
Net operating losses-states	None	2		2		—		N/A
		58		31		27

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(1)N/A indicates that net operating losses with no expiration are not measured on a pre-tax basis.

(2) Federal and state deferred tax assets of $25 million and $2 million, respectively, related to net operating losses were acquired as part of the Company’s April 2020 equipment finance acquisition. While the federal net operating losses are subject to certain annual utilization limits, the Company has determined that a valuation allowance is not necessary based on projected annual limitation and the length of the net operating loss carryover period.

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	2020		2019		2018
	(In millions)
Balance at beginning of year	$	37	$	13	$	27
Additions based on tax positions taken in a prior period	2		25		—
Additions based on tax positions taken in the current period	—		—		11
Reductions based on tax positions taken in a prior period	(25)		—		(13)
Settlements	(1)		—		(11)
Expiration of statute of limitations	(1)		(1)		(1)
Balance at end of year	$	12	$	37	$	13