Form 10-Q |
ý | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2016 |
¨ | 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) | (I.R.S. 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. | ||||
• | 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 reductions of economic growth, which may adversely affect our lending and other businesses and our financial results and conditions. |
• | Possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations, which could have a material adverse effect on our earnings. |
• | The effects of a possible downgrade in the U.S. government’s sovereign credit rating or outlook, which could result in risks to us and general economic conditions that we are not able to predict. |
• | Possible changes in market interest rates or capital markets could adversely affect our revenue and expense, the value of assets and obligations, and the availability and cost of capital and liquidity. |
• | 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 where our allowance for loan losses may not be adequate to cover our eventual 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, which could increase our funding costs. |
• | Our inability to develop and gain acceptance from current and prospective customers for new products and services in a timely manner could have a negative impact on our revenue. |
• | The effects of any developments, changes or actions relating to any litigation or regulatory proceedings brought against us or any of our subsidiaries. |
• | Changes in laws and regulations affecting our businesses, such as the Dodd-Frank Act and other legislation and regulations relating to bank products and services, as well as changes in the enforcement and interpretation of such laws and regulations by applicable governmental and self-regulatory agencies, which could require us to change certain business practices, increase compliance risk, reduce our revenue, impose additional costs on us, or otherwise negatively affect our businesses. |
• | Our ability to obtain a regulatory non-objection (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 redeem preferred stock or other regulatory capital instruments, may impact our ability to return capital to stockholders and market perceptions of us. |
• | Our ability to comply with stress testing and capital planning requirements (as part of the CCAR process or otherwise) may continue to require a significant investment of our managerial resources due to the importance and intensity of such tests and requirements. |
• | Our ability to comply with applicable capital and liquidity requirements (including, among other things, the Basel III capital standards and the LCR rule), including our ability to generate capital internally or raise capital on favorable terms, and if we fail to meet requirements, our financial condition could be negatively impacted. |
• | The Basel III framework calls for additional risk-based capital surcharges for globally systemically important banks. Although we are not subject to such surcharges, it is possible that in the future we may become subject to similar surcharges. |
• | The costs, including possibly incurring fines, penalties, or other negative 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, and which may adversely affect our results. |
• | 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. |
• | Our ability to execute on our strategic and operational plans, including our ability to fully realize the financial and non-financial benefits relating to our strategic initiatives. |
• | The success of our marketing efforts in attracting and retaining customers. |
• | Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets and to attract deposits, which could adversely affect our net income. |
• | Our ability to recruit and retain talented and experienced personnel to assist in the development, management and operation of our products and services may be affected by changes in laws and regulations in effect from time to time. |
• | Fraud or misconduct by our customers, employees or business partners. |
• | Any inaccurate or incomplete information provided to us by our customers or counterparties. |
• | The risks and uncertainties related to our acquisition and integration of other companies. |
• | Inability of our framework to manage risks associated with our business such as credit risk and operational risk, including third-party vendors and other service providers, which could, among other things, result in a breach of operating or security systems as a result of a cyber attack or similar act. |
• | 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 and the potential impact, directly or indirectly, on our businesses. |
• | The effects of man-made and natural disasters, including fires, floods, droughts, tornadoes, hurricanes, and environmental damage, which may negatively affect our operations and/or our loan portfolios and increase our cost of conducting business. |
• | Changes in commodity market prices and conditions could adversely affect the cash flows of our borrowers operating in industries that are impacted by changes in commodity prices (including businesses indirectly impacted by commodities prices such as businesses that transport commodities or manufacture equipment used in the production of commodities), which could impair their ability to service any loans outstanding to them and/or reduce demand for loans in those industries. |
• | Our inability to keep pace with technological changes could result in losing business to competitors. |
• | Our ability to identify and address cyber-security risks such as data security breaches, “denial of service” attacks, “hacking” and identity theft, a failure of which could disrupt our business and result in the disclosure of and/or misuse or misappropriation of confidential or proprietary information; disruption or damage to our systems; increased costs; losses; or adverse effects to our reputation. |
• | Our ability to realize our efficiency ratio target as part of our expense management initiatives. |
• | Significant disruption of, or loss of public confidence in, the Internet and services and devices used to access the Internet could affect the ability of our customers to access their accounts and conduct banking transactions. |
• | Possible downgrades in our credit ratings or outlook could increase the costs of funding from capital markets. |
• | The effects of problems encountered by other financial institutions that adversely affect us or the banking industry generally could require us to change certain business practices, reduce our revenue, impose additional costs on us, or otherwise negatively affect our businesses. |
• | The effects of the failure of any component of our business infrastructure provided by a third party could disrupt our businesses; result in the disclosure of and/or misuse of confidential information or proprietary information; increase our costs; negatively affect our reputation; and cause losses. |
• | Our ability to receive dividends from our subsidiaries could affect our liquidity and ability to pay dividends to stockholders. |
• | Changes in accounting policies or procedures as may be required by the FASB or other regulatory agencies could materially affect how we report our financial results. |
• | Other risks identified from time to time in reports that we file with the SEC. |
• | The effects of any damage to our reputation resulting from developments related to any of the items identified above. |
September 30, 2016 | December 31, 2015 | ||||||
(In millions, except share data) | |||||||
Assets | |||||||
Cash and due from banks | $ | 1,928 | $ | 1,382 | |||
Interest-bearing deposits in other banks | 2,310 | 3,932 | |||||
Trading account securities | 120 | 143 | |||||
Securities held to maturity (estimated fair value of $1,485 and $1,969, respectively) | 1,431 | 1,946 | |||||
Securities available for sale | 23,859 | 22,710 | |||||
Loans held for sale (includes $549 and $353 measured at fair value, respectively) | 571 | 448 | |||||
Loans, net of unearned income | 80,883 | 81,162 | |||||
Allowance for loan losses | (1,126 | ) | (1,106 | ) | |||
Net loans | 79,757 | 80,056 | |||||
Other earning assets | 1,505 | 1,652 | |||||
Premises and equipment, net | 2,075 | 2,152 | |||||
Interest receivable | 305 | 319 | |||||
Goodwill | 4,882 | 4,878 | |||||
Residential mortgage servicing rights at fair value | 238 | 252 | |||||
Other identifiable intangible assets | 228 | 259 | |||||
Other assets | 5,968 | 5,921 | |||||
Total assets | $ | 125,177 | $ | 126,050 | |||
Liabilities and Stockholders’ Equity | |||||||
Deposits: | |||||||
Non-interest-bearing | $ | 36,321 | $ | 34,862 | |||
Interest-bearing | 62,968 | 63,568 | |||||
Total deposits | 99,289 | 98,430 | |||||
Borrowed funds: | |||||||
Short-term borrowings: | |||||||
Other short-term borrowings | — | 10 | |||||
Total short-term borrowings | — | 10 | |||||
Long-term borrowings | 6,054 | 8,349 | |||||
Total borrowed funds | 6,054 | 8,359 | |||||
Other liabilities | 2,469 | 2,417 | |||||
Total liabilities | 107,812 | 109,206 | |||||
Stockholders’ equity: | |||||||
Preferred stock, authorized 10 million shares, par value $1.00 per share | |||||||
Non-cumulative perpetual, liquidation preference $1,000.00 per share, including related surplus, net of issuance costs; issued—1,000,000 shares | 820 | 820 | |||||
Common stock, authorized 3 billion shares, par value $.01 per share: | |||||||
Issued including treasury stock—1,277,600,517 and 1,338,591,703 shares, respectively | 13 | 13 | |||||
Additional paid-in capital | 17,339 | 17,883 | |||||
Retained earnings (deficit) | 465 | (115 | ) | ||||
Treasury stock, at cost—41,259,320 and 41,261,018 shares, respectively | (1,377 | ) | (1,377 | ) | |||
Accumulated other comprehensive income (loss), net | 105 | (380 | ) | ||||
Total stockholders’ equity | 17,365 | 16,844 | |||||
Total liabilities and stockholders’ equity | $ | 125,177 | $ | 126,050 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(In millions, except per share data) | |||||||||||||||
Interest income, including other financing income on: | |||||||||||||||
Loans, including fees | $ | 763 | $ | 748 | $ | 2,293 | $ | 2,201 | |||||||
Securities - taxable | 135 | 137 | 427 | 423 | |||||||||||
Loans held for sale | 4 | 5 | 11 | 12 | |||||||||||
Trading account securities | — | — | 4 | 4 | |||||||||||
Other earning assets | 9 | 11 | 27 | 30 | |||||||||||
Operating lease assets | 31 | — | 95 | — | |||||||||||
Total interest income, including other financing income | 942 | 901 | 2,857 | 2,670 | |||||||||||
Interest expense on: | |||||||||||||||
Deposits | 31 | 27 | 86 | 82 | |||||||||||
Short-term borrowings | — | — | — | 1 | |||||||||||
Long-term borrowings | 51 | 38 | 148 | 116 | |||||||||||
Total interest expense | 82 | 65 | 234 | 199 | |||||||||||
Depreciation expense on operating lease assets | 25 | — | 78 | — | |||||||||||
Total interest expense and depreciation expense on operating lease assets | 107 | 65 | 312 | 199 | |||||||||||
Net interest income and other financing income | 835 | 836 | 2,545 | 2,471 | |||||||||||
Provision for loan losses | 29 | 60 | 214 | 172 | |||||||||||
Net interest income and other financing income after provision for loan losses | 806 | 776 | 2,331 | 2,299 | |||||||||||
Non-interest income: | |||||||||||||||
Service charges on deposit accounts | 166 | 167 | 491 | 496 | |||||||||||
Card and ATM fees | 105 | 93 | 299 | 268 | |||||||||||
Mortgage income | 46 | 39 | 130 | 125 | |||||||||||
Securities gains, net | — | 7 | 1 | 18 | |||||||||||
Other | 282 | 191 | 710 | 650 | |||||||||||
Total non-interest income | 599 | 497 | 1,631 | 1,557 | |||||||||||
Non-interest expense: | |||||||||||||||
Salaries and employee benefits | 486 | 470 | 1,441 | 1,405 | |||||||||||
Net occupancy expense | 87 | 90 | 259 | 270 | |||||||||||
Furniture and equipment expense | 80 | 77 | 237 | 224 | |||||||||||
Other | 281 | 258 | 781 | 835 | |||||||||||
Total non-interest expense | 934 | 895 | 2,718 | 2,734 | |||||||||||
Income from continuing operations before income taxes | 471 | 378 | 1,244 | 1,122 | |||||||||||
Income tax expense | 152 | 116 | 380 | 335 | |||||||||||
Income from continuing operations | 319 | 262 | 864 | 787 | |||||||||||
Discontinued operations: | |||||||||||||||
Income (loss) from discontinued operations before income taxes | 2 | (6 | ) | 7 | (16 | ) | |||||||||
Income tax expense (benefit) | 1 | (2 | ) | 3 | (6 | ) | |||||||||
Income (loss) from discontinued operations, net of tax | 1 | (4 | ) | 4 | (10 | ) | |||||||||
Net income | $ | 320 | $ | 258 | $ | 868 | $ | 777 | |||||||
Net income from continuing operations available to common shareholders | $ | 303 | $ | 246 | $ | 816 | $ | 739 | |||||||
Net income available to common shareholders | $ | 304 | $ | 242 | $ | 820 | $ | 729 | |||||||
Weighted-average number of shares outstanding: | |||||||||||||||
Basic | 1,246 | 1,319 | 1,266 | 1,333 | |||||||||||
Diluted | 1,252 | 1,326 | 1,270 | 1,343 | |||||||||||
Earnings per common share from continuing operations: | |||||||||||||||
Basic | $ | 0.24 | $ | 0.19 | $ | 0.64 | $ | 0.55 | |||||||
Diluted | 0.24 | 0.19 | 0.64 | 0.55 | |||||||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.24 | $ | 0.18 | $ | 0.65 | $ | 0.55 | |||||||
Diluted | 0.24 | 0.18 | 0.65 | 0.54 | |||||||||||
Cash dividends declared per common share | 0.065 | 0.06 | 0.19 | 0.17 |
Three Months Ended September 30 | |||||||
2016 | 2015 | ||||||
(In millions) | |||||||
Net income | $ | 320 | $ | 258 | |||
Other comprehensive income (loss), net of tax: | |||||||
Unrealized losses on securities transferred to held to maturity: | |||||||
Unrealized losses on securities transferred to held to 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 ($4) and ($1) tax effect, respectively) | (5 | ) | (2 | ) | |||
Net change in unrealized losses on securities transferred to held to maturity, net of tax | 5 | 2 | |||||
Unrealized gains (losses) on securities available for sale: | |||||||
Unrealized holding gains (losses) arising during the period (net of ($7) and $28 tax effect, respectively) | (13 | ) | 47 | ||||
Less: reclassification adjustments for securities gains (losses) realized in net income (net of zero and $2 tax effect, respectively) | — | 5 | |||||
Net change in unrealized gains (losses) on securities available for sale, net of tax | (13 | ) | 42 | ||||
Unrealized gains (losses) on derivative instruments designated as cash flow hedges: | |||||||
Unrealized holding gains (losses) on derivatives arising during the period (net of ($12) and $75 tax effect, respectively) | (18 | ) | 121 | ||||
Less: reclassification adjustments for gains (losses) on derivative instruments realized in net income (net of $13 and $16 tax effect, respectively) | 22 | 25 | |||||
Net change in unrealized gains (losses) on derivative instruments, net of tax | (40 | ) | 96 | ||||
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 | ) | (1 | ) | |||
Less: reclassification adjustments for amortization of actuarial loss and prior service cost realized in net income (net of ($3) and ($4) tax effect, respectively) | (6 | ) | (9 | ) | |||
Net change from defined benefit pension plans and other post employment benefits, net of tax | 5 | 8 | |||||
Other comprehensive income (loss), net of tax | (43 | ) | 148 | ||||
Comprehensive income | $ | 277 | $ | 406 | |||
Nine Months Ended September 30 | |||||||
2016 | 2015 | ||||||
(In millions) | |||||||
Net income | $ | 868 | $ | 777 | |||
Other comprehensive income (loss), net of tax: | |||||||
Unrealized losses on securities transferred to held to maturity: | |||||||
Unrealized losses on securities transferred to held to 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 ($8) and ($4) tax effect, respectively) | (12 | ) | (6 | ) | |||
Net change in unrealized losses on securities transferred to held to maturity, net of tax | 12 | 6 | |||||
Unrealized gains (losses) on securities available for sale: | |||||||
Unrealized holding gains (losses) arising during the period (net of $180 and ($17) tax effect, respectively) | 295 | (25 | ) | ||||
Less: reclassification adjustments for securities gains (losses) realized in net income (net of zero and $6 tax effect, respectively) | 1 | 12 | |||||
Net change in unrealized gains (losses) on securities available for sale, net of tax | 294 | (37 | ) | ||||
Unrealized gains (losses) on derivative instruments designated as cash flow hedges: | |||||||
Unrealized holding gains (losses) on derivatives arising during the period (net of $141 and $107 tax effect, respectively) | 231 | 175 | |||||
Less: reclassification adjustments for gains (losses) on derivative instruments realized in net income (net of $41 and $41 tax effect, respectively) | 68 | 67 | |||||
Net change in unrealized gains (losses) on derivative instruments, net of tax | 163 | 108 | |||||
Defined benefit pension plans and other post employment benefits: | |||||||
Net actuarial gains (losses) arising during the period (net of $1 and zero tax effect, respectively) | (1 | ) | (2 | ) | |||
Less: reclassification adjustments for amortization of actuarial loss and prior service cost realized in net income (net of ($9) and ($13) tax effect, respectively) | (17 | ) | (24 | ) | |||
Net change from defined benefit pension plans and other post employment benefits, net of tax | 16 | 22 | |||||
Other comprehensive income (loss), net of tax | 485 | 99 | |||||
Comprehensive income | $ | 1,353 | $ | 876 |
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 per share data) | |||||||||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2015 | 1 | $ | 884 | 1,354 | $ | 14 | $ | 18,767 | $ | (1,177 | ) | $ | (1,377 | ) | $ | (238 | ) | $ | 16,873 | ||||||||||||||
Net income | — | — | — | — | — | 777 | — | — | 777 | ||||||||||||||||||||||||
Amortization of unrealized losses on securities transferred to held to maturity, net of tax | — | — | — | — | — | — | — | 6 | 6 | ||||||||||||||||||||||||
Net change in unrealized gains and losses on securities available for sale, net of tax and reclassification adjustment | — | — | — | — | — | — | — | (37 | ) | (37 | ) | ||||||||||||||||||||||
Net change in unrealized gains and losses on derivative instruments, net of tax and reclassification adjustment | — | — | — | — | — | — | — | 108 | 108 | ||||||||||||||||||||||||
Net change from employee benefit plans, net of tax | — | — | — | — | — | — | — | 22 | 22 | ||||||||||||||||||||||||
Cash dividends declared—$0.17 per share | — | — | — | — | (226 | ) | — | — | — | (226 | ) | ||||||||||||||||||||||
Preferred stock dividends | — | (48 | ) | — | — | — | — | — | — | (48 | ) | ||||||||||||||||||||||
Common stock transactions: | |||||||||||||||||||||||||||||||||
Impact of share repurchase | — | — | (55 | ) | (1 | ) | (544 | ) | — | — | — | (545 | ) | ||||||||||||||||||||
Impact of stock transactions under compensation plans, net and other | — | — | 5 | — | 22 | — | — | — | 22 | ||||||||||||||||||||||||
BALANCE AT SEPTEMBER 30, 2015 | 1 | $ | 836 | 1,304 | $ | 13 | $ | 18,019 | $ | (400 | ) | $ | (1,377 | ) | $ | (139 | ) | $ | 16,952 | ||||||||||||||
BALANCE AT JANUARY 1, 2016 | 1 | $ | 820 | 1,297 | $ | 13 | $ | 17,883 | $ | (115 | ) | $ | (1,377 | ) | $ | (380 | ) | $ | 16,844 | ||||||||||||||
Net income | — | — | — | — | — | 868 | — | — | 868 | ||||||||||||||||||||||||
Amortization of unrealized losses on securities transferred to held to maturity, net of tax | — | — | — | — | — | — | — | 12 | 12 | ||||||||||||||||||||||||
Net change in unrealized gains and losses on securities available for sale, net of tax and reclassification adjustment | — | — | — | — | — | — | — | 294 | 294 | ||||||||||||||||||||||||
Net change in unrealized gains and losses on derivative instruments, net of tax and reclassification adjustment | — | — | — | — | — | — | — | 163 | 163 | ||||||||||||||||||||||||
Net change from employee benefit plans, net of tax | — | — | — | — | — | — | — | 16 | 16 | ||||||||||||||||||||||||
Cash dividends declared—$0.19 per share | — | — | — | — | — | (240 | ) | — | — | (240 | ) | ||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | (48 | ) | — | — | (48 | ) | ||||||||||||||||||||||
Common stock transactions: | |||||||||||||||||||||||||||||||||
Impact of share repurchase | — | — | (65 | ) | — | (569 | ) | — | — | — | (569 | ) | |||||||||||||||||||||
Impact of stock transactions under compensation plans, net and other | — | — | 4 | — | 25 | — | — | — | 25 | ||||||||||||||||||||||||
BALANCE AT SEPTEMBER 30, 2016 | 1 | $ | 820 | 1,236 | $ | 13 | $ | 17,339 | $ | 465 | $ | (1,377 | ) | $ | 105 | $ | 17,365 |
Nine Months Ended September 30 | |||||||
2016 | 2015 | ||||||
(In millions) | |||||||
Operating activities: | |||||||
Net income | $ | 868 | $ | 777 | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Provision for loan losses | 214 | 172 | |||||
Depreciation, amortization and accretion, net | 425 | 384 | |||||
Securities (gains) losses, net | (1 | ) | (18 | ) | |||
Deferred income tax expense | 18 | 68 | |||||
Originations and purchases of loans held for sale | (2,767 | ) | (1,931 | ) | |||
Proceeds from sales of loans held for sale | 2,711 | 2,087 | |||||
(Gain) loss on sale of loans, net | (95 | ) | (70 | ) | |||
(Gain) loss on early extinguishment of debt | 14 | 43 | |||||
Net change in operating assets and liabilities: | |||||||
Trading account securities | 23 | — | |||||
Other earning assets | 69 | (158 | ) | ||||
Interest receivable and other assets | 28 | 116 | |||||
Other liabilities | 157 | (95 | ) | ||||
Other | 76 | 36 | |||||
Net cash from operating activities | 1,740 | 1,411 | |||||
Investing activities: | |||||||
Proceeds from maturities of securities held to maturity | 522 | 174 | |||||
Proceeds from sales of securities available for sale | 1,873 | 1,142 | |||||
Proceeds from maturities of securities available for sale | 3,325 | 2,958 | |||||
Purchases of securities available for sale | (6,108 | ) | (4,169 | ) | |||
Proceeds from sales of loans | 86 | 59 | |||||
Purchases of loans | (779 | ) | (857 | ) | |||
Purchases of mortgage servicing rights | (35 | ) | (4 | ) | |||
Net change in loans | 720 | (3,291 | ) | ||||
Net purchases of other assets | (107 | ) | (193 | ) | |||
Net cash from investing activities | (503 | ) | (4,181 | ) | |||
Financing activities: | |||||||
Net change in deposits | 859 | 2,978 | |||||
Net change in short-term borrowings | (10 | ) | (2,253 | ) | |||
Proceeds from long-term borrowings | 1,607 | 4,997 | |||||
Payments on long-term borrowings | (3,910 | ) | (1,142 | ) | |||
Cash dividends on common stock | (236 | ) | (226 | ) | |||
Cash dividends on preferred stock | (48 | ) | (48 | ) | |||
Repurchase of common stock | (569 | ) | (544 | ) | |||
Other | (6 | ) | 12 | ||||
Net cash from financing activities | (2,313 | ) | 3,774 | ||||
Net change in cash and cash equivalents | (1,076 | ) | 1,004 | ||||
Cash and cash equivalents at beginning of year | 5,314 | 4,004 | |||||
Cash and cash equivalents at end of period | $ | 4,238 | $ | 5,008 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(In millions, except per share data) | |||||||||||||||
Non-interest expense: | |||||||||||||||
Professional and legal expenses/(recoveries) | $ | (2 | ) | $ | 7 | $ | (8 | ) | $ | 16 | |||||
Other | — | (1 | ) | 1 | — | ||||||||||
Total non-interest expense | (2 | ) | 6 | (7 | ) | 16 | |||||||||
Income (loss) from discontinued operations before income taxes | 2 | (6 | ) | 7 | (16 | ) | |||||||||
Income tax expense (benefit) | 1 | (2 | ) | 3 | (6 | ) | |||||||||
Income (loss) from discontinued operations, net of tax | $ | 1 | $ | (4 | ) | $ | 4 | $ | (10 | ) | |||||
Earnings (loss) per common share from discontinued operations: | |||||||||||||||
Basic | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | $ | (0.01 | ) | |||||
Diluted | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | $ | (0.01 | ) |
September 30, 2016 | |||||||||||||||||||||||||||
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: | |||||||||||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||||||
Residential agency | $ | 1,316 | — | (52 | ) | 1,264 | 53 | — | $ | 1,317 | |||||||||||||||||
Commercial agency | 171 | — | (4 | ) | 167 | 1 | — | 168 | |||||||||||||||||||
$ | 1,487 | $ | — | $ | (56 | ) | $ | 1,431 | $ | 54 | $ | — | $ | 1,485 | |||||||||||||
Securities available for sale: | |||||||||||||||||||||||||||
U.S. Treasury securities | $ | 237 | $ | 5 | $ | — | $ | 242 | $ | 242 | |||||||||||||||||
Federal agency securities | 37 | 1 | — | 38 | 38 | ||||||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||||||
Residential agency | 17,189 | 328 | (11 | ) | 17,506 | 17,506 | |||||||||||||||||||||
Residential non-agency | 4 | 1 | — | 5 | 5 | ||||||||||||||||||||||
Commercial agency | 3,333 | 81 | (1 | ) | 3,413 | 3,413 | |||||||||||||||||||||
Commercial non-agency | 1,125 | 19 | (3 | ) | 1,141 | 1,141 | |||||||||||||||||||||
Corporate and other debt securities | 1,304 | 47 | (17 | ) | 1,334 | 1,334 | |||||||||||||||||||||
Equity securities | 170 | 10 | — | 180 | 180 | ||||||||||||||||||||||
$ | 23,399 | $ | 492 | $ | (32 | ) | $ | 23,859 | $ | 23,859 |
December 31, 2015 | |||||||||||||||||||||||||||
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 | 350 | — | (10 | ) | 340 | 9 | — | 349 | |||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||||||
Residential agency | 1,490 | — | (61 | ) | 1,429 | 18 | (2 | ) | 1,445 | ||||||||||||||||||
Commercial agency | 181 | — | (5 | ) | 176 | — | (2 | ) | 174 | ||||||||||||||||||
$ | 2,022 | $ | — | $ | (76 | ) | $ | 1,946 | $ | 27 | $ | (4 | ) | $ | 1,969 | ||||||||||||
Securities available for sale: | |||||||||||||||||||||||||||
U.S. Treasury securities | $ | 228 | $ | 1 | $ | (1 | ) | $ | 228 | $ | 228 | ||||||||||||||||
Federal agency securities | 219 | — | (1 | ) | 218 | 218 | |||||||||||||||||||||
Obligations of states and political subdivisions | 1 | — | — | 1 | 1 | ||||||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||||||
Residential agency | 16,003 | 149 | (90 | ) | 16,062 | 16,062 | |||||||||||||||||||||
Residential non-agency | 5 | — | — | 5 | 5 | ||||||||||||||||||||||
Commercial agency | 3,033 | 10 | (25 | ) | 3,018 | 3,018 | |||||||||||||||||||||
Commercial non-agency | 1,245 | 3 | (17 | ) | 1,231 | 1,231 | |||||||||||||||||||||
Corporate and other debt securities | 1,718 | 12 | (63 | ) | 1,667 | 1,667 | |||||||||||||||||||||
Equity securities | 272 | 10 | (2 | ) | 280 | 280 | |||||||||||||||||||||
$ | 22,724 | $ | 185 | $ | (199 | ) | $ | 22,710 | $ | 22,710 |
Amortized Cost | Estimated Fair Value | ||||||
(In millions) | |||||||
Securities held to maturity: | |||||||
Mortgage-backed securities: | |||||||
Residential agency | $ | 1,316 | $ | 1,317 | |||
Commercial agency | 171 | 168 | |||||
$ | 1,487 | $ | 1,485 | ||||
Securities available for sale: | |||||||
Due in one year or less | $ | 52 | $ | 52 | |||
Due after one year through five years | 463 | 475 | |||||
Due after five years through ten years | 808 | 836 | |||||
Due after ten years | 255 | 251 | |||||
Mortgage-backed securities: | |||||||
Residential agency | 17,189 | 17,506 | |||||
Residential non-agency | 4 | 5 | |||||
Commercial agency | 3,333 | 3,413 | |||||
Commercial non-agency | 1,125 | 1,141 | |||||
Equity securities | 170 | 180 | |||||
$ | 23,399 | $ | 23,859 |
September 30, 2016 | |||||||||||||||||||||||
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: | |||||||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Residential agency | $ | — | $ | — | $ | 388 | $ | (4 | ) | $ | 388 | $ | (4 | ) | |||||||||
Commercial agency | — | — | 169 | (3 | ) | 169 | (3 | ) | |||||||||||||||
$ | — | $ | — | $ | 557 | $ | (7 | ) | $ | 557 | $ | (7 | ) | ||||||||||
Securities available for sale: | |||||||||||||||||||||||
U.S. Treasury securities | $ | 4 | $ | — | $ | 2 | $ | — | $ | 6 | $ | — | |||||||||||
Federal agency securities | — | — | 2 | — | 2 | — | |||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Residential agency | 1,491 | (4 | ) | 604 | (7 | ) | 2,095 | (11 | ) | ||||||||||||||
Residential non-agency | 3 | — | — | — | 3 | — | |||||||||||||||||
Commercial agency | 282 | (1 | ) | 46 | — | 328 | (1 | ) | |||||||||||||||
Commercial non-agency | 94 | (1 | ) | 245 | (2 | ) | 339 | (3 | ) | ||||||||||||||
All other securities | 23 | — | 253 | (17 | ) | 276 | (17 | ) | |||||||||||||||
$ | 1,897 | $ | (6 | ) | $ | 1,152 | $ | (26 | ) | $ | 3,049 | $ | (32 | ) |
December 31, 2015 | |||||||||||||||||||||||
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 | $ | 198 | $ | (1 | ) | $ | — | $ | — | $ | 198 | $ | (1 | ) | |||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Residential agency | 322 | (7 | ) | 1,121 | (38 | ) | 1,443 | (45 | ) | ||||||||||||||
Commercial agency | — | — | 174 | (7 | ) | 174 | (7 | ) | |||||||||||||||
$ | 520 | $ | (8 | ) | $ | 1,295 | $ | (45 | ) | $ | 1,815 | $ | (53 | ) | |||||||||
Securities available for sale: | |||||||||||||||||||||||
U.S. Treasury securities | $ | 59 | $ | (1 | ) | $ | 8 | $ | — | $ | 67 | $ | (1 | ) | |||||||||
Federal agency securities | 74 | — | 7 | — | 81 | — | |||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Residential agency | 8,037 | (73 | ) | 791 | (17 | ) | 8,828 | (90 | ) | ||||||||||||||
Residential non-agency | 3 | — | — | — | 3 | — | |||||||||||||||||
Commercial agency | 1,695 | (20 | ) | 273 | (5 | ) | 1,968 | (25 | ) | ||||||||||||||
Commercial non-agency | 684 | (12 | ) | 264 | (6 | ) | 948 | (18 | ) | ||||||||||||||
All other securities | 805 | (36 | ) | 307 | (29 | ) | 1,112 | (65 | ) | ||||||||||||||
$ | 11,357 | $ | (142 | ) | $ | 1,650 | $ | (57 | ) | $ | 13,007 | $ | (199 | ) |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(In millions) | |||||||||||||||
Gross realized gains | $ | 1 | $ | 15 | $ | 30 | $ | 29 | |||||||
Gross realized losses | (1 | ) | (2 | ) | (28 | ) | (5 | ) | |||||||
OTTI | — | (6 | ) | (1 | ) | (6 | ) | ||||||||
Securities gains (losses), net | $ | — | $ | 7 | $ | 1 | $ | 18 |
September 30, 2016 | December 31, 2015 | ||||||
(In millions, net of unearned income) | |||||||
Commercial and industrial | $ | 35,388 | $ | 35,821 | |||
Commercial real estate mortgage—owner-occupied | 7,007 | 7,538 | |||||
Commercial real estate construction—owner-occupied | 349 | 423 | |||||
Total commercial | 42,744 | 43,782 | |||||
Commercial investor real estate mortgage | 4,306 | 4,255 | |||||
Commercial investor real estate construction | 2,458 | 2,692 | |||||
Total investor real estate | 6,764 | 6,947 | |||||
Residential first mortgage | 13,402 | 12,811 | |||||
Home equity | 10,749 | 10,978 | |||||
Indirect—vehicles | 4,076 | 3,984 | |||||
Indirect—other consumer | 838 | 545 | |||||
Consumer credit card | 1,123 | 1,075 | |||||
Other consumer | 1,187 | 1,040 | |||||
Total consumer | 31,375 | 30,433 | |||||
$ | 80,883 | $ | 81,162 |
Three Months Ended September 30, 2016 | |||||||||||||||
Commercial | Investor Real Estate | Consumer | Total | ||||||||||||
(In millions) | |||||||||||||||
Allowance for loan losses, July 1, 2016 | $ | 825 | $ | 87 | $ | 239 | $ | 1,151 | |||||||
Provision (credit) for loan losses | (15 | ) | (7 | ) | 51 | 29 | |||||||||
Loan losses: | |||||||||||||||
Charge-offs | (31 | ) | (1 | ) | (62 | ) |