Form 10-Q |
ý | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended March 31, 2013 |
¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||
For the transition period from | to |
Regions Financial Corporation | ||
(Exact name of registrant as specified in its charter) | ||
Delaware | 63-0589368 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
1900 Fifth Avenue North Birmingham, Alabama | 35203 | |
(Address of principal executive offices) | (Zip Code) |
Page | ||||
Part I. Financial Information | ||||
Item 1. | Financial Statements (Unaudited) | |||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
Part II. Other Information | ||||
Item 1. | ||||
Item 2. | ||||
Item 6. | ||||
• | The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) became law in July 2010, and a number of legislative, regulatory and tax proposals remain pending. Future and proposed rules, including those that are part of the Basel III process, are expected to require banking institutions to increase levels of capital. All of the foregoing may have significant effects on Regions and the financial services industry, the exact nature and extent of which cannot be determined at this time. |
• | Possible additional loan losses, impairment of goodwill and other intangibles, and adjustment of valuation allowances on deferred tax assets and the impact on earnings and capital. |
• | Possible changes in interest rates may increase funding costs and reduce earning asset yields, thus reducing margins. Increases in benchmark interest rates could also increase debt service requirements for customers whose terms include a variable interest rate, which may negatively impact the ability of borrowers to pay as contractually obligated. |
• | Possible changes in general economic and business conditions in the United States in general and in the communities Regions serves in particular, including any prolonging or worsening of the current challenging economic conditions, including unemployment levels. |
• | Possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans. |
• | Possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations, may have an adverse effect on business. |
• | Possible regulations issued by the Consumer Financial Protection Bureau or other regulators which might adversely impact Regions’ business model or products and services. |
• | Possible stresses in the financial and real estate markets, including possible deterioration in property values. |
• | Regions’ ability to manage fluctuations in the value of assets and liabilities and off-balance sheet exposure so as to maintain sufficient capital and liquidity to support Regions’ business. |
• | Regions’ ability to expand into new markets and to maintain profit margins in the face of competitive pressures. |
• | Regions’ ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by Regions’ customers and potential customers. |
• | Regions’ ability to keep pace with technological changes. |
• | Regions’ ability to effectively identify and manage credit risk, interest rate risk, market risk, operational risk, legal risk, liquidity risk, reputational risk, counterparty risk, international risk, and regulatory and compliance risk. |
• | Regions’ ability to ensure adequate capitalization which is impacted by inherent uncertainties in forecasting credit losses. |
• | The cost and other effects of material contingencies, including litigation contingencies, and any adverse judicial, administrative, or arbitral rulings or proceedings. |
• | The effects of increased competition from both banks and non-banks. |
• | The effects of geopolitical instability and risks such as terrorist attacks. |
• | Regions' ability to identify and address data security breaches. |
• | Possible changes in consumer and business spending and saving habits could affect Regions’ ability to increase assets and to attract deposits. |
• | The effects of weather and natural disasters such as floods, droughts, wind, tornadoes and hurricanes, and the effects of man-made disasters. |
• | Possible downgrades in ratings issued by rating agencies. |
• | Possible changes in the speed of loan prepayments by Regions’ customers and loan origination or sales volumes. |
• | Possible acceleration of prepayments on mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on those securities. |
• | The effects of problems encountered by larger or similar financial institutions that adversely affect Regions or the banking industry generally. |
• | Regions’ ability to receive dividends from its subsidiaries. |
• | The effects of the failure of any component of Regions’ business infrastructure which is provided by a third party. |
• | Changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. |
• | The effects of any damage to Regions’ reputation resulting from developments related to any of the items identified above. |
March 31, 2013 | December 31, 2012 | |||||||
(In millions, except share data) | ||||||||
Assets | ||||||||
Cash and due from banks | $ | 1,796 | $ | 1,979 | ||||
Interest-bearing deposits in other banks | 3,137 | 3,510 | ||||||
Trading account securities | 121 | 116 | ||||||
Securities available for sale | 27,089 | 27,244 | ||||||
Securities held to maturity (estimated fair value of $9 and $11, respectively) | 8 | 10 | ||||||
Loans held for sale (includes $1,016 and $1,282 measured at fair value, respectively) | 1,082 | 1,383 | ||||||
Loans, net of unearned income | 73,936 | 73,995 | ||||||
Allowance for loan losses | (1,749 | ) | (1,919 | ) | ||||
Net loans | 72,187 | 72,076 | ||||||
Other interest-earning assets | 102 | 900 | ||||||
Premises and equipment, net | 2,252 | 2,279 | ||||||
Interest receivable | 366 | 344 | ||||||
Goodwill | 4,816 | 4,816 | ||||||
Mortgage servicing rights at fair value | 236 | 191 | ||||||
Other identifiable intangible assets | 331 | 345 | ||||||
Other assets | 6,195 | 6,154 | ||||||
Total assets | $ | 119,718 | $ | 121,347 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Deposits: | ||||||||
Non-interest-bearing | $ | 29,971 | $ | 29,963 | ||||
Interest-bearing | 64,162 | 65,511 | ||||||
Total deposits | 94,133 | 95,474 | ||||||
Borrowed funds: | ||||||||
Short-term borrowings: | ||||||||
Federal funds purchased and securities sold under agreements to repurchase | 1,829 | 1,449 | ||||||
Other short-term borrowings | 1 | 125 | ||||||
Total short-term borrowings | 1,830 | 1,574 | ||||||
Long-term borrowings | 5,847 | 5,861 | ||||||
Total borrowed funds | 7,677 | 7,435 | ||||||
Other liabilities | 2,168 | 2,939 | ||||||
Total liabilities | 103,978 | 105,848 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, authorized 10 million shares: | ||||||||
Series A, non-cumulative perpetual, par value $1.00 (liquidation preference $1,000.00) per share, including related surplus, net of discount; Issued—500,000 shares | 474 | 482 | ||||||
Common stock, par value $.01 per share: | ||||||||
Authorized 3 billion shares | ||||||||
Issued including treasury stock—1,454,665,741 and 1,454,626,952 shares, respectively | 15 | 15 | ||||||
Additional paid-in capital | 19,643 | 19,652 | ||||||
Retained earnings (deficit) | (3,003 | ) | (3,338 | ) | ||||
Treasury stock, at cost—41,287,272 and 41,287,460 shares, respectively | (1,377 | ) | (1,377 | ) | ||||
Accumulated other comprehensive income (loss), net | (12 | ) | 65 | |||||
Total stockholders’ equity | 15,740 | 15,499 | ||||||
Total liabilities and stockholders’ equity | $ | 119,718 | $ | 121,347 |
Three Months Ended March 31 | |||||||
2013 | 2012 | ||||||
(In millions, except per share data) | |||||||
Interest income on: | |||||||
Loans, including fees | $ | 743 | $ | 812 | |||
Securities - taxable | 156 | 174 | |||||
Loans held for sale | 9 | 7 | |||||
Trading account securities | 1 | 1 | |||||
Other interest-earning assets | 2 | 3 | |||||
Total interest income | 911 | 997 | |||||
Interest expense on: | |||||||
Deposits | 42 | 88 | |||||
Long-term borrowings | 71 | 82 | |||||
Total interest expense | 113 | 170 | |||||
Net interest income | 798 | 827 | |||||
Provision for loan losses | 10 | 117 | |||||
Net interest income after provision for loan losses | 788 | 710 | |||||
Non-interest income: | |||||||
Service charges on deposit accounts | 242 | 254 | |||||
Investment fee income | 27 | 28 | |||||
Mortgage income | 72 | 77 | |||||
Trust department income | 49 | 49 | |||||
Securities gains, net | 15 | 12 | |||||
Other | 96 | 104 | |||||
Total non-interest income | 501 | 524 | |||||
Non-interest expense: | |||||||
Salaries and employee benefits | 447 | 442 | |||||
Net occupancy expense | 90 | 94 | |||||
Furniture and equipment expense | 69 | 64 | |||||
Other | 236 | 313 | |||||
Total non-interest expense | 842 | 913 | |||||
Income from continuing operations before income taxes | 447 | 321 | |||||
Income tax expense | 114 | 82 | |||||
Income from continuing operations | 333 | 239 | |||||
Discontinued operations: | |||||||
Income (loss) from discontinued operations before income taxes | 4 | (65 | ) | ||||
Income tax expense (benefit) | 2 | (25 | ) | ||||
Income (loss) from discontinued operations, net of tax | 2 | (40 | ) | ||||
Net income | $ | 335 | $ | 199 | |||
Net income from continuing operations available to common shareholders | $ | 325 | $ | 185 | |||
Net income available to common shareholders | $ | 327 | $ | 145 | |||
Weighted-average number of shares outstanding: | |||||||
Basic | 1,413 | 1,282 | |||||
Diluted | 1,423 | 1,283 | |||||
Earnings per common share from continuing operations: | |||||||
Basic | $ | 0.23 | $ | 0.14 | |||
Diluted | 0.23 | 0.14 | |||||
Earnings per common share: | |||||||
Basic | $ | 0.23 | $ | 0.11 | |||
Diluted | 0.23 | 0.11 | |||||
Cash dividends declared per common share | 0.01 | 0.01 |
Three Months Ended March 31 | |||||||
2013 | 2012 | ||||||
(In millions) | |||||||
Net income | $ | 335 | $ | 199 | |||
Other comprehensive income (loss), net of tax:* | |||||||
Unrealized gains (losses) on securities available for sale: | |||||||
Unrealized holding gains (losses) arising during the period (net of $(43) and zero tax effect for the three months ended March 31, 2013 and 2012, respectively) | (68 | ) | 2 | ||||
Less: reclassification adjustments for securities gains realized in net income (net of $5 and $4 tax effect for the three months ended March 31, 2013 and 2012, respectively) | 10 | 8 | |||||
Net change in unrealized gains (losses) on securities available for sale, net of tax | (78 | ) | (6 | ) | |||
Unrealized gains (losses) on derivative instruments designated as cash flow hedges: | |||||||
Unrealized holding gains on derivatives arising during the period (net of $1 and $6 tax effect for the three months ended March 31, 2013 and 2012, respectively) | 1 | 10 | |||||
Less: reclassification adjustments for gains realized in net income (net of $6 and $6 tax effect for the three months ended March 31, 2013 and 2012, respectively) | 9 | 10 | |||||
Net change in unrealized gains (losses) on derivative instruments, net of tax | (8 | ) | — | ||||
Defined benefit pension plans and other post employment benefits: | |||||||
Net actuarial gains (losses) arising during the period (net of zero and $1 tax effect for the three months ended March 31, 2013 and 2012, respectively) | (1 | ) | 4 | ||||
Less: reclassification adjustments for amortization of actuarial loss and prior service cost realized in net income, and other (net of $(6) and $(7) tax effect for the three months ended March 31, 2013 and 2012, respectively) | (10 | ) | (11 | ) | |||
Net change from defined benefit pension plans, net of tax | 9 | 15 | |||||
Other comprehensive income (loss), net of tax* | $ | (77 | ) | $ | 9 | ||
Comprehensive income | $ | 258 | $ | 208 |
Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings (Deficit) | Treasury Stock, At Cost | Accumulated Other Comprehensive Income (Loss), Net | Total | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||
(In millions, except share and per share data) | |||||||||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2012(1) | 4 | $ | 3,419 | 1,259 | $ | 13 | $ | 18,855 | $ | (4,322 | ) | $ | (1,397 | ) | $ | (69 | ) | $ | 16,499 | ||||||||||||||
Net income | — | — | — | — | — | 199 | — | — | 199 | ||||||||||||||||||||||||
Net change in unrealized gains and losses on securities available for sale, net of tax and reclassification adjustment | — | — | — | — | — | — | — | (6 | ) | (6 | ) | ||||||||||||||||||||||
Net change from defined benefit pension plans, net of tax | — | — | — | — | — | — | — | 15 | 15 | ||||||||||||||||||||||||
Cash dividends declared—$0.01 per share(1) | — | — | — | — | (13 | ) | — | — | — | (13 | ) | ||||||||||||||||||||||
Preferred dividends: | |||||||||||||||||||||||||||||||||
U.S. Treasury preferred stock dividends | — | — | — | — | — | (44 | ) | — | — | (44 | ) | ||||||||||||||||||||||
Preferred stock transactions: | |||||||||||||||||||||||||||||||||
Discount accretion | — | 10 | — | — | — | (10 | ) | — | — | — | |||||||||||||||||||||||
Common stock transactions: | |||||||||||||||||||||||||||||||||
Net proceeds from issuance of 153 million shares of common stock | — | — | 153 | 2 | 873 | — | — | — | 875 | ||||||||||||||||||||||||
Impact of stock transactions under compensation plans, net | — | — | — | — | 6 | — | 3 | — | 9 | ||||||||||||||||||||||||
BALANCE AT MARCH 31, 2012(1) | 4 | $ | 3,429 | 1,412 | $ | 15 | $ | 19,721 | $ | (4,177 | ) | $ | (1,394 | ) | $ | (60 | ) | $ | 17,534 | ||||||||||||||
BALANCE AT JANUARY 1, 2013 | 1 | $ | 482 | 1,413 | $ | 15 | $ | 19,652 | $ | (3,338 | ) | $ | (1,377 | ) | $ | 65 | $ | 15,499 | |||||||||||||||
Net income | — | — | — | — | — | 335 | — | — | 335 | ||||||||||||||||||||||||
Net change in unrealized gains and losses on securities available for sale, net of tax and reclassification adjustment | — | — | — | — | — | — | — | (78 | ) | (78 | ) | ||||||||||||||||||||||
Net change in unrealized gains and losses on derivative instruments, net of tax and reclassification adjustment | — | — | — | — | — | — | — | (8 | ) | (8 | ) | ||||||||||||||||||||||
Net change from defined benefit pension plans, net of tax | — | — | — | — | — | — | — | 9 | 9 | ||||||||||||||||||||||||
Cash dividends declared—$0.01 per share | — | — | — | — | (14 | ) | — | — | — | (14 | ) | ||||||||||||||||||||||
Series A preferred stock dividends | — | (8 | ) | — | — | — | — | — | — | (8 | ) | ||||||||||||||||||||||
Common stock transactions: | |||||||||||||||||||||||||||||||||
Impact of stock transactions under compensation plans, net | — | — | — | — | 5 | — | — | — | 5 | ||||||||||||||||||||||||
BALANCE AT MARCH 31, 2013 | 1 | $ | 474 | 1,413 | $ | 15 | $ | 19,643 | $ | (3,003 | ) | $ | (1,377 | ) | $ | (12 | ) | $ | 15,740 |
(1) | Prior period cash dividends declared on common stock have been reclassified from retained earnings (deficit) to additional paid-in capital to correct an error in classification. Refer to Note 14 "Stockholder's Equity and Accumulated Other Comprehensive Income (Loss)" in Regions' Annual Report on Form 10-K for the year ended December 31, 2012 for further discussion. |
Three Months Ended March 31 | |||||||
2013 | 2012 | ||||||
(In millions ) | |||||||
Operating activities: | |||||||
Net income | $ | 335 | $ | 199 | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Provision for loan losses | 10 | 117 | |||||
Depreciation, amortization and accretion, net | 171 | 171 | |||||
Provision for losses on other real estate, net | 3 | 15 | |||||
Securities (gains) losses, net | (15 | ) | (12 | ) | |||
Deferred income tax expense | 121 | 55 | |||||
Originations and purchases of loans held for sale | (1,247 | ) | (1,029 | ) | |||
Proceeds from sales of loans held for sale | 1,567 | 1,313 | |||||
(Gain) loss on sale of loans, net | (43 | ) | (38 | ) | |||
Net change in operating assets and liabilities: | |||||||
Trading account assets | (5 | ) | 139 | ||||
Other interest-earning assets | 798 | 31 | |||||
Interest receivable | (22 | ) | (36 | ) | |||
Other assets | 226 | 48 | |||||
Other liabilities | (758 | ) | (218 | ) | |||
Other | (11 | ) | — | ||||
Net cash from operating activities | 1,130 | 755 | |||||
Investing activities: | |||||||
Proceeds from sales of securities available for sale | 388 | 1,398 | |||||
Proceeds from maturities of securities available for sale | 1,765 | 1,594 | |||||
Proceeds from maturities of securities held to maturity | 2 | 1 | |||||
Purchases of securities available for sale | (2,527 | ) | (5,075 | ) | |||
Proceeds from sales of loans | 48 | 159 | |||||
Purchases of loans | (220 | ) | (174 | ) | |||
Net change in loans | (2 | ) | 337 | ||||
Net purchases of premises and equipment | (33 | ) | (37 | ) | |||
Net cash from investing activities | (579 | ) | (1,797 | ) | |||
Financing activities: | |||||||
Net change in deposits | (1,341 | ) | 1,511 | ||||
Net change in short-term borrowings | 256 | (159 | ) | ||||
Payments on long-term borrowings | — | (900 | ) | ||||
Cash dividends on common stock | (14 | ) | (13 | ) | |||
Cash dividends on Series A preferred stock issued to the U.S. Treasury | — | (44 | ) | ||||
Cash dividends on Series A preferred stock | (8 | ) | — | ||||
Net proceeds from issuance of common stock | — | 875 | |||||
Net cash from financing activities | (1,107 | ) | 1,270 | ||||
Net change in cash and cash equivalents | (556 | ) | 228 | ||||
Cash and cash equivalents at beginning of year | 5,489 | 7,245 | |||||
Cash and cash equivalents at end of period | $ | 4,933 | $ | 7,473 |
Three Months Ended March 31 | |||||||
2013 | 2012 | ||||||
(In millions, except per share data) | |||||||
Interest income | $ | — | $ | 8 | |||
Interest expense | — | 1 | |||||
Net interest income | — | 7 | |||||
Non-interest income: | |||||||
Brokerage, investment banking and capital markets | — | 233 | |||||
Other | — | 7 | |||||
Total non-interest income | — | 240 | |||||
Non-interest expense: | |||||||
Salaries and employee benefits | — | 171 | |||||
Net occupancy expense | — | 9 | |||||
Furniture and equipment expense | — | 8 | |||||
Professional and legal expenses | (5 | ) | 96 | ||||
Other | 1 | 28 | |||||
Total non-interest expense | (4 | ) | 312 | ||||
Income (loss) from discontinued operations before income taxes | 4 | (65 | ) | ||||
Income tax expense (benefit) | 2 | (25 | ) | ||||
Income (loss) from discontinued operations, net of tax | $ | 2 | $ | (40 | ) | ||
Earnings (loss) per common share from discontinued operations: | |||||||
Basic | $ | 0.00 | $ | (0.03 | ) | ||
Diluted | $ | 0.00 | $ | (0.03 | ) |
March 31, 2013 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
(In millions) | |||||||||||||||
Securities available for sale: | |||||||||||||||
U.S. Treasury securities | $ | 53 | $ | 1 | $ | — | $ | 54 | |||||||
Federal agency securities | 485 | 3 | (1 | ) | 487 | ||||||||||
Obligations of states and political subdivisions | 7 | — | — | 7 | |||||||||||
Mortgage-backed securities: | |||||||||||||||
Residential agency | 20,469 | 493 | (27 | ) | 20,935 | ||||||||||
Residential non-agency | 11 | 1 | — | 12 | |||||||||||
Commercial agency | 789 | 20 | (1 | ) | 808 | ||||||||||
Commercial non-agency | 1,131 | 30 | (3 | ) | 1,158 | ||||||||||
Corporate and other debt securities | 2,906 | 67 | (16 | ) | 2,957 | ||||||||||
Equity securities | 663 | 8 | — | 671 | |||||||||||
$ | 26,514 | $ | 623 | $ | (48 | ) | $ | 27,089 | |||||||
Securities held to maturity: | |||||||||||||||
U.S. Treasury securities | $ | 2 | $ | — | $ | — | $ | 2 | |||||||
Federal agency securities | 1 | — | — | 1 | |||||||||||
Mortgage-backed securities: | |||||||||||||||
Residential agency | 5 | 1 | — | 6 | |||||||||||
$ | 8 | $ | 1 | $ | — | $ | 9 |
December 31, 2012 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
(In millions) | |||||||||||||||
Securities available for sale: | |||||||||||||||
U.S. Treasury securities | $ | 50 | $ | 2 | $ | — | $ | 52 | |||||||
Federal agency securities | 550 | 4 | (1 | ) | 553 | ||||||||||
Obligations of states and political subdivisions | 9 | — | — | 9 | |||||||||||
Mortgage-backed securities: | |||||||||||||||
Residential agency | 20,721 | 574 | (18 | ) | 21,277 | ||||||||||
Residential non-agency | 12 | 1 | — | 13 | |||||||||||
Commercial agency | 705 | 20 | — | 725 | |||||||||||
Commercial non-agency | 1,055 | 43 | — | 1,098 | |||||||||||
Corporate and other debt securities | 2,762 | 81 | (8 | ) | 2,835 | ||||||||||
Equity securities | 679 | 4 | (1 | ) | 682 | ||||||||||
$ | 26,543 | $ | 729 | $ | (28 | ) | $ | 27,244 | |||||||
Securities held to maturity: | |||||||||||||||
U.S. Treasury securities | $ | 2 | $ | — | $ | — | $ | 2 | |||||||
Federal agency securities | 2 | — | — | 2 | |||||||||||
Mortgage-backed securities: | |||||||||||||||
Residential agency | 6 | 1 | — | 7 | |||||||||||
$ | 10 | $ | 1 | $ | — | $ | 11 |
March 31 2013 | December 31 2012 | |||||||
(In millions) | ||||||||
Federal Reserve Bank | $ | 484 | $ | 484 | ||||
Federal Home Loan Bank | 67 | 73 |
Amortized Cost | Estimated Fair Value | |||||||
(In millions) | ||||||||
Securities available for sale: | ||||||||
Due in one year or less | $ | 42 | $ | 42 | ||||
Due after one year through five years | 920 | 940 | ||||||
Due after five years through ten years | 2,047 | 2,077 | ||||||
Due after ten years | 442 | 446 | ||||||
Mortgage-backed securities: | ||||||||
Residential agency | 20,469 | 20,935 | ||||||
Residential non-agency | 11 | 12 | ||||||
Commercial agency | 789 | 808 | ||||||
Commercial non-agency | 1,131 | 1,158 | ||||||
Equity securities | 663 | 671 | ||||||
$ | 26,514 | $ | 27,089 | |||||
Securities held to maturity: | ||||||||
Due in one year or less | $ | 1 | $ | 1 | ||||
Due after one year through five years | 2 | 2 | ||||||
Due after five years through ten years | — | — | ||||||
Due after ten years | — | — | ||||||
Mortgage-backed securities: | ||||||||
Residential agency | 5 | 6 | ||||||
$ | 8 | $ | 9 |
March 31, 2013 | ||||||||||||||||||||||||
Less Than Twelve Months | Twelve Months or More | Total | ||||||||||||||||||||||
Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
U.S. Treasury securities | $ | 7 | $ | — | $ | — | $ | — | $ | 7 | $ | — | ||||||||||||
Federal agency securities | 351 | (1 | ) | 5 | — | 356 | (1 | ) | ||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
Residential agency | 2,717 | (26 | ) | 121 | (1 | ) | 2,838 | (27 | ) | |||||||||||||||
Residential non-agency | 4 | — | — | — | 4 | — | ||||||||||||||||||
Commercial agency | 110 | (1 | ) | — | — | 110 | (1 | ) | ||||||||||||||||
Commercial non-agency | 314 | (3 | ) | — | — | 314 | (3 | ) | ||||||||||||||||
All other securities | 924 | (15 | ) | 14 | (1 | ) | 938 | (16 | ) | |||||||||||||||
$ | 4,427 | $ | (46 | ) | $ | 140 | $ | (2 | ) | $ | 4,567 | $ | (48 | ) |
December 31, 2012 | ||||||||||||||||||||||||
Less Than Twelve Months | Twelve Months or More | Total | ||||||||||||||||||||||
Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Federal agency securities | $ | 350 | $ | (1 | ) | $ | — | $ | — | $ | 350 | $ | (1 | ) | ||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
Residential agency | 1,777 | (16 | ) | 157 | (2 | ) | 1,934 | (18 | ) | |||||||||||||||
All other securities | 884 | (9 | ) | — | — | 884 | (9 | ) | ||||||||||||||||
$ | 3,011 | $ | (26 | ) | $ | 157 | $ | (2 | ) | $ | 3,168 | $ | (28 | ) |
Three Months Ended March 31 | ||||||||
2013 | 2012 | |||||||
(In millions) | ||||||||
Proceeds | $ | 388 | $ | 1,398 | ||||
Gross realized gains | $ | 16 | $ | 12 | ||||
Gross realized losses | (1 | ) | — | |||||
Securities gains, net | $ | 15 | $ | 12 |
March 31, 2013 | December 31, 2012 | |||||||
(In millions, net of unearned income) | ||||||||
Commercial and industrial | $ | 27,602 | $ | 26,674 | ||||
Commercial real estate mortgage—owner-occupied | 9,812 | 10,095 | ||||||
Commercial real estate construction—owner-occupied | 325 | 302 | ||||||
Total commercial | 37,739 | 37,071 | ||||||
Commercial investor real estate mortgage | 6,338 | 6,808 | ||||||
Commercial investor real estate construction | 984 | 914 | ||||||
Total investor real estate | 7,322 | 7,722 | ||||||
Residential first mortgage | 12,875 | 12,963 | ||||||
Home equity | 11,546 | 11,800 | ||||||
Indirect | 2,483 | 2,336 | ||||||
Consumer credit card | 851 | 906 | ||||||
Other consumer | 1,120 | 1,197 | ||||||
Total consumer | 28,875 | 29,202 | ||||||
$ | 73,936 | $ | 73,995 |
Three Months Ended March 31, 2013 | ||||||||||||||||
Commercial | Investor Real Estate | Consumer | Total | |||||||||||||
(In millions) | ||||||||||||||||
Allowance for loan losses, January 1, 2013 | $ | 847 | $ | 469 | $ | 603 | $ | 1,919 | ||||||||
Provision (credit) for loan losses | 17 | (31 | ) | 24 | 10 | |||||||||||
Loan losses: | ||||||||||||||||
Charge-offs | (99 | ) | (23 | ) | (102 | ) | (224 | ) | ||||||||
Recoveries | 17 | 9 | 18 | 44 | ||||||||||||
Net loan losses | (82 | ) | (14 | ) | (84 | ) | (180 | ) | ||||||||
Allowance for loan losses, March 31, 2013 | 782 | 424 | 543 | 1,749 | ||||||||||||
Reserve for unfunded credit commitments, January 1, 2013 | 69 | 10 | 4 | 83 | ||||||||||||
Provision for unfunded credit commitments | 5 | — | — | 5 | ||||||||||||
Reserve for unfunded credit commitments, March 31, 2013 | 74 | 10 | 4 | 88 | ||||||||||||
Allowance for credit losses, March 31, 2013 | $ | 856 | $ | 434 | $ | 547 | $ | 1,837 | ||||||||
Portion of ending allowance for loan losses: | ||||||||||||||||
Individually evaluated for impairment | $ | 74 | $ | 65 | $ | 1 | $ | 140 | ||||||||
Collectively evaluated for impairment | 708 | 359 | 542 | 1,609 | ||||||||||||
Total allowance for loan losses | $ | 782 | $ | 424 | $ | 543 | $ | 1,749 | ||||||||
Portion of loan portfolio ending balance: | ||||||||||||||||
Individually evaluated for impairment | $ | 384 | $ | 304 | $ | 2 | $ | 690 | ||||||||
Collectively evaluated for impairment | 37,355 | 7,018 | 28,873 | 73,246 | ||||||||||||
Total loans evaluated for impairment | $ | 37,739 | $ | 7,322 | $ | 28,875 | $ | 73,936 |
Three Months Ended March 31, 2012 | ||||||||||||||||
Commercial | Investor Real Estate | Consumer | Total | |||||||||||||
(In millions) | ||||||||||||||||
Allowance for loan losses, January 1, 2012 | $ | 1,030 | $ | 991 | $ | 724 | $ | 2,745 | ||||||||
Provision (credit) for loan losses | 61 | (10 | ) | 66 | 117 | |||||||||||
Loan losses: | ||||||||||||||||
Charge-offs | (125 | ) | (95 | ) | (156 | ) | (376 | ) | ||||||||
Recoveries | 16 | 12 | 16 | 44 | ||||||||||||
Net loan losses | (109 | ) | (83 | ) | (140 | ) | (332 | ) | ||||||||
Allowance for loan losses, March 31, 2012 | 982 | 898 | 650 | 2,530 | ||||||||||||
Reserve for unfunded credit commitments, January 1, 2012 | 30 | 26 | 22 | 78 | ||||||||||||
Provision (credit) for unfunded credit commitments | 14 | — | (1 | ) | 13 | |||||||||||
Reserve for unfunded credit commitments, March 31, 2012 | 44 | 26 | 21 | 91 | ||||||||||||
Allowance for credit losses, March 31, 2012 | $ | 1,026 | $ | 924 | $ | 671 | $ | 2,621 | ||||||||
Portion of ending allowance for loan losses: | ||||||||||||||||
Individually evaluated for impairment | $ | 105 | $ | 146 | $ | 2 | $ | 253 | ||||||||
Collectively evaluated for impairment | 877 | 752 | 648 | 2,277 | ||||||||||||
Total allowance for loan losses | $ | 982 | $ | 898 | $ | 650 | $ | 2,530 | ||||||||
Portion of loan portfolio ending balance: | ||||||||||||||||
Individually evaluated for impairment | $ | 475 | $ | 532 | $ | 7 | $ | 1,014 | ||||||||
Collectively evaluated for impairment | 35,835 | 9,579 | 30,292 | 75,706 | ||||||||||||
Total loans evaluated for impairment | $ | 36,310 | $ | 10,111 | $ | 30,299 | $ | 76,720 |
• | Pass—includes obligations where the probability of default is considered low; |
• | Special Mention—includes obligations that have potential weakness which may, if not reversed or corrected, weaken the credit or inadequately protect the Company’s position at some future date. Obligations in this category may also be subject to economic or market conditions which may, in the future, have an adverse effect on debt service ability; |
• | Substandard Accrual—includes obligations that exhibit a well-defined weakness which presently jeopardizes debt repayment, even though they are currently performing. These obligations are characterized by the distinct possibility that the Company may incur a loss in the future if these weaknesses are not corrected; |
• | Non-accrual—includes obligations where management has determined that full payment of principal and interest is in doubt. |
March 31, 2013 | ||||||||||||||||||||
Pass | Special Mention | Substandard Accrual | Non-accrual | Total | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Commercial and industrial | $ | 26,280 | $ | 430 | $ | 537 | $ | 355 | $ | 27,602 | ||||||||||
Commercial real estate mortgage—owner-occupied | 8,767 | 231 | 394 | 420 | 9,812 | |||||||||||||||
Commercial real estate construction—owner-occupied | 274 | 2 | 37 | 12 | 325 | |||||||||||||||
Total commercial | $ | 35,321 | $ | 663 | $ | 968 | $ | 787 | $ | 37,739 | ||||||||||
Commercial investor real estate mortgage | $ | 4,813 | $ | 373 | $ | 701 | $ | 451 | $ | 6,338 | ||||||||||
Commercial investor real estate construction | 827 | 100 | 44 | 13 | 984 | |||||||||||||||
Total investor real estate | $ | 5,640 | $ | 473 | $ | 745 | $ | 464 | $ | 7,322 | ||||||||||
Accrual | Non-accrual | Total | ||||||||||||||||||
(In millions) | ||||||||||||||||||||
Residential first mortgage | $ | 12,674 | $ | 201 | $ | 12,875 | ||||||||||||||
Home equity | 11,413 | 133 | 11,546 | |||||||||||||||||
Indirect | 2,482 | 1 | 2,483 | |||||||||||||||||
Consumer credit card | 851 | — | 851 | |||||||||||||||||
Other consumer | 1,120 | — | 1,120 | |||||||||||||||||
Total consumer | $ | 28,540 | $ | 335 | $ | 28,875 | ||||||||||||||
$ | 73,936 |
December 31, 2012 | ||||||||||||||||||||
Pass | Special Mention | Substandard Accrual | Non-accrual | Total | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Commercial and industrial | $ | 25,225 | $ | 560 | $ | 480 | $ | 409 | $ | 26,674 | ||||||||||
Commercial real estate mortgage—owner-occupied | 8,976 | 240 | 440 | 439 | 10,095 | |||||||||||||||
Commercial real estate construction—owner-occupied | 278 | 3 | 7 | 14 | 302 | |||||||||||||||
Total commercial | $ | 34,479 | $ | 803 | $ | 927 | $ | 862 | $ | 37,071 | ||||||||||
Commercial investor real estate mortgage | $ | 5,089 | $ | 435 | $ | 827 | $ | 457 | $ | 6,808 | ||||||||||
Commercial investor real estate construction | 733 | 98 | 63 | 20 | 914 | |||||||||||||||
Total investor real estate | $ | 5,822 | $ | 533 | $ | 890 | $ | 477 | $ | 7,722 | ||||||||||
Accrual | Non-accrual | Total | ||||||||||||||||||
(In millions) | ||||||||||||||||||||
Residential first mortgage | $ | 12,749 | $ | 214 | $ | 12,963 | ||||||||||||||
Home equity | 11,672 | 128 | 11,800 | |||||||||||||||||
Indirect | 2,336 | — | 2,336 | |||||||||||||||||
Consumer credit card | 906 | — | 906 | |||||||||||||||||
Other consumer | 1,197 | — | 1,197 | |||||||||||||||||
Total consumer | $ | 28,860 | $ | 342 | $ | 29,202 | ||||||||||||||
$ | 73,995 |
March 31, 2013 | ||||||||||||||||||||||||||||
Accrual Loans | ||||||||||||||||||||||||||||
30-59 DPD | 60-89 DPD | 90+ DPD | Total 30+ DPD | Total Accrual | Non-accrual | Total | ||||||||||||||||||||||