STI-3.31.13 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2013
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-08918
SUNTRUST BANKS, INC.
(Exact name of registrant as specified in its charter)
|
| | |
Georgia | | 58-1575035 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
303 Peachtree Street, N.E., Atlanta, Georgia 30308
(Address of principal executive offices) (Zip Code)
(404) 588-7711
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
ý Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
|
| | | |
| Large accelerated filer x | | Accelerated filer o |
| Non-accelerated filer o (Do not check if a smaller reporting company) | | Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No ý
At April 22, 2013, 540,172,381 shares of the Registrant’s Common Stock, $1.00 par value, were outstanding.
TABLE OF CONTENTS
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Glossary of Defined Terms | i - iii |
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Item 1. | | |
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Item 2. | | |
Item 3. | | |
Item 4. | | |
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Item 1. | | |
Item 1A. | | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
Item 5. | | |
Item 6. | | |
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GLOSSARY OF DEFINED TERMS
ABS — Asset-backed securities.
ACH — Automated clearing house.
AFS — Available for sale.
AIP — Annual Incentive Plan.
ALCO — Asset/Liability Management Committee.
ALM — Asset/Liability Management.
ALLL — Allowance for loan and lease losses.
AOCI — Accumulated other comprehensive income.
ARS — Auction rate securities.
ASU — Accounting standards update.
ATE — Additional termination event.
ATM — Automated teller machine.
Bank — SunTrust Bank.
BCBS — Basel Committee on Banking Supervision.
Board — The Company’s Board of Directors.
C&I — Commercial and Industrial.
CCAR — Comprehensive Capital Analysis and Review.
CDO — Collateralized debt obligation.
CD — Certificate of deposit.
CDS — Credit default swaps.
CEO — Chief Executive Officer.
CFO — Chief Financial Officer.
CIB — Corporate and Investment Banking.
Class A shares — Visa Inc. Class A common stock.
Class B shares —Visa Inc. Class B common stock.
CLO — Collateralized loan obligation.
Coke — The Coca-Cola Company.
Company — SunTrust Banks, Inc.
CP — Commercial paper.
CRE — Commercial Real Estate.
CSA — Credit support annex.
DDA — Demand deposit account.
Dodd-Frank Act — The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
DBRS — DBRS, Inc.
DTA — Deferred tax asset.
EPS — Earnings per share.
ERISA — Employee Retirement Income Security Act of 1974.
Exchange Act — Securities Exchange Act of 1934.
FASB — Financial Accounting Standards Board.
Federal Reserve — The Board of Governors of the Federal Reserve System.
Fed funds — Federal funds.
FFELP — Federal Family Education Loan Program.
FHA — Federal Housing Administration.
FHLB — Federal Home Loan Bank.
FICO — Fair Isaac Corporation.
Fitch — Fitch Ratings Ltd.
FRB — Federal Reserve Board.
FTE — Fully taxable-equivalent.
FVO — Fair value option.
GenSpring — GenSpring Family Offices, LLC.
GSE — Government-sponsored enterprise.
HARP — Home Affordable Refinance Program.
HUD — U.S. Department of Housing and Urban Development.
IIS — Institutional Investment Solutions.
IPO — Initial public offering.
IRLC — Interest rate lock commitment.
ISDA — International Swaps and Derivatives Association.
LCR — Liquidity coverage ratio.
LGD — Loss given default.
LHFI — Loans held for investment.
LHFI-FV — Loans held for investment carried at fair value.
LHFS — Loans held for sale.
LIBOR —London InterBank Offered Rate.
LOCOM – Lower of cost or market.
LTI — Long-term incentive.
LTV— Loan to value.
MBS — Mortgage-backed securities.
MD&A — Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Moody’s — Moody’s Investors Service.
MRA — Master Repurchase Agreement.
MRMG — Model Risk Management Group.
MSR — Mortgage servicing right.
MVE — Market value of equity.
NOW — Negotiable order of withdrawal account.
NPL — Nonperforming loan.
NPR — Notice of Proposed Rulemaking.
OCC — Office of the Comptroller of the Currency.
OCI — Other comprehensive income.
OIG — Office of Inspector General.
OREO — Other real estate owned.
OTC — Over-the-counter.
OTTI — Other-than-temporary impairment.
Parent Company — SunTrust Banks, Inc., the parent Company of SunTrust Bank and other subsidiaries of
SunTrust Banks, Inc.
PD — Probability of default.
QSPE — Qualifying special-purpose entity.
RidgeWorth — RidgeWorth Capital Management, Inc.
ROA — Return on average total assets.
ROE — Return on average common shareholders’ equity.
RWA — Risk-weighted assets.
S&P — Standard and Poor’s.
SBA — Small Business Administration.
SCAP — Supervisory Capital Assessment Program.
SEC — U.S. Securities and Exchange Commission.
SERP — Supplemental Executive Retirement Plan.
SPE — Special purpose entity.
STIS — SunTrust Investment Services, Inc.
STM — SunTrust Mortgage, Inc.
STRH — SunTrust Robinson Humphrey, Inc.
SunTrust — SunTrust Banks, Inc.
SunTrust Community Capital — SunTrust Community Capital, LLC.
TAG — Transaction Account Guarantee.
TDR — Troubled debt restructuring.
TRS — Total return swaps.
U.S. — United States.
U.S. GAAP — Generally Accepted Accounting Principles in the United States.
U.S. Treasury — The United States Department of the Treasury.
VA —Veterans Administration.
VAR —Value at risk.
VI — Variable interest.
VIE — Variable interest entity.
Visa —The Visa, U.S.A. Inc. card association or its affiliates, collectively.
Visa Counterparty — a financial institution which purchased the Company's Visa Class B shares.
W&IM — Wealth and Investment Management.
PART I - FINANCIAL INFORMATION
The following unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and accordingly do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary to comply with Regulation S-X have been included. Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2013.
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Item 1. | FINANCIAL STATEMENTS (UNAUDITED) |
SunTrust Banks, Inc.
Consolidated Statements of Income |
| | | | | | | |
| Three Months Ended March 31 |
(Dollars in millions and shares in thousands, except per share data) (Unaudited) | 2013 | | 2012 |
Interest Income | | | |
Interest and fees on loans |
| $1,169 |
| |
| $1,300 |
|
Interest and fees on loans held for sale | 31 |
| | 25 |
|
Interest and dividends on securities available for sale1 | 143 |
| | 194 |
|
Trading account interest and other | 16 |
| | 15 |
|
Total interest income | 1,359 |
| | 1,534 |
|
Interest Expense | | | |
Interest on deposits | 79 |
| | 127 |
|
Interest on long-term debt | 51 |
| | 88 |
|
Interest on other borrowings | 8 |
| | 8 |
|
Total interest expense | 138 |
| | 223 |
|
Net interest income | 1,221 |
| | 1,311 |
|
Provision for credit losses | 212 |
| | 317 |
|
Net interest income after provision for credit losses | 1,009 |
| | 994 |
|
Noninterest Income | | | |
Service charges on deposit accounts | 160 |
| | 164 |
|
Trust and investment management income | 124 |
| | 130 |
|
Retail investment services | 61 |
| | 59 |
|
Other charges and fees | 89 |
| | 97 |
|
Investment banking income | 68 |
| | 71 |
|
Trading income | 42 |
| | 57 |
|
Card fees | 76 |
| | 79 |
|
Mortgage production related income | 159 |
| | 63 |
|
Mortgage servicing related income | 38 |
| | 81 |
|
Net securities gains2 | 2 |
| | 18 |
|
Other noninterest income | 44 |
| | 57 |
|
Total noninterest income | 863 |
| | 876 |
|
Noninterest Expense | | | |
Employee compensation | 611 |
| | 652 |
|
Employee benefits | 148 |
| | 145 |
|
Outside processing and software | 178 |
| | 176 |
|
Net occupancy expense | 89 |
| | 88 |
|
Regulatory assessments | 54 |
| | 52 |
|
Equipment expense | 45 |
| | 45 |
|
Operating losses | 39 |
| | 60 |
|
Credit and collection services | 33 |
| | 56 |
|
Marketing and customer development | 30 |
| | 27 |
|
Consulting and legal fees | 15 |
| | 36 |
|
Amortization of intangible assets | 6 |
| | 11 |
|
Other real estate expense | — |
| | 50 |
|
Other noninterest expense | 115 |
| | 143 |
|
Total noninterest expense | 1,363 |
| | 1,541 |
|
Income before provision for income taxes | 509 |
| | 329 |
|
Provision for income taxes | 151 |
| | 69 |
|
Net income including income attributable to noncontrolling interest | 358 |
| | 260 |
|
Net income attributable to noncontrolling interest | 6 |
| | 10 |
|
Net income |
| $352 |
| |
| $250 |
|
Net income available to common shareholders |
| $340 |
| |
| $245 |
|
Net income per average common share: | | | |
Diluted |
| $0.63 |
| |
| $0.46 |
|
Basic | 0.64 |
| | 0.46 |
|
Dividends declared per common share | 0.05 |
| | 0.05 |
|
Average common shares - diluted | 539,862 |
| | 536,407 |
|
Average common shares - basic | 535,680 |
| | 533,100 |
|
1 Includes dividends on Coke common stock of of $15 million during the three months ended March 31, 2012.
2 Includes credit-related OTTI losses of $1 million and $2 million, including $1 million and $2 million of unrealized losses reclassified from OCI, before taxes, for the three months ended March 31, 2013 and 2012, respectively.
See Notes to Consolidated Financial Statements (unaudited).
SunTrust Banks, Inc.
Consolidated Statements of Comprehensive Income
|
| | | | | | | |
| Three Months Ended March 31 |
(Dollars in millions) (Unaudited) | 2013 | | 2012 |
Net income |
| $352 |
| |
| $250 |
|
Components of other comprehensive (loss)/income: | | | |
Change in net unrealized gains on securities, net of tax of ($42) and $27, respectively | (73 | ) | | 50 |
|
Change in net unrealized gains on derivatives, net of tax of ($42) and ($58), respectively | (71 | ) | | (101 | ) |
Change related to employee benefit plans, net of tax of $12 and ($14), respectively | 20 |
| | (24 | ) |
Total other comprehensive loss | (124 | ) | | (75 | ) |
Total comprehensive income |
| $228 |
| |
| $175 |
|
See Notes to Consolidated Financial Statements (unaudited).
SunTrust Banks, Inc.
Consolidated Balance Sheets
|
| | | | | | | |
| | | |
(Dollars in millions and shares in thousands) (Unaudited) | March 31,
2013 | | December 31,
2012 |
Assets | | | |
Cash and due from banks |
| $4,787 |
| |
| $7,134 |
|
Federal funds sold and securities borrowed or purchased under agreements to resell | 1,154 |
| | 1,101 |
|
Interest-bearing deposits in other banks | 21 |
| | 22 |
|
Cash and cash equivalents | 5,962 |
| | 8,257 |
|
Trading assets (includes encumbered securities of $950 and $727 at March 31, 2013 and December 31, 2012, respectively) | 6,250 |
| | 6,049 |
|
Securities available for sale | 23,823 |
| | 21,953 |
|
Loans held for sale1 ($2,672 and $3,243 at fair value at March 31, 2013 and December 31, 2012, respectively) | 3,193 |
| | 3,399 |
|
Loans2 ($360 and $379 at fair value at March 31, 2013 and December 31, 2012, respectively) | 120,804 |
| | 121,470 |
|
Allowance for loan and lease losses | (2,152 | ) | | (2,174 | ) |
Net loans | 118,652 |
| | 119,296 |
|
Premises and equipment | 1,541 |
| | 1,564 |
|
Goodwill | 6,369 |
| | 6,369 |
|
Other intangible assets (MSRs at fair value: $1,025 and $899 at March 31, 2013 and December 31, 2012, respectively) | 1,076 |
| | 956 |
|
Other real estate owned | 224 |
| | 264 |
|
Other assets | 5,345 |
| | 5,335 |
|
Total assets |
| $172,435 |
| |
| $173,442 |
|
Liabilities and Shareholders’ Equity | | | |
Noninterest-bearing consumer and commercial deposits |
| $38,593 |
| |
| $39,481 |
|
Interest-bearing consumer and commercial deposits | 89,142 |
| | 90,699 |
|
Total consumer and commercial deposits | 127,735 |
| | 130,180 |
|
Brokered time deposits (CDs at fair value: $810 and $832 at March 31, 2013 and December 31, 2012, respectively) | 2,080 |
| | 2,136 |
|
Foreign deposits | 100 |
| | — |
|
Total deposits | 129,915 |
| | 132,316 |
|
Funds purchased | 605 |
| | 617 |
|
Securities sold under agreements to repurchase | 1,854 |
| | 1,574 |
|
Other short-term borrowings | 4,169 |
| | 3,303 |
|
Long-term debt 3 ($1,632 and $1,622 at fair value at March 31, 2013 and December 31, 2012, respectively) | 9,331 |
| | 9,357 |
|
Trading liabilities | 1,348 |
| | 1,161 |
|
Other liabilities | 4,019 |
| | 4,129 |
|
Total liabilities | 151,241 |
| | 152,457 |
|
Preferred stock, no par value | 725 |
| | 725 |
|
Common stock, $1.00 par value | 550 |
| | 550 |
|
Additional paid in capital | 9,132 |
| | 9,174 |
|
Retained earnings | 11,133 |
| | 10,817 |
|
Treasury stock, at cost, and other4 | (531 | ) | | (590 | ) |
Accumulated other comprehensive income, net of tax | 185 |
| | 309 |
|
Total shareholders’ equity | 21,194 |
| | 20,985 |
|
Total liabilities and shareholders’ equity |
| $172,435 |
| |
| $173,442 |
|
| | | |
Common shares outstanding | 540,187 |
| | 538,959 |
|
Common shares authorized | 750,000 |
| | 750,000 |
|
Preferred shares outstanding | 7 |
| | 7 |
|
Preferred shares authorized | 50,000 |
| | 50,000 |
|
Treasury shares of common stock | 9,734 |
| | 10,962 |
|
1 Includes loans held for sale, at fair value, of consolidated VIEs |
| $315 |
| |
| $319 |
|
2 Includes loans of consolidated VIEs | 355 |
| | 365 |
|
3 Includes debt of consolidated VIEs ($286 at fair value at March 31, 2013 and December 31, 2012) | 656 |
| | 666 |
|
4 Includes noncontrolling interest held | 114 |
| | 114 |
|
See Notes to Consolidated Financial Statements (unaudited).
SunTrust Banks, Inc.
Consolidated Statements of Shareholders’ Equity
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars and shares in millions, except per share data) (Unaudited) | Preferred Stock | | Common Shares Outstanding | | Common Stock | | Additional Paid in Capital | | Retained Earnings | | Treasury Stock and Other 1 | | Accumulated Other Comprehensive Income 2 | | Total |
Balance, January 1, 2012 |
| $275 |
| | 537 |
| |
| $550 |
| |
| $9,306 |
| |
| $8,978 |
| |
| ($792 | ) | |
| $1,749 |
| |
| $20,066 |
|
Net income | — |
| | — |
| | — |
| | — |
| | 250 |
| | — |
| | — |
| | 250 |
|
Other comprehensive loss | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (75 | ) | | (75 | ) |
Change in noncontrolling interest | — |
| | — |
| | — |
| | — |
| | — |
| | 4 |
| | — |
| | 4 |
|
Common stock dividends, $0.05 per share | — |
| | — |
| | — |
| | — |
| | (27 | ) | | — |
| | — |
| | (27 | ) |
Preferred stock dividends, $1,011 per share | — |
| | — |
| | — |
| | — |
| | (3 | ) | | — |
| | — |
| | (3 | ) |
Exercise of stock options and stock compensation expense | — |
| | — |
| | — |
| | (6 | ) | | — |
| | 10 |
| | — |
| | 4 |
|
Restricted stock activity | — |
| | 1 |
| | — |
| | (50 | ) | | — |
| | 58 |
| | — |
| | 8 |
|
Amortization of restricted stock compensation | — |
| | — |
| | — |
| | — |
| | — |
| | 7 |
| | — |
| | 7 |
|
Issuance of stock for employee benefit plans and other | — |
| | — |
| | — |
| | (7 | ) | | — |
| | 14 |
| | — |
| | 7 |
|
Balance, March 31, 2012 |
| $275 |
| | 538 |
| |
| $550 |
| |
| $9,243 |
| |
| $9,198 |
| |
| ($699 | ) | |
| $1,674 |
| |
| $20,241 |
|
Balance, January 1, 2013 |
| $725 |
| | 539 |
| |
| $550 |
| |
| $9,174 |
| |
| $10,817 |
| |
| ($590 | ) | |
| $309 |
| |
| $20,985 |
|
Net income | — |
| | — |
| | — |
| | — |
| | 352 |
| | — |
| | — |
| | 352 |
|
Other comprehensive loss | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (124 | ) | | (124 | ) |
Common stock dividends, $0.05 per share | — |
| | — |
| | — |
| | — |
| | (27 | ) | | — |
| | — |
| | (27 | ) |
Preferred stock dividends 3 | — |
| | — |
| | — |
| | — |
| | (9 | ) | | — |
| | — |
| | (9 | ) |
Exercise of stock options and stock compensation expense | — |
| | — |
| | — |
| | (8 | ) | | — |
| | 13 |
| | — |
| | 5 |
|
Restricted stock activity | — |
| | 1 |
| | — |
| | (33 | ) | | — |
| | 36 |
| | — |
| | 3 |
|
Amortization of restricted stock compensation | — |
| | — |
| | — |
| | — |
| | — |
| | 7 |
| | — |
| | 7 |
|
Issuance of stock for employee benefit plans and other | — |
| | — |
| | — |
| | (1 | ) | | — |
| | 3 |
| | — |
| | 2 |
|
Balance, March 31, 2013 |
| $725 |
| | 540 |
| |
| $550 |
| |
| $9,132 |
| |
| $11,133 |
| |
| ($531 | ) | |
| $185 |
| |
| $21,194 |
|
1 At March 31, 2013, includes ($569) million for treasury stock, ($76) million for compensation element of restricted stock, and $114 million for noncontrolling interest.
At March 31, 2012, includes ($737) million for treasury stock, ($73) million for compensation element of restricted stock, and $111 million for noncontrolling interest.
2 Components of AOCI at March 31, 2013, included $447 million in unrealized net gains on AFS securities, $461 million in unrealized net gains on derivative financial instruments, and ($723) million related to employee benefit plans. At March 31, 2012, components included $1,913 million in unrealized net gains on AFS securities, $468 million in unrealized net gains on derivative financial instruments, and ($707) million related to employee benefit plans.
3 Dividends were $1,000 per share for Perpetual Preferred Stock Series A and B and $1,387 per share for Perpetual Preferred Stock Series E for the three months ended March 31, 2013.
See Notes to Consolidated Financial Statements (unaudited).
SunTrust Banks, Inc. Consolidated Statements of Cash Flows |
| | | | | | | |
| Three Months Ended March 31 |
(Dollars in millions) (Unaudited) | 2013 | | 2012 |
Cash Flows from Operating Activities | | | |
Net income including income attributable to noncontrolling interest |
| $358 |
| |
| $260 |
|
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation, amortization, and accretion | 184 |
| | 192 |
|
Origination of mortgage servicing rights | (110 | ) | | (83 | ) |
Provisions for credit losses and foreclosed property | 228 |
| | 362 |
|
Mortgage repurchase provision | 14 |
| | 175 |
|
Stock option compensation and amortization of restricted stock compensation | 8 |
| | 8 |
|
Net securities gains | (2 | ) | | (18 | ) |
Net gain on sale of loans held for sale, loans, and other assets | (198 | ) | | (252 | ) |
Net decrease in loans held for sale | 404 |
| | 246 |
|
Net increase in other assets | (437 | ) | | (251 | ) |
Net increase/(decrease) in other liabilities | 172 |
| | (537 | ) |
Net cash provided by operating activities | 621 |
| | 102 |
|
Cash Flows from Investing Activities | | | |
Proceeds from maturities, calls, and paydowns of securities available for sale | 1,614 |
| | 1,506 |
|
Proceeds from sales of securities available for sale | 33 |
| | 670 |
|
Purchases of securities available for sale | (3,678 | ) | | (992 | ) |
Net increase in loans, including purchases of loans | (167 | ) | | (1,296 | ) |
Proceeds from sales of loans | 494 |
| | 252 |
|
Capital expenditures | (28 | ) | | (48 | ) |
Proceeds from the sale of other real estate owned and other assets | 145 |
| | 121 |
|
Net cash (used in)/provided by investing activities | (1,587 | ) | | 213 |
|
Cash Flows from Financing Activities | | | |
Net (decrease)/increase in total deposits | (2,401 | ) | | 2,110 |
|
Net increase/(decrease) in funds purchased, securities sold under agreements to repurchase, and other short-term borrowings | 1,134 |
| | (1,899 | ) |
Proceeds from the issuance of long-term debt | 12 |
| | 1,000 |
|
Repayment of long-term debt | (44 | ) | | (34 | ) |
Common and preferred dividends paid | (36 | ) | | (30 | ) |
Stock option activity | 6 |
| | 10 |
|
Net cash (used in)/provided by financing activities | (1,329 | ) | | 1,157 |
|
Net (decrease)/increase in cash and cash equivalents | (2,295 | ) | | 1,472 |
|
Cash and cash equivalents at beginning of period | 8,257 |
| | 4,509 |
|
Cash and cash equivalents at end of period |
| $5,962 |
| |
| $5,981 |
|
Supplemental Disclosures: | | | |
Loans transferred from loans held for sale to loans |
| $12 |
| |
| $11 |
|
Loans transferred from loans to loans held for sale | 57 |
| | 429 |
|
Loans transferred from loans and loans held for sale to other real estate owned | 66 |
| | 96 |
|
See Notes to Consolidated Financial Statements (unaudited).
Notes to Consolidated Financial Statements (Unaudited)
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these financial statements, have been
made.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could vary from these estimates. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.
The Company evaluated subsequent events through the date its financial statements were issued.
These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. Except for accounting policies that have been recently adopted as described below, there have been no significant changes to the Company’s accounting policies as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
Accounting Policies Recently Adopted and Pending Accounting Pronouncements
In December 2011, the FASB issued ASU 2011-11, "Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities." The ASU requires additional disclosures about financial instruments and derivative instruments that are offset or subject to an enforceable master netting arrangement or similar agreement. In January 2013, the FASB issued ASU 2013-01, “Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities”, which more narrowly defined the scope of financial instruments to only include derivatives, repurchase and reverse repurchase agreements, and securities borrowing and lending transactions. The Company adopted these ASUs as of January 1, 2013, and the adoption did not have an impact on the Company's financial position, results of operations, or EPS. See Note 12, "Fair Value Election and Measurement."
In February 2013, the FASB issued ASU 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income" which provides disclosure guidance on amounts reclassified out of OCI by component. The Company adopted the ASU as of January 1, 2013, and the adoption did not have an impact on the Company's financial position, results of operations, or EPS. See Note 15, "Accumulated Other Comprehensive Income."
In March 2013, the FASB issued ASU 2013-04, "Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force)." The ASU requires additional disclosures about joint and several liability arrangements and requires the Company to measure obligations resulting from joint and several liability arrangements as the sum of the amount the Company agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the Company expects to pay on behalf of its co-obligors. The ASU is effective for the fiscal years and interim periods within those years beginning after December 15, 2013. The Company is evaluating the impact of the ASU; however, it is not expected to have a significant impact on the Company's financial position, results of operations, or EPS.
Notes to Consolidated Financial Statements (Unaudited), continued
NOTE 2 – SECURITIES AVAILABLE FOR SALE
Securities Portfolio Composition
|
| | | | | | | | | | | | | | | |
| March 31, 2013 |
(Dollars in millions) | Amortized
Cost | | Unrealized
Gains | | Unrealized
Losses | | Fair
Value |
U.S. Treasury securities |
| $805 |
| |
| $15 |
| |
| $— |
| |
| $820 |
|
Federal agency securities | 2,211 |
| | 79 |
| | 5 |
| | 2,285 |
|
U.S. states and political subdivisions | 280 |
| | 12 |
| | 2 |
| | 290 |
|
MBS - agency | 18,618 |
| | 677 |
| | 40 |
| | 19,255 |
|
MBS - private | 195 |
| | 7 |
| | — |
| | 202 |
|
ABS | 153 |
| | 4 |
| | 1 |
| | 156 |
|
Corporate and other debt securities | 41 |
| | 4 |
| | — |
| | 45 |
|
Other equity securities1 | 769 |
| | 1 |
| | — |
| | 770 |
|
Total securities AFS |
| $23,072 |
| |
| $799 |
| |
| $48 |
| |
| $23,823 |
|
| | | | | | | |
| December 31, 2012 |
(Dollars in millions) | Amortized
Cost | | Unrealized
Gains | | Unrealized
Losses | | Fair
Value |
U.S. Treasury securities |
| $212 |
| |
| $10 |
| |
| $— |
| |
| $222 |
|
Federal agency securities | 1,987 |
| | 85 |
| | 3 |
| | 2,069 |
|
U.S. states and political subdivisions | 310 |
| | 15 |
| | 5 |
| | 320 |
|
MBS - agency | 17,416 |
| | 756 |
| | 3 |
| | 18,169 |
|
MBS - private | 205 |
| | 4 |
| | — |
| | 209 |
|
ABS | 214 |
| | 5 |
| | 3 |
| | 216 |
|
Corporate and other debt securities | 42 |
| | 4 |
| | — |
| | 46 |
|
Other equity securities1 | 701 |
| | 1 |
| | — |
| | 702 |
|
Total securities AFS |
| $21,087 |
| |
| $880 |
| |
| $14 |
| |
| $21,953 |
|
1At March 31, 2013, other equity securities was comprised of the following: $268 million in FHLB of Atlanta stock, $402 million in Federal Reserve Bank stock, $98 million in mutual fund investments, and $2 million of other. At December 31, 2012, other equity securities was comprised of the following: $229 million in FHLB of Atlanta stock, $402 million in Federal Reserve Bank stock, $69 million in mutual fund investments, and $2 million of other.
The following table presents interest and dividends on securities AFS:
|
| | | | | | | |
| Three Months Ended March 31 |
(Dollars in millions) | 2013 | | 2012 |
Taxable interest |
| $132 |
| |
| $168 |
|
Tax-exempt interest | 3 |
| | 4 |
|
Dividends1 | 8 |
| | 22 |
|
Total interest and dividends |
| $143 |
| |
| $194 |
|
1Includes dividends on the Coke common stock of $15 million for the three months ended March 31, 2012.
Securities AFS that were pledged to secure public deposits, repurchase agreements, trusts, and other funds had a fair value of $10.0 billion and $10.6 billion at March 31, 2013 and December 31, 2012, respectively. At March 31, 2013 and December 31, 2012, there were no securities AFS pledged under which the transferee may repledge the collateral. The Company has also pledged $864 million and $727 million of trading assets to secure $813 million and $703 million of repurchase agreements at March 31, 2013 and December 31, 2012, respectively.
The amortized cost and fair value of investments in debt securities at March 31, 2013, by estimated average life, are shown below. Actual cash flows may differ from estimated average lives and contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.
Notes to Consolidated Financial Statements (Unaudited), continued
|
| | | | | | | | | | | | | | | | | | | |
| Distribution of Maturities |
(Dollars in millions) | 1 Year or Less | | 1-5 Years | | 5-10 Years | | After 10 Years | | Total |
Amortized Cost: | | | | | | | | | |
U.S. Treasury securities |
| $11 |
| |
| $201 |
| |
| $593 |
| |
| $— |
| |
| $805 |
|
Federal agency securities | 259 |
| | 1,368 |
| | 440 |
| | 144 |
| | 2,211 |
|
U.S. states and political subdivisions | 80 |
| | 136 |
| | 18 |
| | 46 |
| | 280 |
|
MBS - agency | 1,056 |
| | 12,103 |
| | 3,825 |
| | 1,634 |
| | 18,618 |
|
MBS - private | — |
| | 145 |
| | 50 |
| | — |
| | 195 |
|
ABS | 102 |
| | 50 |
| | 1 |
| | — |
| | 153 |
|
Corporate and other debt securities | 4 |
| | 17 |
| | 20 |
| | — |
| | 41 |
|
Total debt securities |
| $1,512 |
| |
| $14,020 |
| |
| $4,947 |
| |
| $1,824 |
| |
| $22,303 |
|
Fair Value: | | | | | | | | | |
U.S. Treasury securities |
| $11 |
| |
| $210 |
| |
| $599 |
| |
| $— |
| |
| $820 |
|
Federal agency securities | 260 |
| | 1,430 |
| | 446 |
| | 149 |
| | 2,285 |
|
U.S. states and political subdivisions | 82 |
| | 144 |
| | 19 |
| | 45 |
| | 290 |
|
MBS - agency | 1,118 |
| | 12,670 |
| | 3,853 |
| | 1,614 |
| | 19,255 |
|
MBS - private | — |
| | 150 |
| | 52 |
| | — |
| | 202 |
|
ABS | 103 |
| | 51 |
| | 2 |
| | — |
| | 156 |
|
Corporate and other debt securities | 4 |
| | 19 |
| | 22 |
| | — |
| | 45 |
|
Total debt securities |
| $1,578 |
| |
| $14,674 |
| |
| $4,993 |
| |
| $1,808 |
| |
| $23,053 |
|
| | | | | | | | | |
Weighted average yield1 | 3.35 | % | | 2.90 | % | | 2.18 | % | | 2.63 | % | | 2.75 | % |
1Average yields are based on amortized cost and presented on a FTE basis.
Securities in an Unrealized Loss Position
The Company held certain investment securities where amortized cost exceeded fair market value, resulting in unrealized loss positions. Market changes in interest rates and credit spreads may result in temporary unrealized losses as the market price of securities fluctuates. At March 31, 2013, the Company did not intend to sell these securities nor was it more-likely-than-not that the Company would be required to sell these securities before their anticipated recovery or maturity. The Company has reviewed its portfolio for OTTI in accordance with the accounting policies outlined in the Company's Annual Report on Form 10-K for the year ended December 31, 2012.
|
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2013 |
| Less than twelve months | | Twelve months or longer | | Total |
(Dollars in millions) | Fair
Value | | Unrealized
Losses | | Fair
Value | | Unrealized
Losses | | Fair
Value | | Unrealized
Losses |
Temporarily impaired securities: | | | | | | | | | | | |
Federal agency securities |
| $421 |
| |
| $5 |
| |
| $— |
| |
| $— |
| |
| $421 |
| |
| $5 |
|
U.S. states and political subdivisions | 1 |
| | — |
| | 26 |
| | 2 |
| | 27 |
| | 2 |
|
MBS - agency | 4,472 |
| | 40 |
| | — |
| | — |
| | 4,472 |
| | 40 |
|
ABS | — |
| | — |
| | 14 |
| | 1 |
| | 14 |
| | 1 |
|
Total temporarily impaired securities
| 4,894 |
| | 45 |
| | 40 |
| | 3 |
| | 4,934 |
| | 48 |
|
OTTI securities1: | | | | | | | | | | | |
ABS | — |
| | — |
| | 1 |
| | — |
| | 1 |
| | — |
|
Total OTTI securities | — |
| | — |
| | 1 |
| | — |
| | 1 |
| | — |
|
Total impaired securities |
| $4,894 |
| |
| $45 |
| |
| $41 |
| |
| $3 |
| |
| $4,935 |
| |
| $48 |
|
Notes to Consolidated Financial Statements (Unaudited), continued
|
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2012 |
| Less than twelve months | | Twelve months or longer | | Total |
(Dollars in millions) | Fair Value | | Unrealized Losses | | Fair Value | | Unrealized Losses | | Fair Value | | Unrealized Losses |
Temporarily impaired securities: | | | | | | | | | | | |
Federal agency securities |
| $298 |
| |
| $3 |
| |
| $— |
| |
| $— |
| |
| $298 |
| |
| $3 |
|
U.S. states and political subdivisions | 1 |
| | — |
| | 24 |
| | 5 |
| | 25 |
| | 5 |
|
MBS - agency | 1,212 |
| | 3 |
| | — |
| | — |
| | 1,212 |
| | 3 |
|
ABS | — |
| | — |
| | 13 |
| | 2 |
| | 13 |
| | 2 |
|
Total temporarily impaired securities | 1,511 |
| | 6 |
| | 37 |
| | 7 |
| | 1,548 |
| | 13 |
|
OTTI securities1: | | | | | | | | | | | |
ABS | — |
| | — |
| | 3 |
| | 1 |
| | 3 |
| | 1 |
|
Total OTTI securities | — |
| | — |
| | 3 |
| | 1 |
| | 3 |
| | 1 |
|
Total impaired securities |
| $1,511 |
| |
| $6 |
| |
| $40 |
| |
| $8 |
| |
| $1,551 |
| |
| $14 |
|
1Includes OTTI securities for which credit losses have been recorded in earnings in current or prior periods.
At March 31, 2013 and December 31, 2012, unrealized losses on securities that have been in a temporarily impaired position for longer than twelve months included municipal ARS and one ABS collateralized by 2004 vintage home equity loans. The municipal securities are backed by investment grade rated obligors; however, the fair value of these securities continues to be impacted by the lack of a functioning ARS market and the extension of time for expected refinance and repayment. No credit loss is expected on these securities. The ABS also continues to receive timely principal and interest payments, and is evaluated quarterly for credit impairment. Cash flow analysis shows that the underlying collateral can withstand highly stressed loss assumptions without incurring a credit loss.
The portion of unrealized losses on securities that have been other-than-temporarily impaired that relates to factors other than credit are recorded in AOCI. Losses related to credit impairment on these securities is determined through estimated cash flow analyses and have been recorded in earnings in current or prior periods. Due to improvement in market pricing and continued reduction in securities that have been other-than-temporarily impaired, the unrealized OTTI loss relating to these ABS at March 31, 2013 is immaterial.
Realized Gains and Losses and Other-than-Temporarily Impaired Securities
|
| | | | | | | |
| Three Months Ended March 31 |
(Dollars in millions) | 2013 | | 2012 |
Gross realized gains |
| $3 |
| |
| $20 |
|
OTTI | (1 | ) | | (2 | ) |
Net securities gains |
| $2 |
| |
| $18 |
|
Credit impairment that is determined through the use of cash flow models is estimated using cash flows on security specific collateral and the transaction structure. Future expected credit losses are determined by using various assumptions, the most significant of which include default rates, prepayment rates, and loss severities. If, based on this analysis, the security is in an unrealized loss position and the Company does not expect to recover the entire amortized cost basis of the security, the expected cash flows are then discounted at the security’s initial effective interest rate to arrive at a present value amount. OTTI credit losses reflect the difference between the present value of cash flows expected to be collected and the amortized cost basis of these securities.
The Company continues to reduce existing exposure primarily through paydowns. In certain instances, the amount of impairment losses recognized in earnings includes credit losses on debt securities that exceeds the total impairment, and as a result, the securities may have unrealized gains in AOCI relating to factors other than credit.
The securities that gave rise to credit impairments recognized during the three months ended March 31, 2013 and 2012, as shown in the table below, consisted of private MBS and ABS with a combined fair value of $2 million and private MBS with a fair value of $114 million, respectively.
Notes to Consolidated Financial Statements (Unaudited), continued
|
| | | | | | | | |
| | Three Months Ended March 31 |
(Dollars in millions) | | 2013 | | 2012 |
OTTI1 | |
| $— |
| |
| $— |
|
Portion of gains/(losses) recognized in OCI (before taxes) | | 1 |
| | 2 |
|
Net impairment losses recognized in earnings | |
| $1 |
| |
| $2 |
|
1The initial OTTI amount represents the excess of the amortized cost over the fair value of AFS debt securities. For subsequent impairments of the same security, amount includes additional declines in the fair value subsequent to the previously recorded OTTI, if applicable, until such time the security is no longer in an unrealized loss position.
The following is a rollforward of credit losses recognized in earnings for the three months ended March 31, 2013 and 2012, related to securities for which the Company does not intend to sell and it is not more-likely-than-not that the Company will be required to sell as of the end of each period presented. Subsequent credit losses may be recorded on securities without a corresponding further decline in fair value when there has been a decline in expected cash flows.
|
| | | | | | | |
| Three Months Ended March 31 |
(Dollars in millions) | 2013 | | 2012 |
Balance, beginning of period |
| $31 |
| |
| $25 |
|
Additions: | | | |
OTTI credit losses on previously impaired securities | 1 |
| | 2 |
|
Balance, end of period |
| $32 |
| |
| $27 |
|
The following table presents a summary of the significant inputs used in determining the measurement of credit losses recognized in earnings for private MBS and ABS for the three months ended March 31:
|
| | | |
| 2013 | | 2012 |
Default rate | 6 - 9% | | 2 - 6% |
Prepayment rate | 7 - 8% | | 8 - 16% |
Loss severity | 61 - 74% | | 47 - 52% |
Assumption ranges represent the lowest and highest lifetime average estimates of each security for which credit losses were recognized in earnings. Ranges may vary from period to period as the securities for which credit losses are recognized vary. Additionally, severity may vary widely when losses are few and large.
Notes to Consolidated Financial Statements (Unaudited), continued
NOTE 3 - LOANS
Composition of Loan Portfolio
The composition of the Company's loan portfolio is shown in the following table: |
| | | | | | | |
(Dollars in millions) | March 31,
2013 | | December 31,
2012 |
Commercial loans: | | | |
C&I |
| $54,343 |
| |
| $54,048 |
|
Commercial real estate | 4,261 |
| | 4,127 |
|
Commercial construction | 634 |
| | 713 |
|
Total commercial loans | 59,238 |
| | 58,888 |
|
Residential loans: | | | |
Residential mortgages - guaranteed | 3,930 |
| | 4,252 |
|
Residential mortgages - nonguaranteed1 | 23,051 |
| | 23,389 |
|
Home equity products | 14,617 |
| | 14,805 |
|
Residential construction | 683 |
| | 753 |
|
Total residential loans | 42,281 |
| | 43,199 |
|
Consumer loans: | | | |
Guaranteed student loans | 5,275 |
| | 5,357 |
|
Other direct | 2,387 |
| | 2,396 |
|
Indirect | 11,009 |
| | 10,998 |
|
Credit cards | 614 |
| | 632 |
|
Total consumer loans | 19,285 |
| | 19,383 |
|
LHFI |
| $120,804 |
| |
| $121,470 |
|
LHFS |
| $3,193 |
| |
| $3,399 |
|
During the three months ended March 31, 2013 and 2012, the Company transferred $57 million and $429 million in LHFI to LHFS, and $12 million and $11 million in LHFS to LHFI, respectively. Additionally, during the three months ended March 31, 2013 and 2012, the Company sold $503 million and $239 million in loans and leases for a gain of $4 million and $13 million, respectively.
Credit Quality Evaluation
The Company evaluates the credit quality of its loan portfolio by employing a dual internal risk rating system, which assigns both PD and LGD ratings to derive expected losses. Assignment of PD and LGD ratings are predicated upon numerous factors, including consumer credit risk scores, rating agency information, borrower/guarantor financial capacity, LTV ratios, collateral type, debt service coverage ratios, collection experience, other internal metrics/analysis, and qualitative assessments.
For the commercial portfolio, the Company believes that the most appropriate credit quality indicator is the individual loan’s risk assessment expressed according to regulatory agency classification, Pass or Criticized. The Company's risk rating system is granular, with multiple risk ratings in both the Pass and Criticized categories. Pass ratings reflect relatively low PDs; whereas, criticized assets have a higher PD. The granularity in Pass ratings assists in the establishment of pricing, loan structures, approval requirements, reserves, and ongoing credit management requirements. The Company conforms to the following regulatory classifications for Criticized assets: Other Assets Especially Mentioned (or Special Mention), Adversely Classified, Doubtful, and Loss. However, for the purposes of disclosure, management believes the most meaningful distinction within the Criticized categories is between Accruing Criticized (which includes Special Mention and a portion of Adversely Classified) and Nonaccruing Criticized (which includes a portion of Adversely Classified, Doubtful, and Loss). This distinction identifies those relatively higher risk loans for which there is a basis to believe that the Company will collect all amounts due from those where full collection is less certain.
Notes to Consolidated Financial Statements (Unaudited), continued
Risk ratings are refreshed at least annually, or more frequently as appropriate, based upon considerations such as market conditions, loan characteristics, and portfolio trends. Additionally, management routinely reviews portfolio risk ratings, trends, and concentrations to support risk identification and mitigation activities.
For consumer and residential loans, the Company monitors credit risk based on indicators such as delinquencies and FICO scores. The Company believes that consumer credit risk, as assessed by the industry-wide FICO scoring method, is a relevant credit quality indicator. Borrower-specific FICO scores are obtained at origination as part of the Company’s formal underwriting process, and refreshed FICO scores are obtained by the Company at least quarterly.
For government-guaranteed loans, the Company monitors the credit quality based primarily on delinquency status, as it is a more relevant indicator of credit quality due to the government guarantee. At March 31, 2013 and December 31, 2012, 90% and 89%, respectively, of the guaranteed student loan portfolio was current with respect to payments. At March 31, 2013 and December 31, 2012, 82% and 83%, respectively, of the guaranteed residential loan portfolio was current with respect to payments. Loss exposure to the Company on these loans is mitigated by the government guarantee.
LHFI by credit quality indicator are shown in the tables below: |
| | | | | | | | | | | | | | | | | | | | | | | |
| Commercial Loans |
| C&I | | Commercial real estate | | Commercial construction |
(Dollars in millions) | March 31,
2013 | | December 31, 2012 | | March 31,
2013 | | December 31, 2012 | | March 31,
2013 | | December 31, 2012 |
Credit rating: | | | | | | | | | | | |
Pass |
| $52,506 |
| |
| $52,292 |
| |
| $3,767 |
| |
| $3,564 |
| |
| $440 |
| |
| $506 |
|
Criticized accruing | 1,632 |
| | 1,562 |
| | 435 |
| | 497 |
| | 169 |
| | 173 |
|
Criticized nonaccruing | 205 |
| | 194 |
| | 59 |
| | 66 |
| | 25 |
| | 34 |
|
Total |
| $54,343 |
| |
| $54,048 |
| |
| $4,261 |
| |
| $4,127 |
| |
| $634 |
| |
| $713 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Residential Loans 1 |
| Residential mortgages - nonguaranteed | | Home equity products | | Residential construction |
(Dollars in millions) | March 31,
2013 | | December 31, 2012 | | March 31,
2013 | | December 31, 2012 | | March 31,
2013 | | December 31, 2012 |
Current FICO score range: | | | | | | | | | | | |
700 and above |
| $17,168 |
| |
| $17,410 |
| |
| $11,202 |
| |
| $11,339 |
| |
| $515 |
| |
| $561 |
|
620 - 699 | 3,848 |
| | 3,850 |
| | 2,291 |
| | 2,297 |
| | 113 |
| | 123 |
|
Below 6202 | 2,035 |
| | 2,129 |
| | 1,124 |
| | 1,169 |
| | 55 |
| | 69 |
|
Total |
| $23,051 |
| |
| $23,389 |
| |
| $14,617 |
| |
| $14,805 |
| |
| $683 |
| |
| $753 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Consumer Loans 3 |
| Other direct | | Indirect | | Credit cards |
(Dollars in millions) | March 31,
2013 | | December 31, 2012 | | March 31,
2013 | | December 31, 2012 | | March 31,
2013 | | December 31, 2012 |
Current FICO score range: | | | | | | | | | | | |
700 and above |
| $1,952 |
| |
| $1,980 |
| |
| $8,270 |
| |
| $8,300 |
| |
| $418 |
| |
| $435 |
|
620 - 699 | 368 |
| | 350 |
| | 2,084 |
| | 2,038 |
| | 153 |
| | 152 |
|
Below 6202 | 67 |
| | 66 |
| | 655 |
| | 660 |
| | 43 |
| | 45 |
|
Total |
| $2,387 |
| |
| $2,396 |
| |
| $11,009 |
| |
| $10,998 |
| |
| $614 |
| |
| $632 |
|
1Excludes $3.9 billion and $4.3 billion at March 31, 2013 and December 31, 2012, respectively, of guaranteed residential loans. At March 31, 2013 and December 31, 2012, the majority of these loans had FICO scores of 700 and above.
2For substantially all loans with refreshed FICO scores below 620, the borrower’s FICO score at the time of origination exceeded 620 but has since deteriorated as the loan has seasoned.
3Excludes $5.3 billion and $5.4 billion at March 31, 2013 and December 31, 2012, respectively, of guaranteed student loans.
Notes to Consolidated Financial Statements (Unaudited), continued
The payment status for the LHFI portfolio is shown in the tables below: |
| | | | | | | | | | | | | | | | | | | |
| March 31, 2013 |
(Dollars in millions) | Accruing Current | | Accruing 30-89 Days Past Due | | Accruing 90+ Days Past Due | | Nonaccruing 2 | | Total |
Commercial loans: | | | | | | | | | |
C&I |
| $54,026 |
| |
| $93 |
| |
| $19 |
| |
| $205 |
| |
| $54,343 |
|
Commercial real estate | 4,193 |
| | 8 |
| | 1 |
| | 59 |
| | 4,261 |
|
Commercial construction | 609 |
| | — |
| | — |
| | 25 |
| | 634 |
|
Total commercial loans | 58,828 |
| | 101 |
| | 20 |
| | 289 |
| | 59,238 |
|
Residential loans: | | | | | | | | | |
Residential mortgages - guaranteed | 3,218 |
| | 39 |
| | 673 |
| | — |
| | 3,930 |
|
Residential mortgages - nonguaranteed1 | 22,131 |
| | 175 |
| | 24 |
| | 721 |
| | 23,051 |
|
Home equity products | 14,167 |
| | 116 |
| | — |
| | 334 |
| | 14,617 |
|
Residential construction | 572 |
| | 7 |
| | 2 |
| | 102 |
| | 683 |
|
Total residential loans | 40,088 |
| | 337 |
| | 699 |
| | 1,157 |
| | 42,281 |
|
Consumer loans: | | | | | | | | | |
Guaranteed student loans | 4,738 |
| | 442 |
| | 95 |
| | — |
| | 5,275 |
|
Other direct | 2,366 |
| | 13 |
| | 2 |
| | 6 |
| | 2,387 |
|
Indirect | 10,951 |
| | 42 |
| | 1 |
| | 15 |
| | 11,009 |
|
Credit cards | 602 |
| | 6 |
| | 6 |
| | — |
| | 614 |
|
Total consumer loans | 18,657 |
| | 503 |
| | 104 |
| | 21 |
| | 19,285 |
|
Total LHFI |
| $117,573 |
| |
| $941 |
| |
| $823 |
| |
| $1,467 |
| |
| $120,804 |
|
2Nonaccruing loans past due 90 days or more totaled $883 million. Nonaccruing loans past due fewer than 90 days include modified nonaccrual loans reported as TDRs and performing second lien loans which are classified as nonaccrual when the first lien loan is nonperforming.
|
| | | | | | | | | | | | | | | | | | | |
| December 31, 2012 |
(Dollars in millions) | Accruing Current | | Accruing 30-89 Days Past Due | | Accruing 90+ Days Past Due | | Nonaccruing 2 | | Total |
Commercial loans: | | | | | | | | | |
C&I |
| $53,747 |
| |
| $81 |
| |
| $26 |
| |
| $194 |
| |
| $54,048 |
|
Commercial real estate | 4,050 |
| | 11 |
| | — |
| | 66 |
| | 4,127 |
|
Commercial construction | 679 |
| | — |
| | — |
| | 34 |
| | 713 |
|
Total commercial loans | 58,476 |
| | 92 |
| | 26 |
| | 294 |
| | 58,888 |
|
Residential loans: | | | | | | | | | |
Residential mortgages - guaranteed | 3,523 |
| | 39 |
| | 690 |
| | — |
| | 4,252 |
|
Residential mortgages - nonguaranteed1 | 22,401 |
| | 192 |
| | 21 |
| | 775 |
| | 23,389 |
|
Home equity products | 14,314 |
| | 149 |
| | 1 |
| | 341 |
| | 14,805 |
|
Residential construction | 625 |
| | 15 |
| | 1 |
| | 112 |
| | 753 |
|
Total residential loans | 40,863 |
| | 395 |
| | 713 |
| | 1,228 |
| | 43,199 |
|
Consumer loans: | | | | | | | | | |
Guaranteed student loans | 4,769 |
| | 556 |
| | 32 |
| | — |
| | 5,357 |
|
Other direct | 2,372 |
| | 15 |
| | 3 |
| | 6 |
| | 2,396 |
|
Indirect | 10,909 |
| | 68 |
| | 2 |
| | 19 |
| | 10,998 |
|
Credit cards | 619 |
| | 7 |
| | 6 |
| | — |
| | 632 |
|
Total consumer loans | 18,669 |
| | 646 |
| | 43 |
| | 25 |
| | 19,383 |
|
Total LHFI |
| $118,008 |
| |
| $1,133 |
| |
| $782 |
| |
| $1,547 |
| |
| $121,470 |
|
2Nonaccruing loans past due 90 days or more totaled $975 million. Nonaccruing loans past due fewer than 90 days include modified nonaccrual loans reported as TDRs and performing second lien loans which are classified as nonaccrual when the first lien loan is nonperforming.
Notes to Consolidated Financial Statements (Unaudited), continued
Impaired Loans
A loan is considered impaired when it is probable that the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the agreement. Commercial nonaccrual loans greater than $3 million and certain consumer, residential, and commercial loans whose terms have been modified in a TDR are individually evaluated for impairment. Smaller-balance homogeneous loans that are collectively evaluated for impairment are not included in the following tables. Additionally, the tables below exclude guaranteed student loans and guaranteed residential mortgages for which there was nominal risk of principal loss.
|
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2013 | | December 31, 2012 |
(Dollars in millions) | Unpaid Principal Balance | | Amortized Cost1 | | Related Allowance | | Unpaid Principal Balance | | Amortized Cost1 | | Related Allowance |
Impaired loans with no related allowance recorded: | | | | | | | | | | |
Commercial loans: | | | | | | | | | | | |
C&I |
| $80 |
| |
| $37 |
| |
| $— |
| |
| $59 |
| |
| $40 |
| |
| $— |
|
Commercial real estate | 9 |
| | 9 |
| | — |
| | 6 |
| | 5 |
| | — |
|
Commercial construction | 45 |
| | 45 |
| | — |
| | 45 |
| | 45 |
| | — |
|
Total commercial loans | 134 |
| | 91 |
| | — |
| | 110 |
| | 90 |
| | — |
|
Impaired loans with an allowance recorded: | | | | | | | | | | |
Commercial loans: | | | | | | | | | | | |
C&I | 30 |
| | 28 |
| | 3 |
| | 46 |
| | 38 |
| | 6 |
|
Commercial real estate | 14 |
| | 9 |
| | — |
| | 15 |
| | 7 |
| | 1 |
|
Commercial construction | 6 |
| | 5 |
| | — |
| | 5 |
| | 3 |
| | — |
|
Total commercial loans | 50 |
| | 42 |
| | 3 |
| | 66 |
| | 48 |
| | 7 |
|
Residential loans: | | | | | | | | | | | |
Residential mortgages - nonguaranteed | 2,305 |
| | 2,013 |
| | 229 |
| | 2,346 |
| | 2,046 |
| | 234 |
|
Home equity products | 705 |
| | 626 |
| | 93 |
| | 661 |
| | 612 |
| | 88 |
|
Residential construction | 269 |
| | 206 |
| | 27 |
| | 259 |
| | 201 |
| | 26 |
|
Total residential loans | 3,279 |
| | 2,845 |
| | 349 |
| | 3,266 |
| | 2,859 |
| | 348 |
|
Consumer loans: | | | | | |