Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q


QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017

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)
(800) 786-8787
(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  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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).    
Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer    þ
 
Accelerated filer        ¨
Non-accelerated filer     ¨   (Do not check if a smaller reporting company)



 
Smaller reporting company    ¨
Emerging growth company    ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).        Yes  ¨    No  þ

At October 31, 2017, 476,033,241 shares of the registrant’s common stock, $1.00 par value, were outstanding.




TABLE OF CONTENTS

 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



GLOSSARY OF DEFINED TERMS

ABS — Asset-backed securities.
ACH — Automated clearing house.
AFS — Available for sale.
AIP — Annual Incentive Plan.
ALCO — Asset/Liability Committee.
ALM — Asset/Liability Management.
ALLL — Allowance for loan and lease losses.
AOCI — Accumulated other comprehensive income.
APIC — Additional paid-in capital.
ASC — Accounting Standards Codification.
ASU — Accounting Standards Update.
ATE — Additional termination event.
ATM — Automated teller machine.
Bank — SunTrust Bank.
Basel III — the Third Basel Accord, a comprehensive set of reform measures developed by the BCBS.
BCBS — Basel Committee on Banking Supervision.
BHC — Bank holding company.
Board — The Company’s Board of Directors.
bps — Basis points.
BRC — Board Risk Committee.
CCAR — Comprehensive Capital Analysis and Review.
CCB — Capital conservation buffer.
CD — Certificate of deposit.
CDR — Conditional default rate.
CDS — Credit default swaps.
CECL — Current expected credit loss.
CEO — Chief Executive Officer.
CET1 — Common Equity Tier 1 Capital.
CFO — Chief Financial Officer.
CIB — Corporate and investment banking.
C&I — Commercial and industrial.
Class A shares — Visa Inc. Class A common stock.
Class B shares — Visa Inc. Class B common stock.
CLO — Collateralized loan obligation.
CME — Chicago Mercantile Exchange.
Company — SunTrust Banks, Inc.
CP — Commercial paper.
CPR — Conditional prepayment rate.
CRE — Commercial real estate.
CSA — Credit support annex.
DDA — Demand deposit account.
DOJ — Department of Justice.
DTA — Deferred tax asset.
DVA — Debit valuation adjustment.
EBPC — Enterprise Business Practices Committee.
EPS — Earnings per share.
ER — Enterprise Risk.
ERISA — Employee Retirement Income Security Act of 1974.
Exchange Act — Securities Exchange Act of 1934.
Fannie Mae — Federal National Mortgage Association.
Freddie Mac — Federal Home Loan Mortgage Corporation.
FDIC — Federal Deposit Insurance Corporation.
Federal Reserve — Federal Reserve System.
Fed funds — Federal funds.
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.
Ginnie Mae — Government National Mortgage Association.
GSE — Government-sponsored enterprise.
HAMP — Home Affordable Modification Program.
HUD — U.S. Department of Housing and Urban Development.
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.
LHFS — Loans held for sale.
LIBOR — London InterBank Offered Rate.
LOCOM — Lower of cost or market.
LTI — Long-term incentive.
LTV— Loan to value.
MasterCard — MasterCard International.
MBS — Mortgage-backed securities.
MD&A — Management’s Discussion and Analysis of Financial Condition and Results of Operation.
Moody’s — Moody’s Investors Service.
MRA — Master Repurchase Agreement.
MRM — Market Risk Management.
MRMG — Model Risk Management Group.
MSR — Mortgage servicing right.
MVE — Market value of equity.
NCF — National Commerce Financial Corporation.
NOW — Negotiable order of withdrawal account.
NPA — Nonperforming asset.
NPL — Nonperforming loan.
NPR — Notice of proposed rulemaking.
NSFR — Net stable funding ratio.
OCC — Office of the Comptroller of the Currency.
OCI — Other comprehensive income.
OREO — Other real estate owned.
OTC — Over-the-counter.
OTTI — Other-than-temporary impairment.
PAC — Premium Assignment Corporation.
Parent Company — SunTrust Banks, Inc. (the parent Company of SunTrust Bank and other subsidiaries).
PD — Probability of default.
Pillar — substantially all of the assets of the operating subsidiaries of Pillar Financial, LLC.
PPNR — Pre-provision net revenue.
PWM — Private Wealth Management.
REIT — Real estate investment trust.
ROA — Return on average total assets.
ROE — Return on average common shareholders’ equity.
ROTCE — Return on average tangible common shareholders' equity.
RSU — Restricted stock unit.
RWA — Risk-weighted assets.

i

S&P — Standard and Poor’s.
SBA — Small Business Administration.
SEC — U.S. Securities and Exchange Commission.
STAS — SunTrust Advisory Services, Inc.
STCC — SunTrust Community Capital, LLC.
STIS — SunTrust Investment Services, Inc.
STM — SunTrust Mortgage, Inc.
STRH — SunTrust Robinson Humphrey, Inc.
SunTrust — SunTrust Banks, Inc.
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.
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 that purchased the Company's Visa Class B shares.


ii



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, 2017 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2017.


1



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)
2017
 
2016
 
2017
 
2016
Interest Income
 
 
 
 
 
 
 
Interest and fees on loans

$1,382

 

$1,245

 

$4,009

 

$3,670

Interest and fees on loans held for sale
24

 
25

 
70

 
62

Interest and dividends on securities available for sale
195

 
159

 
573

 
483

Trading account interest and other
34

 
22

 
95

 
70

Total interest income
1,635

 
1,451

 
4,747

 
4,285

Interest Expense
 
 
 
 
 
 
 
Interest on deposits
111

 
67

 
286

 
188

Interest on long-term debt
76

 
68

 
216

 
191

Interest on other borrowings
18

 
8

 
46

 
29

Total interest expense
205

 
143

 
548

 
408

Net interest income
1,430

 
1,308

 
4,199

 
3,877

Provision for credit losses
120

 
97

 
330

 
343

Net interest income after provision for credit losses
1,310

 
1,211

 
3,869

 
3,534

Noninterest Income
 
 
 
 
 
 
 
Service charges on deposit accounts
154


162

 
453

 
477

Other charges and fees
92


93

 
291

 
290

Card fees
86

 
83

 
255

 
243

Investment banking income
166

 
147

 
480

 
372

Trading income
51

 
65

 
148

 
154

Trust and investment management income
79

 
80

 
229

 
230

Retail investment services
69

 
71

 
208

 
212

Mortgage production related income
61

 
118

 
170

 
288

Mortgage servicing related income
46

 
49

 
148

 
164

Commercial real estate related income 1
17

 
8

 
61

 
36

Net securities gains
—


—

 
1

 
4

Other noninterest income 1
25


13

 
76

 
99

Total noninterest income
846

 
889

 
2,520

 
2,569

Noninterest Expense
 
 
 
 
 
 
 
Employee compensation
725

 
687

 
2,152

 
1,994

Employee benefits
81

 
86

 
302

 
315

Outside processing and software
203

 
225

 
612

 
626

Net occupancy expense
94

 
93

 
280

 
256

Regulatory assessments
47

 
47

 
143

 
127

Marketing and customer development
45

 
38

 
129

 
120

Equipment expense
40

 
44

 
123

 
126

Amortization
22

 
14

 
49

 
35

Operating (gains)/losses
(34
)
 
35

 
17

 
85

Other noninterest expense
168

 
140

 
436

 
388

Total noninterest expense
1,391

 
1,409

 
4,243

 
4,072

Income before provision for income taxes
765

 
691

 
2,146

 
2,031

Provision for income taxes
225

 
215

 
606

 
611

Net income including income attributable to noncontrolling interest
540

 
476

 
1,540

 
1,420

Net income attributable to noncontrolling interest
2

 
2

 
7

 
7

Net income

$538

 

$474

 

$1,533

 

$1,413

Net income available to common shareholders

$512

 

$457

 

$1,468

 

$1,363

 
 
 
 
 
 
 
 
Net income per average common share:
 
 
 
 
 
 
 
Diluted

$1.06

 

$0.91

 

$3.00

 

$2.70

Basic
1.07

 
0.92

 
3.04

 
2.72

Dividends declared per common share
0.40

 
0.26

 
0.92

 
0.74

Average common shares - diluted
483,640

 
500,885

 
489,176

 
505,619

Average common shares - basic
478,258

 
496,304

 
483,711

 
501,036

1 Beginning January 1, 2017, the Company began presenting income related to the Company's Pillar, STCC, and Structured Real Estate businesses as a separate line item on the Consolidated Statements of Income titled Commercial real estate related income. For periods prior to January 1, 2017, these amounts were previously presented in Other noninterest income and have been reclassified to Commercial real estate related income for comparability.


See accompanying Notes to Consolidated Financial Statements (unaudited).

2

SunTrust Banks, Inc.
Consolidated Statements of Comprehensive Income

 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions) (Unaudited)
2017
 
2016
 
2017
 
2016
Net income

$538

 

$474

 

$1,533

 

$1,413

Components of other comprehensive income/(loss):
 
 
 
 
 
 
 
Change in net unrealized gains/(losses) on securities available for sale,
net of tax of $24, ($19), $57, and $228, respectively
40

 
(32
)
 
97

 
383

Change in net unrealized (losses)/gains on derivative instruments,
net of tax of ($1), ($51), ($7), and $81, respectively
(2
)
 
(86
)
 
(13
)
 
137

Change in credit risk adjustment on long-term debt,
net of tax of $1, ($2), $1, and ($3), respectively 1
1

 
(3
)
 
1

 
(5
)
Change related to employee benefit plans,
net of tax of $2, $2, $3, and $39, respectively
3

 
3

 
1

 
65

Total other comprehensive income/(loss), net of tax
42

 
(118
)
 
86

 
580

Total comprehensive income

$580

 

$356

 

$1,619

 

$1,993

1 Related to the Company's early adoption of the ASU 2016-01 provision related to changes in instrument-specific credit risk. See Note 1, "Significant Accounting Policies," and Note 17, "Accumulated Other Comprehensive (Loss)/Income," for additional information.


See accompanying Notes to Consolidated Financial Statements (unaudited).

3

SunTrust Banks, Inc.
Consolidated Balance Sheets
 
September 30,
 
December 31,
(Dollars in millions and shares in thousands, except per share data)
2017
 
2016
Assets
(Unaudited)
 
 
Cash and due from banks

$7,071

 

$5,091

Federal funds sold and securities borrowed or purchased under agreements to resell
1,182

 
1,307

Interest-bearing deposits in other banks
25

 
25

Cash and cash equivalents
8,278

 
6,423

Trading assets and derivative instruments 1
6,318

 
6,067

Securities available for sale 2
31,444

 
30,672

Loans held for sale ($2,252 and $3,540 at fair value at September 30, 2017 and December 31, 2016, respectively)
2,835

 
4,169

Loans 3 ($206 and $222 at fair value at September 30, 2017 and December 31, 2016, respectively)
144,264

 
143,298

Allowance for loan and lease losses
(1,772
)
 
(1,709
)
Net loans
142,492

 
141,589

Premises and equipment, net
1,616

 
1,556

Goodwill
6,338

 
6,337

Other intangible assets (Residential MSRs at fair value: $1,628 and $1,572 at September 30, 2017 and December 31, 2016, respectively)
1,706

 
1,657

Other assets
7,225

 
6,405

Total assets

$208,252

 

$204,875

 
 
 
 
Liabilities
 
 
 
Noninterest-bearing deposits

$43,984

 

$43,431

Interest-bearing deposits (CDs at fair value: $207 and $78 at September 30, 2017 and December 31, 2016, respectively)
118,753

 
116,967

Total deposits
162,737

 
160,398

Funds purchased
3,118

 
2,116

Securities sold under agreements to repurchase
1,422

 
1,633

Other short-term borrowings
909

 
1,015

Long-term debt 4 ($758 and $963 at fair value at September 30, 2017 and December 31, 2016, respectively)
11,280

 
11,748

Trading liabilities and derivative instruments
1,284

 
1,351

Other liabilities
2,980

 
2,996

Total liabilities
183,730

 
181,257

Shareholders’ Equity
 
 
 
Preferred stock, no par value
1,975

 
1,225

Common stock, $1.00 par value
550

 
550

Additional paid-in capital
8,985

 
9,010

Retained earnings
17,021

 
16,000

Treasury stock, at cost, and other 5
(3,274
)
 
(2,346
)
Accumulated other comprehensive loss, net of tax
(735
)
 
(821
)
Total shareholders’ equity
24,522

 
23,618

Total liabilities and shareholders’ equity

$208,252

 

$204,875

 
 
 
 
Common shares outstanding 6
476,001

 
491,188

Common shares authorized
750,000

 
750,000

Preferred shares outstanding
20

 
12

Preferred shares authorized
50,000

 
50,000

Treasury shares of common stock
74,053

 
58,738

 
 
 
 
1 Includes trading securities pledged as collateral where counterparties have the right to sell or repledge the collateral

$1,043

 

$1,437

2 Includes securities AFS pledged as collateral where counterparties have the right to sell or repledge the collateral
280

 
—

3 Includes loans of consolidated VIEs
186

 
211

4 Includes debt of consolidated VIEs
195

 
222

5 Includes noncontrolling interest
101

 
103

6 Includes restricted shares
9

 
11



See accompanying Notes to Consolidated Financial Statements (unaudited).

4

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
 
Total
Balance, January 1, 2016

$1,225

 
509

 

$550

 

$9,094

 

$14,686

 

($1,658
)
 

($460
)
 

$23,437

Cumulative effect of credit risk adjustment 2
—

 
—

 
—

 
—

 
5

 
—

 
(5
)
 
—

Net income
—

 
—

 
—

 
—

 
1,413

 
—

 
—

 
1,413

Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
580

 
580

Change in noncontrolling interest
—

 
—

 
—

 
—

 
—

 
(7
)
 
—

 
(7
)
Common stock dividends, $0.74 per share
—

 
—

 
—

 
—

 
(370
)
 
—

 
—

 
(370
)
Preferred stock dividends 3
—

 
—

 
—

 
—

 
(49
)
 
—

 
—

 
(49
)
Repurchase of common stock
—

 
(15
)
 
—

 
—

 
—

 
(566
)
 
—

 
(566
)
Repurchase of common stock warrants
—

 
—

 
—

 
(24
)
 
—

 
—

 
—

 
(24
)
Exercise of stock options and stock compensation expense 4
—

 
1

 
—

 
(28
)
 
—

 
43

 
—

 
15

Restricted stock activity 4
—

 
1

 
—

 
(33
)
 
(4
)
 
55

 
—

 
18

Amortization of restricted stock compensation
—

 
—

 
—

 
—

 
—

 
2

 
—

 
2

Balance, September 30, 2016

$1,225

 
496

 

$550

 

$9,009

 

$15,681

 

($2,131
)
 

$115

 

$24,449

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, January 1, 2017

$1,225

 
491

 

$550

 

$9,010

 

$16,000

 

($2,346
)
 

($821
)
 

$23,618

Net income
—

 
—

 
—

 
—

 
1,533

 
—

 
—

 
1,533

Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
86

 
86

Change in noncontrolling interest
—

 
—

 
—

 
—

 
—

 
(2
)
 
—

 
(2
)
Common stock dividends, $0.92 per share
—

 
—

 
—

 
—

 
(443
)
 
—

 
—

 
(443
)
Preferred stock dividends 3
—

 
—

 
—

 
—

 
(65
)
 
—

 
—

 
(65
)
Issuance of preferred stock, Series G
750

 
—

 
—

 
(7
)
 
—

 
—

 
—

 
743

Repurchase of common stock
—

 
(17
)
 
—

 
—

 
—

 
(984
)
 
—

 
(984
)
Exercise of stock options and stock compensation expense
—

 
1

 
—

 
(14
)
 
—

 
27

 
—

 
13

Restricted stock activity
—

 
1

 
—

 
(4
)
 
(4
)
 
31

 
—

 
23

Balance, September 30, 2017

$1,975

 
476

 

$550

 

$8,985

 

$17,021

 

($3,274
)
 

($735
)
 

$24,522

1 At September 30, 2017, includes ($3,374) million for treasury stock and $101 million for noncontrolling interest.
At September 30, 2016, includes ($2,232) million for treasury stock and $101 million for noncontrolling interest.
2 Related to the Company's early adoption of the ASU 2016-01 provision related to changes in instrument-specific credit risk, beginning January 1, 2016. See Note 1, "Significant Accounting Policies," and Note 17, "Accumulated Other Comprehensive (Loss)/Income," for additional information.
3 For the nine months ended September 30, 2017, dividends were $3,044 per share for both Perpetual Preferred Stock Series A and B, $4,406 per share for Perpetual Preferred Stock Series E, $4,219 per share for Perpetual Preferred Stock Series F, and $2,090 per share for Perpetual Preferred Stock Series G.
For the nine months ended September 30, 2016, dividends were $3,056 per share for both Perpetual Preferred Stock Series A and B, $4,406 per share for Perpetual Preferred Stock Series E, and $4,219 per share for Perpetual Preferred Stock Series F.
4 Includes a ($4) million net reclassification of excess tax benefits from Additional paid-in capital to Provision for income taxes, related to the Company's adoption of ASU 2016-09.


See accompanying Notes to Consolidated Financial Statements (unaudited).

5

SunTrust Banks, Inc.
Consolidated Statements of Cash Flows
 
Nine Months Ended September 30
(Dollars in millions) (Unaudited)
2017
 
2016
Cash Flows from Operating Activities
 
 
 
Net income including income attributable to noncontrolling interest

$1,540

 

$1,420

Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
 
 
 
Depreciation, amortization, and accretion
540

 
533

Origination of servicing rights
(262
)
 
(198
)
Provisions for credit losses and foreclosed property
336

 
347

Stock-based compensation
121

 
85

Net securities gains
(1
)
 
(4
)
Net gain on sale of loans held for sale, loans, and other assets
(183
)
 
(376
)
Net decrease/(increase) in loans held for sale
1,488

 
(1,647
)
Net increase in trading assets
(272
)
 
(704
)
Net increase in other assets
(950
)
 
(193
)
Net (decrease)/increase in other liabilities
(267
)
 
155

Net cash provided by/(used in) operating activities
2,090

 
(582
)
Cash Flows from Investing Activities
 
 
 
Proceeds from maturities, calls, and paydowns of securities available for sale
3,169

 
3,763

Proceeds from sales of securities available for sale
1,486

 
197

Purchases of securities available for sale
(5,344
)
 
(5,297
)
Net increase in loans, including purchases of loans
(1,839
)
 
(7,007
)
Proceeds from sales of loans
520

 
1,482

Purchases of servicing rights
—

 
(101
)
Capital expenditures
(233
)
 
(188
)
Payments related to acquisitions, including contingent consideration, net of cash acquired
—

 
(23
)
Proceeds from the sale of other real estate owned and other assets
183

 
171

Net cash used in investing activities
(2,058
)
 
(7,003
)
Cash Flows from Financing Activities
 
 
 
Net increase in total deposits
2,339

 
9,012

Net increase in funds purchased, securities sold under agreements to repurchase, and other short-term borrowings
685

 
272

Proceeds from issuance of long-term debt
2,623

 
4,924

Repayments of long-term debt
(3,073
)
 
(1,448
)
Proceeds from the issuance of preferred stock
743

 
—

Repurchase of common stock
(984
)
 
(566
)
Repurchase of common stock warrants
—

 
(24
)
Common and preferred stock dividends paid
(485
)
 
(412
)
Taxes paid related to net share settlement of equity awards
(38
)
 
(47
)
Proceeds from exercise of stock options
13

 
15

Net cash provided by financing activities
1,823

 
11,726

Net increase in cash and cash equivalents
1,855

 
4,141

Cash and cash equivalents at beginning of period
6,423

 
5,599

Cash and cash equivalents at end of period

$8,278

 

$9,740

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

$16

 

$23

Loans transferred from loans to loans held for sale
218

 
315

Loans transferred from loans and loans held for sale to other real estate owned
43

 
46

Non-cash impact of debt assumed by purchaser in lease sale
9

 
74



See accompanying Notes to Consolidated Financial Statements (unaudited).

6
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 to present interim financial statement 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 that 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 Consolidated 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.
 
These interim Consolidated Financial Statements should be read in conjunction with the Company’s 2016 Annual Report on Form 10-K. Other than the recently issued accounting pronouncements discussed in this section, there have been no significant changes to the Company’s accounting policies, as disclosed in the 2016 Annual Report on Form 10-K, that could have a material effect on the Company's financial statements.
The Company evaluated events that occurred between September 30, 2017 and the date the accompanying financial statements were issued, and there were no material events, other than those already discussed in this Form 10-Q, that would require recognition in the Company's Consolidated Financial Statements or disclosure in the accompanying Notes.

Recently Issued Accounting Pronouncements
The following table summarizes ASUs recently issued by the FASB that could have a material effect on the Company's financial statements:
Standard
Description
Required Date of Adoption
Effect on the Financial Statements or Other Significant Matters
Standard(s) Adopted in 2017 (or partially adopted previously)
ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities
The ASU amends ASC Topic 825, Financial Instruments-Overall, and addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The main provisions require investments in equity securities to be measured at fair value through net income, unless they qualify for a practicability exception, and require fair value changes arising from changes in instrument-specific credit risk for financial liabilities that are measured under the fair value option to be recognized in other comprehensive income. With the exception of disclosure requirements that will be adopted prospectively, the ASU must be adopted on a modified retrospective basis.
January 1, 2018

Early adoption is permitted beginning January 1, 2016 or 2017 for the provision related to changes in instrument-specific credit risk for financial liabilities under the FVO.

The Company early adopted the provision related to changes in instrument-specific credit risk beginning January 1, 2016, which resulted in an immaterial, cumulative effect adjustment from retained earnings to AOCI. See Note 1, “Significant Accounting Policies,” to the Company's 2016 Annual Report on Form 10-K for additional information. The Company does not expect the remaining provisions of this ASU to have a material impact on its Consolidated Financial Statements and related disclosures.

Standard(s) Not Yet Adopted
ASU 2016-02, Leases
The ASU creates ASC Topic 842, Leases, which supersedes ASC Topic 840, Leases. ASC Topic 842 requires lessees to recognize right-of-use assets and associated liabilities that arise from leases, with the exception of short-term leases. The ASU does not make significant changes to lessor accounting; however, there were certain improvements made to align lessor accounting with the lessee accounting model and ASC Topic 606, Revenue from Contracts with Customers. There are several new qualitative and quantitative disclosures required. Upon transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach.

January 1, 2019

Early adoption is permitted.
The Company has formed a cross-functional team to oversee the implementation of this ASU. The Company's implementation efforts are ongoing, including the review of its lease portfolios and related lease accounting policies, the review of its service contracts for embedded leases, and the deployment of a new lease software solution. The Company's adoption of this ASU will result in an increase in right-of-use assets and associated lease liabilities, arising from operating leases in which the Company is the lessee, on its Consolidated Balance Sheets.

The amount of the right-of-use assets and associated lease liabilities recorded upon adoption will be based primarily on the present value of unpaid future minimum lease payments, the amount of which will depend on the population of leases in effect at the date of adoption. At September 30, 2017, the Company’s estimate of right-of-use assets and lease liabilities that would be recorded on its Consolidated Balance Sheets upon adoption is in excess of $1 billion. The Company does not expect this ASU to have a material impact on its Consolidated Statements of Income.


7
Notes to Consolidated Financial Statements (Unaudited), continued



Standard
Description
Required Date of Adoption
Effect on the Financial Statements or Other Significant Matters
Standard(s) Not Yet Adopted (continued)
ASU 2016-13, Measurement of Credit Losses on Financial Instruments
The ASU amends ASC Topic 326, Financial Instruments-Credit Losses, to replace the incurred loss impairment methodology with a CECL methodology for financial instruments measured at amortized cost and other commitments to extend credit. For this purpose, expected credit losses reflect losses over the remaining contractual life of an asset, considering the effect of voluntary prepayments and considering available information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The resulting allowance for credit losses reflects the portion of the amortized cost basis that the entity does not expect to collect. Additional quantitative and qualitative disclosures are required upon adoption.

The CECL model does not apply to AFS debt securities; however, the ASU requires entities to record an allowance when recognizing credit losses for AFS securities, rather than recording a direct write-down of the carrying amount.

January 1, 2020

Early adoption is permitted beginning January 1, 2019.
The Company has formed a cross-functional team to oversee the implementation of this ASU and is assessing the required changes to its credit loss estimation methodologies. The Company is evaluating the impact that this ASU will have on its Consolidated Financial Statements and related disclosures, and the Company currently anticipates that an increase to the allowance for credit losses will be recognized upon adoption to provide for the expected credit losses over the estimated life of the financial assets. However, since the magnitude of the anticipated increase in the allowance for credit losses will be impacted by economic conditions and trends in the Company’s portfolio at the time of adoption, the quantitative impact cannot yet be reasonably estimated.

ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments
The ASU amends ASC Topic 230, Statement of Cash Flows, to clarify the classification of certain cash receipts and payments within the Company's Consolidated Statements of Cash Flow. These items include: cash payments for debt prepayment or debt extinguishment costs; cash outflows for the settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; distributions received from equity method investees; and beneficial interests acquired in securitization transactions. The ASU also clarifies that when no specific U.S. GAAP guidance exists and the source of the cash flows are not separately identifiable, then the predominant source of cash flow should be used to determine the classification for the item. The ASU must be adopted on a retrospective basis.

January 1, 2018

Early adoption is permitted.
The Company is evaluating the impact that this ASU will have on its Consolidated Statements of Cash Flows. Changes in the Company's presentation of certain cash payments and receipts between the operating, financing, and investing sections of its Consolidated Statements of Cash Flows are expected; however, the quantitative impact has not yet been determined.
ASU 2014-09, Revenue from Contracts with Customers

ASU 2015-14, Deferral of the Effective Date

ASU 2016-08, Principal versus Agent Considerations

ASU 2016-10, Identifying Performance Obligations and Licensing

ASU 2016-12, Narrow-Scope Improvements and Practical Expedients

ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers

These ASUs comprise ASC Topic 606, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The core principle of these ASUs is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. These ASUs may be adopted either retrospectively or on a modified retrospective basis to new contracts and existing contracts, with remaining performance obligations as of the effective date.
January 1, 2018

Early adoption is permitted beginning January 1, 2017.
The Company is completing its evaluation of the anticipated effects that these ASUs will have on its Consolidated Financial Statements and related disclosures. The Company conducted a comprehensive scoping exercise to determine the revenue streams that are in the scope of these updates. Results indicate that certain noninterest income financial statement line items, including service charges on deposit accounts, card fees, other charges and fees, investment banking income, trust and investment management income, retail investment services, commercial real estate related income, and other noninterest income, contain revenue streams that are within the scope of these updates. Additionally, the Company's analyses indicate that there will be changes to the presentation of certain types of revenue and expenses within investment banking income, such as underwriting revenue and expenses, which will be shown gross pursuant to the new requirements.

The Company is in the process of developing additional quantitative and qualitative disclosures that will be required upon adoption of these ASUs. The Company plans to adopt these standards beginning January 1, 2018 and expects to use the modified retrospective method of adoption. The Company does not expect these ASUs to have a material impact on its Consolidated Financial Statements and related disclosures.


8
Notes to Consolidated Financial Statements (Unaudited), continued



Standard
Description
Required Date of Adoption
Effect on the Financial Statements or Other Significant Matters
Standard(s) Not Yet Adopted (continued)
ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
The ASU amends ASC Topic 350, Intangibles - Goodwill and Other, to simplify the subsequent measurement of goodwill, by eliminating Step 2 from the goodwill impairment test. The amendments require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Entities should recognize an impairment charge for the amount by which a reporting unit's carrying amount exceeds its fair value, but the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU must be applied on a prospective basis.

January 1, 2020

Early adoption is permitted.
Based on the Company's most recent annual goodwill impairment test performed as of October 1, 2016, there were no reporting units for which the carrying amount of the reporting unit exceeded its fair value; therefore, this ASU would not currently have an impact on the Company's Consolidated Financial Statements and related disclosures. However, if upon adoption the carrying amount of a reporting unit exceeds its fair value, the Company would be impacted by the amount of impairment recognized.
ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities
The ASU amends ASC Topic 815, Derivatives and Hedging, to simplify the requirements for hedge accounting. Key amendments include: eliminating the requirement to separately measure and report hedge ineffectiveness, requiring changes in the value of the hedging instrument to be presented in the same income statement line as the earnings effect of the hedged item, and the ability to measure the hedged item based on the benchmark interest rate component of the total contractual coupon for fair value hedges. New incremental disclosures are also required for reporting periods subsequent to the date of adoption. All transition requirements and elections should be applied to hedging relationships existing on the date of adoption using a modified retrospective approach.

January 1, 2019

Early adoption is permitted.
The Company is evaluating the significance and other effects that this ASU will have on its Consolidated Financial Statements and related disclosures; however, the quantitative impact has not yet been determined.


NOTE 2 - FEDERAL FUNDS SOLD AND SECURITIES FINANCING ACTIVITIES
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, 2017
 
December 31, 2016
Fed funds sold

$—

 

$58

Securities borrowed
371

 
270

Securities purchased under agreements to resell
811

 
979

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

$1,182

 

$1,307

Securities purchased under agreements to resell are primarily collateralized by U.S. government or agency securities and are carried at the amounts at which the securities will be subsequently resold, plus accrued interest. Securities borrowed are primarily collateralized by corporate securities. The Company borrows securities and purchases securities under agreements to resell as part of its securities financing activities. On the acquisition date of these securities, the Company and the
 
related counterparty agree on the amount of collateral required to secure the principal amount loaned under these arrangements. The Company monitors collateral values daily and calls for additional collateral to be provided as warranted under the respective agreements. At September 30, 2017 and December 31, 2016, the total market value of collateral held was $1.2 billion and $1.3 billion, of which $194 million and $246 million was repledged, respectively.


9
Notes to Consolidated Financial Statements (Unaudited), continued



Securities Sold Under Agreements to Repurchase
Securities sold under agreements to repurchase are accounted for as secured borrowings. The following table presents the Company’s related activity, by collateral type and remaining contractual maturity:
 
September 30, 2017
 
December 31, 2016
(Dollars in millions)
Overnight and Continuous
 
Up to 30 days
 
30-90 days
 
Total
 
Overnight and Continuous
 
Up to 30 days
 
30-90 days
 
Total
U.S. Treasury securities

$32

 

$—

 

$—

 

$32

 

$27

 

$—

 

$—

 

$27

Federal agency securities
58

 
25

 
—

 
83

 
288

 
24

 
—

 
312

MBS - agency
738

 
94

 
—

 
832

 
793

 
51

 
—

 
844

CP
68

 
—

 
—

 
68

 
49

 
—

 
—

 
49

Corporate and other debt securities
292

 
75

 
40

 
407

 
311

 
50

 
40

 
401

Total securities sold under agreements to repurchase

$1,188

 

$194

 

$40

 

$1,422

 

$1,468

 

$125

 

$40

 

$1,633


For these securities sold under agreements to repurchase, the Company would be obligated to provide additional collateral in the event of a significant decline in fair value of the collateral pledged. This risk is managed by monitoring the liquidity and credit quality of the collateral, as well as the maturity profile of the transactions.

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 13, "Derivative Financial Instruments." The following table presents the Company's securities borrowed or purchased under agreements to resell and securities sold under agreements to repurchase that
 
are subject to MRAs. Generally, MRAs require collateral to exceed the asset or liability recognized on the balance sheet. Transactions subject to these agreements are treated as collateralized financings, and those with a single counterparty are permitted to be presented net on the Company's Consolidated Balance Sheets, provided certain criteria are met that permit balance sheet netting. At September 30, 2017 and December 31, 2016, there were no such transactions subject to legally enforceable MRAs that were eligible for balance sheet netting.
The following table includes the amount of collateral pledged or received related to exposures subject to enforceable MRAs. While these agreements are typically over-collateralized, the amount of collateral presented in this table is limited to the amount of the related recognized asset or liability for each counterparty.
(Dollars in millions)
Gross
Amount
 
Amount
Offset
 
Net Amount
Presented in
Consolidated
Balance Sheets
 
Held/Pledged Financial
Instruments
 
Net
Amount
September 30, 2017
 
 
 
 
 
 
 
 
 
Financial assets:
 
 
 
 
 
 
 
 
 
Securities borrowed or purchased under agreements to resell

$1,182

 

$—

 

$1,182

1 

$1,165

 

$17

Financial liabilities:
 
 
 
 
 
 
 
 
 
Securities sold under agreements to repurchase
1,422

 
—

 
1,422

 
1,422

 
—

 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
Financial assets:
 
 
 
 
 
 
 
 
 
Securities borrowed or purchased under agreements to resell

$1,249

 

$—

 

$1,249

1 

$1,241

 

$8

Financial liabilities:
 
 
 
 
 
 
 
 
 
Securities sold under agreements to repurchase
1,633

 
—

 
1,633

 
1,633

 
—

1 Excludes $0 and $58 million of Fed funds sold, which are not subject to a master netting agreement at September 30, 2017 and December 31, 2016, respectively.


10
Notes to Consolidated Financial Statements (Unaudited), continued



NOTE 3 - TRADING ASSETS AND LIABILITIES AND DERIVATIVE INSTRUMENTS

The fair values of the components of trading assets and liabilities and derivative instruments are presented in the following table:
(Dollars in millions)
September 30, 2017
 
December 31, 2016
Trading Assets and Derivative Instruments:
 
 
 
U.S. Treasury securities

$366

 

$539

Federal agency securities
303

 
480

U.S. states and political subdivisions
53

 
134

MBS - agency
666

 
567

CLO securities
—

 
1

Corporate and other debt securities
665

 
656

CP
383

 
140

Equity securities
30

 
49

Derivative instruments 1
898

 
984

Trading loans 2
2,954

 
2,517

Total trading assets and derivative instruments

$6,318

 

$6,067

 
 
 
 
Trading Liabilities and Derivative Instruments:
 
 
 
U.S. Treasury securities

$555

 

$697

MBS - agency
—

 
1

Corporate and other debt securities
347

 
255

Equity securities
5

 
—

Derivative instruments 1
377

 
398

Total trading liabilities and derivative instruments

$1,284

 

$1,351

1 Amounts include the impact of offsetting cash collateral received from and paid to the same derivative counterparties, and the impact of netting derivative assets and derivative liabilities when a legally enforceable master netting agreement or similar agreement exists.
2 Includes loans related to TRS.

Various trading and derivative instruments are used as part of the Company’s overall balance sheet management strategies and to support client requirements executed through the Bank and/or STRH, a broker/dealer subsidiary of the Company. The Company manages the potential market volatility associated with trading instruments by using appropriate risk management strategies. The size, volume, and nature of the trading products and derivative instruments can vary based on economic conditions as well as client-specific and Company-specific asset or liability positions.
Product offerings to clients include debt securities, loans traded in the secondary market, equity securities, derivative contracts, and other similar financial instruments. Other trading-
 
related activities include acting as a market maker for certain debt and equity security transactions, derivative instrument transactions, and foreign exchange transactions. The Company also uses derivatives to manage its interest rate and market risk from non-trading activities. The Company has policies and procedures to manage market risk associated with client trading and non-trading activities, and assumes a limited degree of market risk by managing the size and nature of its exposure. For valuation assumptions and additional information related to the Company's trading products and derivative instruments, see Note 13, “Derivative Financial Instruments,” and the “Trading Assets and Derivative Instruments and Securities Available for Sale” section of Note 14, “Fair Value Election and Measurement.”
Pledged trading assets are presented in the following table:
(Dollars in millions)
September 30, 2017
 
December 31, 2016
Pledged trading assets to secure repurchase agreements 1

$756

 

$968

Pledged trading assets to secure certain derivative agreements
291

 
471

Pledged trading assets to secure other arrangements
51

 
40

1 Repurchase agreements secured by collateral totaled $721 million and $928 million at September 30, 2017 and December 31, 2016, respectively.


11
Notes to Consolidated Financial Statements (Unaudited), continued



NOTE 4 – SECURITIES AVAILABLE FOR SALE
Securities Portfolio Composition
 
September 30, 2017
(Dollars in millions)
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
U.S. Treasury securities

$4,300

 

$9

 

$48

 

$4,261

Federal agency securities
266

 
5

 
1

 
270

U.S. states and political subdivisions
558

 
9

 
4

 
563

MBS - agency
24,860

 
287

 
167

 
24,980

MBS - non-agency residential
59

 
4

 
1

 
62

MBS - non-agency commercial
747

 
6

 
3

 
750

ABS
6

 
2

 
—

 
8

Corporate and other debt securities
33

 
—

 
—

 
33

Other equity securities 1
518

 
1

 
2

 
517

Total securities AFS

$31,347

 

$323

 

$226

 

$31,444

 
 
 
 
 
 
 
 
 
December 31, 2016
(Dollars in millions)
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
U.S. Treasury securities

$5,486

 

$5

 

$86

 

$5,405

Federal agency securities
310

 
5

 
2

 
313

U.S. states and political subdivisions
279

 
5

 
5

 
279

MBS - agency
23,642

 
313

 
293

 
23,662

MBS - non-agency residential
71

 
3

 
—

 
74

MBS - non-agency commercial
257

 
—

 
5

 
252

ABS
8

 
2

 
—

 
10

Corporate and other debt securities
34

 
1

 
—

 
35

Other equity securities 1
642

 
1

 
1

 
642

Total securities AFS

$30,729

 

$335

 

$392

 

$30,672

1 At September 30, 2017, the fair value of other equity securities was comprised of the following: $68 million of FHLB of Atlanta stock, $403 million of Federal Reserve Bank of Atlanta stock, $41 million of mutual fund investments, and $5 million of other.
At December 31, 2016, the fair value of other equity securities was comprised of the following: $132 million of FHLB of Atlanta stock, $402 million of Federal Reserve Bank of Atlanta stock, $102 million of mutual fund investments, and $6 million of other.

The following table presents interest and dividends on securities AFS:
 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions)
2017
 
2016
 
2017
 
2016
Taxable interest

$187

 

$154

 

$551

 

$470

Tax-exempt interest
4

 
2

 
9

 
4

Dividends
4

 
3

 
13

 
9

Total interest and dividends on securities AFS

$195

 

$159

 

$573

 

$483


Securities AFS pledged to secure public deposits, repurchase agreements, trusts, certain derivative agreements, and other funds had a fair value of $3.3 billion and $2.0 billion at September 30, 2017 and December 31, 2016, respectively.


12
Notes to Consolidated Financial Statements (Unaudited), continued



The following table presents the amortized cost, fair value, and weighted average yield of investments in debt securities AFS at September 30, 2017, by remaining contractual maturity, with the exception of MBS and ABS, which are based on estimated average life. Receipt of cash flows may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.
 
Distribution of Remaining Maturities
(Dollars in millions)
Due in 1 Year or Less
 
Due After 1 Year through 5 Years
 
Due After 5 Years through 10 Years
 
Due After 10 Years
 
Total
Amortized Cost:
 
 
 
 
 
 
 
 
 
U.S. Treasury securities

$—

 

$2,002

 

$2,298

 

$—

 

$4,300

Federal agency securities
126

 
46

 
4

 
90

 
266

U.S. states and political subdivisions
6

 
46

 
179

 
327

 
558

MBS - agency
1,475

 
9,092

 
13,785

 
508

 
24,860

MBS - non-agency residential
—

 
59

 
—

 
—

 
59

MBS - non-agency commercial
5

 
12

 
730

 
—

 
747

ABS
—

 
6

 
—

 
—

 
6

Corporate and other debt securities
23

 
10

 
—

 
—

 
33

Total debt securities AFS

$1,635

 

$11,273

 

$16,996

 

$925

 

$30,829

Fair Value:
 
 
 
 
 
 
 
 
 
U.S. Treasury securities

$—

 

$1,996

 

$2,265

 

$—

 

$4,261

Federal agency securities
129

 
47

 
4

 
90

 
270

U.S. states and political subdivisions
6

 
48

 
185

 
324

 
563

MBS - agency
1,544

 
9,199

 
13,730

 
507

 
24,980

MBS - non-agency residential
—

 
62

 
—

 
—

 
62

MBS - non-agency commercial
5

 
12

 
733

 
—

 
750

ABS
—

 
8

 
—

 
—

 
8

Corporate and other debt securities
23

 
10

 
—

 
—

 
33

Total debt securities AFS

$1,707

 

$11,382

 

$16,917

 

$921

 

$30,927

 Weighted average yield 1
3.51
%
 
2.35
%
 
2.67
%
 
3.15
%
 
2.62
%
1 Weighted average yields are based on amortized cost.


13
Notes to Consolidated Financial Statements (Unaudited), continued



Securities AFS in an Unrealized Loss Position
The Company held certain investment securities AFS where amortized cost exceeded fair value, resulting in unrealized loss positions. Market changes in interest rates and credit spreads may result in temporary unrealized losses as the market prices of securities fluctuate. At September 30, 2017, 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 reviewed its portfolio for OTTI in accordance with the accounting policies described in Note 1, "Significant Accounting Policies," to the Company's 2016 Annual Report on Form 10-K.

Securities AFS in an unrealized loss position at period end are presented in the following tables:
 
September 30, 2017
 
Less than twelve months
 
Twelve months or longer
 
Total
(Dollars in millions)
Fair
Value
 
Unrealized
Losses 2
 
Fair
Value
 
Unrealized
Losses 2
 
Fair
Value
 
Unrealized
Losses 2
Temporarily impaired securities AFS:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities

$1,092

 

$9

 

$1,382

 

$39

 

$2,474

 

$48

Federal agency securities
43

 
—

 
33

 
1

 
76

 
1

U.S. states and political subdivisions
178

 
1

 
119

 
3

 
297

 
4

MBS - agency
9,571

 
92

 
2,709

 
75

 
12,280

 
167

MBS - non-agency commercial
207

 
2

 
47

 
1

 
254

 
3

ABS
—

 
—

 
5

 
—

 
5

 
—

Corporate and other debt securities
10

 
—

 
—

 
—

 
10

 
—

Other equity securities
—

 
—

 
3

 
2

 
3

 
2

Total temporarily impaired securities AFS
11,101

 
104


4,298


121


15,399


225

OTTI securities AFS 1:
 
 
 
 
 
 
 
 
 
 
 
MBS - non-agency residential
14

 
1

 
—

 
—

 
14

 
1

ABS
—

 
—

 
1

 
—

 
1

 
—

Total OTTI securities AFS
14

 
1

 
1

 
—

 
15