v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Taxes [Abstract]  
Income Taxes
NOTE 19. INCOME TAXES
The components of income tax expense for the years ended December 31 were as follows:
202520242023
 (In millions)
Current income tax expense:
Federal$388 $383 $417 
State121 57 84 
Total current expense$509 $440 $501 
Deferred income tax expense (benefit):
Federal$84 $1 $25 
State(6)20 7 
Total deferred expense $78 $21 $32 
Total income tax expense$587 $461 $533 
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 $64 million, $179 million and $94 million for 2025, 2024, and 2023, respectively.
Income tax expense and the effective tax rate for financial reporting purposes differs from the amount computed by applying the statutory federal income tax rate of 21 percent. In 2025, the Company adopted accounting guidance that updates
certain disclosure requirements and prior periods have been updated to reflect the current year presentation. A reconciliation between the statutory tax rate and effective tax rate is shown in the following table:
202520242023
AmountPercentAmountPercentAmountPercent
 (Dollars in millions)
Tax on income computed at statutory federal income tax rate$576 21.0 %$494 21.0 %$547 21.0 %
Increase (decrease) in taxes resulting from:
State and local income tax, net of federal tax effect (1)
55 2.0 %60 2.6 %69 2.7 %
Tax credits:
Affordable housing and economic development credits, net of amortization (2)
(36)(1.3)%(48)(1.9)%(41)(1.6)%
Other tax credits(6)(0.3)%(5)(0.4)%(13)(0.4)%
Non-taxable and non-deductible items:
Tax-exempt interest(40)(1.4)%(39)(1.7)%(38)(1.5)%
Other non-deductible expenses23 0.8 %23 1.0 %22 0.8 %
Bank-owned life insurance(22)(0.8)%(24)(1.0)%(19)(0.7)%
Other, net1 0.1 %(2)(0.1)%3 0.1 %
Change in UTB
36 1.3 %2 0.1 %3 0.1 %
Income tax expense and total effective tax rate
$587 21.4 %$461 19.6 %$533 20.5 %
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(1) In 2025, Alabama and Tennessee combined comprise more than half of the tax effect in this category. In both 2024 and 2023, Alabama comprises more than half of the tax effect in this category.
(2) Income tax expense includes gross amortization of affordable housing and economic development projects of $193 million, $188 million, and $166 million for 2025, 2024 and 2023, respectively. See Note 2 for additional information.
Significant components of the Company’s net deferred tax asset at December 31 are listed below:
20252024
 (In millions)
Deferred tax assets:
Unrealized losses included in shareholders' equity$522 $976 
Allowance for credit losses426 433 
Right of use liability128 123 
Accrued expenses33 48 
Other27 18 
Federal and state tax credit carryforwards
2 27 
Federal and state net operating losses, net of federal tax effect19 28 
Total deferred tax assets1,157 1,653 
Less: valuation allowance(18)(22)
Total deferred tax assets less valuation allowance1,139 1,631 
Deferred tax liabilities:
Lease financing362 413 
Right of use asset121 116 
Mortgage servicing rights92 96 
Goodwill and intangibles138 126 
Fixed assets87 7 
Employee benefits and deferred compensation33 34 
Other62 64 
Total deferred tax liabilities895 856 
Net deferred tax asset $244 $775 
The Company files U.S. federal, state, and local income tax returns, and as of December 31, 2025 had federal and state net operating loss and tax credit carryforwards, all of which were immaterial. 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, which is also immaterial.
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 2023 have been completed. With limited exceptions, the Company is no longer subject to state and local tax examinations for tax years prior to 2022. 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.
As of December 31, 2025, 2024 and 2023, the balance of UTBs, as shown below, would reduce the effective tax rate, if recognized. A reconciliation of the beginning and ending amount of UTB is as follows:
202520242023
 (In millions)
Balance at beginning of year$12 $11 $8 
Additions based on tax positions taken in a prior period46 — 3 
Additions based on tax positions taken in the current period1 1 — 
Reductions based on tax positions taken in a prior period(3)— — 
Settlements(1)— — 
Expiration of statute of limitations(8)— — 
Balance at end of year$47 $12 $11 
For the year ended December 31, 2025, the Company recognized an $11 million expense for gross interest and penalties related to its UTBs. For the years ended December 31, 2024 and 2023, the Company recognized an immaterial expense (benefit) for gross interest and penalties related to its UTBs. As of December 31, 2025, the Company had liabilities for interest and penalties related to UTBs of $14 million. As of December 31, 2024 and 2023, the Company had an immaterial gross liability for interest and penalties related to UTBs.