STI-9.30.13 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 September 30, 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 November 1, 2013, 536,082,029 shares of the Registrant’s Common Stock, $1.00 par value, were outstanding.

 
 



TABLE OF CONTENTS

 
 
Page
Glossary of Defined Terms
i - iii
 
 
 iii
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 
 
 
 
 
 



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.
Basel III — The third Basel Accord developed by the BCBS to strengthen existing regulatory capital requirements.
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.
DBRS — DBRS, Inc.
DDA — Demand deposit account.
DFAST — Dodd-Frank Act Stress Test.
Dodd-Frank Act — The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
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.
FDIC — The Federal Deposit Insurance Corporation.
Federal Reserve — The Board of Governors of the Federal Reserve System.

i

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.
Form 8-K items - Items disclosed in Form 8-K that was filed with the SEC on September 6, 2012 or October 10, 2013.
FRB — Federal Reserve Board.
FTE — Fully taxable-equivalent.
FVO — Fair value option.
GenSpring — GenSpring Family Offices, LLC.
GSE — Government-sponsored enterprise.
HAMP — Home Affordable Modification Program.
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.
IRS — Internal Revenue Service.
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.
NOL — Net operating loss.
NPA — Nonperforming assets.
NPL — Nonperforming loan.
OCC — Office of the Comptroller of the Currency.
OCI — Other comprehensive income.
OIG — Office of Inspector General.
OREO — Other real estate owned.

ii

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.
RSU — Restricted stock unit.
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.
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.
UPB — Unpaid principal balance.
UTB — Unrecognized tax benefit.
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 and nine months ended September 30, 2013, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2013.

iii



Item 1.
FINANCIAL STATEMENTS (UNAUDITED)

SunTrust Banks, Inc.
Consolidated Statements of Income
 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions and shares in thousands, except per share data) (Unaudited)
2013
 
2012
 
2013
 
2012
Interest Income
 
 
 
 
 
 
 
Interest and fees on loans

$1,148

 

$1,257

 

$3,474

 

$3,820

Interest and fees on loans held for sale
30

 
29

 
90

 
84

Interest and dividends on securities available for sale1
143

 
144

 
429

 
519

Trading account interest and other
18

 
15

 
52

 
48

Total interest income
1,339

 
1,445

 
4,045

 
4,471

Interest Expense
 
 
 
 
 
 
 
Interest on deposits
70

 
98

 
224

 
342

Interest on long-term debt
52

 
66

 
156

 
244

Interest on other borrowings
9

 
10

 
25

 
29

Total interest expense
131

 
174

 
405

 
615

Net interest income
1,208

 
1,271

 
3,640

 
3,856

Provision for credit losses
95

 
450

 
453

 
1,067

Net interest income after provision for credit losses
1,113

 
821

 
3,187

 
2,789

Noninterest Income
 
 
 
 
 
 
 
Service charges on deposit accounts
168


172

 
492

 
504

Trust and investment management income
133


127

 
387

 
387

Retail investment services
68


60

 
198

 
180

Other charges and fees
91


97

 
277

 
305

Investment banking income
99


83

 
260

 
230

Trading income
33

 
19

 
124

 
145

Card fees
77

 
74

 
231

 
239

Mortgage production related (loss)/income
(10
)
 
(64
)
 
282

 
102

Mortgage servicing related income
11

 
64

 
50

 
215

Net securities gains2
—


1,941

 
2

 
1,973

Other noninterest income/(loss)
10


(31
)
 
98

 
78

     Total noninterest income
680

 
2,542

 
2,401

 
4,358

Noninterest Expense
 
 
 
 
 
 
 
Employee compensation
611

 
670

 
1,856

 
1,977

Employee benefits
71

 
110

 
322

 
363

Outside processing and software
190

 
171

 
555

 
527

Net occupancy expense
86

 
92

 
261

 
267

Regulatory assessments
45

 
67

 
140

 
179

Equipment expense
45

 
49

 
136

 
140

Operating losses
350

 
71

 
461

 
200

Credit and collection services
139

 
65

 
224

 
181

Marketing and customer development
34

 
75

 
95

 
134

Other staff expense
22

 
41

 
46

 
75

Amortization/impairment of intangible assets/goodwill
6

 
17

 
18

 
39

Other real estate expense
4

 
30

 
4

 
133

Net loss on debt extinguishment
—

 
2

 
—

 
15

Other noninterest expense
140

 
266

 
385

 
583

Total noninterest expense
1,743

 
1,726

 
4,503

 
4,813

Income before (benefit)/provision for income taxes
50

 
1,637

 
1,085

 
2,334

(Benefit)/provision for income taxes
(146
)
 
551

 
151

 
710

Net income including income attributable to noncontrolling interest
196

 
1,086

 
934

 
1,624

Net income attributable to noncontrolling interest
7

 
9

 
16

 
22

Net income

$189

 

$1,077

 

$918

 

$1,602

Net income available to common shareholders

$179

 

$1,066

 

$884

 

$1,581

Net income per average common share:
 
 
 
 
 
 
 
Diluted

$0.33

 

$1.98

 

$1.64

 

$2.94

Basic
0.33

 
1.99

 
1.65

 
2.96

Dividends declared per common share
0.10

 
0.05

 
0.25

 
0.15

Average common shares - diluted
538,850

 
538,699

 
539,488

 
537,538

Average common shares - basic
533,829

 
534,506

 
534,887

 
533,859

1 Includes dividends on Coke common stock of $31 million during the nine months ended September 30, 2012.
2 Total OTTI was $0 million for the three months ended September 30, 2013 and 2012. Of total OTTI, losses of $0 million and $3 million were recognized in earnings, and gains of $0 million and $3 million were recognized as non-credit-related OTTI in OCI for the three months ended September 30, 2013 and 2012, respectively. Total OTTI was $0 million for the nine months ended September 30, 2013 and 2012. Of total OTTI, losses of $1 million and $7 million were recognized in earnings, and gains of $1 million and $7 million were recognized as non-credit-related OTTI in OCI for the nine months ended September 30, 2013 and 2012, respectively.

See Notes to Consolidated Financial Statements (unaudited).

1




SunTrust Banks, Inc.
Consolidated Statements of Comprehensive Income/(Loss)

 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions) (Unaudited)
2013
 
2012
 
2013
 
2012
Net income

$189

 

$1,077

 

$918

 

$1,602

Components of other comprehensive loss:
 
 
 
 
 
 
 
Change in net unrealized gains on securities,
net of tax of ($7), ($795), ($272), and ($688), respectively
(11
)
 
(1,448
)
 
(466
)
 
(1,256
)
Change in net unrealized gains on derivatives,
net of tax of ($15), $111, ($111), and $15, respectively
(26
)
 
204

 
(189
)
 
34

Change related to employee benefit plans,
net of tax of $3, $3, $18, and ($13), respectively
4

 
5

 
30

 
(23
)
Total other comprehensive loss
(33
)
 
(1,239
)
 
(625
)
 
(1,245
)
Total comprehensive income/(loss)

$156

 

($162
)
 

$293

 

$357

See Notes to Consolidated Financial Statements (unaudited).



2


SunTrust Banks, Inc.
Consolidated Balance Sheets
 
 
 
 
(Dollars in millions and shares in thousands) (Unaudited)
September 30,
2013
 
December 31, 2012
Assets
 
 
 
Cash and due from banks

$3,041

 

$7,134

Federal funds sold and securities borrowed or purchased under agreements to resell
1,222

 
1,101

Interest-bearing deposits in other banks
23

 
22

Cash and cash equivalents
4,286

 
8,257

Trading assets (includes encumbered securities pledged against repurchase agreements of $764 and $727 at September 30, 2013 and December 31, 2012, respectively)
5,731

 
6,049

Securities available for sale
22,626

 
21,953

Loans held for sale1 ($2,240 and $3,243 at fair value at September 30, 2013 and December 31, 2012, respectively)
2,462

 
3,399

Loans2 ($316 and $379 at fair value at September 30, 2013 and December 31, 2012, respectively)
124,340

 
121,470

Allowance for loan and lease losses
(2,071
)
 
(2,174
)
Net loans
122,269

 
119,296

Premises and equipment
1,515

 
1,564

Goodwill
6,369

 
6,369

Other intangible assets (MSRs at fair value: $1,248 and $899 at September 30, 2013 and December 31, 2012, respectively)
1,287

 
956

Other real estate owned
196

 
264

Other assets
5,036

 
5,335

Total assets

$171,777

 

$173,442

Liabilities and Shareholders’ Equity
 
 
 
Noninterest-bearing consumer and commercial deposits

$39,006

 

$39,481

Interest-bearing consumer and commercial deposits
87,855

 
90,699

Total consumer and commercial deposits
126,861

 
130,180

Brokered time deposits (CDs at fair value: $784 and $832 at September 30, 2013 and December 31, 2012, respectively)
2,022

 
2,136

Total deposits
128,883

 
132,316

Funds purchased
934

 
617

Securities sold under agreements to repurchase
1,574

 
1,574

Other short-term borrowings
4,479

 
3,303

Long-term debt 3 ($1,593 and $1,622 at fair value at September 30, 2013 and December 31, 2012, respectively)
9,985

 
9,357

Trading liabilities
1,264

 
1,161

Other liabilities
3,588

 
4,129

Total liabilities
150,707

 
152,457

Preferred stock, no par value
725

 
725

Common stock, $1.00 par value
550

 
550

Additional paid in capital
9,117

 
9,174

Retained earnings
11,573

 
10,817

Treasury stock, at cost, and other4
(579
)
 
(590
)
Accumulated other comprehensive (loss)/income, net of tax
(316
)
 
309

Total shareholders’ equity
21,070

 
20,985

Total liabilities and shareholders’ equity

$171,777

 

$173,442

 
 
 
 
Common shares outstanding
537,549

 
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
12,372

 
10,962

1 Includes loans held for sale, at fair value, of consolidated VIEs

$314

 

$319

2 Includes loans of consolidated VIEs
336

 
365

3 Includes debt of consolidated VIEs ($284 and $286 at fair value at September 30, 2013 and December 31, 2012,
   respectively)
634

 
666

4 Includes noncontrolling interest held
116

 
114

 

See Notes to Consolidated Financial Statements (unaudited).

3



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 
(Loss)/Income 2
 
Total
Balance, January 1, 2012

$275

 
537

 

$550

 

$9,306

 

$8,978

 

($792
)
 

$1,749

 

$20,066

Net income
—

 
—

 
—

 
—

 
1,602

 
—

 
—

 
1,602

Other comprehensive loss
—

 
—

 
—

 
—

 
—

 
—

 
(1,245
)
 
(1,245
)
Change in noncontrolling interest
—

 
—

 
—

 
—

 
—

 
7

 
—

 
7

Common stock dividends, $0.15 per share
—

 
—

 
—

 
—

 
(81
)
 
—

 
—

 
(81
)
Preferred stock dividends, $3,056 per share
—

 
—

 
—

 
—

 
(8
)
 
—

 
—

 
(8
)
Exercise of stock options and stock compensation expense
—

 
1

 
—

 
(35
)
 
—

 
51

 
—

 
16

Restricted stock activity
—

 
1

 
—

 
(64
)
 
—

 
69

 
—

 
5

Amortization of restricted stock compensation
—

 
—

 
—

 
—

 
—

 
22

 
—

 
22

Issuance of stock for employee benefit plans and other
—

 
—

 
—

 
(12
)
 
—

 
27

 
—

 
15

Balance, September 30, 2012

$275

 
539

 

$550

 

$9,195

 

$10,491

 

($616
)
 

$504

 

$20,399

Balance, January 1, 2013

$725

 
539

 

$550

 

$9,174

 

$10,817

 

($590
)
 

$309

 

$20,985

Net income
—

 
—

 
—

 
—

 
918

 
—

 
—

 
918

Other comprehensive loss
—

 
—

 
—

 
—

 
—

 
—

 
(625
)
 
(625
)
Change in noncontrolling interest
—

 
—

 
—

 
—

 
—

 
2

 
—

 
2

Common stock dividends, $0.25 per share
—

 
—

 
—

 
—

 
(134
)
 
—

 
—

 
(134
)
Preferred stock dividends 3
—

 
—

 
—

 
—

 
(28
)
 
—

 
—

 
(28
)
Acquisition of treasury stock
—

 
(3
)
 
—

 
—

 
—

 
(100
)
 
—

 
(100
)
Exercise of stock options and stock compensation expense
—

 
1

 
—

 
(24
)
 
—

 
40

 
—

 
16

Restricted stock activity
—

 
1

 
—

 
(35
)
 
—

 
40

 
—

 
5

Amortization of restricted stock compensation
—

 
—

 
—

 
—

 
—

 
24

 
—

 
24

Issuance of stock for employee benefit plans and other
—

 
—

 
—

 
2

 
—

 
5

 
—

 
7

Balance, September 30, 2013

$725

 
538

 

$550

 

$9,117

 

$11,573

 

($579
)
 

($316
)
 

$21,070


1 At September 30, 2013, includes ($636) million for treasury stock, ($59) million for compensation element of restricted stock, and $116 million for noncontrolling interest.
At September 30, 2012, includes ($673) million for treasury stock, ($57) million for compensation element of restricted stock, and $114 million for noncontrolling interest.
2 Components of AOCI at September 30, 2013, included $54 million in unrealized net gains on AFS securities, $342 million in unrealized net gains on derivative financial instruments, and ($712) million related to employee benefit plans. At September 30, 2012, components included $607 million in unrealized net gains on AFS securities, $603 million in unrealized net gains on derivative financial instruments, and ($706) million related to employee benefit plans.
3 Dividends were $3,044 per share for Perpetual Preferred Stock Series A and B and $4,325 per share for Perpetual Preferred Stock Series E for the nine months ended September 30, 2013.

See Notes to Consolidated Financial Statements (unaudited).


4


 
SunTrust Banks, Inc.
Consolidated Statements of Cash Flows
 
Nine Months Ended September 30
(Dollars in millions) (Unaudited)
2013
 
2012
Cash Flows from Operating Activities
 
 
 
Net income including income attributable to noncontrolling interest

$934

 

$1,624

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, amortization, and accretion
542

 
567

Origination of mortgage servicing rights
(302
)
 
(244
)
Provisions for credit losses and foreclosed property
495

 
1,191

Mortgage repurchase provision
102

 
701

Stock option compensation and amortization of restricted stock compensation
25

 
26

Net securities gains
(2
)
 
(1,973
)
Net gain on sale of loans held for sale, loans, and other assets
(169
)
 
(839
)
Net decrease/(increase) in loans held for sale
1,200

 
(199
)
Net (increase)/decrease in other assets
(95
)
 
393

Net decrease in other liabilities
(148
)
 
(339
)
Net cash provided by operating activities
2,582

 
908

Cash Flows from Investing Activities
 
 
 
Proceeds from maturities, calls, and paydowns of securities available for sale
4,672

 
5,431

Proceeds from sales of securities available for sale
529

 
4,195

Purchases of securities available for sale
(6,744
)
 
(3,097
)
Net increase in loans, including purchases of loans
(4,525
)
 
(4,390
)
Proceeds from sales of loans
730

 
1,572

Capital expenditures
(104
)
 
(168
)
Payments related to acquisitions, including contingent consideration
—

 
(13
)
Proceeds from the sale of other real estate owned and other assets
403

 
427

Net cash (used in)/provided by investing activities
(5,039
)
 
3,957

Cash Flows from Financing Activities
 
 
 
Net decrease in total deposits
(3,433
)
 
(696
)
Net increase/(decrease) in funds purchased, securities sold under agreements
to repurchase, and other short-term borrowings
1,493

 
(2,645
)
Proceeds from the issuance of long-term debt
747

 
4,000

Repayment of long-term debt
(77
)
 
(4,359
)
Repurchase of common stock
(100
)
 
—

Common and preferred dividends paid
(162
)
 
(89
)
Stock option activity
18

 
22

Net cash used in financing activities
(1,514
)
 
(3,767
)
Net (decrease)/increase in cash and cash equivalents
(3,971
)
 
1,098

Cash and cash equivalents at beginning of period
8,257

 
4,509

Cash and cash equivalents at end of period

$4,286

 

$5,607

Supplemental Disclosures:
 
 
 
Loans transferred from loans held for sale to loans

$28

 

$34

Loans transferred from loans to loans held for sale
200

 
3,112

Loans transferred from loans and loans held for sale to other real estate owned
197

 
304


See Notes to Consolidated Financial Statements (unaudited).

5

Notes to Consolidated Financial Statements (Unaudited)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

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 2012 Annual Report on Form 10-K. There have been no significant changes to the Company’s accounting policies as disclosed in the Company’s 2012 Annual Report on Form 10-K.
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 2, "Federal Funds Sold and Securities Borrowed or Purchased under Agreements to Resell" and Note 11, "Derivative Financial Instruments."
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 AOCI 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 16, "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 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.
In June 2013, the FASB issued ASU 2013-08, "Financial Services—Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements." The ASU clarifies the characteristics of an investment company and requires an investment company to measure noncontrolling ownership interests in other investment companies at fair value rather than using the equity method of accounting. The ASU is effective for the fiscal years and interim periods 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.

In July 2013, the FASB issued ASU 2013-10, “Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes (a consensus of the Emerging Issues Task Force).” The ASU permits the Fed Funds Effective Swap Rate (OIS) to be used as a benchmark interest rate for hedge accounting purposes, in addition to U.S. Treasury rates, and LIBOR. The amendments also remove the restriction on using different benchmark rates for similar hedges. The ASU was effective prospectively for qualifying new or

6
Notes to Consolidated Financial Statements (Unaudited), continued



redesignated hedging relationships entered into on or after July 17, 2013. The ASU has no impact on the Company's current hedging relationships and, thus, no impact on the Company's financial position, results of operations, or EPS.

In July 2013, the FASB issued ASU 2013-11,“Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the Emerging Issues Task Force).” Prior to this ASU, U.S. GAAP did not include explicit guidance on the financial statement presentation of a UTB when a NOL carryforward, a similar tax loss, or a tax credit carryforward exists. The ASU requires, with limited exceptions, that a UTB, or a portion of a UTB, should be presented in the financial statements as a reduction to a DTA for a NOL carryforward, a similar tax loss, or a tax credit carryforward. The ASU is effective for fiscal years and interim periods beginning after December 15, 2013. As early adoption is permitted, the Company adopted this ASU upon issuance and it resulted in an immaterial reclassification within liabilities in the Consolidated Balance Sheets. As this ASU only impacts financial statement presentation and related footnote disclosures, there will be no impact on the Company's financial position, results of operations, or EPS.


NOTE 2 - FEDERAL FUNDS SOLD AND SECURITIES BORROWED OR PURCHASED UNDER AGREEMENTS TO RESELL

Fed funds sold and securities borrowed or purchased under agreements to resell were as follows:

(Dollars in millions)
September 30, 2013
 
December 31, 2012
Fed funds

$97

 

$29

Securities borrowed
241

 
155

Resell agreements
884

 
917

Total fed funds sold and securities borrowed or purchased under agreements to resell

$1,222

 

$1,101


Securities purchased under agreements to resell are primarily collateralized by U.S. government or agency securities and are carried at the amounts at which securities will be subsequently resold. Securities borrowed are primarily collateralized by corporate securities. The Company takes possession of all securities purchased under agreements to resell and securities borrowed and performs the appropriate margin evaluation on the acquisition date based on market volatility, as necessary. It is the Company's policy to obtain possession of collateral with a fair value between 95% to 110% of the principal amount loaned under resale and securities borrowing agreements. The total market value of the collateral held was $1.1 billion at both September 30, 2013 and December 31, 2012, of which $263 million and $246 million was repledged, respectively.

The Company has also pledged $764 million and $727 million of trading assets to secure $756 million and $703 million of repurchase agreements at September 30, 2013 and December 31, 2012, respectively.

Netting of Securities - Repurchase and Resell Agreements
The Company has various financial assets and financial liabilities that are subject to enforceable master netting agreements or similar agreements. The Company's derivatives that are subject to enforceable master netting agreements or similar agreements are discussed in Note 11, "Derivative Financial Instruments." Securities purchased under agreements to resell and securities sold under agreements to repurchase are governed by a MRA. Under the terms of the MRA, all transactions between the Company and the counterparty constitute a single business relationship such that in the event of default, the nondefaulting party is entitled to set off claims and apply property held by that party in respect of any transaction against obligations owed. Any payments, deliveries, or other transfers may be applied against each other and netted. These amounts are limited to the contract asset/liability balance, and accordingly, do not include excess collateral received/pledged.


7
Notes to Consolidated Financial Statements (Unaudited), continued



The following table presents the Company's eligible securities borrowed or purchased under agreements to resell and securities sold under agreements to repurchase at September 30, 2013 and December 31, 2012:
(Dollars in millions)
Gross
Amount
 
Amount
Offset
 
Net Amount
Presented in
Consolidated
Balance Sheets
 
Held/Pledged
Financial
Instruments
 
Net
Amount
September 30, 2013
 
 
 
 
 
 
 
 
 
Financial assets:
 
 
 
 
 
 
 
 
 
Securities borrowed or purchased under agreements to resell

$1,125

 

$—

 

$1,125

1, 2 

$1,117

 

$8

Financial liabilities:
 
 
 
 
 
 
 
 
 
Securities sold under agreements to repurchase
1,574

 
—

 
1,574

1 
1,574

 
—

 
 
 
 
 
 
 
 
 
 
December 31, 2012
 
 
 
 
 
 
 
 
 
Financial assets:
 
 
 
 
 
 
 
 
 
Securities borrowed or purchased under agreements to resell

$1,072

 

$—

 

$1,072

1,2 

$1,069

 

$3

Financial liabilities:
 
 
 
 
 
 
 
 
 
Securities sold under agreements to repurchase
1,574

 
—

 
1,574

1 
1,574

 
—

1 None of the Company's repurchase and reverse repurchase transactions met the right of setoff criteria at September 30, 2013 and December 31, 2012.
2 Excludes $97 million and $29 million of Fed funds sold which are not subject to a master netting agreement at September 30, 2013 and December 31, 2012, respectively.



NOTE 3 – SECURITIES AVAILABLE FOR SALE
Securities Portfolio Composition
 
September 30, 2013
(Dollars in millions)
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
U.S. Treasury securities

$792

 

$7

 

$28

 

$771

Federal agency securities
2,167

 
53

 
49

 
2,171

U.S. states and political subdivisions
239

 
8

 
2

 
245

MBS - agency
18,223

 
449

 
314

 
18,358

MBS - private
167

 
1

 
2

 
166

ABS
95

 
2

 
1

 
96

Corporate and other debt securities
40

 
3

 
—

 
43

Other equity securities1
775

 
1

 
—

 
776

Total securities AFS

$22,498

 

$524

 

$396

 

$22,626

 
 
 
 
 
 
 
 
 
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 September 30, 2013, other equity securities was comprised of the following: $266 million in FHLB of Atlanta stock, $402 million in Federal Reserve Bank stock, $107 million in mutual fund investments, and $1 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.

8
Notes to Consolidated Financial Statements (Unaudited), continued




The following table presents interest and dividends on securities AFS:
 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions)
2013
 
2012
 
2013
 
2012
Taxable interest

$132

 

$132

 

$397

 

$454

Tax-exempt interest
3

 
4

 
8

 
12

Dividends1
8

 
8

 
24

 
53

Total interest and dividends

$143

 

$144

 

$429

 

$519

1Includes dividends on Coke common stock of $31 million for the nine months ended September 30, 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 September 30, 2013 and December 31, 2012, respectively. At September 30, 2013 and December 31, 2012, there were no securities AFS pledged under secured borrowing arrangements under which the secured party has possession of the collateral and would customarily sell or repledge that collateral, other than in an event of default of the Company.

The amortized cost and fair value of investments in debt securities at September 30, 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.
 
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

$1

 

$201

 

$590

 

$—

 

$792

Federal agency securities
41

 
1,410

 
563

 
153

 
2,167

U.S. states and political subdivisions
97

 
89

 
9

 
44

 
239

MBS - agency
1,730

 
9,369

 
3,795

 
3,329

 
18,223

MBS - private
—

 
160

 
7

 
—

 
167

ABS
74

 
20

 
1

 
—

 
95

Corporate and other debt securities
—

 
22

 
18

 
—

 
40

Total debt securities

$1,943

 

$11,271

 

$4,983

 

$3,526

 

$21,723

Fair Value:
 
 
 
 
 
 
 
 
 
U.S. Treasury securities

$1

 

$208

 

$562

 

$—

 

$771

Federal agency securities
41

 
1,458

 
523

 
149

 
2,171

U.S. states and political subdivisions
99

 
93

 
10

 
43

 
245

MBS - agency
1,824

 
9,677

 
3,717

 
3,140

 
18,358

MBS - private
—

 
159

 
7

 
—

 
166

ABS
73

 
21

 
2

 
—

 
96

Corporate and other debt securities
—

 
25

 
18

 
—

 
43

Total debt securities

$2,038

 

$11,641

 

$4,839

 

$3,332

 

$21,850

 Weighted average yield1
2.89
%
 
2.93
%
 
2.20
%
 
2.69
%
 
2.72
%
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 September 30, 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 in the Company's 2012 Annual Report on Form 10-K.

9
Notes to Consolidated Financial Statements (Unaudited), continued



 
September 30, 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:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities

$563

 

$28

 

$—

 

$—

 

$563

 

$28

Federal agency securities
637

 
48

 
18

 
1

 
655

 
49

U.S. states and political subdivisions
—

 
—

 
20

 
2

 
20

 
2

MBS - agency
7,147

 
311

 
84

 
3

 
7,231

 
314

ABS
—

 
—

 
13

 
1

 
13

 
1

Total temporarily impaired securities
8,347

 
387

 
135

 
7

 
8,482

 
394

OTTI securities1:
 
 
 
 
 
 
 
 
 
 
 
MBS - private
113

 
2

 
—

 
—

 
113

 
2

Total OTTI securities
113

 
2

 
—

 
—

 
113

 
2

Total impaired securities

$8,460

 

$389

 

$135

 

$7

 

$8,595

 

$396


 
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.

Unrealized losses on securities that have been in a temporarily impaired position for longer than twelve months included municipal ARS, federal agency securities, agency MBS, 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 fair value of agency MBS has declined due to the increase in market interest rates. The ABS 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 is recorded in AOCI. Losses related to credit impairment on these securities are determined through estimated cash flow analyses and have been recorded in earnings in current or prior periods.

Realized Gains and Losses and Other-than-Temporarily Impaired Securities
 
Three Months Ended September 30
 
Nine Months Ended September 30
 
(Dollars in millions)
2013
 
2012
 
2013
 
2012
 
Gross realized gains

$—



$1,944

1 

$4

 

$1,980

1 
Gross realized losses
—

 
—

 
(1
)
 
—

 
OTTI
—

 
(3
)
 
(1
)
 
(7
)
 
Net securities gains

$—

 

$1,941

 

$2

 

$1,973

 
1 Included in these amounts are $305 million in losses recognized during the three and nine months ended September 30, 2012 related to the termination of the Agreements that hedge the Coke common stock.


10
Notes to Consolidated Financial Statements (Unaudited), continued



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 and nine months ended September 30, 2013 and 2012, as shown in the table below, consisted of private MBS and ABS with a fair value of approximately $23 million and $217 million, respectively, at September 30, 2013 and 2012.
 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions)
2013
 
2012
 
2013
 
2012
OTTI1

$—

 

$—

 

$—

 

$—

Portion of gains/(losses) recognized in OCI (before taxes)
—

 
3

 
1

 
7

Net impairment losses recognized in earnings

$—

 

$3

 

$1

 

$7

1 The 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 and nine months ended September 30, 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 September 30
 
Nine Months Ended September 30
(Dollars in millions)
2013
 
2012
 
2013
 
2012
Balance, beginning of period

$32

 

$28

 

$31

 

$25

Additions:
 
 
 
 
 
 
 
OTTI credit losses on previously impaired securities
—

 
3

 
1

 
7

Reductions:
 
 
 
 
 
 
 
Increases in expected cash flows recognized over the remaining life of the securities
(1
)
 
—

 
(1
)
 
(1
)
Balance, end of period

$31

 

$31

 

$31

 

$31


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 nine months ended September 30:
 
2013
 
2012
Default rate
2 - 9%
 
2 - 9%
Prepayment rate
7 - 21%
 
7 - 21%
Loss severity
46 - 74%
 
40 - 56%

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.

11
Notes to Consolidated Financial Statements (Unaudited), continued



NOTE 4 - LOANS
Composition of Loan Portfolio
The composition of the Company's loan portfolio is shown in the following table:
(Dollars in millions)
September 30,
2013
 
December 31, 2012
Commercial loans:
 
 
 
C&I

$55,943

 

$54,048

CRE
4,755

 
4,127

Commercial construction
737

 
713

Total commercial loans
61,435

 
58,888

Residential loans:
 
 
 
Residential mortgages - guaranteed
3,527

 
4,252

Residential mortgages - nonguaranteed1
24,106

 
23,389

Home equity products
14,826

 
14,805

Residential construction
582

 
753

Total residential loans
43,041

 
43,199

Consumer loans:
 
 
 
Guaranteed student loans
5,489

 
5,357

Other direct
2,670

 
2,396

Indirect
11,035

 
10,998

Credit cards
670

 
632

Total consumer loans
19,864

 
19,383

LHFI

$124,340

 

$121,470

LHFS

$2,462

 

$3,399

1Includes $316 million and $379 million of loans carried at fair value at September 30, 2013 and December 31, 2012, respectively.

During the three months ended September 30, 2013 and 2012, the Company transferred $56 million and $2.0 billion in LHFI to LHFS, and $11 million and $3 million in LHFS to LHFI, respectively. Additionally, during the three months ended September 30, 2013 and 2012, the Company sold $99 million and $515 million in loans and leases for gains of less than $1 million for both periods.
During the nine months ended September 30, 2013 and 2012, the Company transferred $200 million and $3.1 billion in LHFI to LHFS, and $28 million and $34 million in LHFS to LHFI, respectively. Additionally, during the nine months ended September 30, 2013 and 2012, the Company sold $761 million and $1.5 billion in loans and leases for a gain of $7 million and $36 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 an individual loan’s risk assessment expressed according to the broad regulatory agency classifications of 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 and Doubtful and Loss). This distinction identifies those relatively higher risk

12
Notes to Consolidated Financial Statements (Unaudited), continued



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.
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 September 30, 2013 and December 31, 2012, 84% and 89%, respectively, of the guaranteed student loan portfolio was current with respect to payments. At September 30, 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
 
CRE
 
Commercial construction
(Dollars in millions)
September 30,
2013
 
December 31, 2012
 
September 30,
2013
 
December 31, 2012
 
September 30,
2013
 
December 31, 2012
Credit rating:
 
 
 
 
 
 
 
 
 
 
 
Pass

$54,162

 

$52,292

 

$4,421

 

$3,564

 

$672

 

$506

Criticized accruing
1,565

 
1,562

 
292

 
497

 
48

 
173

Criticized nonaccruing
216

 
194

 
42

 
66

 
17

 
34

Total

$55,943

 

$54,048

 

$4,755

 

$4,127

 

$737

 

$713

 
Residential Loans 1
 
Residential mortgages -
nonguaranteed
 
Home equity products
 
Residential construction
(Dollars in millions)
September 30,
2013
 
December 31, 2012
 
September 30,
2013
 
December 31, 2012
 
September 30,
2013
 
December 31, 2012
Current FICO score range:
 
 
 
 
 
 
 
 
 
 
 
700 and above

$18,593

 

$17,410

 

$11,588

 

$11,339

 

$439

 

$561

620 - 699
3,740

 
3,850

 
2,250

 
2,297

 
101

 
123

Below 6202
1,773

 
2,129

 
988

 
1,169

 
42

 
69

Total

$24,106

 

$23,389

 

$14,826

 

$14,805

 

$582

 

$753

 
Consumer Loans 3
 
Other direct
 
Indirect
 
Credit cards
(Dollars in millions)
September 30,
2013
 
December 31, 2012
 
September 30,
2013
 
December 31, 2012
 
September 30,
2013
 
December 31, 2012
Current FICO score range:
 
 
 
 
 
 
 
 
 
 
 
700 and above

$2,238

 

$1,980

 

$8,214

 

$8,300

 

$466

 

$435

620 - 699
372

 
350

 
2,223

 
2,038

 
164

 
152

Below 6202
60

 
66

 
598

 
660

 
40

 
45

Total

$2,670

 

$2,396

 

$11,035

 

$10,998

 

$670

 

$632