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, 2014 |
¨ | 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. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |||
Item 3. | ||||
Item 4. | ||||
Part II. Other Information | ||||
Item 1. | ||||
Item 2. | ||||
Item 6. | ||||
• | Current and future economic and market conditions in the United States generally or in the communities we serve, including the effects of declines in property values, unemployment rates and potential reduction of economic growth. |
• | Possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations. |
• | The effects of a possible downgrade in the U.S. government’s sovereign credit rating or outlook. |
• | Possible changes in market interest rates. |
• | Any impairment of our goodwill or other intangibles, or any adjustment of valuation allowances on our deferred tax assets due to adverse changes in the economic environment, declining operations of the reporting unit, or other factors. |
• | Possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans. |
• | Changes in the speed of loan prepayments, loan origination and sale volumes, charge-offs, loan loss provisions or actual loan losses. |
• | Possible acceleration of prepayments on mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on those securities. |
• | Our ability to effectively compete with other financial services companies, some of whom possess greater financial resources than we do and are subject to different regulatory standards than we are. |
• | Loss of customer checking and savings account deposits as customers pursue other, higher-yield investments. |
• | Our ability to develop and gain acceptance from current and prospective customers for new products and services in a timely manner. |
• | Changes in laws and regulations affecting our businesses, including changes in the enforcement and interpretation of such laws and regulations by applicable governmental and self-regulatory agencies. |
• | Our ability to obtain regulatory approval (as part of the CCAR process or otherwise) to take certain capital actions, including paying dividends and any plans to increase common stock dividends, repurchase common stock under current or future programs, or issue or redeem preferred stock or other regulatory capital instruments. |
• | Our ability to comply with applicable capital and liquidity requirements (including finalized Basel III capital standards), including our ability to generate capital internally or raise capital on favorable terms. |
• | The costs and other effects (including reputational harm) of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions to which we or any of our subsidiaries are a party. |
• | Any adverse change to our ability to collect interchange fees in a profitable manner, whether such change is the result of regulation, litigation, legislation, or other governmental action. |
• | Our 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 our business. |
• | Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets and to attract deposits. |
• | Any inaccurate or incomplete information provided to us by our customers or counterparties. |
• | Inability of our framework to manage risks associated with our business, including operational risk and credit risk. |
• | The inability of our internal disclosure controls and procedures to prevent, detect or mitigate any material errors or fraudulent acts. |
• | The effects of geopolitical instability, including wars, conflicts and terrorist attacks. |
• | The effects of man-made and natural disasters, including fires, floods, droughts, tornadoes, hurricanes and environmental damage. |
• | Our ability to keep pace with technological changes. |
• | Our ability to identify and address cyber-security risks such as data security breaches, “denial of service” attacks, “hacking” and identity theft. |
• | Possible downgrades in our credit ratings or outlook. |
• | The effects of problems encountered by other financial institutions that adversely affect us or the banking industry generally. |
• | The effects of the failure of any component of our business infrastructure which is provided by a third party. |
• | Our ability to receive dividends from our subsidiaries. |
• | 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 our reputation resulting from developments related to any of the items identified above. |
March 31, 2014 | December 31, 2013 | ||||||
(In millions, except share data) | |||||||
Assets | |||||||
Cash and due from banks | $ | 2,072 | $ | 1,661 | |||
Interest-bearing deposits in other banks | 3,114 | 3,612 | |||||
Federal funds sold and securities purchased under agreements to resell | 10 | — | |||||
Trading account securities | 117 | 111 | |||||
Securities held to maturity (estimated fair value of $2,294 and $2,307, respectively) | 2,317 | 2,353 | |||||
Securities available for sale | 21,615 | 21,485 | |||||
Loans held for sale (includes $344 and $429 measured at fair value, respectively) | 395 | 1,055 | |||||
Loans, net of unearned income | 75,680 | 74,609 | |||||
Allowance for loan losses | (1,261 | ) | (1,341 | ) | |||
Net loans | 74,419 | 73,268 | |||||
Other interest-earning assets | 86 | 86 | |||||
Premises and equipment, net | 2,194 | 2,216 | |||||
Interest receivable | 316 | 313 | |||||
Goodwill | 4,816 | 4,816 | |||||
Mortgage servicing rights at fair value | 288 | 297 | |||||
Other identifiable intangible assets | 294 | 295 | |||||
Other assets | 5,880 | 5,828 | |||||
Total assets | $ | 117,933 | $ | 117,396 | |||
Liabilities and Stockholders’ Equity | |||||||
Deposits: | |||||||
Non-interest-bearing | $ | 31,154 | $ | 30,083 | |||
Interest-bearing | 62,239 | 62,370 | |||||
Total deposits | 93,393 | 92,453 | |||||
Borrowed funds: | |||||||
Short-term borrowings: | |||||||
Federal funds purchased and securities sold under agreements to repurchase | 1,981 | 2,182 | |||||
Long-term borrowings | 4,226 | 4,830 | |||||
Total borrowed funds | 6,207 | 7,012 | |||||
Other liabilities | 2,201 | 2,163 | |||||
Total liabilities | 101,801 | 101,628 | |||||
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 | 442 | 450 | |||||
Common stock, par value $.01 per share: | |||||||
Authorized 3 billion shares | |||||||
Issued including treasury stock—1,419,451,253 and 1,419,006,360 shares, respectively | 14 | 14 | |||||
Additional paid-in capital | 19,179 | 19,216 | |||||
Retained earnings (deficit) | (1,897 | ) | (2,216 | ) | |||
Treasury stock, at cost—41,264,356 and 41,285,676 shares, respectively | (1,377 | ) | (1,377 | ) | |||
Accumulated other comprehensive income (loss), net | (229 | ) | (319 | ) | |||
Total stockholders’ equity | 16,132 | 15,768 | |||||
Total liabilities and stockholders’ equity | $ | 117,933 | $ | 117,396 |
Three Months Ended March 31 | |||||||
2014 | 2013 | ||||||
(In millions, except per share data) | |||||||
Interest income on: | |||||||
Loans, including fees | $ | 732 | $ | 743 | |||
Securities - taxable | 154 | 156 | |||||
Loans held for sale | 8 | 9 | |||||
Trading account securities | 2 | 1 | |||||
Other interest-earning assets | 2 | 2 | |||||
Total interest income | 898 | 911 | |||||
Interest expense on: | |||||||
Deposits | 27 | 42 | |||||
Long-term borrowings | 55 | 71 | |||||
Total interest expense | 82 | 113 | |||||
Net interest income | 816 | 798 | |||||
Provision for loan losses | 2 | 10 | |||||
Net interest income after provision for loan losses | 814 | 788 | |||||
Non-interest income: | |||||||
Service charges on deposit accounts | 173 | 184 | |||||
Card and ATM fees | 79 | 76 | |||||
Mortgage income | 40 | 72 | |||||
Securities gains (losses), net | 2 | 15 | |||||
Other | 144 | 154 | |||||
Total non-interest income | 438 | 501 | |||||
Non-interest expense: | |||||||
Salaries and employee benefits | 455 | 447 | |||||
Net occupancy expense | 93 | 90 | |||||
Furniture and equipment expense | 70 | 69 | |||||
Other | 199 | 236 | |||||
Total non-interest expense | 817 | 842 | |||||
Income from continuing operations before income taxes | 435 | 447 | |||||
Income tax expense | 128 | 114 | |||||
Income from continuing operations | 307 | 333 | |||||
Discontinued operations: | |||||||
Income from discontinued operations before income taxes | 19 | 4 | |||||
Income tax expense | 7 | 2 | |||||
Income from discontinued operations, net of tax | 12 | 2 | |||||
Net income | $ | 319 | $ | 335 | |||
Net income from continuing operations available to common shareholders | $ | 299 | $ | 325 | |||
Net income available to common shareholders | $ | 311 | $ | 327 | |||
Weighted-average number of shares outstanding: | |||||||
Basic | 1,378 | 1,413 | |||||
Diluted | 1,390 | 1,423 | |||||
Earnings per common share from continuing operations: | |||||||
Basic | $ | 0.22 | $ | 0.23 | |||
Diluted | 0.21 | 0.23 | |||||
Earnings per common share: | |||||||
Basic | $ | 0.23 | $ | 0.23 | |||
Diluted | 0.22 | 0.23 | |||||
Cash dividends declared per common share | 0.03 | 0.01 |
Three Months Ended March 31 | |||||||
2014 | 2013 | ||||||
(In millions) | |||||||
Net income | $ | 319 | $ | 335 | |||
Other comprehensive income (loss), net of tax: | |||||||
Unrealized losses on securities transferred to held to maturity: | |||||||
Unrealized losses on securities transferred to held for maturity during the period (net of zero and zero tax effect, respectively) | — | — | |||||
Less: reclassification adjustments for amortization of unrealized losses on securities transferred to held to maturity (net of ($1) and zero tax effect, respectively) | (2 | ) | — | ||||
Net change in unrealized losses on securities transferred to held to maturity | 2 | — | |||||
Unrealized gains (losses) on securities available for sale: | |||||||
Unrealized holding gains (losses) arising during the period (net of $49 and ($43) tax effect, respectively) | 79 | (68 | ) | ||||
Less: reclassification adjustments for securities gains (losses) realized in net income (net of $1 and $5 tax effect, respectively) | 1 | 10 | |||||
Net change in unrealized gains (losses) on securities available for sale, net of tax | 78 | (78 | ) | ||||
Unrealized gains (losses) on derivative instruments designated as cash flow hedges: | |||||||
Unrealized holding gains (losses) on derivatives arising during the period (net of $14 and $1 tax effect, respectively) | 23 | 1 | |||||
Less: reclassification adjustments for gains (losses) realized in net income (net of $11 and $6 tax effect, respectively) | 17 | 9 | |||||
Net change in unrealized gains (losses) on derivative instruments, net of tax | 6 | (8 | ) | ||||
Defined benefit pension plans and other post employment benefits: | |||||||
Net actuarial gains (losses) arising during the period (net of zero and zero tax effect, respectively) | — | (1 | ) | ||||
Less: reclassification adjustments for amortization of actuarial loss and prior service cost realized in net income, and other (net of ($2) and ($6) tax effect, respectively) | (4 | ) | (10 | ) | |||
Net change from defined benefit pension plans, net of tax | 4 | 9 | |||||
Other comprehensive income (loss), net of tax | 90 | (77 | ) | ||||
Comprehensive income | $ | 409 | $ | 258 |
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, 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 | ||||||||||||||
BALANCE AT JANUARY 1, 2014 | 1 | $ | 450 | 1,378 | $ | 14 | $ | 19,216 | $ | (2,216 | ) | $ | (1,377 | ) | $ | (319 | ) | $ | 15,768 | ||||||||||||||
Net income | — | — | — | — | — | 319 | — | — | 319 | ||||||||||||||||||||||||
Amortization of unrealized losses on securities transferred to held to maturity, net of tax | — | — | — | — | — | — | — | 2 | 2 | ||||||||||||||||||||||||
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 | — | — | — | — | — | — | — | 6 | 6 | ||||||||||||||||||||||||
Net change from defined benefit pension plans, net of tax | — | — | — | — | — | — | — | 4 | 4 | ||||||||||||||||||||||||
Cash dividends declared—$0.03 per share | — | — | — | — | (41 | ) | — | — | — | (41 | ) | ||||||||||||||||||||||
Series A preferred stock dividends | — | (8 | ) | — | — | — | — | — | — | (8 | ) | ||||||||||||||||||||||
Common stock transactions: | |||||||||||||||||||||||||||||||||
Impact of share repurchase | — | — | (1 | ) | — | (8 | ) | — | — | — | (8 | ) | |||||||||||||||||||||
Impact of stock transactions under compensation plans, net | — | — | 1 | — | 12 | — | — | — | 12 | ||||||||||||||||||||||||
BALANCE AT MARCH 31, 2014 | 1 | $ | 442 | 1,378 | $ | 14 | $ | 19,179 | $ | (1,897 | ) | $ | (1,377 | ) | $ | (229 | ) | $ | 16,132 |
Three Months Ended March 31 | |||||||
2014 | 2013 | ||||||
(In millions) | |||||||
Operating activities: | |||||||
Net income | $ | 319 | $ | 335 | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Provision for loan losses | 2 | 10 | |||||
Depreciation, amortization and accretion, net | 122 | 171 | |||||
Provision for losses on other real estate, net | — | 3 | |||||
Securities (gains) losses, net | (2 | ) | (15 | ) | |||
Deferred income tax expense | 115 | 121 | |||||
Originations and purchases of loans held for sale | (511 | ) | (1,247 | ) | |||
Proceeds from sales of loans held for sale | 640 | 1,567 | |||||
Gain on TDRs held for sale, net | (35 | ) | — | ||||
(Gain) loss on sale of loans, net | (7 | ) | (43 | ) | |||
Net change in operating assets and liabilities: | |||||||
Trading account securities | (6 | ) | (5 | ) | |||
Other interest-earning assets | — | 798 | |||||
Interest receivable | (3 | ) | (22 | ) | |||
Other assets | (250 | ) | 226 | ||||
Other liabilities | 36 | (758 | ) | ||||
Other | 1 | (11 | ) | ||||
Net cash from operating activities | 421 | 1,130 | |||||
Investing activities: | |||||||
Proceeds from sales of securities available for sale | 185 | 388 | |||||
Proceeds from maturities of securities held to maturity | 36 | 2 | |||||
Proceeds from maturities of securities available for sale | 711 | 1,765 | |||||
Purchases of securities available for sale | (846 | ) | (2,527 | ) | |||
Proceeds from sales of loans | 580 | 48 | |||||
Purchases of loans | (246 | ) | (220 | ) | |||
Net change in loans | (963 | ) | (2 | ) | |||
Net purchases of premises and equipment | (37 | ) | (33 | ) | |||
Net cash from investing activities | (580 | ) | (579 | ) | |||
Financing activities: | |||||||
Net change in deposits | 940 | (1,341 | ) | ||||
Net change in short-term borrowings | (201 | ) | 256 | ||||
Payments on long-term borrowings | (600 | ) | — | ||||
Cash dividends on common stock | (41 | ) | (14 | ) | |||
Cash dividends on preferred stock | (8 | ) | (8 | ) | |||
Repurchase of common stock | (8 | ) | — | ||||
Net cash from financing activities | 82 | (1,107 | ) | ||||
Net change in cash and cash equivalents | (77 | ) | (556 | ) | |||
Cash and cash equivalents at beginning of year | 5,273 | 5,489 | |||||
Cash and cash equivalents at end of period | $ | 5,196 | $ | 4,933 |
Three Months Ended March 31 | |||||||
2014 | 2013 | ||||||
(In millions, except per share data) | |||||||
Non-interest expense: | |||||||
Professional and legal expenses | $ | (19 | ) | $ | (5 | ) | |
Other | — | 1 | |||||
Total non-interest expense | (19 | ) | (4 | ) | |||
Income from discontinued operations before income taxes | 19 | 4 | |||||
Income tax expense | 7 | 2 | |||||
Income from discontinued operations, net of tax | $ | 12 | $ | 2 | |||
Earnings per common share from discontinued operations: | |||||||
Basic | $ | 0.01 | $ | 0.00 | |||
Diluted | $ | 0.01 | $ | 0.00 |
March 31, 2014 | |||||||||||||||||||||||||||
Recognized in OCI (1) | Not recognized in OCI | ||||||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Carrying Value | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||
Securities held to maturity: | |||||||||||||||||||||||||||
U.S. Treasury securities | $ | 1 | $ | — | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | |||||||||||||
Federal agency securities | 351 | — | (14 | ) | 337 | — | — | 337 | |||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||||||
Residential agency | 1,840 | — | (79 | ) | 1,761 | — | (17 | ) | 1,744 | ||||||||||||||||||
Commercial agency | 226 | — | (8 | ) | 218 | — | (6 | ) | 212 | ||||||||||||||||||
$ | 2,418 | $ | — | $ | (101 | ) | $ | 2,317 | $ | — | $ | (23 | ) | $ | 2,294 | ||||||||||||
Securities available for sale: | |||||||||||||||||||||||||||
U.S. Treasury securities | $ | 57 | $ | — | $ | — | $ | 57 | $ | 57 | |||||||||||||||||
Federal agency securities | 81 | 1 | — | 82 | 82 | ||||||||||||||||||||||
Obligations of states and political subdivisions | 4 | — | — | 4 | 4 | ||||||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||||||
Residential agency | 15,498 | 209 | (121 | ) | 15,586 | 15,586 | |||||||||||||||||||||
Residential non-agency | 8 | 1 | — | 9 | 9 | ||||||||||||||||||||||
Commercial agency | 1,125 | 6 | (13 | ) | 1,118 | 1,118 | |||||||||||||||||||||
Commercial non-agency | 1,264 | 13 | (23 | ) | 1,254 | 1,254 | |||||||||||||||||||||
Corporate and other debt securities | 2,838 | 51 | (44 | ) | 2,845 | 2,845 | |||||||||||||||||||||
Equity securities | 648 | 12 | — | 660 | 660 | ||||||||||||||||||||||
$ | 21,523 | $ | 293 | $ | (201 | ) | $ | 21,615 | $ | 21,615 |
December 31, 2013 | |||||||||||||||||||||||||||
Recognized in OCI (1) | Not recognized in OCI | ||||||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Carrying Value | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||
Securities held to maturity: | |||||||||||||||||||||||||||
U.S. Treasury securities | $ | 1 | $ | — | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | |||||||||||||
Federal agency securities | 351 | — | (15 | ) | 336 | — | (3 | ) | 333 | ||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||||||
Residential agency | 1,878 | — | (81 | ) | 1,797 | — | (37 | ) | 1,760 | ||||||||||||||||||
Commercial agency | 227 | — | (8 | ) | 219 | — | (6 | ) | 213 | ||||||||||||||||||
$ | 2,457 | $ | — | $ | (104 | ) | $ | 2,353 | $ | — | $ | (46 | ) | $ | 2,307 | ||||||||||||
Securities available for sale: | |||||||||||||||||||||||||||
U.S. Treasury securities | $ | 56 | $ | — | $ | — | $ | 56 | $ | 56 | |||||||||||||||||
Federal agency securities | 88 | 1 | — | 89 | 89 | ||||||||||||||||||||||
Obligations of states and political subdivisions | 5 | — | — | 5 | 5 | ||||||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||||||
Residential agency | 15,664 | 183 | (170 | ) | 15,677 | 15,677 | |||||||||||||||||||||
Residential non-agency | 8 | 1 | — | 9 | 9 | ||||||||||||||||||||||
Commercial agency | 947 | 4 | (16 | ) | 935 | 935 | |||||||||||||||||||||
Commercial non-agency | 1,232 | 12 | (33 | ) | 1,211 | 1,211 | |||||||||||||||||||||
Corporate and other debt securities | 2,855 | 44 | (72 | ) | 2,827 | 2,827 | |||||||||||||||||||||
Equity securities | 664 | 12 | — | 676 | 676 | ||||||||||||||||||||||
$ | 21,519 | $ | 257 | $ | (291 | ) | $ | 21,485 | $ | 21,485 |
March 31, 2014 | December 31, 2013 | ||||||
(In millions) | |||||||
Federal Reserve Bank | $ | 472 | $ | 472 | |||
Federal Home Loan Bank | 34 | 67 |
Amortized Cost | Estimated Fair Value | ||||||
(In millions) | |||||||
Securities held to maturity: | |||||||
Due in one year or less | $ | 1 | $ | 1 | |||
Due after one year through five years | 1 | 1 | |||||
Due after five years through ten years | 350 | 336 | |||||
Mortgage-backed securities: | |||||||
Residential agency | 1,840 | 1,744 | |||||
Commercial agency | 226 | 212 | |||||
$ | 2,418 | $ | 2,294 | ||||
Securities available for sale: | |||||||
Due in one year or less | $ | 74 | $ | 75 | |||
Due after one year through five years | 1,080 | 1,098 | |||||
Due after five years through ten years | 1,440 | 1,421 | |||||
Due after ten years | 386 | 394 | |||||
Mortgage-backed securities: | |||||||
Residential agency | 15,498 | 15,586 | |||||
Residential non-agency | 8 | 9 | |||||
Commercial agency | 1,125 | 1,118 | |||||
Commercial non-agency | 1,264 | 1,254 | |||||
Equity securities | 648 | 660 | |||||
$ | 21,523 | $ | 21,615 |
March 31, 2014 | |||||||||||||||||||||||
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) | |||||||||||||||||||||||
Securities held to maturity: | |||||||||||||||||||||||
Federal agency securities | $ | 192 | $ | (8 | ) | $ | 144 | $ | (6 | ) | $ | 336 | $ | (14 | ) | ||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Residential agency | 941 | (50 | ) | 801 | (45 | ) | 1,742 | (95 | ) | ||||||||||||||
Commercial agency | 165 | (11 | ) | 46 | (4 | ) | 211 | (15 | ) | ||||||||||||||
$ | 1,298 | $ | (69 | ) | $ | 991 | $ | (55 | ) | $ | 2,289 | $ | (124 | ) | |||||||||
Securities available for sale: | |||||||||||||||||||||||
U.S. Treasury securities | $ | 11 | $ | — | $ | 4 | $ | — | $ | 15 | $ | — | |||||||||||
Federal agency securities | — | — | 10 | — | 10 | — | |||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Residential agency | 5,825 | (114 | ) | 291 | (8 | ) | 6,116 | (122 | ) | ||||||||||||||
Commercial agency | 635 | (12 | ) | — | — | 635 | (12 | ) | |||||||||||||||
Commercial non-agency | 546 | (17 | ) | 146 | (6 | ) | 692 | (23 | ) | ||||||||||||||
All other securities | 1,087 | (30 | ) | 262 | (14 | ) | 1,349 | (44 | ) | ||||||||||||||
$ | 8,104 | $ | (173 | ) | $ | 713 | $ | (28 | ) | $ | 8,817 | $ | (201 | ) |
December 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) | |||||||||||||||||||||||
Securities held to maturity: | |||||||||||||||||||||||
Federal agency securities | $ | 190 | $ | (9 | ) | $ | 142 | $ | (8 | ) | $ | 332 | $ | (17 | ) | ||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Residential agency | 1,236 | (77 | ) | 521 | (41 | ) | 1,757 | (118 | ) | ||||||||||||||
Commercial agency | 212 | (15 | ) | — | — | 212 | (15 | ) | |||||||||||||||
$ | 1,638 | $ | (101 | ) | $ | 663 | $ | (49 | ) | $ | 2,301 | $ | (150 | ) | |||||||||
Securities available for sale: | |||||||||||||||||||||||
U.S. Treasury securities | $ | 15 | $ | — | $ | 1 | $ | — | $ | 16 | $ | — | |||||||||||
Federal agency securities | 3 | — | 9 | — | 12 | — | |||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Residential agency | 6,153 | (161 | ) | 270 | (9 | ) | 6,423 | (170 | ) | ||||||||||||||
Commercial agency | 610 | (17 | ) | — | — | 610 | (17 | ) | |||||||||||||||
Commercial non-agency | 711 | (30 | ) | 62 | (3 | ) | 773 | (33 | ) | ||||||||||||||
All other securities | 1,422 | (58 | ) | 209 | (13 | ) | 1,631 | (71 | ) | ||||||||||||||
$ | 8,914 | $ | (266 | ) | $ | 551 | $ | (25 | ) | $ | 9,465 | $ | (291 | ) |
Three Months Ended March 31 | |||||||
2014 | 2013 | ||||||
(In millions) | |||||||
Gross realized gains | $ | 3 | $ | 16 | |||
Gross realized losses | (1 | ) | (1 | ) | |||
Securities gains, net | $ | 2 | $ | 15 |
March 31, 2014 | December 31, 2013 | ||||||
(In millions, net of unearned income) | |||||||
Commercial and industrial | $ | 30,466 | $ | 29,413 | |||
Commercial real estate mortgage—owner-occupied | 9,257 | 9,495 | |||||
Commercial real estate construction—owner-occupied | 375 | 310 | |||||
Total commercial | 40,098 | 39,218 | |||||
Commercial investor real estate mortgage | 5,338 | 5,318 | |||||
Commercial investor real estate construction | 1,654 | 1,432 | |||||
Total investor real estate | 6,992 | 6,750 | |||||
Residential first mortgage | 12,136 | 12,163 | |||||
Home equity | 11,148 | 11,294 | |||||
Indirect | 3,253 | 3,075 | |||||
Consumer credit card | 917 | 948 | |||||
Other consumer | 1,136 | 1,161 | |||||
Total consumer | 28,590 | 28,641 | |||||
$ | 75,680 | $ | 74,609 |
Three Months Ended March 31, 2014 | |||||||||||||||
Commercial | Investor Real Estate | Consumer | Total | ||||||||||||
(In millions) | |||||||||||||||
Allowance for loan losses, January 1, 2014 | $ | 711 | $ | 236 | $ | 394 | $ | 1,341 | |||||||
Provision (credit) for loan losses | 5 | (27 | ) | 24 | 2 | ||||||||||
Loan losses: | |||||||||||||||
Charge-offs | (41 | ) | (9 | ) | (74 | ) | (124 | ) | |||||||
Recoveries | 17 | 8 | 17 | 42 | |||||||||||
Net loan losses | (24 | ) | (1 | ) | (57 | ) | (82 | ) | |||||||
Allowance for loan losses, March 31, 2014 | 692 | 208 | 361 | 1,261 | |||||||||||
Reserve for unfunded credit commitments, January 1, 2014 | 63 | 12 | 3 | 78 | |||||||||||
Provision (credit) for unfunded credit losses | — | (1 | ) | 1 | — | ||||||||||
Reserve for unfunded credit commitments, March 31, 2014 | 63 | 11 | 4 | 78 | |||||||||||
Allowance for credit losses, March 31, 2014 | $ | 755 | $ | 219 | $ | 365 | $ | 1,339 | |||||||
Portion of ending allowance for loan losses: | |||||||||||||||
Individually evaluated for impairment | $ | 223 | $ | 98 | $ | 90 | $ | 411 | |||||||
Collectively evaluated for impairment | 469 | 110 | 271 | 850 | |||||||||||
Total allowance for loan losses | $ | 692 | $ | 208 | $ | 361 | $ | 1,261 | |||||||
Portion of loan portfolio ending balance: | |||||||||||||||
Individually evaluated for impairment | $ | 1,006 | $ | 676 | $ | 869 | $ | 2,551 | |||||||
Collectively evaluated for impairment | 39,092 | 6,316 | 27,721 | 73,129 | |||||||||||
Total loans evaluated for impairment | $ | 40,098 | $ | 6,992 | $ | 28,590 | $ | 75,680 |
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 losses | 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* | $ | 189 | $ | 185 | $ | 185 | $ | 559 | |||||||
Collectively evaluated for impairment* | 593 | 239 | 358 | 1,190 | |||||||||||
Total allowance for loan losses | $ | 782 | $ | 424 | $ | 543 | $ | 1,749 | |||||||
Portion of loan portfolio ending balance: | |||||||||||||||
Individually evaluated for impairment* | $ | 1,001 | $ | 1,172 | $ | 1,642 | $ | 3,815 | |||||||
Collectively evaluated for impairment* | 36,738 | 6,150 | 27,233 | 70,121 | |||||||||||
Total loans evaluated for impairment | $ | 37,739 | $ | 7,322 | $ | 28,875 | $ | 73,936 |
• | 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, 2014 | |||||||||||||||||||
Pass | Special Mention | Substandard Accrual | Non-accrual | Total | |||||||||||||||
(In millions) | |||||||||||||||||||
Commercial and industrial | $ | 29,289 | $ | 501 | $ | 396 | $ | 280 | $ | 30,466 | |||||||||
Commercial real estate mortgage—owner-occupied | 8,356 | 237 | 357 | 307 | 9,257 | ||||||||||||||
Commercial real estate construction—owner-occupied | 350 | 6 | 3 | 16 | 375 | ||||||||||||||
Total commercial | $ | 37,995 | $ | 744 | $ | 756 | $ | 603 | $ | 40,098 | |||||||||
Commercial investor real estate mortgage | $ | 4,558 | $ | 269 | $ | 302 | $ | 209 | $ | 5,338 | |||||||||
Commercial investor real estate construction | 1,556 | 54 | 36 | 8 | 1,654 | ||||||||||||||
Total investor real estate | $ | 6,114 | $ | 323 | $ | 338 | $ | 217 | $ | 6,992 | |||||||||