SUNTRUST BANKS INC, 10-Q filed on 5/6/2011
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2011
Apr. 27, 2011
Document Type
10-Q 
 
Amendment Flag
FALSE 
 
Document Period End Date
2011-03-31 
 
Document Fiscal Year Focus
2011 
 
Document Fiscal Period Focus
Q1 
 
Trading Symbol
STI 
 
Entity Registrant Name
SUNTRUST BANKS INC 
 
Entity Central Index Key
0000750556 
 
Current Fiscal Year End Date
12/31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
536,888,834 
Consolidated Statements of Income/(Loss) (USD $)
In Millions, except Per Share data
3 Months Ended
Mar. 31,
2011
2010
Interest Income
 
 
Interest and fees on loans
$ 1,314 
$ 1,317 
Interest and fees on loans held for sale
28 
33 
Interest and dividends on securities available for sale
 
 
Taxable interest
165 
176 
Tax-exempt interest
Dividends
20 1
19 1
Trading account interest
22 
20 
Total interest income
1,554 
1,574 
Interest Expense
 
 
Interest on deposits
169 
233 
Interest on funds purchased and securities sold under agreements to repurchase
Interest on trading liabilities
Interest on other short-term borrowings
Interest on long-term debt
124 
159 
Total interest expense
305 
402 
Net interest income
1,249 
1,172 
Provision for credit losses
447 
862 
Net interest income after provision for credit losses
802 
310 
Noninterest Income
 
 
Service charges on deposit accounts
163 
196 
Other charges and fees
126 
129 
Card fees
100 
87 
Trust and investment management income
135 
122 
Retail investment services
58 
47 
Mortgage production related loss
(1)
(31)
Mortgage servicing related income
72 
70 
Investment banking income
67 
56 
Trading account profits/(losses) and commissions
52 
(7)
Net securities gains
64 2
2
Other noninterest income
47 
28 
Total noninterest income
883 
698 
Noninterest Expense
 
 
Employee compensation
618 
557 
Employee benefits
136 
135 
Outside processing and software
158 
149 
Net occupancy expense
89 
91 
Regulatory assessments
71 
64 
Other real estate expense
69 
46 
Credit and collection services
51 
74 
Equipment expense
44 
41 
Marketing and customer development
38 
34 
Operating losses
27 
14 
Amortization of intangible assets
11 
13 
Net gain on debt extinguishment
(1)
(9)
Other noninterest expense
154 
152 
Total noninterest expense
1,465 
1,361 
Income/(loss) before provision/(benefit) for income taxes
220 
(353)
Provision/(benefit) for income taxes
33 
(194)
Net income/(loss) including income attributable to noncontrolling interest
187 
(159)
Net income attributable to noncontrolling interest
Net income/(loss)
180 
(161)
Net income/(loss) available to common shareholders
38 
(229)
Net income/(loss) per average common share
 
 
Diluted
0.08 3
(0.46)3
Basic
0.08 
(0.46)
Dividends declared per common share
$ 0.01 
$ 0.01 
Average common shares - diluted
504 
498 
Average common shares - basic
500 
495 
Consolidated Statements of Income/(Loss) (Parenthetical) (USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Dividends on common stock of The Coca-Cola Company
$ 14 
$ 13 
Net impairment losses recognized in earnings
Portion of losses recognized in OCI (before taxes)
$ 0 
$ 0 
Consolidated Balance Sheets (USD $)
In Millions, except Share data in Thousands
Mar. 31, 2011
Dec. 31, 2010
Assets
 
 
Cash and due from banks
$ 5,216 
$ 4,296 
Interest-bearing deposits in other banks
20 
24 
Funds sold and securities purchased under agreements to resell
981 
1,058 
Cash and cash equivalents
6,217 
5,378 
Trading assets
6,289 
6,175 
Securities available for sale
26,569 
26,895 
Loans held for sale (loans at fair value: $1,837 as of March 31, 2011; $3,168 as of December 31, 2010)
2,165 1
3,501 1
Loans (loans at fair value: $457 as of March 31, 2011; $492 as of December 31, 2010)
114,932 2
115,975 2
Allowance for loan and lease losses
(2,854)
(2,974)
Net loans
112,078 
113,001 
Premises and equipment
1,575 
1,620 
Goodwill
6,324 
6,323 
Other intangible assets (MSRs at fair value: $1,538 as of March 31, 2011; $1,439 as of December 31, 2010)
1,659 
1,571 
Other real estate owned
534 
596 
Other assets
7,384 
7,814 
Total assets
170,794 
172,874 
Liabilities and Shareholders' Equity
 
 
Noninterest-bearing consumer and commercial deposits
28,521 
27,290 
Interest-bearing consumer and commercial deposits
93,038 
92,735 
Total consumer and commercial deposits
121,559 
120,025 
Brokered deposits (CDs at fair value: $1,181 as of March 31, 2011; $1,213 of December 31, 2010)
2,369 
2,365 
Foreign deposits
57 
654 
Total deposits
123,985 
123,044 
Funds purchased
1,150 
951 
Securities sold under agreements to repurchase
2,113 
2,180 
Other short-term borrowings
2,858 
2,690 
Long-term debt (debt at fair value: $2,854 as of March 31, 2011; $2,837 as of December 31, 2010)
14,663 3
13,648 3
Trading liabilities
2,731 
2,678 
Other liabilities
4,071 
4,553 
Total liabilities
151,571 
149,744 
Preferred stock, no par value
172 
4,942 
Common stock, $1.00 par value
550 
515 
Additional paid in capital
9,324 
8,403 
Retained earnings
8,575 
8,542 
Treasury stock, at cost, and other
(823)
(888)
Accumulated other comprehensive income, net of tax
1,425 
1,616 
Total shareholders' equity
19,223 
23,130 
Total liabilities and shareholders' equity
$ 170,794 
$ 172,874 
Common shares outstanding
536,817 
500,436 
Common shares authorized
750,000 
750,000 
Preferred shares outstanding
50 
Preferred shares authorized
50,000 
50,000 
Treasury shares of common stock
13,104 
14,231 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Per Share data
Mar. 31, 2011
Dec. 31, 2010
Loans held for sale, loans at fair value
$ 1,837 
$ 3,168 
Loans, loans at fair value
457 
492 
Other intangible assets, MSRs at fair value
1,538 
1,439 
Brokered deposits, CDs at fair value
1,181 
1,213 
Long-term debt, fair value
2,854 
2,837 
Common stock, par value
Loans held for sale
2,165 1
3,501 1
Loans
114,932 2
115,975 2
Long-term debt
14,663 3
13,648 3
Variable Interest Entity, Primary Beneficiary
 
 
Loans held for sale
324 
316 
Loans
2,750 
2,869 
Long-term debt
$ 754 
$ 764 
Consolidated Statements of Shareholders' Equity (USD $)
In Millions
Preferred Stock
Common Stock
Additional Paid in Capital
Retained Earnings
Treasury Stock
Accumulated Other Comprehensive Income
Year
Beginning Balance at Dec. 31, 2009
$ 4,917 
$ 515 
$ 8,521 
$ 8,563 
$ (1,055)1
$ 1,070 
$ 22,531 
Beginning Balance (in shares) at Dec. 31, 2009
 
499 
 
 
 
 
 
Net income (loss)
 
 
 
(161)
 
 
(161)
Other comprehensive income:
 
 
 
 
 
 
 
Change in unrealized gains (losses) on securities, net of taxes
 
 
 
 
 
39 
39 
Change in unrealized gains (losses) on derivatives, net of taxes
 
 
 
 
 
122 
122 
Change related to employee benefit plans
 
 
 
 
 
75 
75 
Change in noncontrolling interest
 
 
 
 
(2)1
 
(2)
Common stock dividends, $0.01 per share
 
 
 
(5)
 
 
(5)
Series A preferred dividends
 
 
 
(2)
 
 
(2)
U.S. Treasury preferred stock dividends, $1,236 in 2011 and $1250 in 2010 per share
 
 
 
(60)
 
 
(60)
Accretion of discount associated with U.S. Treasury preferred stock
 
 
(6)
 
 
 
Stock compensation expense
 
 
 
 
 
Restricted stock activity (in shares)
 
 
 
 
 
 
Restricted stock activity
 
 
(68)
 
40 1
 
(28)
Amortization of restricted stock compensation
 
 
 
 
12 1
 
12 
Issuance of stock for employee benefit plans and other
 
 
(13)
16 1
 
Fair value election of MSRs
 
 
 
89 
 
 
89 
Ending Balance at Mar. 31, 2010
4,923 
515 
8,446 
8,419 
(989)1
1,306 
22,620 
Ending Balance (in shares) at Mar. 31, 2010
 
500 
 
 
 
 
 
Beginning Balance at Dec. 31, 2010
4,942 
515 
8,403 
8,542 
(888)1
1,616 
23,130 
Beginning Balance (in shares) at Dec. 31, 2010
 
500 
 
 
 
 
 
Net income (loss)
 
 
 
180 
 
 
180 
Other comprehensive income:
 
 
 
 
 
 
 
Change in unrealized gains (losses) on securities, net of taxes
 
 
 
 
 
(69)
(69)
Change in unrealized gains (losses) on derivatives, net of taxes
 
 
 
 
 
(125)
(125)
Change related to employee benefit plans
 
 
 
 
 
Change in noncontrolling interest
 
 
 
 
1
 
Common stock dividends, $0.01 per share
 
 
 
(5)
 
 
(5)
Series A preferred dividends
 
 
 
(2)
 
 
(2)
U.S. Treasury preferred stock dividends, $1,236 in 2011 and $1250 in 2010 per share
 
 
 
(60)
 
 
(60)
Accretion of discount associated with U.S. Treasury preferred stock
 
 
(6)
 
 
 
Repurchase of preferred stock issued to the U.S. Treasury and associated accelerated accretion
(4,776)
 
 
(74)
 
 
(4,850)
Issuance of common stock (in shares)
 
35 
 
 
 
 
35 
Issuance of common stock
 
35 
981 
 
 
 
1,016 
Stock compensation expense
 
 
 
 
 
Restricted stock activity (in shares)
 
 
 
 
 
 
Restricted stock activity
 
 
(58)
 
43 1
 
(15)
Amortization of restricted stock compensation
 
 
 
 
1
 
Issuance of stock for employee benefit plans and other
 
 
(5)
 
11 1
 
Ending Balance at Mar. 31, 2011
$ 172 
$ 550 
$ 9,324 
$ 8,575 
$ (823)1
$ 1,425 
$ 19,223 
Ending Balance (in shares) at Mar. 31, 2011
 
537 
 
 
 
 
 
Consolidated Statements of Shareholders' Equity (Parenthetical) (USD $)
In Millions, except Per Share data
3 Months Ended
Mar. 31,
2011
2010
Common stock dividends, per share
$ 0.01 
$ 0.01 
Series A preferred stock dividends, per share
1,000 
1,000 
U.S. Treasury preferred stock dividends, per share
1,236 
1,250 
Treasury Stock
 
 
Ending Balance, treasury stock
(881)
(1,030)
Ending Balance, compensation element of restricted stock
(73)
(65)
Ending Balance, noncontrolling interest
$ 131 
$ 106 
Consolidated Statements of Cash Flows (USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Cash Flows from Operating Activities:
 
 
Net income/(loss) including income attributable to noncontrolling interest
$ 187 
$ (159)
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
 
 
Depreciation, amortization and accretion
186 
198 
Origination of Mortgage Servicing Rights
(88)
(66)
Provisions for credit losses and foreclosed property
490 
904 
Amortization of restricted stock compensation
12 
Stock option compensation
Net gain on debt extinguishment
(1)
(9)
Net securities gains
(64)1
(1)1
Net gain on sale of assets
(16)
(8)
Net decrease in loans held for sale
1,465 
441 
Net increase in other assets
(125)
(860)
Net (decrease)/increase in other liabilities
(141)
872 
Net cash provided by operating activities
1,905 
1,330 
Cash Flows from Investing Activities:
 
 
Proceeds from maturities, calls and paydowns of securities available for sale
1,158 
1,106 
Proceeds from sales of securities available for sale
9,413 
2,726 
Purchases of securities available for sale
(10,100)
(1,570)
Proceeds from maturities, calls and paydowns of trading securities
77 
44 
Proceeds from sales of trading securities
102 
 
Net (increase)/decrease in loans, including purchases of loans
(304)
497 
Proceeds from sales of loans
143 
230 
Capital expenditures
(1)
(48)
Proceeds from the sale of other assets
198 
152 
Net cash provided by investing activities
686 
3,137 
Cash Flows from Financing Activities:
 
 
Net increase/(decrease) in total deposits
941 
(3,113)
Net increase/(decrease) in funds purchased, securities sold under agreements to repurchase, and other short-term borrowings
301 
(1,048)
Proceeds from the issuance of long-term debt
1,039 
 
Repayment of long-term debt
(132)
(926)
Proceeds from the issuance of common stock
1,016 
 
Repurchase of preferred stock
(4,850)
 
Common and preferred dividends paid
(67)
(67)
Net cash used in financing activities
(1,752)
(5,154)
Net increase/(decrease) in cash and cash equivalents
839 
(687)
Cash and cash equivalents at beginning of period
5,378 
6,997 
Cash and cash equivalents at end of period
6,217 
6,310 
Supplemental Disclosures:
 
 
Loans transferred from loans held for sale to loans
Loans transferred from loans to loans held for sale
122 
185 
Loans transferred from loans to other real estate owned
201 
182 
Accretion on preferred stock issued to the U.S. Treasury
80 
Total assets of newly consolidated VIEs at January 1, 2010
 
2,049 
Significant Accounting Policies
Significant Accounting Policies

Note 1 – Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these financial statements, have been made.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could vary from these estimates. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

The Company evaluated subsequent events through the date its financial statements were issued.

These financial statements should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2010. Except for accounting policies that have been modified or recently adopted as described below, there have been no significant changes to the Company’s accounting policies as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2010.

Accounting Policies Recently Adopted and Pending Accounting Pronouncements

In January 2010, the FASB issued ASU 2010-06, an update to ASC 820-10, “Fair Value Measurements.” This update added a new requirement to disclose transfers in and out of level 1 and level 2 of the fair value hierarchy, along with the reasons for the transfers, and requires a gross presentation of purchases and sales of level 3 instruments. Additionally, the update clarifies that entities provide fair value measurement disclosures for each class of assets and liabilities and that entities provide enhanced disclosures around level 2 valuation techniques and inputs. The Company adopted the disclosure requirements for level 1 and level 2 transfers and the expanded fair value measurement and valuation disclosures effective January 1, 2010. The disclosure requirements for level 3 activities were effective for the interim reporting period ending March 31, 2011. The adoption of these disclosure requirements had no impact on the Company’s financial position, results of operations, and EPS.

In July 2010, the FASB issued ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” The update requires companies to provide more disclosures about the credit quality of their financing receivables, which include loans, lease receivables, and other long-term receivables, and the credit allowances held against them. The disclosure requirements that were effective as of December 31, 2010 are included in Note 3, “Loans,” and Note 4, “Allowance for Credit Losses,” to the Consolidated Financial Statements. Disclosures about activity that occurs during a reporting period were effective for the interim reporting period ending March 31, 2011 and are also included in Note 3, “Loans,” and Note 4, “Allowance for Credit Losses,” to the Consolidated Financial Statements. The adoption of the credit quality disclosures did not have an impact on the Company’s financial position, results of operations, and EPS.

In December 2010, the FASB issued ASU 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.” The update requires companies to perform a step 2 analysis if the carrying value of a reporting unit is zero or negative and if it is more likely than not that goodwill is impaired. The update is effective for goodwill impairment testing performed during 2011 with any resulting impairment charge recorded through a cumulative effect adjustment to beginning retained earnings. The Company has adopted the standard as of January 1, 2011 and will apply the new guidance to future goodwill impairment testing. The Company does not expect the standard to have a substantive impact on its goodwill impairment evaluation.

In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.” The update provides additional guidance to assist creditors in determining whether a restructuring of a receivable meets the criteria to be considered a TDR, both for purposes of recording impairment and disclosing TDRs. A restructuring of a credit arrangement constitutes a TDR if the restructuring constitutes a concession, and the debtor is experiencing financial difficulties. The clarifications for classification apply to all restructurings occurring on or after January 1, 2011. The measurement of impairment for those newly identified TDRs will be applied prospectively beginning in the third quarter of 2011. The related disclosures which were previously deferred will be required for the interim reporting period ending September 30, 2011. The Company is still in the process of evaluating the impact of the standard. However, we do not anticipate adoption to have a significant impact on the Company’s financial position, results of operations, and EPS.

Securities Available for Sale
Securities Available for Sale

Note 2 – Securities Available for Sale

Securities AFS at March 31, 2011 and December 31, 2010 were as follows:

 

     March 31, 2011  
(Dollars in millions)    Amortized
Cost
     Unrealized
Gains
     Unrealized
Losses
     Fair
Value
 

U.S. Treasury securities

     $223         $-         $1         $222   

Federal agency securities

     3,829         13         26         3,816   

U.S. states and political subdivisions

     537         17         3         551   

MBS - agency

     17,679         348         32         17,995   

MBS - private

     355         2         19         338   

CDO securities

     77         -         -         77   

ABS

     710         14         4         720   

Corporate and other debt securities

     55         2         1         56   

Coke common stock

     -         1,990         -         1,990   

Other equity securities1

     803         1         -         804   
                                   

Total securities AFS

     $24,268         $2,387         $86         $26,569   
                                   
     December 31, 2010  
(Dollars in millions)    Amortized
Cost
     Unrealized
Gains
     Unrealized
Losses
     Fair
Value
 

U.S. Treasury securities

     $5,446         $115         $45         $5,516   

Federal agency securities

     1,883         19         7         1,895   

U.S. states and political subdivisions

     565         17         3         579   

MBS - agency

     14,014         372         28         14,358   

MBS - private

     378         3         34         347   

CDO securities

     50         -         -         50   

ABS

     798         15         5         808   

Corporate and other debt securities

     464         19         1         482   

Coke common stock

     -         1,973         -         1,973   

Other equity securities1

     886         1         -         887   
                                   

Total securities AFS

     $24,484         $2,534         $123         $26,895   
                                   

1At March 31, 2011, other equity securities included $298 million in FHLB of Atlanta stock (par value), $391 million in Federal Reserve Bank stock (par value), and $114 million in mutual fund investments (par value). At December 31, 2010, other equity securities included $298 million in FHLB of Atlanta stock (par value), $391 million in Federal Reserve Bank stock (par value), and $197 million in mutual fund investments (par value).

Securities AFS that were pledged to secure public deposits, repurchase agreements, trusts, and other funds had a fair value of $4.9 billion and $6.9 billion as of March 31, 2011 and December 31, 2010, respectively. Further, under The Agreements, the Company pledged its shares of Coke common stock, which is hedged with derivative instruments, as discussed in Note 11, “Derivative Financial Instruments” to the Consolidated Financial Statements. The Company has also pledged $889 million of certain trading assets and cash equivalents to secure $867 million of repurchase agreements as of March 31, 2011.

The amortized cost and fair value of investments in debt securities at March 31, 2011 by estimated average life are shown below. Actual cash flows may differ from estimated average lives and contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(Dollars in millions)    1 Year
or Less
     1-5
Years
     5-10
Years
     After 10
Years
     Total  

Distribution of Maturities:

              

Amortized Cost

              

U.S. Treasury securities

     $2         $221         $-         $-         $223   

Federal agency securities

     62         3,245         484         38         3,829   

U.S. states and political subdivisions

     127         279         48         83         537   

MBS - agency

     338         12,740         1,773         2,828         17,679   

MBS - private

     34         318         3         -         355   

CDO securities

     -         77         -         -         77   

ABS

     203         503         4         -         710   

Corporate and other debt securities

     6         6         17         26         55   
                                            

Total debt securities

     $772         $17,389         $2,329         $2,975         $23,465   
                                            

Fair Value

              

U.S. Treasury securities

     $2         $220         $-         $-         $222   

Federal agency securities

     62         3,230         487         37         3,816   

U.S. states and political subdivisions

     129         292         49         81         551   

MBS - agency

     348         13,001         1,806         2,840         17,995   

MBS - private

     32         303         3         -         338   

CDO securities

     -         77         -         -         77   

ABS

     209         507         4         -         720   

Corporate and other debt securities

     6         6         19         25         56   
                                            

Total debt securities

     $788         $17,636         $2,368         $2,983         $23,775   
                                            

Gross realized gains and losses on sales and OTTI on securities AFS during the periods were as follows:

 

     Three Months Ended March 31  
(Dollars in millions)    2011     2010  

Gross realized gains

     $143        $15   

Gross realized losses

     (78     (13

OTTI

     (1     (1
                

Net securities gains

     $64        $1   
                

Securities in a continuous unrealized loss position at March 31, 2011 and December 31, 2010 were as follows:

     March 31, 2011  
     Less than twelve months      Twelve months or longer      Total  
(Dollars in millions)    Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
 

Temporarily impaired securities

                 

U.S. Treasury securities

     $201         $1         $-         $-         $201         $1   

Federal agency securities

     3,402         26         -         -         3,402         26   

U.S. states and political subdivisions

     30         1         36         2         66         3   

MBS - agency

     4,770         32         -         -         4,770         32   

MBS - private

     3         -         24         2         27         2   

CDO securities

     27         -         -         -         27         -   

ABS

     -         -         13         3         13         3   

Corporate and other debt securities

     -         -         3         1         3         1   
                                                     

Total temporarily impaired securities

     8,433         60         76         8         8,509         68   

Other-than-temporarily impaired securities1

                 

MBS - private

     19         -         261         17         280         17   

ABS

     2         -         3         1         5         1   
                                                     

Total other-than-temporarily impaired securities

     21         -         264         18         285         18   
                                                     

Total impaired securities

     $8,454         $60         $340         $26         $8,794         $86   
                                                     
     December 31, 2010  
     Less than twelve months      Twelve months or longer      Total  
(Dollars in millions)    Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
 

Temporarily impaired securities

                 

U.S. Treasury securities

     $2,010         $45         $-         $-         $2,010         $45   

Federal agency securities

     1,426         7         -         -         1,426         7   

U.S. states and political subdivisions

     45         1         35         2         80         3   

MBS - agency

     3,497         28         -         -         3,497         28   

MBS - private

     18         -         17         3         35         3   

ABS

     -         -         14         4         14         4   

Corporate and other debt securities

     -         -         3         1         3         1   
                                                     

Total temporarily impaired securities

     6,996         81         69         10         7,065         91   

Other-than-temporarily impaired securities1

                 

MBS - private

     -         -         286         31         286         31   

ABS

     4         1         -         -         4         1   
                                                     

Total other-than-temporarily impaired securities

     4         1         286         31         290         32   
                                                     

Total impaired securities

     $7,000         $82         $355         $41         $7,355         $123   
                                                     

1 Includes OTTI for which credit losses have been recorded in earnings in current or prior periods.

The Company held certain investment securities having unrealized loss positions. As of March 31, 2011, the Company did not intend to sell these securities nor was it more likely than not that the Company would be required to sell these securities before their anticipated recovery or maturity. The Company has reviewed its portfolio for OTTI in accordance with the accounting policies outlined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

The Company records OTTI through earnings based on the credit impairment estimates generally derived from cash flow analyses. The remaining unrealized loss, due to factors other than credit, is recorded in OCI. The unrealized OTTI loss relating to private MBS as of March 31, 2011 includes purchased and retained interests from securitizations that have been other-than-temporarily impaired in current and prior periods. The unrealized OTTI loss relating to ABS is related to two securities within the portfolio that are home equity issuances and have also been other-than-temporarily impaired in prior periods. Based on the analysis of the underlying cash flows of these securities, there is no expectation of further credit impairment. In addition, the expectation of cash flows for the previously impaired ABS securities has improved such that the amount of expected credit losses was reduced, and the expected increase in cash flows will be accreted into earnings as a yield adjustment over the remaining life of the securities.

The following is a rollforward of credit losses recognized in earnings for the three months ended March 31, 2011 and 2010, related to securities for which some portion of the OTTI loss remains in AOCI:

 

(Dollars in millions)       

Balance, as of January 1, 2010

   $ 22   

Additions/reductions1

     -   
        

Balance, as of March 31, 2010

   $ 22   
        

Balance, as of January 1, 2011

   $ 20   

Additions:

  

OTTI credit losses on previously impaired securities

     1   
        

Balance, as of March 31, 2011

   $ 21   
        

1 During the three months ended March 31, 2010, the Company recognized $1 million of OTTI through earnings on debt securities in which no portion of the OTTI loss was included in OCI at any time during the period. OTTI related to these securities are excluded from these amounts.

   

All securities AFS are reviewed quarterly for OTTI. The securities that gave rise to the credit impairment recognized during the three months ended March 31, 2011 consisted of private MBS with a fair market value of $114 million at March 31, 2011. The securities impacted by credit impairment during the three months ended March 31, 2010, were primarily private MBS with a fair value of less than $1 million as of March 31, 2010. Credit impairment that is determined through the use of cash flow models is estimated using cash flows on security specific collateral and the transaction structure. Future expected credit losses are determined by using various assumptions, the most significant of which include current default rates, prepayment rates, and loss severities. For the majority of the securities that the Company has reviewed for credit-related OTTI, credit information is available and modeled at the loan level underlying each security, and the Company also considers information such as loan to collateral values, FICO scores, and geographic considerations such as home price appreciation/depreciation. These inputs are updated on a regular basis to ensure the most current credit and other assumptions are utilized in the analysis. If, based on this analysis, the Company does not expect to recover the entire amortized cost basis of the security, the expected cash flows are then discounted at the security’s initial effective interest rate to arrive at a present value amount. OTTI credit losses reflect the difference between the present value of cash flows expected to be collected and the amortized cost basis of these securities. During the three months ended March 31, 2011 and 2010, all OTTI recognized in earnings on private MBS have underlying collateral of residential mortgage loans originated in 2006 and 2007, the majority of which were originated by the Company and, therefore, have geographic concentrations in the Company’s primary footprint. In addition, the Company has not purchased new private MBS in securities AFS during the three months ended March 31, 2011, and continues to reduce existing exposure primarily through paydowns.

The following table presents a summary of the significant inputs used in determining the measurement of credit losses recognized in earnings for private MBS for the three months ended March, 31, 2011 and 2010:

 

     March 31, 2011     March 31, 2010  

Current default rate

     5 - 7     2 - 6

Prepayment rate

     13 - 19     15 - 22

Loss severity

     39 - 43     37 - 46

 

Loans
Loans

Note 3 - Loans

The composition of the Company’s loan portfolio at March 31, 2011 and December 31, 2010 is shown in the following table:

 

(Dollars in millions)    March 31,
2011
     December 31,
2010
 

Commercial loans:

     

Commercial & industrial1

     $45,080         $44,753   

Commercial real estate

     6,043         6,167   

Commercial construction

     2,109         2,568   
                 

Total commercial loans

     53,232         53,488   

Residential loans:

     

Residential mortgages - guaranteed

     4,516         4,520   

Residential mortgages - nonguaranteed2

     23,443         23,959   

Home equity products

     16,382         16,751   

Residential construction

     1,208         1,291   
                 

Total residential loans

     45,549         46,521   

Consumer loans:

     

Guaranteed student loans

     4,477         4,260   

Other direct

     1,786         1,722   

Indirect

     9,469         9,499   

Credit cards

     419         485   
                 

Total consumer loans

     16,151         15,966   
                 

LHFI

     $114,932         $115,975   
                 

LHFS

     $2,165         $3,501   

1Includes $4 million of loans previously acquired from GB&T and carried at fair value at March 31, 2011 and December 31, 2010, respectively.

2Includes $453 million and $488 million of loans carried at fair value at March 31, 2011 and December 31, 2010, respectively.

During the three months ended March 31, 2011, the Company transferred $122 million in LHFI to LHFS, including $57 million of nonperforming residential mortgages that the Company intends to sell in future periods. The Company recorded an incremental charge-off of $10 million in connection with the transfer of the NPLs; the remaining loans were transferred at carrying value. Additionally, during the three months ended March 31, 2011, the Company sold $141 million in loans that had been held for investment at December 31, 2010 for approximately their carrying value. There were no other material purchases or sales of LHFI during the period.

The Company evaluates the credit quality of its loan portfolio based on internal credit risk ratings using numerous factors, including consumer credit risk scores, rating agency information, LTV ratios, collateral, collection experience, and other internal metrics. For the Commercial portfolio, the Company believes that the most appropriate credit quality indicator is the individual loan’s risk assessment expressed according to regulatory agency classification, Pass or Criticized. Criticized loans typically have a higher probability of default. As a result, Criticized loans are further categorized into accruing and nonaccruing, representing management’s assessment of the collectability of principal and interest. Ratings for individual loans are updated at least annually or more frequently if there is a material change in creditworthiness. For consumer and residential loans, the Company believes that consumer credit risk, as assessed by the FICO scoring method, is a relevant credit quality indicator. FICO scores are obtained at origination as part of the Company’s formal underwriting process, and refreshed FICO scores are obtained by the Company at least quarterly.

LHFI by credit quality indicator are shown in the tables below. Student loans and residential mortgages that were guaranteed by government agencies and for which there was nominal risk of principal loss have been excluded from the tables.

 

     Commercial & industrial      Commercial real estate      Commercial construction  
(Dollars in millions)    March 31,
2011
     December 31,
2010
     March 31,
2011
     December 31,
2010
     March 31,
2011
     December 31,
2010
 

Credit rating:

                 

Pass

     $42,543         $42,140         $4,192         $4,316         $701         $836   

Criticized accruing

     1,952         2,029         1,416         1,509         565         771   

Criticized nonaccruing

     585         584         435         342         843         961   
                                                     

Total

     $45,080         $44,753         $6,043         $6,167         $2,109         $2,568   
                                                     
     Residential mortgages -
nonguaranteed
     Home equity products      Residential construction  
     March 31,
2011
     December 31,
2010
     March 31,
2011
     December 31,
2010
     March 31,
2011
     December 31,
2010
 

Current FICO score range:

                 

700 and above

     $15,660         $15,920         $11,436         $11,673         $791         $828   

620 - 699

     4,419         4,457         2,855         2,897         241         258   

Below 6201

     3,364         3,582         2,091         2,181         176         205   
                                                     

Total

     $23,443         $23,959         $16,382         $16,751         $1,208         $1,291   
                                                     
     Consumer - other direct2      Consumer - indirect      Consumer - credit cards  
     March 31,
2011
     December 31,
2010
     March 31,
2011
     December 31,
2010
     March 31,
2011
     December 31,
2010
 

Current FICO score range:

                 

700 and above

     $1,028         $973         $6,805         $6,780         $214         $258   

620 - 699

     229         231         1,784         1,799         133         149   

Below 6201

     100         105         880         920         72         78   
                                                     

Total

     $1,357         $1,309         $9,469         $9,499         $419         $485   
                                                     

1For substantially all loans with refreshed FICO scores below 620, the borrower’s FICO score at the time of origination exceeded 620 but has since deteriorated as the loan has seasoned.

2Excludes $429 million and $413 million as of March 31, 2011 and December 31, 2010, respectively, of private-label student loans with third party insurance.

The payment status for the LHFI portfolio at March 31, 2011 and December 31, 2010 is shown in the tables below:

 

     As of March 31, 2011  
(Dollars in millions)    Accruing
Current
     Accruing
30-89 Days
Past Due
     Accruing
90+ Days
Past Due
     Nonaccruing3      Total  

Commercial loans:

              

Commercial & industrial1

     $44,379         $99         $17         $585         $45,080   

Commercial real estate

     5,587         20         1         435         6,043   

Commercial construction

     1,253         10         3         843         2,109   
                                            

Total commercial loans

     51,219         129         21         1,863         53,232   

Residential loans:

              

Residential mortgages - guaranteed

     3,433         136         947         -         4,516   

Residential mortgages - nonguaranteed2

     21,558         381         46         1,458         23,443   

Home equity products

     15,800         239         -         343         16,382   

Residential construction

     892         36         5         275         1,208   
                                            

Total residential loans

     41,683         792         998         2,076         45,549   

Consumer loans:

              

Guaranteed student loans

     3,457         397         623         -         4,477   

Other direct

     1,750         20         5         11         1,786   

Indirect

     9,383         64         1         21         9,469   

Credit cards

     400         9         10         -         419   
                                            

Total consumer loans

     14,990         490         639         32         16,151   
                                            

Total LHFI

     $107,892         $1,411         $1,658         $3,971         $114,932   
                                            

1Includes $4 million in loans carried at fair value at March 31, 2011.

2Includes $453 million in loans carried at fair value at March 31, 2011.

3Total nonaccruing loans past due 90 days or more totaled $3.0 billion at March 31, 2011. Nonaccruing loans past due fewer than 90 days include modified nonaccrual loans reported as TDRs.

 

     As of December 31, 2010  
(Dollars in millions)    Accruing
Current
     Accruing
30-89 Days
Past Due
     Accruing
90+ Days
Past Due
     Nonaccruing3      Total  

Commercial loans:

              

Commercial & industrial1

     $44,046         $111         $12         $584         $44,753   

Commercial real estate

     5,794         27         4         342         6,167   

Commercial construction

     1,595         11         1         961         2,568   
                                            

Total commercial loans

     51,435         149         17         1,887         53,488   

Residential loans:

              

Residential mortgages - guaranteed

     3,469         167         884         -         4,520   

Residential mortgages - nonguaranteed2

     21,916         456         44         1,543         23,959   

Home equity products

     16,162         234         -         355         16,751   

Residential construction

     953         42         6         290         1,291   
                                            

Total residential loans

     42,500         899         934         2,188         46,521   

Consumer loans:

              

Guaranteed student loans

     3,281         383         596         -         4,260   

Other direct

     1,692         15         5         10         1,722   

Indirect

     9,400         74         -         25         9,499   

Credit cards

     460         12         13         -         485   
                                            

Total consumer loans

     14,833         484         614         35         15,966   
                                            

Total LHFI

     $108,768         $1,532         $1,565         $4,110         $115,975   
                                            

1Includes $4 million in loans carried at fair value at December 31, 2010.

2Includes $488 million in loans carried at fair value at December 31, 2010.

3Total nonaccruing loans past due 90 days or more totaled $3.3 billion at December 31, 2010. Nonaccruing loans past due fewer than 90 days include modified nonaccrual loans reported as TDRs.

A loan is considered impaired when it is probable that the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the agreement. Large commercial nonaccrual loans and certain consumer, residential, and commercial loans whose terms have been modified in a TDR are individually evaluated for impairment. Smaller-balance homogeneous loans that are collectively evaluated for impairment are not included in the following tables. Additionally, the tables below exclude student loans and residential mortgages that were guaranteed by government agencies and for which there was nominal risk of principal loss.

 

     As of March 31, 2011  
(Dollars in millions)    Unpaid
Principal
Balance
    Amortized
Cost1
    Related
Allowance
    Average
Amortized
Cost
    Interest
Income
Recognized2
 

Impaired loans with no related allowance recorded:

          

Commercial loans:

          

Commercial & industrial

     $112        $102        $-        $104        $-   

Commercial real estate

     80        64        -        57        -   

Commercial construction

     133        119        -        109        1   
                                        

Total commercial loans

     325        285        -        270        1   

Impaired loans with an allowance recorded:

          

Commercial loans:

          

Commercial & industrial

     195        175        46        172        -   

Commercial real estate

     140        120        33        118        -   

Commercial construction

     454        392        114        390        1   
                                        

Total commercial loans

     789        687        193        680        1   

Residential loans:

          

Residential mortgages - nonguaranteed

     2,803        2,452        310        2,463        22   

Home equity products

     516        486        96        407        5   

Residential construction

     228        196        25        200        2   
                                        

Total residential loans

     3,547        3,134        431        3,070        29   

Consumer loans:

          

Other direct

     12        12        2        10        -   
                                        

Total impaired loans

     $4,673        $4,118        $626        $4,030        $31   
                                        

1Amortized cost reflects charge-offs that have been recognized plus other amounts that have been applied to reduce net book balance.

2Of the total interest income recognized for the three months ended March 31, 2011, cash basis interest income was $6 million.

 

     As of December 31, 2010  
(Dollars in millions)    Unpaid
Principal
Balance
     Amortized
Cost1
     Related
Allowance
 

Impaired loans with no related allowance recorded:

        

Commercial loans:

        

Commercial & industrial

     $86         $67         $-   

Commercial real estate

     110         86         -   

Commercial construction

     67         52         -   
                          

Total commercial loans

     263         205         -   

Impaired loans with an allowance recorded:

        

Commercial loans:

        

Commercial & industrial

     123         96         18   

Commercial real estate

     103         81         19   

Commercial construction

     673         524         138   
                          

Total commercial loans

     899         701         175   

Residential loans:

        

Residential mortgages - nonguaranteed

     2,785         2,467         309   

Home equity products

     503         503         93   

Residential construction

     226         196         26   
                          

Total residential loans

     3,514         3,166         428   

Consumer loans:

        

Other direct

     11         11         2   
                          

Total impaired loans

     $4,687         $4,083         $605   
                          

1Amortized cost reflects charge-offs that have been recognized plus other amounts that have been applied to reduce net book balance.

Included in the impaired loan balances above were $2.5 billion of accruing TDRs at both March 31, 2011 and December 31, 2010, of which 86% and 85% were current, respectively. See Note 1, “Significant Accounting Policies,” to the Consolidated Financial Statements in the Company’s 2010 Annual Report on Form 10-K for further information regarding the Company’s loan impairment policy.

Nonperforming assets at March 31, 2011 and December 31, 2010 are shown in the following table:

 

(Dollars in millions)    March 31,
2011
    December 31,
2010
 

Nonperforming Assets

    

Nonaccrual/NPLs:

    

Commercial loans:

    

Commercial & industrial1

     $585        $584   

Commercial real estate

     435        342   

Commercial construction

     843        961   

Residential loans:

    

Residential mortgages - nonguaranteed2

     1,458        1,543   

Home equity products

     343        355   

Residential construction

     275        290   

Consumer loans:

    

Other direct

     11        10   

Indirect

     21        25   
                

Total nonaccrual/NPLs

     3,971        4,110   

OREO3

     534        596   

Other repossessed assets

     16        52   

Nonperforming LHFS

     47        -   
                

Total nonperforming assets

     $4,568        $4,758   
                

1Includes $4 million of loans carried at fair value at March 31, 2011 and December 31, 2010, respectively.

2Includes $19 million and $24 million of loans carried at fair value at March 31, 2011 and December 31, 2010, respectively.

3Does not include foreclosed real estate related to serviced loans insured by the FHA or the VA. Insurance proceeds due from the FHA and the VA are recorded as a receivable in other assets until the funds are received and the property is conveyed.

 

At March 31, 2011 and December 31, 2010, the Company had $29 million and $15 million, respectively, in commitments to lend additional funds to debtors owing receivables whose terms have been modified in a TDR.

Concentrations of Credit Risk

The Company does not have a significant concentration of risk to any individual client except for the U.S. government and its agencies. A geographic concentration arises because the Company operates primarily in the Southeastern and Mid-Atlantic regions of the U.S.

The major concentrations of credit risk for the Company arise by collateral type in relation to loans and credit commitments. The only significant concentration that exists is in loans secured by residential real estate. At March 31, 2011, the Company owned $45.5 billion in residential loans, representing 40% of total LHFI, and had $13.4 billion in commitments to extend credit on home equity lines and $9.9 billion in mortgage loan commitments. Of the residential loans owned at March 31, 2011, 10% were government guaranteed. At December 31, 2010, the Company owned $46.5 billion in residential real estate loans, representing 40% of total LHFI, and had $13.6 billion in commitments to extend credit on home equity lines and $9.2 billion in mortgage loan commitments. Of the residential loans owned at December 31, 2010, 10% were government guaranteed.

The Company has originated and retained $16.1 billion and $16.6 billion of certain residential loans at March 31, 2011 and December 31, 2010, respectively, that include potentially higher risk characteristics, such as an interest only feature, a high LTV ratio, or a junior lien position. Of these higher risk loans, $12.7 billion and $13.2 billion were interest only loans at origination, primarily with a ten year interest only period, including those loans that have since been modified.

SunTrust engages in limited international banking activities. The Company’s total cross-border outstanding loans were $395 million and $446 million at March 31, 2011 and December 31, 2010, respectively.

Allowance for Credit Losses
Allowance for Credit Losses

Note 4 - Allowance for Credit Losses

The allowance for credit losses consists of the ALLL and the reserve for unfunded commitments. Activity in the allowance for credit losses is summarized in the table below:

 

     Three Months Ended
March 31
 
(Dollars in millions)    2011     2010  

Balance at beginning of period

     $3,032        $3,235   

Provision for loan losses

     451        877   

Provision/(benefit) for unfunded commitments

     (4     (15

Loan charge-offs

     (615     (862

Loan recoveries

     44        41   
                

Balance at end of period

     $2,908        $3,276   
                

Components:

    

ALLL

     $2,854        $3,176   

Unfunded commitments reserve1

     54        100   
                

Allowance for credit losses

     $2,908        $3,276   
                

1The unfunded commitments reserve is separately recorded in other liabilities in the Consolidated Balance Sheets.

 

Activity in the ALLL by segment is presented in the tables below:

 

     Three Months Ended March 31, 2011  
(Dollars in millions)    Commercial     Residential     Consumer     Total  

Balance at beginning of period

     $1,303        $1,498        $173        $2,974   

Provision for loan losses

     108        322        21        451   

Loan charge-offs

     (185     (385     (45     (615

Loan recoveries

     29        5        10        44   
                                

Balance at end of period

     $1,255        $1,440        $159        $2,854   
                                
     Three Months Ended March 31, 2010  
(Dollars in millions)    Commercial     Residential     Consumer     Total  

Balance at beginning of period

     $1,353        $1,592        $175        $3,120   

Provision for loan losses

     215        601        61        877   

Loan charge-offs

     (192     (608     (62     (862

Loan recoveries

     23        5        13        41   
                                

Balance at end of period

     $1,399        $1,590        $187        $3,176   
                                

As further discussed in the Company’s 2010 Annual Report on Form 10-K, the ALLL is composed of specific allowances for certain nonaccrual loans and TDRs and general allowances grouped into loan pools based on similar characteristics. No allowance is required for loans carried at fair value. Additionally, the Company does not record an allowance for loan products that are guaranteed by government agencies, as there is nominal risk of principal loss. The Company’s LHFI portfolio and related ALLL at March 31, 2011 and December 31, 2010, respectively, is shown in the tables below:

 

     As of March 31, 2011  
     Commercial      Residential      Consumer      Total  
(Dollars in millions)    Carrying
Value
     Associated
ALLL
     Carrying
Value
     Associated
ALLL
     Carrying
Value
     Associated
ALLL
     Carrying
Value
     Associated
ALLL
 

Individually evaluated

     $972         $193         $3,134         $431         $12         $2         $4,118         $626   

Collectively evaluated

     52,256         1,062         41,962         1,009         16,139         157         110,357         2,228   
                                                                       

Total evaluated

     53,228         1,255         45,096         1,440         16,151         159         114,475         2,854   

LHFI at fair value

     4         -         453         -         -         -         457         -   
                                                                       

Total LHFI

     $53,232         $1,255         $45,549         $1,440         $16,151         $159         $114,932         $2,854   
                                                                       
     As of December 31, 2010  
     Commercial      Residential      Consumer      Total  
(Dollars in millions)    Carrying
Value
     Associated
ALLL
     Carrying
Value
     Associated
ALLL
     Carrying
Value
     Associated
ALLL
     Carrying
Value
     Associated
ALLL
 

Individually evaluated

     $906         $175         $3,166         $428         $11         $2         $4,083         $605   

Collectively evaluated

     52,578         1,128         42,867         1,070         15,955         171         111,400         2,369   
                                                                       

Total evaluated

     53,484         1,303         46,033         1,498         15,966         173         115,483         2,974   

LHFI at fair value

     4         -         488         -         -         -         492         -   
                                                                       

Total LHFI

     $53,488         $1,303         $46,521         $1,498         $15,966         $173         $115,975         $2,974   
                                                                       
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets

Note 5 – Goodwill and Other Intangible Assets

Goodwill is required to be tested for impairment on an annual basis or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. No events have occurred or circumstances changed since the annual testing of the Company’s goodwill on September 30, 2010 that caused interim testing of goodwill during the first quarter of 2011.

 

Changes in the carrying amounts of other intangible assets for three months ended March 31 are as follows:

 

Core Deposit Core Deposit Core Deposit Core Deposit Core Deposit
(Dollars in millions)    Core Deposit
Intangibles
    MSRs
LOCOM
    MSRs
Fair Value
    Other     Total  

Balance, January 1, 2010

     $104        $604        $936        $67        $1,711   

Designated at fair value (transfers from amortized cost)

     -        (604     604        -        -   

Amortization

     (9     -        -        (3     (12

MSRs originated

     -        -        66        -        66   

Changes in fair value

          

Due to fair value election

     -        -        145        -        145   

Due to changes in inputs or assumptions 1

     -        -        (45     -        (45

Other changes in fair value 2

     -        -        (65     -        (65
                                        

Balance, March 31, 2010

     $95        $-        $1,641        $64        $1,800   
                                        

Balance, January 1, 2011

     $67        $-        $1,439        $65        $1,571   

Amortization

     (8     -        -        (3     (11

MSRs originated

     -        -        88        -        88   

Sale of MSRs

     -        -        (7     -        (7

Changes in fair value

          

Due to changes in inputs or assumptions 1

     -        -        70        -        70   

Other changes in fair value 2

     -        -        (52     -        (52
                                        

Balance, March 31, 2011

     $59        $-        $1,538        $62        $1,659   
                                        

1 Primarily reflects changes in discount rates and prepayment speed assumptions, due to changes in interest rates.

2 Represents changes due to the collection of expected cash flows, net of accretion, due to passage of time.

Certain Transfers of Financial Assets, Mortgage Servicing Rights and Variable Interest Entities
Certain Transfers of Financial Assets, Mortgage Servicing Rights and Variable Interest Entities

Note 6 - Certain Transfers of Financial Assets, Mortgage Servicing Rights and Variable Interest Entities

Certain Transfers of Financial Assets and related Variable Interest Entities

The Company has transferred residential and commercial mortgage loans, student loans, commercial and corporate loans, and CDO securities in sale or securitization transactions in which the Company has, or had, continuing involvement. All such transfers have been accounted for as sales by the Company. The Company’s continuing involvement in such transfers includes owning certain beneficial interests, including senior and subordinate debt instruments as well as equity interests, servicing or collateral manager responsibilities, and guarantee or recourse arrangements. Except as specifically noted herein, the Company is not required to provide additional financial support to any of the entities to which the Company has transferred financial assets, nor has the Company provided any support it was not otherwise obligated to provide. In accordance with the accounting guidance related to transfers of financial assets that became effective on January 1, 2010, upon completion of future transfers of assets that satisfy the conditions to be reported as a sale, the Company will derecognize the transferred assets and recognize at fair value any beneficial interests in the transferred financial assets such as trading assets or securities AFS, as well as servicing rights retained and guarantee liabilities incurred. See Note 12, “Fair Value Election and Measurement,” to the Consolidated Financial Statements, for further discussion of the Company’s fair value methodologies.

When evaluating transfers and other transactions with VIEs for consolidation under the VIE consolidation guidance, the Company first determines if it has a VI in the VIE. A VI is typically in the form of securities representing retained interests in the transferred assets and, at times, servicing rights and collateral manager fees. If the Company has a VI in the entity, it then evaluates whether or not it has both (1) the power to direct the activities that most significantly impact the economic performance of the VIE, and (2) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. If the Company determines that it does not have power over the significant activities of the VIE, an analysis of the economics of the VIE is not necessary. If it is determined that the Company does have power over the significant activities of the VIE, the Company must determine if it also has an obligation to absorb losses and/or the right to receive benefits that could potentially be significant to the VIE.

Below is a summary of transfers of financial assets to VIEs for which the Company has retained some level of continuing involvement.

Residential Mortgage Loans

The Company typically transfers first lien residential mortgage loans in conjunction with Ginnie Mae, Fannie Mae, and Freddie Mac securitization transactions whereby the loans are exchanged for cash or securities that are readily redeemed for cash proceeds and servicing rights. The securities issued through these transactions are guaranteed by the issuer and, as such, under seller/servicer agreements the Company is required to service the loans in accordance with the issuers’ servicing guidelines and standards. The Company sold residential mortgage loans to these entities, which resulted in pre-tax gains of $12 million and $85 million, including servicing rights, for the three months ended March 31, 2011 and 2010, respectively. These gains are included within mortgage production related loss in the Consolidated Statements of Income/(Loss). These gains include the change in value of the loans as a result of changes in interest rates from the time the related IRLCs were issued to the borrowers but do not include the results of hedging activities initiated by the Company to mitigate this market risk. See Note 11, “Derivative Financial Instruments,” to the Consolidated Financial Statements for further discussion of the Company’s hedging activities. As seller, the Company has made certain representations and warranties with respect to the originally transferred loans, including those transferred under Ginnie Mae, Fannie Mae, and Freddie Mac programs, which are discussed in Note 13, “Reinsurance Arrangements and Guarantees,” to the Consolidated Financial Statements.

In a limited number of securitizations, the Company has transferred loans to trusts, which previously qualified as QSPEs, sponsored by the Company. These trusts issue securities which are ultimately supported by the loans in the underlying trusts. In these transactions, the Company has received securities representing retained interests in the transferred loans in addition to cash and servicing rights in exchange for the transferred loans. The received securities are carried at fair value as either trading assets or securities AFS. As of March 31, 2011 and December 31, 2010, the fair value of securities received totaled $186 million and $193 million, respectively. At March 31, 2011, securities with a fair value of $167 million were valued using a third party pricing service. The remaining $19 million in securities consist of subordinate interests from a 2003 securitization of prime fixed and floating rate loans and were valued using a discounted cash flow model that uses historically derived prepayment rates and credit loss assumptions along with estimates of current market discount rates. The Company did not significantly modify the assumptions used to value these retained interests at March 31, 2011 from the assumptions used to value the interests at December 31, 2010. For both periods, analyses of the impact on the fair values of two adverse changes from the key assumptions were performed and the resulting amounts were insignificant for each key assumption and in the aggregate.

The Company evaluated these securitization transactions for consolidation under the VIE consolidation guidance. As servicer of the underlying loans, the Company is generally deemed to have power over the securitization. However, if a single party, such as the issuer or the master servicer, effectively controls the servicing activities or has the unilateral ability to terminate the Company as servicer without cause, then that party is deemed to have power. In almost all of its securitization transactions, the Company does not retain power over the securitization as a result of these rights held by the master servicer; therefore, an analysis of the economics of the securitization is not necessary. In certain transactions, the Company does have power as the servicer; however, the Company does not also have an obligation to absorb losses or the right to receive benefits that could potentially be significant to the securitization. The absorption of losses and the receipt of benefits would generally manifest itself through the retention of senior or subordinated interests. As of January 1, 2010, the Company determined that it was not the primary beneficiary of, and thus did not consolidate, any of these securitization entities. No events occurred during the three months ended March 31, 2011 that would change the Company’s previous conclusion that it is not the primary beneficiary of any of these securitization entities. Total assets as of March 31, 2011 and December 31, 2010 of the unconsolidated trusts in which the Company has a VI are $616 million and $651 million, respectively.

The Company’s maximum exposure to loss related to the unconsolidated VIEs in which it holds a VI is comprised of the loss of value of any interests it retains and any repurchase obligations it incurs as a result of a breach of its representations and warranties.

Separately, the Company has accrued $91 million and $81 million as of March 31, 2011 and December 31, 2010, respectively, for expected losses related to certain of its representations and warranties made in connection with certain transfers of nonconforming loans. The Company did not repurchase a significant amount of these previously transferred loans during the three months ended March 31, 2011 or during the year ended December 31, 2010.

Commercial and Corporate Loans

In 2007, the Company completed a $1.9 billion structured sale of corporate loans to multi-seller CP conduits, which are VIEs administered by unrelated third parties, from which it retained a 3% residual interest in the pool of loans transferred, which does not constitute a VI in the third party conduits as it relates to the unparticipated portion of the loans. In conjunction with the transfer of the loans, the Company also provided commitments in the form of liquidity facilities to these conduits. In January 2010, the administrator of the conduits drew on these commitments in full, resulting in a funded loan to the conduits that was recorded on the Company’s Consolidated Balance Sheets. During the quarter ended March 31, 2011, the Company exercised its clean up call rights on the structured participation and repurchased the remaining corporate loans. In conjunction with the clean up call, the outstanding amount of the liquidity facilities and the residual interest were paid off. The exercise of the clean up call was not material to the Company’s financial condition, results of operations, or cash flows.

 

The Company has involvement with CLO entities that own commercial leveraged loans and bonds, certain of which were transferred by the Company to the CLOs. In addition to retaining certain securities issued by the CLOs, the Company also acts as collateral manager for these CLOs. The securities retained by the Company and the fees received as collateral manager represent a VI in the CLOs, which are considered to be VIEs.

The Company determined that it was the primary beneficiary of, and thus, would consolidate one of these CLOs as it has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses and the right to receive benefits from the entity that could potentially be significant to the CLO. In addition to fees received as collateral manager, including eligibility for performance incentive fees, and owning certain preference shares, the Company’s multi-seller conduit, Three Pillars, owns a senior interest in the CLO, resulting in economics that could potentially be significant to the VIE. On January 1, 2010, the Company consolidated $307 million in total assets and $279 million in net liabilities of the CLO entity. The Company elected to consolidate the CLO at fair value and to carry the financial assets and financial liabilities of the CLO at fair value subsequent to adoption. The initial consolidation of the CLO had a negligible impact on the Company’s Consolidated Statements of Shareholders’ Equity. Substantially all of the assets and liabilities of the CLO are loans and issued debt, respectively. The loans are classified within LHFS at fair value and the debt is included within long-term debt at fair value on the Company’s Consolidated Balance Sheets (see Note 12, “Fair Value Election and Measurement,” to the Consolidated Financial Statements for a discussion of the Company’s methodologies for estimating the fair values of these financial instruments). At March 31, 2011, the Company’s Consolidated Balance Sheets reflected $324 million of loans held by the CLO and $289 million of debt issued by the CLO. The Company is not obligated, contractually or otherwise, to provide financial support to this VIE nor has it previously provided support to this VIE. Further, creditors of the VIE have no recourse to the general credit of the Company, as the liabilities of the CLO are paid only to the extent of available cash flows from the CLO’s assets.

For the remaining CLOs, which are also considered to be VIEs, the Company has determined that it is not the primary beneficiary as it does not have an obligation to absorb losses or the right to receive benefits from the entities that could potentially be significant to the VIE. At March 31, 2010, the carrying value of the Company’s investment in the preference shares was zero due to the significant deterioration in the performance of the collateral in those vehicles; however, during the remainder of 2010, the Company observed an improvement in cash flow expectations as well as an overall steady recovery in liquidity and value in the broader CLO market. As a result, the Company was able to liquidate a number of its positions in these CLO preference shares during 2010. Its remaining preference share exposure was valued at $2 million as of March 31, 2011 and December 31, 2010. Upon liquidation of the preference shares, the Company’s only remaining involvement with these VIEs was through its collateral manager role. The Company receives fees for managing the assets of these vehicles; these fees are considered adequate compensation and are commensurate with the level of effort required to provide such services. The fees received by the Company from these entities totaled approximately $3 million for the three months ended March 31, 2011 and 2010. The fees received by the Company from these entities are recorded as trust and investment management income in the Consolidated Statements of Income/(Loss). Senior fees earned by the Company are generally not considered at risk; however, subordinate fees earned by the Company are subject to the availability of cash flows and to the priority of payments. The estimated assets and liabilities of these entities that were not included on the Company’s Consolidated Balance Sheets were both $2.0 billion at March 31, 2011, and $2.1 billion and $2.0 billion, respectively, at December 31, 2010. The Company is not obligated to provide any support to these entities, nor has it previously provided support to these entities. No events occurred during the three months ended March 31, 2011 that would change the Company’s previous conclusion that it is not the primary beneficiary of any of these securitization entities.

Student Loans

In 2006, the Company completed a securitization of government-guaranteed student loans through a transfer of loans to a securitization SPE, which previously qualified as a QSPE, and retained the related residual interest in the SPE. The Company, as master servicer of the loans in the SPE, has agreed to service each loan consistent with the guidelines determined by the applicable government agencies in order to maintain the government guarantee. The Company and the SPE have entered into an agreement to have the loans subserviced by an unrelated third party.

During the year ended December 31, 2010, the Company determined that this securitization of government-guaranteed student loans (the “Student Loan entity”) should be consolidated. Accordingly, the Company consolidated the Student Loan entity at its unpaid principal amount as of September 30, 2010, resulting in incremental total assets and total liabilities of $0.5 billion, respectively, and an immaterial impact on shareholders’ equity. The consolidation of the Student Loan entity had no impact on the Company’s earnings or cash flows that results from its involvement with this VIE. The primary balance sheet impacts from consolidating the Student Loan entity were increases in LHFI, the related ALLL, and long-term debt. In addition, the Company’s ownership of the residual interest in the SPE, previously classified in trading assets, was eliminated upon consolidation and the assets and liabilities of the Student Loan entity are recorded on a cost basis. At March 31, 2011 and December 31, 2010, the Company’s Consolidated Balance Sheets reflected $470 million and $479 million, respectively, of assets held by the Student Loan entity and $465 million and $474 million, respectively, of debt issued by the Student Loan entity.

Payments from the assets in the SPE must first be used to settle the obligations of the SPE, with any remaining payments remitted to the Company as the owner of the residual interest. To the extent that losses occur on the SPE’s assets, the SPE has recourse to the federal government as the guarantor up to a maximum guarantee amount of 97%. Losses in excess of the government guarantee reduce the amount of available cash payable to the owner of the residual interest. To the extent that losses result from a breach of the master servicer’s servicing responsibilities, the SPE has recourse to the Company; the SPE may require the Company to repurchase the loan from the SPE at par value. If the breach was caused by the subservicer, the Company has recourse to seek reimbursement from the subservicer up to the guaranteed amount. The Company’s maximum exposure to loss related to the SPE is represented by the potential losses resulting from a breach of servicing responsibilities. To date, all loss claims filed with the guarantor that have been denied due to servicing errors have either been cured or reimbursement has been provided to the Company by the subservicer. The Company is not obligated to provide any noncontractual support to this entity, nor has it to date provided any such support to this entity.

CDO Securities

The Company has transferred bank trust preferred securities in securitization transactions. The majority of these transfers occurred between 2002 and 2005 with one transaction completed in 2007. The Company retained equity interests in certain of these entities and also holds certain senior interests that were acquired during 2008 in conjunction with its acquisition of assets from the ARS transactions discussed in Note 14, “Contingencies,” to the Consolidated Financial Statements. The assumptions and inputs considered by the Company in valuing this retained interest include prepayment speeds, credit losses, and the discount rate. Due to the seniority of the interests in the structure, current estimates of credit losses in the underlying collateral could withstand a 20% adverse change without the securities incurring a loss. In addition, while all the underlying collateral is currently eligible for repayment by the obligor, given the nature of the collateral and the current repricing environment, the Company assumed no prepayment would occur before the final maturity, which is approximately 23 years on a weighted average basis. Therefore, the key assumption in valuing these securities was the assumed discount rate, which was estimated to range from 8% to 10% over LIBOR at March 31, 2011 compared to 14% to 16% over LIBOR at December 31, 2010. This significant change in the discount rate was supported by a return to liquidity in the market for similar interests. At March 31, 2011, and December 31, 2010, a 20% adverse change in the assumed discount rate results in declines of approximately $7 million and $5 million, respectively, in the fair value of these securities.

The Company is not obligated to provide any support to these entities and its maximum exposure to loss at March 31, 2011 and December 31, 2010 was limited to the current senior interests held in trading securities, which had a fair value of $42 million as of March 31, 2011 and $25 million as of December 31, 2010. The total assets of the trust preferred CDO entities in which the Company has remaining exposure to loss was $1.3 billion at both March 31, 2011 and December 31, 2010. The Company determined that it was not the primary beneficiary of any of these VIEs under VIE consolidation guidance, as the Company lacks the power to direct the significant activities of any of the VIEs. No events occurred during the three months ended March 31, 2011 that changed either the Company’s sale accounting or the Company’s conclusions that it is not the primary beneficiary of these VIEs.

The following tables present certain information related to the Company’s asset transfers in which it has continuing economic involvement for the three months ended March 31:

 

     Three Months Ended March 31, 2011  
(Dollars in millions)    Residential
Mortgage
Loans
     Commercial
and Corporate
Loans
     Student
Loans
     CDO
Securities
     Total  

Cash flows on interests held

     $15         $-         $-         $1         $16   

Servicing or management fees

     1         3         -         -         4   
     Three Months Ended March 31, 2010  
(Dollars in millions)    Residential
Mortgage
Loans
     Commercial
and Corporate
Loans
     Student
Loans
     CDO
Securities
     Total  

Cash flows on interests held

     $14         $1         $3         $1         $19   

Servicing or management fees

     1         3         -         -         4   

 

 

Portfolio balances and delinquency balances based on accruing loans 90 days or more past due and all nonaccrual loans as of March 31, 2011 and December 31, 2010, and net charge-offs related to managed portfolio loans (both those that are owned by the Company and those that have been transferred) for three months ended March 31, 2011 and 2010 are as follows:

 

     Principal Balance      Past Due      Net Charge-offs  
(Dollars in millions)    March 31
2011
     December 31
2010
     March 31
2011
     December 31
2010
     For the Three Months Ended
March 31
 
               2011      2010  

Type of loan:

                 

Commercial

     $53,232         $53,488         $1,884         $1,904         $156         $169   

Residential

     45,549         46,521         3,074         3,122         380         603   

Consumer

     16,151         15,966         671         649         35         49   
                                                     

Total loan portfolio

     114,932         115,975         5,629         5,675         571         821   

Managed securitized loans

                 

Commercial

     2,032         2,244         54         44         -         -   

Residential

     1,179         1,245         95         96         13         11   
                                                     

Total managed loans

     $118,143         $119,464         $5,778         $5,815         $584         $832   
                                                     

Residential mortgage loans securitized through Ginnie Mae, Fannie Mae, and Freddie Mac have been excluded from the tables above since the Company does not retain any beneficial interests or other continuing involvement in the loans other than servicing responsibilities on behalf of Ginnie Mae, Fannie Mae, and Freddie Mac and repurchase contingencies under standard representations and warranties made with respect to the transferred mortgage loans. The total amount of loans serviced by the Company as a result of such securitization transactions totaled $120.3 billion and $119.2 billion at March 31, 2011 and December 31, 2010, respectively. Related servicing fees received by the Company during the three months ended March 31, 2011 and 2010 were $86 million and $92 million, respectively.

Mortgage Servicing Rights

In addition to other interests that continue to be held by the Company in the form of securities, the Company also retains MSRs from certain of its sales or securitizations of residential mortgage loans. MSRs on residential mortgage loans are the only servicing assets capitalized by the Company.

Income earned by the Company on its MSRs is derived primarily from contractually specified mortgage servicing fees and late fees, net of curtailment costs. Such income earned for the three months ended March 31, 2011 and 2010, was $92 million, and $99 million, respectively. These amounts are reported in mortgage servicing related income in the Consolidated Statements of Income/(Loss).

As of March 31, 2011 and December 31, 2010, the total unpaid principal balance of mortgage loans serviced was $164.5 billion and $167.2 billion, respectively. Included in these amounts were $132.7 billion and $134.1 billion as of March 31, 2011 and December 31, 2010, respectively, of loans serviced for third parties. During the three months ended March 31, 2011, the Company sold MSRs on residential loans with an unpaid principal balance of $1.7 billion. Because MSRs are reported at fair value, the sale did not have a material impact on mortgage servicing related income.

A summary of the key characteristics, inputs, and economic assumptions used to estimate the fair value of the Company’s MSRs as of March 31, 2011 and December 31, 2010, and the sensitivity of the fair values to immediate 10% and 20% adverse changes in those assumptions are as follows:

 

(Dollars in millions)    March 31, 2011     December 31, 2010  

Fair value of retained MSRs

     $1,538        $1,439   

Prepayment rate assumption (annual)

     10     12

Decline in fair value from 10% adverse change

     $60        $50   

Decline in fair value from 20% adverse change

     102        95   

Discount rate (annual)

     12     12

Decline in fair value from 10% adverse change

     $75        $68   

Decline in fair value from 20% adverse change

     143        130   

Weighted-average life (in years)

     6.8        6.2   

Weighted-average coupon

     5.3     5.4

 

The above sensitivities are hypothetical and should be used with caution. As the amounts indicate, changes in fair value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another, which might magnify or counteract the sensitivities. In addition, the sensitivities above do not include the effect of hedging activity undertaken by the Company to offset changes in the fair value of MSRs. See Note 11, “Derivative Financial Instruments,” for further information regarding these hedging transactions.

Other Variable Interest Entities

In addition to the Company’s involvement with certain VIEs, which is discussed herein under “Certain Transfers of Financial Assets and related Variable Interest Entities,” the Company also has involvement with VIEs from other business activities.

Three Pillars Funding, LLC

SunTrust assists in providing liquidity to select corporate clients by directing them to a multi-seller CP conduit, Three Pillars. Three Pillars provides financing for direct purchases of financial assets originated and serviced by SunTrust’s corporate clients by issuing CP.

The Company has determined that Three Pillars is a VIE as Three Pillars has not issued sufficient equity at risk. Previously, Three Pillars had issued a subordinated note to a third party, which would have absorbed the first dollar of loss in the event of nonpayment of any of Three Pillars’ assets. In January 2010, Three Pillars repaid and extinguished the subordinated note in full. In accordance with the VIE consolidation guidance, the Company has determined that it is the primary beneficiary of Three Pillars, as certain subsidiaries have both the power to direct the significant activities of Three Pillars and own potentially significant VIs, as discussed further herein. The assets and liabilities of Three Pillars were consolidated by the Company at their unpaid principal amounts at January 1, 2010; upon consolidation, the Company recorded an allowance for loan losses on $1.7 billion of secured loans that were consolidated at that time, resulting in a transition adjustment of less than $1 million, which is recorded in the Company’s Consolidated Statements of Shareholders’ Equity.

The Company’s involvement with Three Pillars includes the following activities: services related to the administration of Three Pillars’ activities and client referrals to Three Pillars; the issuing of letters of credit, which provide partial credit protection to the CP holders; and providing liquidity arrangements that would provide funding to Three Pillars in the event it can no longer issue CP or in certain other circumstances. The Company’s activities with Three Pillars generated total revenue for the Company, net of direct salary and administrative costs, of $16 million and $15 million for the three months ended March 31, 2011 and 2010, respectively.

At March 31, 2011 and December 31, 2010, the Company’s Consolidated Balance Sheets reflected approximately $2.3 billion and $2.4 billion, respectively, of secured loans held by Three Pillars, which are included within commercial loans, and $163 million and $99 million, respectively, of CP issued by Three Pillars, excluding intercompany liabilities, which is included within other short-term borrowings; other assets and liabilities were de minimis to the Company’s Consolidated Balance Sheets. No losses on any of Three Pillars’ assets were incurred during the three months ended March 31, 2011 and 2010.

Funding commitments extended by Three Pillars to its customers, which typically carry initial terms of one to three years and may be repaid or refinanced at any time, totaled $3.8 billion and $4.1 billion at March 31, 2011 and December 31, 2010, respectively. The majority of the commitments are backed by trade receivables and equipment loans/leases that have been originated by companies operating across a number of industries. Trade receivables and equipment loans/leases collateralize 42% and 16%, respectively, of the outstanding commitments, as of March 31, 2011, compared to 48% and 14%, respectively, as of December 31, 2010. Total assets supporting outstanding commitments have a weighted average life of 2.4 years and 2.3 years at March 31, 2011 and December 31, 2010, respectively.

Each transaction added to Three Pillars is typically structured to a minimum implied A/A2 rating according to established credit and underwriting policies as approved by credit risk management and monitored on a regular basis to ensure compliance with each transaction’s terms and conditions. Typically, transactions contain dynamic credit enhancement features that provide increased credit protection in the event asset performance deteriorates. If asset performance deteriorates beyond predetermined covenant levels, the transaction could become ineligible for continued funding by Three Pillars. This could result in the transaction being amended with the approval of credit risk management, or Three Pillars could terminate the transaction and enforce any rights or remedies available, including amortization of the transaction or liquidation of the collateral. In addition, Three Pillars has the option to fund under the liquidity facility provided by the Bank in connection with the transaction and may be required to fund under the liquidity facility if the transaction remains in breach. In addition, each commitment renewal requires credit risk management approval. The Company is not aware of unfavorable trends related to Three Pillars’ assets for which the Company expects to suffer material losses.

At March 31, 2011, Three Pillars’ outstanding CP used to fund its assets had remaining weighted average lives of 11 days and maturities through May 2, 2011. The assets of Three Pillars generally provide the sources of cash flows for the CP. However, the Company has issued commitments in the form of liquidity facilities and other credit enhancements to support the operations of Three Pillars. Due to the Company’s consolidation of Three Pillars as of January 1, 2010, these commitments are eliminated in consolidation for U.S. GAAP purposes. The liquidity commitments are revolving facilities that are sized based on the current commitments provided by Three Pillars to its customers. The liquidity facilities may generally be used if new CP cannot be issued by Three Pillars to repay maturing CP. However, the liquidity facilities are available in all circumstances, except certain bankruptcy-related events with respect to Three Pillars. Draws on the facilities are subject to the purchase price (or borrowing base) formula that, in many cases, excludes defaulted assets to the extent that they exceed available over-collateralization in the form of non-defaulted assets, and may also provide the liquidity banks with loss protection equal to a portion of the loss protection provided for in the related securitization agreement. Additionally, there are transaction specific covenants and triggers that are tied to the performance of the assets of the relevant seller/servicer that may result in a transaction termination event, which, if continuing, would require funding through the related liquidity facility. Finally, in a termination event of Three Pillars, such as if its tangible net worth falls below $5,000 for a period in excess of 15 days, Three Pillars would be unable to issue CP, which would likely result in funding through the liquidity facilities. Draws under the credit enhancement are also available in all circumstances, but are generally used to the extent required to make payment on any maturing CP if there are insufficient funds from collections of receivables or the use of liquidity facilities. The required amount of credit enhancement at Three Pillars will vary from time to time as new receivable pools are purchased or removed from its asset portfolio, but is generally equal to 10% of the aggregate commitments of Three Pillars.

Due to the consolidation of Three Pillars, the Company’s maximum exposure to potential loss was $3.9 billion and $4.2 billion as of March 31, 2011 and December 31, 2010, respectively, which represents the Company’s exposure to the lines of credit that Three Pillars had extended to its clients. The Company did not recognize any liability on its Consolidated Balance Sheets related to the liquidity facilities and other credit enhancements provided to Three Pillars as of March 31, 2011 or December 31, 2010, as no amounts had been drawn, nor were any draws probable to occur, such that a loss should have been accrued.

Total Return Swaps

The Company has had involvement with various VIEs related to its TRS business, which recommenced during 2010 and is ongoing.

Under the matched book TRS business model, the VIEs purchase assets (typically loans) from the market, which are identified by third party clients, that serve as the underlying reference assets for a TRS between the VIE and the Company and a mirror TRS between the Company and its third party clients. The TRS contracts between the VIEs and the Company hedge the Company’s exposure to the TRS contracts with its third party clients. These third parties are not related parties to the Company, nor are they and the Company de facto agents of each other. In order for the VIEs to purchase the reference assets, the Company provides senior financing, in the form of demand notes, to these VIEs. The TRS contracts pass through interest and other cash flows on the assets owned by the VIEs to the third parties, along with exposing the third parties to depreciation on the assets and providing them with the rights to appreciation on the assets. The terms of the TRS contracts require the third parties to post initial collateral, in addition to ongoing margin as the fair values of the underlying assets change. Although the Company has always caused the VIEs to purchase a reference asset in response to the addition of a reference asset by its third party clients, there is no legal obligation between the Company and its third party clients for the Company to purchase the reference assets or for the Company to cause the VIEs to purchase the assets.

The Company considered the VIE consolidation guidance, which requires an evaluation of the substantive contractual and non-contractual aspects of transactions involving VIEs established subsequent to January 1, 2010. The Company and its third party clients are the only VI holders. As such, the Company evaluated the nature of all VIs and other interests and involvement with the VIEs, in addition to the purpose and design of the VIEs, relative to the risks they were designed to create. The purpose and design of a VIE are key components of a consolidation analysis and any power should be analyzed based on the substance of that power relative to the purpose and design of the VIE. The VIEs were designed for the benefit of the third parties and would not exist if the Company did not enter into the TRS contracts with the third parties. The activities of the VIEs are restricted to buying and selling reference assets with respect to the TRS contracts entered into between the Company and its third party clients and the risks/benefits of any such assets owned by the VIEs are passed to the third party clients via the TRS contracts. The TRS contracts between the Company and its third party clients have a substantive effect on the design of the overall transaction and the VIEs. Based on its evaluation, the Company has determined that it is not the primary beneficiary of the VIEs, as the design of the TRS business results in the Company having no substantive power to direct the significant activities of the VIEs.

At March 31, 2011 and December 31, 2010, the Company had $1.0 billion and $972 million, respectively, in senior financing outstanding to VIEs, which were classified within trading assets on the Consolidated Balance Sheets and carried at fair value. These VIEs had entered into TRS contracts with the Company with outstanding notional amounts of $1.0 billion and $969 million at March 31, 2011 and December 31, 2010, respectively, and the Company had entered into mirror TRS contracts with its third parties with the same outstanding notional amounts. At March 31, 2011, the fair values of these TRS assets and liabilities were $38 million and $36 million, respectively, and at December 31, 2010, the fair values of these TRS assets and liabilities were $34 million and $32 million, respectively, reflecting the pass-through nature of these structures. The notional amounts of the TRS contracts with the VIEs represent the Company’s maximum exposure to loss, although such exposure to loss has been mitigated via the TRS contracts with the third parties. The Company has not provided any support to the VIE that it was not contractually obligated to for the three months ended March 31, 2011 or during the year ended December 31, 2010. For additional information on the Company’s TRS with these VIEs, see Note 11, “Derivative Financial Instruments” to the Consolidated Financial Statements.

Community Development Investments

As part of its community reinvestment initiatives, the Company invests almost exclusively within its footprint in multi-family affordable housing developments and other community development entities as a limited and/or general partner and/or a debt provider. The Company receives tax credits for its partnership investments. The Company has determined that these partnerships are VIEs. During 2011 and 2010, the Company did not provide any financial or other support to its consolidated or unconsolidated investments that it was not previously contractually required to provide.

For partnerships where the Company operates strictly as the general partner, the Company consolidates these partnerships on its Consolidated Balance Sheets. As the general partner, the Company typically guarantees the tax credits due to the limited partner and is responsible for funding construction and operating deficits. As of March 31, 2011 and December 31, 2010, total assets, which consist primarily of fixed assets and cash attributable to the consolidated partnerships, were $9 million and $8 million, respectively, and total liabilities, excluding intercompany liabilities, were $1 million. Security deposits from the tenants are recorded as liabilities on the Company’s Consolidated Balance Sheets. The Company maintains separate cash accounts to fund these liabilities and these assets are considered restricted. The tenant liabilities and corresponding restricted cash assets were de minimis as of March 31, 2011 and December 31, 2010. While the obligations of the general partner are generally non-recourse to the Company, as the general partner, the Company may from time to time step in when needed to fund deficits. During 2011 and 2010, the Company did not provide any significant amount of funding as the general partner or to cover any deficits the partnerships may have generated.

For other partnerships, the Company acts only in a limited partnership capacity. The Company has determined that it is not the primary beneficiary of these partnerships and accounts for its limited partner interests in accordance with the accounting guidance for investments in affordable housing projects. The general partner or an affiliate of the general partner provides guarantees to the limited partner, which protects the Company from losses attributable to operating deficits, construction deficits and tax credit allocation deficits. Partnership assets of $1.1 billion in these partnerships were not included in the Consolidated Balance Sheets at March 31, 2011 and December 31, 2010. These limited partner interests had carrying values of $201 million and $202 million at March 31, 2011 and December 31, 2010, respectively, and are recorded in other assets on the Company’s Consolidated Balance Sheets. The Company’s maximum exposure to loss for these limited partner investments totaled $462 million and $458 million at March 31, 2011 and December 31, 2010, respectively. The Company’s maximum exposure to loss would be borne by the loss of the limited partnership equity investments along with $228 million and $222 million of loans issued by the Company to the limited partnerships at March 31, 2011 and December 31, 2010, respectively. The difference between the maximum exposure to loss and the investment and loan balances is primarily attributable to the unfunded equity commitments. Unfunded equity commitments are amounts that the Company has committed to the partnerships upon the partnerships meeting certain conditions. When these conditions are met, the Company will invest these additional amounts in the partnerships.

When the Company owns both the limited partner and general partner interests or acts as the indemnifying party, the Company consolidates the partnerships and does not consider these partnerships VIEs. As of March 31, 2011 and December 31, 2010, total assets, which consist primarily of fixed assets and cash, attributable to the consolidated, non-VIE partnerships were $387 million and $394 million, respectively, and total liabilities, excluding intercompany liabilities, primarily representing third party borrowings, were $111 million and $123 million, respectively. See Note 12, “Fair Value Election and Measurement,” to the Consolidated Financial Statements for further discussion on the impact of impairment charges on affordable housing partnership investments.

Registered and Unregistered Funds Advised by RidgeWorth

RidgeWorth, a registered investment advisor and majority owned subsidiary of the Company, serves as the investment advisor for various private placement, common and collective funds, and registered mutual funds (collectively the “Funds”). The Company evaluates these Funds to determine if the Funds are VIEs. In February 2010, the FASB issued guidance that defers the application of the existing VIE consolidation guidance for investment funds meeting certain criteria. All of the registered and unregistered Funds advised by RidgeWorth meet the scope exception criteria and thus are not evaluated for consolidation under the guidance. Accordingly, the Company continues to apply the consolidation guidance in effect prior to the issuance of the existing guidance to interests in funds that qualify for the deferral. Further, funds that were determined to be VIEs under the previous accounting guidance and are still considered VIEs under the current accounting guidance are required to comply with the current disclosure requirements.

The Company has concluded that some of the Funds are VIEs. However, the Company has concluded that it is not the primary beneficiary of these funds as the Company does not absorb a majority of the expected losses nor expected returns of the funds. The Company’s exposure to loss is limited to the investment advisor and other administrative fees it earns and if applicable, any equity investments. The total unconsolidated assets of these funds as of March 31, 2011 and December 31, 2010 were $1.6 billion and $1.9 billion, respectively.

The Company does not have any contractual obligation to provide monetary support to any of the Funds. The Company did not provide any significant support, contractual or otherwise, to the Funds during the three months ended March 31, 2011 or during the year ended December 31, 2010.

Net Income/(Loss) Per Share
Net Income/(Loss) Per Share

Note 7 – Net Income/(Loss) Per Share

Equivalent shares of 32 million related to common stock options and common stock warrants outstanding as of March 31, 2011 and 2010 were excluded from the computations of diluted income/(loss) per average common share because they would have been anti-dilutive. Further, for EPS calculation purposes, during the three months ended March 31, 2010, the impact of dilutive securities were excluded from the diluted share count because the Company recognized a net loss available to common shareholders and the impact would have been anti-dilutive.

A reconciliation of the difference between average basic common shares outstanding and average diluted common shares outstanding for the three months ended March 31, 2011 and 2010 is included below. Additionally, included below is a reconciliation of net income/(loss) to net income/(loss) available to common shareholders.

 

     Three Months Ended
March 31
 
(In millions, except per share data)            2011                     2010          

Net income/(loss)

     $180        ($161

Series A preferred dividends

     (2     (2

U.S. Treasury preferred dividends and accretion of discount

     (66     (66

Accelerated accretion associated with repurchase of preferred stock issued to the U.S. Treasury

     (74     -   
                

Net income/(loss) available to common shareholders

     $38        ($229
                

Average basic common shares

     500        495   

Effect of dilutive securities:

    

Stock options

     1        1   

Restricted stock

     3        2   
                

Average diluted common shares

     504        498   
                

Net income/(loss) per average common share - diluted

     $0.08        ($0.46
                

Net income/(loss) per average common share - basic

     $0.08        ($0.46
                
Long-Term Debt and Capital
Long-Term Debt and Capital

Note 8 – Long-Term Debt and Capital

In March 2011, the Federal Reserve completed its review of the Company’s capital plan in connection with the CCAR. Upon completion of the review, the Federal Reserve did not object to the Company’s capital plan as originally submitted in December 2010. As a result, the Company completed, during the three months ended March 31, 2011, a $1.0 billion common stock offering and a $1.0 billion senior debt offering. The Company subsequently used the proceeds from these offerings as well as from other available funds to repurchase, on March 30, 2011, $3.5 billion of Fixed Rate Cumulative Preferred Stock, Series C, and $1.4 billion of Fixed Rate Cumulative Preferred Stock, Series D that was issued to the U.S. Treasury under the TARP’s CPP. As a result of the repurchase of Series C and D preferred stock, the Company incurred a one-time non-cash charge to net income/(loss) available to common shareholders of $74 million during the three months ended March 31, 2011, related to accelerating the outstanding discount accretion on the Series C and D preferred stock. The U.S. Treasury continues to hold warrants to purchase 11,891,280 shares of SunTrust common stock at an exercise price of $44.15 per share and 6,008,902 shares of SunTrust common stock at an exercise price of $33.70 per share.

Primarily as a result of the senior debt offering, the Company’s long term debt increased from $13.6 billion at December 31, 2010 to $14.7 billion at March 31, 2011. The $1.0 billion senior notes were issued at 3.60% and are due in 2016. In addition to the senior debt offering during the first quarter of 2011, the Company also repurchased $120 million of its fixed rate senior and junior subordinated notes that were due in 2011 and 2036.

As a result of the common stock offering, the Company’s common equity increased by $1.0 billion, net of issuance costs, and approximately 35 million new common shares were added to the Company’s outstanding common shares. Conversely, Consolidated Shareholders’ Equity decreased by $3.9 billion from December 31, 2010 primarily as a result of the repurchase of the Series C and D preferred stock, offset by the new common share issuance. The Company’s capital ratios as of March 31, 2011 and December 31, 2010 are noted below.

 

         As of March 31, 2011             As of December 31, 2010      
(Dollars in millions)    Amount      Ratio     Amount      Ratio  

SunTrust Banks, Inc.

          

Tier 1 common

     $11,811         9.05     $10,737         8.08

Tier 1 capital

     14,363         11.00        18,156         13.67   

Total capital

     18,178         13.92        21,967         16.54   

Tier 1 leverage

        8.72           10.94   

SunTrust Bank

          

Tier 1 capital

     $13,477         10.48     $13,120         10.05

Total capital

     16,782         13.05        16,424         12.58   

Tier 1 leverage

        8.50           8.33   
Income Taxes
Income Taxes

Note 9 - Income Taxes

The provision for income taxes was $33 million and a benefit of $194 million for the three months ended March 31, 2011 and 2010, respectively, representing effective tax rates of 15.5% and (54.7%), respectively, during those periods. The Company calculated income taxes for the three months ended March 31, 2011 and 2010 based on actual year-to-date results.

As of March 31, 2011, the Company’s gross cumulative income tax on UTBs amounted to $99 million, of which $67 million (net of federal tax benefit) would affect the Company’s effective tax rate, if recognized. As of December 31, 2010, the Company’s gross cumulative income tax on UTBs amounted to $102 million. Additionally, the Company had a gross liability of $21 million for interest related to its UTBs as of March 31, 2011 and December 31, 2010. Interest recognized related to UTBs was expense of less than $1 million and income of approximately $5 million for the three months ended March 31, 2011 and 2010, respectively. The Company continually evaluates the UTBs associated with its uncertain tax positions. It is reasonably possible that the total amount of income tax on UTBs could decrease during the next 12 months by up to $10 million due to completion of tax authority examinations and the expiration of statutes of limitations.

The Company files consolidated and separate income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. As of March 31, 2011, the Company’s federal returns through 2006 have been examined by the IRS and all issues have been resolved. The Company’s 2007 through 2009 federal income tax returns are currently under examination by the IRS. Generally, the state jurisdictions in which the Company files income tax returns are subject to examination for a period from three to seven years after returns are filed.

Employee Benefit Plans
Employee Benefit Plans

Note 10 - Employee Benefit Plans

The Company sponsors various short-term incentive and LTI plans for eligible employees. The Company delivers LTIs through various incentive programs, including stock options, restricted stock, LTI cash, and salary shares. Compensation expense related to LTI cash for the three months ended March 31, 2011 and 2010 was $9 million and $6 million, respectively.

TARP prohibited the payment of any bonus, incentive compensation or stock option award to our five NEOs and other highly compensated executives. As a result, SunTrust continued the use of salary shares in 2011 as defined in the U.S. Treasury’s Interim Final Rule on TARP Standards for Compensation and Corporate Governance. Specifically, the Company paid additional base salary amounts in the form of stock (salary shares) to the senior executive officers and other employees who were among the next 20 most highly-compensated employees. The Company did this each pay period in the form of stock units under the SunTrust Banks, Inc. 2009 Stock Plan. The stock units did not include any rights to receive dividends or dividend equivalents. As required by The Emergency Economic Stabilization Act of 2008, each salary share was non-forfeitable upon grant but may not be sold or transferred until the expiration of a holding period (except as necessary to satisfy applicable withholding taxes). As a result, these individuals are at risk for the value of our stock price until the stock unit is settled. The stock units are settled in cash; for the 2010 salary shares one half was settled on March 31, 2011 and one half will be settled on March 31, 2012, unless settled earlier due to the executive’s death. The 2011 salary shares were settled on the date of TARP repayment on March 30, 2011. The amount to be paid on settlement of the stock units will be equal to the value of a share of SunTrust common stock on the settlement date. Benefit plan determinations and limits were established to ensure that the salary shares were accounted for equitably within relevant benefit plans. As of March 31, 2011, the accrual related to salary shares was $5 million.

Following the repayment by SunTrust of the U.S. Treasury’s TARP investment in the Company, the Compensation Committee of the Board (the “Committee”) approved a revised compensation structure for the Company’s NEOs. Effective April 1, 2011, the compensation structure includes an annual incentive opportunity under the Company’s existing Management Incentive Plan. New LTI arrangements were also implemented. The design of the plan delivers 50% restricted stock units with vesting tied to the Company’s total shareholder return relative to a peer group consisting of the banks which comprise the KBW Bank Sector Index. The remaining 50% of the LTI will consist of approximately half restricted stock units, the vesting of which is tied to the achievement of a Tier 1 capital ratio target, and the other half in stock options.

Stock-Based Compensation

The Company granted 404,745 shares of stock options and 1,243,138 shares of restricted stock during the first three months of 2011. The weighted average prices of these grants were $32.27 and $32.18, respectively. The fair value of options granted during the first three months of 2011 and 2010 were $12.20 per share and $12.75 per share, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

 

         Three Months Ended March 31      
     2011     2010  

Dividend yield

     0.12     0.17

Expected stock price volatility

     34.54        56.23   

Risk-free interest rate (weighted average)

     2.72        2.84   

Expected life of options

     6 years        6 years   

Stock-based compensation expense recognized in noninterest expense was as follows:

 

     Three Months Ended March 31  
(Dollars in millions)    2011      2010  

Stock-based compensation expense:

     

Stock options

     $3         $4   

Restricted stock

     9         12   
                 

Total stock-based compensation expense

     $12         $16   
                 

The recognized stock-based compensation tax benefit amounted to $5 million and $6 million for the three months ended March 31, 2011 and 2010, respectively.

Retirement Plans

SunTrust did not contribute to either of its noncontributory qualified retirement plans (“Retirement Benefits” plans) in the first quarter of 2011. The expected long-term rate of return on plan assets for the Retirement Benefit Plans is 7.75% for 2011.

Anticipated employer contributions/benefit payments for 2011 are $22 million for the Supplemental Retirement Benefit plans. For the first quarter of 2011, the actual contributions/benefit payments totaled $1 million.

SunTrust contributed less than $1 million to the Postretirement Welfare Plan in the first quarter of 2011. Additionally, SunTrust expects to receive a Medicare Part D Subsidy reimbursement for 2011 in the amount of $3 million. The expected pre-tax long-term rate of return on plan assets for the Postretirement Welfare plan is 6.75% for 2011.

 

     Three Months Ended March 31  
     2011     2010  
(Dollars in millions)    Retirement
Benefits
    Other
Postretirement
Benefits
    Retirement
Benefits
    Other
Postretirement
Benefits
 

Service cost

     $18        $-        $17        $-   

Interest cost

     32        3        32        3   

Expected return on plan assets

     (47     (2     (45     (2

Amortization of prior service cost

     (5     -        (3     -   

Recognized net actuarial loss

     10        -        15        -   
                                

Net periodic benefit cost

     $8        $1        $16        $1   
                                
Derivative Financial Instruments
Derivative Financial Instruments

Note 11 - Derivative Financial Instruments

The Company enters into various derivative financial instruments, both in a dealer capacity to facilitate client transactions and as an end user as a risk management tool. Where derivatives have been entered into with clients, the Company generally manages the risk associated with these derivatives within the framework of its VAR approach that monitors total exposure daily and seeks to manage the exposure on an overall basis. Derivatives are used as a risk management tool to hedge the Company’s exposure to changes in interest rates or other identified market or credit risks, either economically or in accordance with the hedge accounting provisions. The Company may also enter into derivatives, on a limited basis, in consideration of trading opportunities in the market. In addition, as a normal part of its operations, the Company enters into IRLCs on mortgage loans that are accounted for as freestanding derivatives and has certain contracts containing embedded derivatives that are carried, in their entirety, at fair value. All freestanding derivatives and any embedded derivatives that the Company bifurcates from the host contracts are carried at fair value in the Consolidated Balance Sheets in trading assets, other assets, trading liabilities, or other liabilities. The associated gains and losses are either recorded in OCI, net of tax, or within the Consolidated Statements of Income/(Loss) depending upon the use and designation of the derivatives.

Credit and Market Risk Associated with Derivatives

Derivatives expose the Company to credit risk. If the counterparty fails to perform, the credit risk at that time would be equal to the net derivative asset position, if any, for that counterparty. The Company minimizes the credit or repayment risk in derivatives by entering into transactions with high credit-quality counterparties that are reviewed periodically by the Company’s Credit Risk Management division. The Company’s derivatives may also be governed by an ISDA, depending on the nature of the derivative transactions, bilateral collateral agreements may be in place as well. When the Company has more than one outstanding derivative transaction with a single counterparty and there exists a legally enforceable master netting agreement with that counterparty, the Company considers its exposure to the counterparty to be the net market value of all positions with that counterparty, if such net value is an asset to the Company, and zero, if such net value is a liability to the Company. As of March 31, 2011, net derivative asset positions to which the Company was exposed to risk of its counterparties were $1.5 billion, representing the net of $2.7 billion in net derivative gains by counterparty, netted by counterparty where formal netting arrangements exist, adjusted for collateral of $1.2 billion that the Company holds in relation to these gain positions. As of December 31, 2010, net derivative asset positions to which the Company was exposed to risk of its counterparties were $1.6 billion, representing the net of $2.8 billion in net derivative gains by counterparty, netted by counterparty where formal netting arrangements exist, adjusted for collateral of $1.2 billion that the Company holds in relation to these gain positions.

Derivative instruments are primarily transacted in the institutional dealer market and priced with observable market assumptions at a mid-market valuation point, with appropriate valuation adjustments for liquidity and credit risk. For purposes of valuation adjustments to its derivative positions, the Company has evaluated liquidity premiums that may be demanded by market participants, as well as the credit risk of its counterparties and its own credit. The Company has considered factors such as the likelihood of default by itself and its counterparties, its net exposures, and remaining maturities in determining the appropriate fair value adjustments to record. Generally, the expected loss of each counterparty is estimated using the Company’s proprietary internal risk rating system. The risk rating system utilizes counterparty-specific probabilities of default and loss given default estimates to derive the expected loss. For counterparties that are rated by national rating agencies, those ratings are also considered in estimating the credit risk. In addition, counterparty exposure is evaluated by netting positions that are subject to master netting arrangements, as well as considering the amount of marketable collateral securing the position. Specifically approved counterparties and exposure limits are defined. The approved counterparties are regularly reviewed and appropriate business action is taken to adjust the exposure to certain counterparties, as necessary. This approach used to estimate exposures to counterparties is also used by the Company to estimate its own credit risk on derivative liability positions. The Company adjusted the net fair value of its derivative contracts for estimates of net counterparty credit risk by approximately $31 million and $33 million as of March 31, 2011 and December 31, 2010 respectively.

The majority of the Company’s derivatives contain contingencies that relate to the creditworthiness of the Bank. These contingencies contained in industry standard master trading agreements may be considered events of default. Should the Bank be in default under any of these provisions, the Bank’s counterparties would be permitted under such master agreements to close-out net at amounts that would approximate the then-fair values of the derivatives and the netting of the amounts would produce a single sum due by one party to the other. The counterparties would have the right to apply any collateral posted by the Bank against any net amount owed by the Bank. In addition, certain of the Company’s derivative liability positions, totaling $949 million and $1.1 billion in fair value at March 31, 2011 and December 31, 2010, respectively, contain provisions conditioned on downgrades of the Bank’s credit rating. These provisions, if triggered, would either give rise to an ATE that permits the counterparties to close-out net and apply collateral or, where a CSA is present, require the Bank to post additional collateral. Collateral posting requirements generally result from differences in the fair value of the net derivative liability compared to specified collateral thresholds at different ratings levels of the Bank, both of which are negotiated provisions within each CSA. At March 31, 2011, the Bank carried senior long-term debt ratings of A3/BBB+ from three of the major ratings agencies. At the current rating level, ATEs have been triggered for approximately $3 million in fair value liabilities as of March 31, 2011. For illustrative purposes, if the Bank were further downgraded to Baa3/BBB-, ATEs would be triggered in derivative liability contracts that had a total fair value of $11 million at March 31, 2011, against which the Bank had posted collateral of $6 million; ATEs do not exist at lower ratings levels. At March 31, 2011, $945 million in fair value of derivative liabilities were subject to CSAs, against which the Bank has posted $882 million in collateral. If requested by the counterparty per the terms of the CSA, the Bank would be required to post estimated additional collateral against these contracts at March 31, 2011 of $24 million if the Bank were downgraded to Baa3/BBB-, and any further downgrades to Ba1/BB+ or below would require the posting of an additional $14 million at March 31, 2011. Such collateral posting amounts may be more or less than the Bank’s estimates based on the specified terms of each CSA as to the timing of a collateral calculation and whether the Bank and its counterparties differ on their estimates of the fair values of the derivatives or collateral.

Derivatives also expose the Company to market risk. Market risk is the adverse effect that a change in market factors, such as interest rates, currency rates, equity prices, or implied volatility, has on the value of a derivative. The Company manages the market risk associated with its derivatives by establishing and monitoring limits on the types and degree of risk that may be undertaken. The Company continually measures this risk by using a VAR methodology.

The tables below present the Company’s derivative positions at March 31, 2011 and December 31, 2010. The notional amounts in the tables are presented on a gross basis and have been classified within Asset Derivatives or Liability Derivatives based on the estimated fair value of the individual contract at March 31, 2011 and December 31, 2010. For purposes of the table below, the gross positive and gross negative fair value amounts associated with the respective notional amounts are presented without consideration of any netting agreements. For contracts constituting a combination of options that contain a written option and a purchased option (such as a collar), the notional amount of each option is presented separately, with the purchased notional amount generally being presented as an Asset Derivative and the written notional amount being presented as a Liability Derivative. The fair value of a combination of options is generally presented as a single value with the purchased notional amount if the combined fair value is positive, and with the written notional amount, if the combined fair value is negative.

     As of March 31, 2011  
     Asset Derivatives      Liability Derivatives  
(Dollars in millions)      Balance Sheet  
Classification
       Notional  
Amounts
      Fair Value          Balance Sheet  
Classification
       Notional  
Amounts
      Fair Value    

Derivatives designated in cash flow hedging relationships 5

               

Equity contracts hedging:

               

Securities AFS

     Trading assets         $1,547        $-         Trading liabilities         $1,547        $161   

Interest rate contracts hedging:

               

Floating rate loans

     Trading assets         13,400        858         Trading liabilities         950        20   
                                       

Total

        14,947        858            2,497        181   
                                       

Derivatives not designated as hedging instruments 6

  

            

Interest rate contracts covering:

               

Fixed rate debt

     Trading assets         1,274        43         Trading liabilities         60        4   

MSRs

     Other assets         24,335        117         Other liabilities         4,075        25   

LHFS, IRLCs, LHFI-FV

     Other assets         2,661  3      7         Other liabilities         2,144        9   

Trading activity

     Trading assets         140,528  1      3,743         Trading liabilities         110,135        3,433   

Foreign exchange rate contracts covering:

               

Foreign-denominated debt and commercial loans

     Trading assets         1,151        82         Trading liabilities         511        114   

Trading activity

     Trading assets         5,898        197         Trading liabilities         5,953        189   

Credit contracts covering:

               

Loans

     Trading assets         30        -         Trading liabilities         207        3   

Trading activity

     Trading assets         1,131  2      42         Trading liabilities         1,108  2      38   

Equity contracts - Trading activity

     Trading assets         5,775  1      669         Trading liabilities         9,007        827   

Other contracts:

               

IRLCs and other

     Other assets         2,205        24         Other liabilities         625  4      26  4 

Trading activity

     Trading assets         194        33         Trading liabilities         195        33   
                                       

Total

        185,182        4,957            134,020        4,701   
                                       

Total derivatives

        $200,129        $5,815            $136,517        $4,882   
                                       

1 Amounts include $24.7 billion and $0.6 billion of notional related to interest rate futures and equity futures, respectively. These futures contracts settle in cash daily and therefore no derivative asset or liability is recorded.

2 Asset and liability amounts include $1 million and $10 million, respectively, of notional from purchased and written interest rate swap risk participation agreements, respectively, which notional is calculated as the notional of the interest rate swap participated adjusted by the relevant risk weighted assets conversion factor.

3 Amount includes $0.4 billion of notional amounts related to interest rate futures. These futures contracts settle in cash daily and therefore no derivative asset or liability is recorded.

4 Includes a $23 million derivative liability recorded in other liabilities in the Consolidated Balance Sheets, related to a notional amount of $134 million. The notional amount is based on the number of Visa Class B shares, 3.2 million, the conversion ratio from Visa Class B common stock to Visa Class A common stock, and the Visa Class A common stock price at the derivative inception date of May 28, 2009. This derivative was established upon the sale of Visa Class B shares in the second quarter of 2009 as discussed in Note 18, “Reinsurance Arrangements and Guarantees,” to the Consolidated Financial Statements in the Company’s 2010 Annual Report on Form 10-K.

5 See “Cash Flow Hedges” in this Note for further discussion.

6 See “Economic Hedging and Trading Activities” in this Note for further discussion.

 

The table below presents the Company’s derivative positions at December 31, 2010.

 

     As of December 31, 2010  
     Asset Derivatives      Liability Derivatives  
(Dollars in millions)    Balance  Sheet
Classification
     Notional
Amounts
    Fair Value      Balance  Sheet
Classification
     Notional
Amounts
    Fair Value  

Derivatives designated in cash flow hedging relationships 5

               

Equity contracts hedging:

               

Securities AFS

     Trading assets         $1,547        $-         Trading liabilities         $1,547        $145   

Interest rate contracts hedging:

               

Floating rate loans

     Trading assets         15,350        947         Trading liabilities         500        10   
                                       

Total

        16,897        947            2,047        155   
                                       

Derivatives not designated as hedging instruments 6

               

Interest rate contracts covering:

               

Fixed rate debt

     Trading assets         1,273        41         Trading liabilities         60        4   

Corporate bonds and loans

        -        -         Trading liabilities         5        -   

MSRs

     Other assets         20,474        152         Other liabilities         6,480        73   

LHFS, IRLCs, LHFI-FV

     Other assets         7,269  3      92         Other liabilities         2,383        20   

Trading activity

     Trading assets         132,286  1      4,211         Trading liabilities         105,926        3,884   

Foreign exchange rate contracts covering:

               

Foreign-denominated debt and commercial loans

     Trading assets         1,083        17         Trading liabilities         495        128   

Trading activity

     Trading assets         2,691        92         Trading liabilities         2,818        91   

Credit contracts covering:

               

Loans

     Trading assets         15        -         Trading liabilities         227        2   

Trading activity

     Trading assets         1,094  2      39         Trading liabilities         1,039  2      34   

Equity contracts - Trading activity

     Trading assets         5,010  1      583         Trading liabilities         8,012        730   

Other contracts:

               

IRLCs and other

     Other assets         2,169        18         Other liabilities         2,196  4      42  4 

Trading activity

     Trading assets         111        11         Trading liabilities         111        11   
                                       

Total

        173,475        5,256            129,752        5,019   
                                       

Total derivatives

        $190,372        $6,203            $131,799        $5,174   
                                       

1 Amounts include $25.0 billion and $0.5 billion of notional related to interest rate futures and equity futures, respectively. These futures contracts settle in cash daily and therefore no derivative asset or liability is recorded.

2 Asset and liability amounts include $1 million and $8 million, respectively, of notional from purchased and written interest rate swap risk participation agreements, respectively, which notional is calculated as the notional of the interest rate swap participated adjusted by the relevant risk weighted assets conversion factor.

3 Amount includes $1.4 billion of notional amounts related to interest rate futures. These futures contracts settle in cash daily and therefore no derivative asset or liability is recorded.

4 Includes a $23 million derivative liability recorded in other liabilities in the Consolidated Balance Sheets, related to a notional amount of $134 million. The notional amount is based on the number of Visa Class B shares, 3.2 million, the conversion ratio from Visa Class B common stock to Visa Class A common stock, and the Visa Class A common stock price at the derivative inception date of May 28, 2009. This derivative was established upon the sale of Visa Class B shares in the second quarter of 2009 as discussed in Note 18, “Reinsurance Arrangements and Guarantees,” to the Consolidated Financial Statements in the Company’s 2010 Annual Report on Form 10-K.

5 See “Cash Flow Hedges” in this Note for further discussion.

6 See “Economic Hedging and Trading Activities” in this Note for further discussion.

The impacts of derivative financial instruments on the Consolidated Statements of Income/(Loss) and the Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2011 and 2010 are presented below. The impacts are segregated between those derivatives that are designated in hedging relationships and those that are used for economic hedging or trading purposes, with further identification of the underlying risks in the derivatives and the hedged items, where appropriate. The tables do not disclose the financial impact of the activities that these derivative instruments are intended to hedge, for both economic hedges and those instruments designated in formal, qualifying hedging relationships.

 

    Three Months Ended March 31, 2011  

(Dollars in millions)

Derivatives in cash flow hedging relationships

  Amount of pre-tax loss recognized in
OCI on Derivatives
(Effective Portion)
    Classification of gain reclassified
from AOCI into Income
(Effective Portion)
    Amount of pre-tax gain reclassified
from AOCI into Income
(Effective Portion) 1
 

Equity contracts hedging:

     

Securities AFS

    ($16       $-   

Interest rate contracts hedging:

     

Floating rate loans

    (27     Interest and fees on loans        113   
                 

Total

    ($43       $113   
                 

 

(Dollars in millions)

Derivatives not designated as hedging instruments

 

Classification of gain/(loss) recognized in Income on

Derivatives

  Amount of gain/(loss) recognized in
Income on Derivatives
 

Interest rate contracts covering:

   

Fixed rate debt

  Trading account profits/(losses) and commissions     $1   

MSRs

  Mortgage servicing related income     (43

LHFS, IRLCs, LHFI-FV

  Mortgage production related loss     (26

Trading activity

  Trading account profits/(losses) and commissions     4   

Foreign exchange rate contracts covering:

   

Foreign-denominated debt and commercial loans

  Trading account profits/(losses) and commissions     81   

Trading activity

  Trading account profits/(losses) and commissions     (1

Credit contracts covering:

   

Loans

  Trading account profits/(losses) and commissions     (1

Other

  Trading account profits/(losses) and commissions     4   

Equity contracts - trading activity

  Trading account profits/(losses) and commissions     3   

Other contracts:

   

IRLCs

  Mortgage production related loss     36   
         

Total

      $58   
         

1 During the three months ended March 31, 2011, the Company reclassified $41 million in pre-tax gains from AOCI into net interest income. These gains related to hedging relationships that have been previously terminated or de-designated.

 

 

    Three Months Ended March 31, 2010  

(Dollars in millions)

Derivatives in cash flow hedging relationships

  Amount of pre-tax gain recognized in
OCI on Derivatives
(Effective Portion)
    Classification of gain reclassified from
AOCI into Income
(Effective Portion)
    Amount of pre-tax gain reclassified
from AOCI into Income
(Effective Portion) 1
 

Equity contracts hedging:

     

Securities AFS

    $61          $-   

Interest rate contracts hedging:

     

Floating rate loans

    288        Interest and fees on loans        127   
                 

Total

    $349          $127   
                 

 

(Dollars in millions)

Derivatives not designated as hedging instruments

 

Classification of gain/(loss) recognized in Income on

Derivatives

  Amount of gain/(loss) recognized in
Income on Derivatives
 

Interest rate contracts covering:

   

Fixed rate debt

  Trading account profits/(losses) and commissions     $46   

Corporate bonds and loans

  Trading account profits/(losses) and commissions     (1

MSRs

  Mortgage servicing related income     76   

LHFS, IRLCs, LHFI-FV

  Mortgage production related income     (70

Trading activity

  Trading account profits/(losses) and commissions     30   

Foreign exchange rate contracts covering:

   

Foreign-denominated debt and commercial loans

  Trading account profits/(losses) and commissions     (96

Trading activity

  Trading account profits/(losses) and commissions     7   

Equity contracts - trading activity

  Trading account profits/(losses) and commissions     7   

Other contracts:

   

IRLCs

  Mortgage production related income     92   
         

Total

      $91   
         

1 During the three months ended March 31, 2010, the Company reclassified $29 million in pre-tax gains from AOCI into net interest income. These gains related to hedging relationships that have been previously terminated or de-designated.

 

Credit Derivatives

As part of its trading businesses, the Company enters into contracts that are, in form or substance, written guarantees: specifically, CDS, swap participations, and TRS. The Company accounts for these contracts as derivative instruments and, accordingly, records these contracts at fair value, with changes in fair value recorded in trading account profits/(losses) and commissions in the Consolidated Statements of Income/(Loss).

The Company writes CDS, which are agreements under which the Company receives premium payments from its counterparty for protection against an event of default of a reference asset. In the event of default under the CDS, the Company would either net cash settle or make a cash payment to its counterparty and take delivery of the defaulted reference asset, from which the Company may recover all, a portion, or none of the credit loss, depending on the performance of the reference asset. Events of default, as defined in the CDS agreements, are generally triggered upon the failure to pay and similar events related to the issuer(s) of the reference asset. As of March 31, 2011, all written CDS contracts reference single name corporate credits or corporate credit indices. When the Company has written CDS, it has generally entered into offsetting CDS for the underlying reference asset, under which the Company paid a premium to its counterparty for protection against an event of default on the reference asset. The counterparties to these purchased CDS are generally of high creditworthiness and typically have ISDA master agreements in place that subject the CDS to master netting provisions, thereby mitigating the risk of non-payment to the Company. As such, at March 31, 2011, the Company did not have any significant risk of making a non-recoverable payment on any written CDS. During 2011 and 2010, the only instances of default on written CDS were driven by credit indices with constituent credit default. In all cases where the Company made resulting cash payments to settle, the Company collected like amounts from the counterparties to the offsetting purchased CDS. At March 31, 2011, the written CDS had remaining terms ranging from one year to five years. The maximum guarantees outstanding at March 31, 2011 and December 31, 2010, as measured by the gross notional amounts of written CDS, were $77 million and $99 million, respectively. At March 31, 2011 and December 31, 2010, the gross notional amounts of purchased CDS contracts, which represent benefits to, rather than obligations of, the Company, were $75 million and $87 million, respectively. The fair values of written CDS were $4 million and $3 million at March 31, 2011 and December 31, 2010, respectively, and the fair values of purchased CDS were de minimis at March 31, 2011 and December 31, 2010, respectively.

The Company writes risk participations, which are credit derivatives whereby the Company has guaranteed payment to a dealer counterparty in the event that the counterparty experiences a loss on a derivative instrument, such as an interest rate swap, due to a failure to pay by the counterparty’s customer (the “obligor”) on that derivative instrument. The Company monitors its payment risk on its risk participations by monitoring the creditworthiness of the obligors, which is based on the normal credit review process the Company would have performed had it entered into the derivative instruments directly with the obligors. The obligors are all corporations or partnerships. However, the Company continues to monitor the creditworthiness of its obligors and the likelihood of payment could change at any time due to unforeseen circumstances. To date, no material losses have been incurred related to the Company’s written swap participations. At March 31, 2011, the remaining terms on these risk participations generally ranged from two months to seven years, with a weighted average on the maximum estimated exposure of 3.3 years. The Company’s maximum estimated exposure to written swap participations, as measured by projecting a maximum value of the guaranteed derivative instruments based on interest rate curve simulations and assuming 100% default by all obligors on the maximum values, was approximately $75 million and $74 million at March 31, 2011 and December 31, 2010, respectively. The fair values of the written swap participations were de minimis at March 31, 2011 and December 31, 2010. As part of its trading activities, the Company may enter into purchased swap participations, but such activity is not matched, as discussed herein related to CDS or TRS.

The Company has also entered into TRS contracts on loans. The Company’s TRS business consists of matched trades, such that when the Company pays depreciation on one TRS, it receives the same depreciation on the matched TRS. As such, the Company does not have any long or short exposure, other than credit risk of its counterparty, which is mitigated through collateralization. The Company typically receives initial cash collateral from the counterparty upon entering into the TRS and is entitled to additional collateral as the fair value of the underlying reference assets deteriorate. At March 31, 2011 and December 31, 2010, there were $1.0 billion and $969 million of outstanding and offsetting TRS notional balances, respectively. The fair values of the TRS derivative assets and liabilities at March 31, 2011 were $38 million and $36 million, respectively, and related collateral held at March 31, 2011 was $241 million. The fair values of the TRS derivative assets and liabilities at December 31, 2010 were $34 million and $32 million, respectively, and related collateral held at December 31, 2010 was $268 million.

 

Cash Flow Hedges

The Company utilizes a comprehensive risk management strategy to monitor sensitivity of earnings to movements in interest rates. Specific types of funding and principal amounts hedged are determined based on prevailing market conditions and the shape of the yield curve. In conjunction with this strategy, the Company may employ various interest rate derivatives as risk management tools to hedge interest rate risk from recognized assets and liabilities or from forecasted transactions. The terms and notional amounts of derivatives are determined based on management’s assessment of future interest rates, as well as, other factors. The Company establishes parameters for derivative usage, including identification of assets and liabilities to hedge, derivative instruments to be utilized, and notional amounts of hedging relationships. At March 31, 2011, the Company’s only outstanding interest rate hedging relationships involve interest rate swaps that have been designated as cash flow hedges of probable forecasted transactions related to recognized floating rate loans.

Interest rate swaps have been designated as hedging the exposure to the benchmark interest rate risk associated with floating rate loans. At March 31, 2011, the maximum range of hedge maturities for hedges of floating rate loans is one to five years, with the weighted average being 3.1 years. Ineffectiveness on these hedges was de minimis during the three months ended March 31, 2011 and 2010. As of March 31, 2011, $342 million, net of tax, of the deferred net gains on derivatives that are recorded in AOCI are expected to be reclassified to net interest income over the next twelve months in connection with the recognition of interest income on these hedged items.

During the third quarter of 2008, the Company executed The Agreements on 30 million common shares of Coke. A consolidated subsidiary of SunTrust owns 22.9 million Coke common shares and a consolidated subsidiary of the Bank owns 7.1 million Coke common shares. These two subsidiaries entered into separate derivative contracts on their respective holdings of Coke common shares with a large, unaffiliated financial institution (the “Counterparty”). Execution of The Agreements (including the pledges of the Coke common shares pursuant to the terms of The Agreements) did not constitute a sale of the Coke common shares under U.S. GAAP for several reasons, including that ownership of the common shares was not legally transferred to the Counterparty. The Agreements were zero-cost equity collars at inception, which caused the Agreements to be derivatives in their entirety. The Company has designated The Agreements as cash flow hedges of the Company’s probable forecasted sales of its Coke common shares, which are expected to occur between 6.5 and 7 years from The Agreements’ effective date, for overall price volatility below the strike prices on the floor (purchased put) and above the strike prices on the ceiling (written call). Although the Company is not required to deliver its Coke common shares under The Agreements, the Company has asserted that it is probable that it will sell all of its Coke common shares at or around the settlement date of The Agreements. The Federal Reserve’s approval for Tier 1 capital treatment was significantly based on this expected disposition of the Coke common shares under The Agreements or in another market transaction. Both the sale and the timing of such sale remain probable to occur as designated. At least quarterly, the Company assesses hedge effectiveness and measures hedge ineffectiveness with the effective portion of the changes in fair value of The Agreements recorded in AOCI and any ineffective portions recorded in trading account profits/(losses) and commissions. None of the components of The Agreements’ fair values are excluded from the Company’s assessments of hedge effectiveness. Potential sources of ineffectiveness include changes in market dividends and certain early termination provisions. During the three months ended March 31, 2011 and 2010, the Company recognized ineffectiveness gains of less than $1 million and approximately $7 million, respectively. Ineffectiveness gains were recorded in trading account profits/(losses) and commissions. Other than potential measured hedge ineffectiveness, no amounts are expected to be reclassified from AOCI over the next twelve months and any remaining amounts recorded in AOCI will be reclassified to earnings when the probable forecasted sales of the Coke common shares occur.

Economic Hedging and Trading Activities

In addition to designated hedging relationships, the Company also enters into derivatives as an end user as a risk management tool to economically hedge risks associated with certain non-derivative and derivative instruments, along with entering into derivatives in a trading capacity with its clients.

The primary risks that the Company economically hedges are interest rate risk, foreign exchange risk, and credit risk. The economic hedging activities are accomplished by entering into individual derivatives or by using derivatives on a macro basis, and generally accomplish the Company’s goal of mitigating the targeted risk. To the extent that specific derivatives are associated with specific hedged items, the notional amounts, fair values, and gains/(losses) on the derivatives are illustrated in the tables in this footnote.

 

   

The Company utilizes interest rate derivatives to mitigate exposures from various instruments.

 

  o

The Company is subject to interest rate risk on its fixed rate debt. As market interest rates move, the fair value of the Company’s debt is affected. To protect against this risk on certain debt issuances that the Company has elected to carry at fair value, the Company has entered into pay variable-receive fixed interest rate swaps (in addition to entering into certain non-derivative instruments on a macro basis) that decrease in value in a rising rate environment and increase in value in a declining rate environment.

 

  o

The Company is exposed to risk on the returns of certain of its brokered deposits that are carried at fair value. To hedge against this risk, the Company has entered into interest rate derivatives that mirror the risk profile of the returns on these instruments.

 

  o

The Company is exposed to interest rate risk associated with MSRs, which the Company hedges with a combination of mortgage and interest rate derivatives, including forward and option contracts, futures, and forward rate agreements.

 

  o

The Company enters into mortgage and interest rate derivatives, including forward contracts, futures, and option contracts to mitigate interest rate risk associated with IRLCs, mortgage LHFS, and mortgage LHFI reported at fair value.

 

   

The Company is exposed to foreign exchange rate risk associated with certain senior notes denominated in euros and pound sterling. This risk is economically hedged with cross currency swaps, which receive either euros or pound sterling and pay U.S. dollars. Interest expense on the Consolidated Statements of Income/(Loss) reflects only the contractual interest rate on the debt based on the average spot exchange rate during the applicable period, while fair value changes on the derivatives and valuation adjustments on the debt are both recorded within trading account profits/(losses) and commissions.

 

 

   

The Company enters into CDS to hedge credit risk associated with certain loans held within its CIB line of business.

 

 

   

Trading activity, in the tables in this footnote, primarily includes interest rate swaps, equity derivatives, CDS, futures, options and foreign currency contracts. These derivatives are entered into in a dealer capacity to facilitate client transactions or are utilized as a risk management tool by the Company as an end user in certain macro-hedging strategies. The macro-hedging strategies are focused on managing the Company’s overall interest rate risk exposure that is not otherwise hedged by derivatives or in connection with specific hedges and, therefore, the Company does not specifically associate individual derivatives with specific assets or liabilities.

Fair Value Election and Measurement
Fair Value Election and Measurement

Note 12 - Fair Value Election and Measurement

The Company carries certain assets and liabilities at fair value on a recurring basis and appropriately classifies them as level 1, level 2, or level 3 within the fair value hierarchy. The Company’s recurring fair value measurements are based on a requirement to carry such assets and liabilities at fair value or the Company’s election to carry certain financial assets and financial liabilities at fair value. Assets and liabilities that are required to be carried at fair value on a recurring basis include trading securities, securities AFS, and derivative financial instruments. Assets and liabilities that the Company has elected to carry at fair value on a recurring basis include certain LHFI and LHFS, MSRs, certain brokered deposits, and certain issuances of fixed rate debt.

In certain circumstances, fair value enables a company to more accurately align its financial performance with the economic value of actively traded or hedged assets or liabilities. Fair value also enables a company to mitigate the non-economic earnings volatility caused from financial assets and financial liabilities being carried at different bases of accounting, as well as to more accurately portray the active and dynamic management of a company’s balance sheet. In cases where the Company believed that fair value was more representative of the results of its activities, the Company elected to carry certain financial instruments at fair value, as discussed further herein.

The classification of an instrument as level 3 versus level 2 involves judgment and is based on a variety of subjective factors in order to assess whether a market is inactive, resulting in the application of significant unobservable assumptions to value a financial instrument. A market is considered inactive if significant decreases in the volume and level of activity for the asset or liability have been observed. In determining whether a market is inactive, the Company evaluates such factors as the number of recent transactions in either the primary or secondary markets, whether price quotations are current, the nature of the market participants, the variability of price quotations, the significance of bid/ask spreads, declines in (or the absence of) new issuances and the availability of public information. Inactive markets necessitate the use of additional judgment when valuing financial instruments, such as pricing matrices, cash flow modeling and the selection of an appropriate discount rate. The assumptions used to estimate the value of an instrument where the market was inactive were based on the Company’s assessment of the assumptions a market participant would use to value the instrument in an orderly transaction and included considerations of illiquidity in the current market environment. Where the Company determined that a significant decrease in the volume and level of activity had occurred, the Company was then required to evaluate whether significant adjustments were required to market data to arrive at an exit price. In those cases where significant unobservable inputs are used, the financial instruments are classified as level 3.

The following tables present certain information regarding assets and liabilities measured at fair value on a recurring basis and the changes in fair value for those specific financial instruments in which fair value has been elected.

Recurring Fair Value Measurements

 

     Fair Value Measurements at
March 31, 2011
Using
 
(Dollars in millions)    Assets/Liabilities      Quoted
Prices In
Active
Markets
for
Identical
Assets/Liabilities
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Assets

           

Trading assets

           

U.S. Treasury securities

     $226         $226         $-         $-   

Federal agency securities

     438         -         438         -   

U.S. states and political subdivisions

     156         -         156         -   

MBS - agency

     221         -         221         -   

MBS - private

     2         -         -         2   

CDO securities

     45         -         3         42   

ABS

     37         -         32         5   

Corporate and other debt securities

     716         -         716         -   

CP

     53         -         53         -   

Equity securities

     156         2         98         56   

Derivative contracts

     2,758         222         2,536         -   

Trading loans

     1,481         -         1,481         -   
                                   

Total trading assets

     6,289         450         5,734         105   
                                   

Securities AFS

           

U.S. Treasury securities

     222         222         -         -   

Federal agency securities

     3,816         -         3,816         -   

U.S. states and political subdivisions

     551         -         478         73   

MBS - agency

     17,995         -         17,995         -   

MBS - private

     338         -         -         338   

CDO securities

     77         -         77         -   

ABS

     720         -         700         20   

Corporate and other debt securities

     56         -         51         5   

Coke common stock

     1,990         1,990         -         -   

Other equity securities

     804         -         114         690  3 
                                   

Total securities AFS

     26,569         2,212         23,231         1,126   
                                   

LHFS

           

Residential loans

     1,513         -         1,496         17   

Corporate and other loans

     324         -         324         -   
                                   

Total LHFS

     1,837         -         1,820         17   
                                   

LHFI

     457         -         -         457   

Other intangible assets 2

     1,538         -         -         1,538   

Other assets 1

     136         -         112         24   

Liabilities

           

Trading liabilities

           

U.S. Treasury securities

     540         540         -         -   

Corporate and other debt securities

     277         -         277         -   

Equity securities

     1         1         -         -   

Derivative contracts

     1,913         166         1,586         161   
                                   

Total trading liabilities

     2,731         707         1,863         161   
                                   

Brokered deposits

     1,181         -         1,181         -   

Long-term debt

     2,854         -         2,854         -   

Other liabilities 1

     48         -         22         26   

 

1 

These amounts include IRLCs and derivative financial instruments entered into by the Mortgage line of business to hedge its interest rate risk along with a derivative associated with the Company’s sale of Visa shares during ended December 31, 2009.

2 

This amount includes MSRs carried at fair value.

3 

Includes $298 million of FHLB of Atlanta stock stated at par value and $391 million of Federal Reserve FHLB of Atlanta stock stated at par value.

 

    Fair Value Measurements at
December 31, 2010
Using
 
(Dollars in millions)   Assets/Liabilities     Quoted
Prices In
Active
Markets
for
Identical
Assets/Liabilities
(Level 1)
    Significant
Other
Observable
Inputs
(Level 2)
    Significant
Unobservable
Inputs
(Level 3)
 

Assets

       

Trading assets

       

U.S. Treasury securities

    $187        $187        $-        $-   

Federal agency securities

    361        -        361        -   

U.S. states and political subdivisions

    123        -        123        -   

MBS - agency

    301        -        301        -   

MBS - private

    15        -        9        6   

CDO securities

    55        -        2        53   

ABS

    59        -        32        27   

Corporate and other debt securities

    743        -        743        -   

CP

    14        -        14        -   

Equity securities

    221        -        98        123   

Derivative contracts

    2,743        166        2,577        -   

Trading loans

    1,353        -        1,353        -   
                               

Total trading assets

    6,175        353        5,613        209   
                               

Securities AFS

       

U.S. Treasury securities

    5,516        5,516        -        -   

Federal agency securities

    1,895        -        1,895        -   

U.S. states and political subdivisions

    579        -        505        74   

MBS - agency

    14,358        -        14,358        -   

MBS - private

    347        -        -        347   

CDO securities

    50        -        50        -   

ABS

    808        -        788        20   

Corporate and other debt securities

    482        -        477        5   

Coke common stock

    1,973        1,973        -        -   

Other equity securities

    887        -        197        690  3 
                               

Total securities AFS

    26,895        7,489        18,270        1,136   
                               

LHFS

       

Residential loans

    2,847        -        2,845        2   

Corporate and other loans

    321        -        316        5   
                               

Total LHFS

    3,168        -        3,161        7   
                               

LHFI

    492        -        -        492   

Other intangible assets 2

    1,439        -        -        1,439   

Other assets 1

    241        -        223        18   

Liabilities

       

Trading liabilities

       

U.S. Treasury securities

    439        439        -        -   

Corporate and other debt securities

    398        -        398        -   

Derivative contracts

    1,841        120        1,576        145   
                               

Total trading liabilities

    2,678        559        1,974        145   
                               

Brokered deposits

    1,213        -        1,213        -   

Long-term debt

    2,837        -        2,837        -   

Other liabilities 1

    114        -        72        42   

 

1 

These amounts include IRLCs and derivative financial instruments entered into by the Mortgage line of business to hedge its interest rate risk along with a derivative associated with the Company’s sale of Visa shares during the year ended December 31, 2009.

2 

This amount includes MSRs carried at fair value.

3 

Includes $298 million of FHLB of Atlanta stock stated at par value and $391 million of Federal Reserve Bank FHLB of Atlanta stock stated at par value.

The following tables present the difference between the aggregate fair value and the aggregate unpaid principal balance of trading assets, LHFI, LHFS, brokered deposits, and long-term debt instruments for which the FVO has been elected. For LHFI and LHFS for which the FVO has been elected, the tables also include the difference between aggregate fair value and the aggregate unpaid principal balance of loans that are 90 days or more past due, as well as loans in nonaccrual status.

 

(Dollars in millions)   Aggregate
Fair Value
March  31, 2011
    Aggregate
Unpaid Principal
Balance under FVO

March 31, 2011
    Fair  Value
Over/(Under)
Unpaid Principal
 

Trading loans

    $1,481        $1,456        $25   

LHFI

    432        485        (53

Past due loans of 90 days or more

    2        4        (2

Nonaccrual loans

    23        42        (19

LHFS

    1,807        1,793        14   

Past due loans of 90 days or more

    15        15        -   

Nonaccrual loans

    15        28        (13

Brokered deposits

    1,181        1,142        39   

Long-term debt

    2,854        2,753        101   
(Dollars in millions)   Aggregate
Fair Value
December 31, 2010
    Aggregate
Unpaid Principal
Balance under FVO
December 31, 2010
    Fair Value
Over/(Under)
Unpaid Principal
 

Trading loans

    $1,353        $1,320        $33   

LHFI

    462        517        (55

Past due loans of 90 days or more

    2        4        (2

Nonaccrual loans

    28        54        (26

LHFS

    3,160        3,155        5   

Past due loans of 90 days or more

    2        2        -   

Nonaccrual loans

    6        25        (19

Brokered deposits

    1,213        1,188        25   

Long-term debt

    2,837        2,753        84   

The following tables present the change in fair value during the three months ended March 31, 2011 and 2010 of financial instruments for which the FVO has been elected. The tables do not reflect the change in fair value attributable to the related economic hedges the Company used to mitigate the market-related risks associated with the financial instruments. The changes in the fair value of economic hedges were also recorded in trading account profits/(losses) and commissions, mortgage production related loss, or mortgage servicing related income/(loss), as appropriate, and are designed to partially offset the change in fair value of the financial instruments referenced in the tables below. The Company’s economic hedging activities are deployed at both the instrument and portfolio level.

     Fair Value Gain/(Loss) for the Three Months Ended
March 31, 2011, for Items Measured at Fair Value Pursuant
to Election of the FVO
 
(Dollars in millions)    Trading
Account
Profits/(Losses)

and
Commissions
    Mortgage
Production
Related
Income 2
    Mortgage
Servicing
Related
Income
     Total
Changes in
Fair Values

Included in
Current-
Period
Earnings1
 

Assets

         

Trading loans

     $7        $-        $-         $7   

LHFS

     2        30        -         32   

LHFI

     3        (4     -         (1

MSRs

     -        2        17         19   

Liabilities

         

Brokered deposits

     (11     -        -         (11

Long-term debt

     (17     -        -         (17

1 Changes in fair value for the three months ended March 31, 2011 exclude accrued interest for the periods then ended. Interest income or interest expense on trading assets, LHFI, LHFS, brokered deposits and long-term debt that have been elected to be carried at fair value are recorded in interest income or interest expense in the Consolidated Statements of Income/(Loss) based on their contractual coupons. Certain trading assets do not have a contractually stated coupon and, for these securities, the Company records interest income based on the effective yield calculated upon acquisition of the securities.

2 For the three months ended March 31, 2011, income related to LHFS includes $86 million related to MSRs recognized upon the sale of loans reported at fair value. For the three months ended March 31, 2011, income related to MSRs includes $2 million of MSRs recognized upon the sale of loans reported at LOCOM. These MSRs are included in the table since the Company elected to report MSRs recognized in 2009 using the fair value method. Previously, MSRs were reported under the amortized cost method.

 

     Fair Value Gain/(Loss) for the Three Months Ended
March 31, 2010, for Items Measured at Fair Value Pursuant
to Election of the FVO
 
(Dollars in millions)    Trading
Account

Profits/(Losses)
and
Commissions
    Mortgage
Production
Related
Income 2
     Mortgage
Servicing
Related
Income
    Total
Changes in

Fair  Values
Included  in
Current-
Period
Earnings1
 

Assets

         

Trading loans

     $1        $-         $-        $1   

LHFS

     11        92         -        103   

Other intangible assets

     -        4         (109     (105

Liabilities

         

Brokered deposits

     (31     -         -        (31

Long-term debt

     (86     -         -        (86

1 Changes in fair value for the quarter ended March 31, 2010 exclude accrued interest for the periods then ended. Interest income or interest expense on trading assets, LHFI, LHFS, brokered deposits and long-term debt that have been elected to be carried at fair value are recorded in interest income or interest expense in the Consolidated Statements of Income/(Loss) based on their contractual coupons. Certain trading assets do not have a contractually stated coupon and, for these securities, the Company records interest income based on the effective yield calculated upon acquisition of those securities.

2 For the quarter ended March 31, 2010, income related to LHFS, includes $62 million related to MSRs recognized upon the sale of loans reported at fair value. For the quarter ended March 31, 2010, income related to MSRs includes $4 million of MSRs recognized upon the sale of loans reported at LOCOM. These MSRs are included in the table since the Company elected to report MSRs recognized in 2009 using the fair value method. Previously, MSRs were reported under the amortized cost method.

The following is a discussion of the valuation techniques and inputs used in developing fair value measurements for assets and liabilities classified as level 2 or level 3 that are measured at fair value on a recurring basis, based on the class as determined by the nature and risks of the instrument.

Trading Assets and Securities Available for Sale

Unless otherwise indicated, trading assets are priced by the trading desk and independently validated against pricing received from third party pricing sources; securities AFS are valued by an independent third party pricing service that is widely used by market participants. The Company classifies instruments as level 2 in the fair value hierarchy when it is able to determine that external pricing sources are using similar instruments trading in the markets as the basis for estimating fair value.

Federal agency securities

The Company includes in this classification securities issued by federal agencies and GSEs. For SBA instruments, the Company estimated fair value based on pricing from observable trading activity for similar securities or obtained fair values from a third party pricing service; accordingly, the Company has also classified these instruments as level 2.

U.S. states and political subdivisions

The Company’s investments in U.S. states and political subdivisions (collectively “municipals”) include obligations of county and municipal authorities and agency bonds, which are general obligations of the municipality or are supported by a specified revenue source. Holdings were geographically dispersed, with no significant concentrations in any one state or municipality. Additionally, 99% of AFS municipal obligations classified as level 2 are rated AAA or AA, or are otherwise collateralized by securities backed by the full faith and credit of the federal government.

Level 3 municipal securities are primarily ARS purchased since the auction rate market began failing in February 2008 and have been considered level 3 securities due to the significant decrease in the volume and level of activity in these markets, which has necessitated the use of significant unobservable inputs into the Company’s valuations. Municipal ARS are classified as securities AFS. These securities were valued using comparisons to similar ARS for which auctions are currently successful and/or to longer term, non-ARS issued by similar municipalities. The Company also looked at the relative strength of the municipality and made appropriate downward adjustments in price based on the credit rating of the municipality as well as the relative financial strength of the insurer on those bonds. Although auctions for several municipal ARS have been operating successfully, ARS owned by the Company at March 31, 2011 continued to be classified as level 3 as they are those ARS for which the auctions continued to fail; accordingly, due to the uncertainty around the success rates for auctions and the absence of any successful auctions for these identical securities, the Company continued to price the ARS below par.

Level 3 AFS municipal bond securities also include bonds that are only redeemable with the issuer at par and cannot be traded in the market. As such, no significant observable market data for these instruments is available. In order to estimate pricing on these securities, the Company utilized a third party municipal bond yield curve for the lowest investment grade bonds (BBB rated) and priced each bond based on the yield associated with that maturity.

MBS – agency

MBS – agency include pass-through securities and collateralized mortgage obligations issued by GSEs and U.S. government agencies, such as Fannie Mae, Freddie Mac and Ginnie Mae. Each security contains a guarantee by the issuing GSE or agency.

MBS – private

Private-label MBS includes purchased interests in third party securitizations as well as retained interests in Company-sponsored securitizations of residential mortgages. Generally, the Company attempts to obtain pricing for its securities from an independent pricing service or third party brokers who have experience in valuing certain investments. This pricing may be used as either direct support for the Company’s valuations or used to validate outputs from its own proprietary models. The Company evaluates third party pricing to determine the reasonableness of the information relative to changes in market data, such as any recent trades, market information received from outside market participants and analysts, and/or changes in the underlying collateral performance. When actual trades are not available to corroborate pricing information received, the Company uses industry-standard or proprietary models to estimate fair value and considers assumptions that are generally not observable in the current markets or that are not specific to the securities that the Company owns, such as relevant market indices that correlate to the underlying collateral, prepayment speeds, default rates, loss severity rates and discount rates. As liquidity returns to these markets, we see the availability of more pricing information from third parties and a reduction in the need to use internal pricing models to estimate fair value. Even though limited third party pricing has been available, the Company continued to classify private-label MBS as level 3, as the Company believes that this third party pricing relied on a significant amount of unobservable assumptions, as evidenced by a persistently wide bid-ask price range, particularly for the vintage and exposures held by the Company.

Securities that are classified as AFS and are in an unrealized loss position are included as part of our quarterly OTTI evaluation process. See Note 2, “Securities Available for Sale,” to the Consolidated Financial Statements for details regarding assumptions used to assess impairment and impairment amounts recognized through earnings on private-label MBS during the three months ended March 31, 2011.

CDO Securities

Level 2 securities AFS consists of senior interests in third party CLOs for which independent broker pricing based on market trades and/or from new issuance of similar assets is readily available. At March 31, 2011, the Company’s investments in level 3 trading CDOs consisted of senior ARS interests in Company-sponsored securitizations of trust preferred collateral totaling $42 million. During the three months ended March 31, 2011, the Company sold the remaining securities within trading assets related to the SIV liquidation, which included $21 million of CDO securities. In addition, the Company’s $20 million retained interest in a structured participation of commercial loans was liquidated through the exercise of the Company’s clean up call. For the remaining CDOs classified as level 3 trading assets, increases in the value of these interests during the three months ending March 31, 2011 was due primarily to a steady recovery in the broader CLO market. For the ARS CDO interests, although market conditions have improved, the auctions continued to fail and the Company made significant adjustments to any observable secondary market trading of similar term securities; therefore, the Company continued to classify these investments as level 3 within the fair value hierarchy.

Asset-backed securities

Level 2 ABS classified as securities AFS are interests collateralized by third party securitizations of 2009 through 2011 vintage auto loans. These ABS are either publicly traded or are 144A privately placed bonds. The Company utilizes an independent pricing service to obtain fair values for publicly traded securities and similar securities for estimating the fair value of the privately placed bonds. No significant unobservable assumptions were used in pricing the auto loan ABS; therefore, the Company classified these bonds as level 2. Additionally, the Company classified $32 million of trading ARS and $93 million of AFS ARS collateralized by government guaranteed student loans as level 2 in the fair value hierarchy due to observable market trades and bids for similar senior securities. Student loan ABS held by the Company are generally collateralized by Federal Family Education Loan Program student loans, the majority of which benefit from a 97% (or higher) government guarantee of principal and interest. For subordinate securities in the same structure, the Company adjusts valuations on the senior securities based on the likelihood that the issuer will refinance in the near term, a security’s level of subordination in the structure, and/or the perceived risk of the issuer as determined by credit ratings or total leverage of the trust. These adjustments may be significant; therefore, the subordinate student loan ARS held as trading assets continue to be classified as level 3.

During the three months ended March 31, 2011, the Company sold the remaining ABS related to the assets acquired in 2007, including the SIV liquidation that occurred in December 2010. This included $31 million of level 3 trading ABS collateralized by auto loans and home equity lines of credit.

Corporate and other debt securities

Corporate debt securities are predominantly comprised of senior and subordinate debt obligations of domestic corporations. Other debt securities in level 3 include bonds that are redeemable with the issuer at par and cannot be traded in the market; as such, no significant observable market data for these instruments is available.

Commercial paper

From time to time, the Company trades third party CP that is generally short-term in nature (less than 30 days) and highly rated (A-1/P-1). The Company estimates the fair value of the CP that it trades based on observable pricing from executed trades of similar instruments.

Equity securities

Level 2 equity securities, both trading and AFS, consist primarily of money market mutual funds that trade at a $1 net asset value, which is considered the fair market value of those fund shares.

Level 3 equity securities classified as trading include nonmarketable preferred shares in municipal funds issued as ARS that the Company has purchased since the auction rate market began failing in February 2008. These ARS have been considered level 3 securities due to the significant decrease in the volume and level of activity in these markets, which has necessitated the use of significant unobservable inputs into the Company’s valuations. Valuation of these shares is based on the level of issuer redemptions at par that have occurred as well as discussions with the dealer community.

Level 3 equity securities classified as securities AFS include, as of March 31, 2011 and December 31, 2010, $690 million of FHLB stock and Federal Reserve Bank stock, which are redeemable with the issuer at par and cannot be traded in the market. As such, no significant observable market data for these instruments is available. The Company accounts for the stock based on the industry guidance that requires these investments be carried at cost and evaluated for impairment based on the ultimate recovery of par value.

Derivative contracts (trading assets or trading liabilities)

With the exception of one derivative contract discussed herein and certain instruments discussed under ‘Other assets/liabilities, net’ that qualify as derivative instruments, the Company’s derivative instruments are level 1 or level 2 instruments. Level 1 derivative contracts generally include exchange-traded futures or option contracts for which pricing is readily available.

The Company’s level 2 instruments are predominantly standard OTC swaps, options and forwards, with underlying market variables of interest rates, foreign exchange, equity and credit. Because fair values for OTC contracts are not readily available, the Company estimates fair values using internal, but standard, valuation models that incorporate market-observable inputs. The valuation model is driven by the type of contract: for option-based products, the Company uses an appropriate option pricing model, such as Black-Scholes; for forward-based products, the Company’s valuation methodology is generally a discounted cash flow approach. The primary drivers of the fair values of derivative instruments are the underlying variables, such as interest rates, exchange rates, equity, or credit. As such, the Company uses market-based assumptions for all of it significant inputs, such as interest rate yield curves, quoted exchange rates and spot prices, market implied volatilities and credit curves.

The Agreements the Company entered into related to its Coke common stock are level 3 instruments, due to the unobservability of a significant assumption used to value these instruments. Because the value is primarily driven by the embedded equity collars on the Coke shares, a Black-Scholes model is the appropriate valuation model. Most of the assumptions are directly observable from the market, such as the per share market price of Coke common stock, interest rates, and the dividend rate on the Coke common stock. Volatility is a significant assumption and is impacted both by the unusually large size of the trade and the long tenor until settlement. Because the derivatives carry scheduled terms of 6.5 and 7 years from the effective date and are on a significant number of Coke shares, the observable and active options market on Coke does not provide for any identical or similar instruments. As such, the Company receives estimated market values from a market participant who is knowledgeable about Coke equity derivatives and is active in the market. Based on inquiries of the market participant as to their procedures, as well as the Company’s own valuation assessment procedures, the Company has satisfied itself that the market participant is using methodologies and assumptions that other market participants would use in estimating the fair value of The Agreements. At March 31, 2011 and December 31, 2010, The Agreements’ combined fair value was a liability of $161 million and $145 million, respectively.

Derivative instruments are primarily transacted in the institutional dealer market and priced with observable market assumptions at a mid-market valuation point, with appropriate valuation adjustments for liquidity and credit risk. For purposes of valuation adjustments to its derivative positions, the Company has evaluated liquidity premiums that may be demanded by market participants, as well as the credit risk of its counterparties and its own credit. The Company has considered factors such as the likelihood of default by itself and its counterparties, its net exposures, and remaining maturities in determining the appropriate fair value adjustments to record. Generally, the expected loss of each counterparty is estimated using the Company’s proprietary internal risk rating system. The risk rating system utilizes counterparty-specific probabilities of default and loss given default estimates to derive the expected loss. For counterparties that are rated by national rating agencies, those ratings are also considered in estimating the credit risk. In addition, counterparty exposure is evaluated by netting positions that are subject to master netting arrangements, as well as considering the amount of marketable collateral securing the position. Specifically approved counterparties and exposure limits are defined. Creditworthiness of the approved counterparties is regularly reviewed and appropriate business action is taken to adjust the exposure to certain counterparties, as necessary. This approach used to estimate exposures to counterparties is also used by the Company to estimate its own credit risk on derivative liability positions. See Note 11, “Derivative Financial Instruments”, to the Consolidated Financial Statements, for additional information on the Company’s derivative contracts.

Trading loans

The Company engages in certain businesses whereby the election to carry loans at fair value for financial reporting aligns with the underlying business purposes. Specifically, the loans that are included within this classification are: (i) loans made in connection with the Company’s TRS business (see Note 11, “Derivative Financial Instruments”, to the Consolidated Financial Statements for further discussion of this business), (ii) loans backed by the SBA and (iii) the loan sales and trading business within the Company’s CIB line of business. All of these loans have been classified as level 2 within the fair value hierarchy, due to the market data that the Company uses in its estimates of fair value.

The loans made in connection with the Company’s TRS business are short-term, demand loans, whereby the repayment is senior in priority and whose value is collateralized. While these loans do not trade in the market, the Company believes that the par amount of the loans approximates fair value and no unobservable assumptions are made by the Company to arrive at this conclusion. At March 31, 2011 and December 31, 2010, the Company had outstanding $1.0 billion and $972 million, respectively, of such short-term loans carried at fair value.

SBA loans are similar to SBA securities discussed herein under “Federal agency securities”, except for their legal form. In both cases, the Company trades instruments that are fully guaranteed by the U.S. government as to contractual principal and interest and has sufficient observable trading activity upon which to base its estimates of fair value.

The loans from the Company’s sales and trading business are commercial and corporate leveraged loans that are either traded in the market or for which similar loans trade. The Company elected to carry these loans at fair value in order to reflect the active management of these positions. The Company is able to obtain fair value estimates for substantially all of these loans using a reputable, third party valuation service that is broadly used by market participants. While most of the loans are traded in the markets, the Company does not believe that trading activity qualifies the loans as level 1 instruments within the fair value hierarchy, as the volume and level of trading activity is subject to variability and the loans are not exchange-traded, such that the Company believes that level 2 is a more appropriate presentation of the underlying market activity for the loans. At March 31, 2011 and December 31, 2010, $441 million and $381 million, respectively, of loans related to the Company’s trading business were outstanding.

Loans and Loans Held for Sale

Residential LHFS

Current U.S. GAAP generally does not require loans to be measured at fair value on a recurring basis, but does provide for an election to do so. As such, in the second quarter of 2007, the Company began recording at fair value certain newly-originated mortgage LHFS based upon defined product criteria. The Company chose to fair value these mortgage LHFS in order to eliminate the complexities and inherent difficulties of achieving hedge accounting and to better align reported results with the underlying economic changes in value of the loans and related hedge instruments. This election impacts the timing and recognition of origination fees and costs, as well as servicing value. Specifically, origination fees and costs are recognized in earnings at the time of origination. The servicing value, which had been recorded as MSRs at the time the loan was sold, is now included in the fair value of the loan and initially recognized at the time the Company enters into IRLCs with borrowers. The Company began using derivatives to economically hedge changes in servicing value as a result of including the servicing value in the fair value of the loan. The mark to market adjustments related to LHFS and the associated economic hedges are captured in mortgage production income.

Level 2 LHFS are primarily agency loans which trade in active secondary markets and are priced using current market pricing for similar securities adjusted for servicing and risk. Level 3 loans are primarily non-agency residential mortgages for which there is little to no observable trading activity of similar instruments in either the new issuance or secondary loan markets as either whole loans or as securities. Prior to the non-agency residential loan market disruption, which began during the third quarter of 2007 and continues, the Company was able to obtain certain observable pricing from either the new issuance or secondary loan market. However, as the markets deteriorated and certain loans were not actively trading as either whole loans or as securities, the Company began employing the same alternative valuation methodologies used to value level 3 residential MBS to fair value the loans.

As disclosed in the tabular level 3 rollforwards, transfers of certain mortgage LHFS into level 3 during 2011 were largely due to borrower defaults or the identification of other loan defects impacting the marketability of the loans.

For residential loans that the Company has elected to carry at fair value, the Company has considered the component of the fair value changes due to instrument-specific credit risk, which is intended to be an approximation of the fair value change attributable to changes in borrower-specific credit risk. For both the three months ended March 31, 2011 and 2010, the Company recognized losses in the Consolidated Statements of Income/(Loss) of $5 million due to changes in fair value attributable to borrower-specific credit risk. In addition to borrower-specific credit risk, there are other, more significant, variables that drive changes in the fair values of the loans, including interest rates and general conditions in the principal markets for the loans.

Corporate and other LHFS

As discussed in Note 6, “Certain Transfers of Financial Assets, Mortgage Servicing Rights and Variable Interest Entities”, the Company has determined that it is the primary beneficiary of a CLO vehicle, which resulted in the Company consolidating the loans of that vehicle. Because the CLO trades its loans from time to time and in order to fairly present the economics of the CLO, the Company elected to carry the loans of the CLO at fair value. The Company is able to obtain fair value estimates for substantially all of these loans using a reputable, third party valuation service that is broadly used by market participants. While most of the loans are traded in the markets, the Company does not believe the loans qualify as level 1 instruments, as the volume and level of trading activity is subject to variability and the loans are not exchange-traded, such that the Company believes that level 2 is more representative of the general market activity for the loans.

LHFI

Level 3 loans include $4 million of fair value loans that were acquired through the acquisition of GB&T. The loans the Company elected to account for at fair value are primarily nonperforming commercial real estate loans, which do not trade in an active secondary market. As these loans are classified as nonperforming, cash proceeds from the sale of the underlying collateral is the expected source of repayment for a majority of these loans. Accordingly, the fair value of these loans is derived from internal estimates, incorporating market data when available, of the value of the underlying collateral. Additionally, level 3 LHFI include $453 million of mortgage loans that have been deemed not marketable, largely due to borrower defaults or the identification of other loan defects.

Other Intangible Assets

Other intangible assets that the Company records at fair value are the Company’s MSR asset. The fair values of MSRs are determined by projecting cash flows, which are then discounted to estimate an expected fair value. The fair values of MSRs are impacted by a variety of factors, including prepayment assumptions, discount rates, delinquency rates, contractually specified servicing fees, and underlying portfolio characteristics. The underlying assumptions and estimated values are corroborated by values received from independent third parties based on their review of the servicing portfolio. Because these inputs are not transparent in market trades, MSRs are considered to be level 3 assets.

Other Assets/Liabilities, net

The Company’s other assets/liabilities that are carried at fair value on a recurring basis include IRLCs that satisfy the criteria to be treated as derivative financial instruments, derivative financial instruments that are used by the Company to economically hedge certain loans and MSRs, and the derivative that the Company obtained as a result of its sale of Visa Class B shares.

The fair value of IRLCs on residential mortgage LHFS, while based on interest rates observable in the market, is highly dependent on the ultimate closing of the loans. These “pull-through” rates are based on the Company’s historical data and reflect the Company’s best estimate of the likelihood that a commitment will ultimately result in a closed loan. Servicing value is included in the fair value of IRLCs, and the fair value of servicing value is determined by projecting cash flows which are then discounted to estimate an expected fair value. The fair value of servicing value is impacted by a variety of factors, including prepayment assumptions, discount rates, delinquency rates, contractually specified servicing fees and underlying portfolio characteristics. Because these inputs are not transparent in market trades, IRLCs are considered to be level 3 assets.

During the three months ended March 31, 2011, the Company transferred $14 million of IRLCs out of level 3 as the associated loans were closed.

The Company is exposed to interest rate risk associated with MSRs, IRLCs, mortgage LHFS, and mortgage LHFI reported at fair value. The Company hedges these exposures with a combination of derivatives, including MBS forward and option contracts, interest rate swap and swaption contracts, futures contracts, and eurodollar options. The Company estimates the fair values of such derivative instruments consistent with the methodologies discussed herein under “Derivative contracts” and accordingly these derivatives are considered to be level 2 instruments.

During the second quarter of 2009, in connection with its sale of Visa Class B shares, the Company entered into a derivative contract whereby the ultimate cash payments received or paid, if any, under the contract are based on the ultimate resolution of litigation involving Visa. The value of the derivative was estimated based on the Company’s expectations regarding the ultimate resolution of that litigation, which involved a high degree of judgment and subjectivity. Accordingly, the value of the derivative liability was classified as a level 3 instrument.

Liabilities

Trading liabilities

Trading liabilities are primarily comprised of derivative contracts, but also include various contracts involving U.S. Treasury securities, Federal agency securities and corporate debt securities that the Company uses in certain of its trading businesses. The Company employs the same valuation methodologies for these derivative contracts and securities as are discussed within the corresponding sections herein under “Trading Assets and Securities Available for Sale”.

Brokered deposits

The Company has elected to measure certain CDs at fair value. These debt instruments include embedded derivatives that are generally based on underlying equity securities or equity indices, but may be based on other underlyings that may or may not be clearly and closely related to the host debt instrument. The Company elected to carry these instruments at fair value in order to remove the mixed attribute accounting model for the single debt instrument or to better align the economics of the CDs with the Company’s risk management strategies. The Company evaluated, on an instrument by instrument basis, whether a new issuance would be carried at fair value.

The Company has classified these CDs as level 2 instruments due to the Company’s ability to reasonably measure all significant inputs based on observable market variables. The Company employs a discounted cash flow approach to the host debt component of the CD, based on observable market interest rates for the term of the CD and an estimate of the Bank’s credit risk. For the embedded derivative features, the Company uses the same valuation methodologies as if the derivative were a standalone derivative, as discussed herein under “Derivative contracts”.

For brokered deposits carried at fair value, the Company estimated credit spreads above LIBOR, based on credit spreads from actual or estimated trading levels of the debt, or other relevant market data. The Company recognized losses of approximately $14 million and $16 million for the three months ended March 31, 2011 and 2010, respectively, due to changes in its own credit spread on its brokered deposits carried at fair value.

Long-term debt

The Company has elected to carry at fair value certain fixed rate debt issuances of public debt in which it has entered into derivative financial instruments that economically converted the interest rate on the debt from fixed to floating. The election to fair value the debt was made in order to align the accounting for the debt with the accounting for the derivatives without having to account for the debt under hedge accounting, thus avoiding the complex and time consuming fair value hedge accounting requirements.

The publicly-issued, fixed rate debt that the Company has elected to carry at fair value is valued by obtaining quotes from a third party pricing service and utilizing broker quotes to corroborate the reasonableness of those marks. In addition, information from market data of recent observable trades and indications from buy side investors, if available, are taken into consideration as additional support for the value. Due to the availability of this information, the Company determined that the appropriate classification for the debt was level 2.

For the publicly-traded fixed rate debt carried at fair value, the Company estimated credit spreads above U.S. Treasury rates based on credit spreads from actual or estimated trading levels of the debt, or other relevant market data. The Company recognized losses of $19 million and $80 million for the three months ended March 31, 2011 and 2010, respectively, due to changes in its own credit spread on its public debt carried at fair value.

The Company also carries approximately $289 million of issued securities contained in a consolidated CLO at fair value in order to recognize the nonrecourse nature of these liabilities to the Company. Specifically, the holders of the liabilities are only paid interest and principal to the extent of the cash flows from the assets of the vehicle and the Company has no current or future obligations to fund any of the CLO vehicle’s liabilities. The Company has classified these securities as level 2, as the primary driver of their fair values are the loans owned by the CLO, which the Company has also elected to carry at fair value, as discussed herein under “Loans and Loans Held for Sale – Corporate and other loans”.

The following tables show a reconciliation of the beginning and ending balances for fair valued assets and liabilities measured on a recurring basis using significant unobservable inputs (other than MSRs which are disclosed in Note 5, “Goodwill and Other Intangible Assets”, to the Consolidated Financial Statements). Transfers into and out of the fair value hierarchy levels are assumed to be as of the end of the quarter in which the transfer occurred. None of the transfers into or out of level 3 have been the result of using alternative valuation approaches to estimate fair values.

 

Fair Value Measurements  

Using Significant Unobservable Inputs

 
(Dollars in millions)    Beginning
balance
January 1,
2011
    Included in
earnings
    OCI     Sales     Settlements     Transfers
to/from  other

balance sheet
line items
    Transfers
into
Level 3
     Transfers
out of
Level 3
    Fair value
March 31,
2011
    Change in unrealized
gains/(losses)

included in earnings
for the three months
ended March 31, 2011
related to financial
assets still held at
March 31, 2011
 

Assets

                     

Trading assets

                     

MBS - private

     $6        $2        $-        ($5     ($1     $-        $-         $-        $2        $-   

CDO securities

     53        31  5      -        (21     (1     (20     -         -        42        18  5 

ABS

     27        9  5      -        (31     -        -        -         -        5        2  5 

Equity securities

     123        8  5      -        -        (75     -        -         -        56        2   
                                                                                 

Total trading assets

     209        50  1      -        (57     (77     (20     -         -        105        22  1 
                                                                                 

Securities AFS

                     

U.S. states and political subdivisions

     74        -        -        -        (1     -        -         -        73        -   

MBS - private

     347        (1     18        -        (26     -        -         -        338        (1

ABS

     20        -        2        -        (2     -        -         -        20        -   

Corporate and other debt securities

     5        -        -        -        -        -        -         -        5        -   

Other equity securities

     690        -        -        -        -        -        -         -        690        -   
                                                                                 

Total securities AFS

     1,136        (1 2      20        -        (29     -        -         -        1,126        (1 ) 2 
                                                                                 

LHFS

                     

Residential loans

     2        (1 3      -        (2     (1     9        11         (1     17        (3

Corporate and other loans

     5        (1 7      -        -        -        (4     -         -        -        -   

LHFI

     492        (1 4      -        -        (23     (11     -         -        457        (2 ) 4 

Other assets/(liabilities), net

     (24     36  3      -        -        -        (14     -         -        (2     36  3 

Liabilities

                     

Trading liabilities

     (145     -        (16 ) 6      -        -        -        -         -        (161     -   

1 Amounts included in earnings are recorded in trading account profits/(losses) and commissions.

2 Amounts included in earnings are recorded in net securities gains.

3 Amounts included in earnings are net of issuances, fair value changes, and expirations and are recorded in mortgage production related income.

4 Amounts are generally included in mortgage production related income, however, the mark on certain fair value loans is included in trading account profits/(losses) and commissions.

5 Amounts included in earnings do not include losses accrued as a result of the ARS settlement discussed in Note 14, “Contingencies,” to the Consolidated Financial Statements.

6 Amount recorded in OCI is the effective portion of the cash flow hedges related to the Company’s probable forecasted sale of its shares of Coke common stock as discussed in Note 11, “Derivative Financial Instruments,” to the Consolidated Financial Statements.

7 Amounts included in earnings are recorded in other noninterest income.

 

Fair Value Measurements

Using Significant Unobservable Inputs

 
(Dollars in millions)   Ending
balance
December 31
2009
    Reclassifications     Beginning
balance
January 1
2010
    Included in
earnings
    Other
comprehensive
income
    Purchases,
sales,
issuances,
settlements,

maturities
paydowns, net
    Transfers
to/from other
balance sheet
line items
    Transfers
into
Level 3
    Transfers
out of
Level 3
    Fair value
March 31,
2010
    Change in  unrealized
gains/(losses)
included in earnings

for the three months
ended March 31, 2010
related to financial
assets still held
at March 31, 2010
 

Assets

                     

Trading assets

                     

U.S. states and political subdivisions

    $7        $-        $7        $-        $-        ($1     $-        $-        $-        $6        $-   

MBS - private

    14        (8     6        -        -        (1     -        -        -        5        -   

CDO securities

    175        -        175        11  5      -        (27     -        -        -        159        5   

ABS

    -        51        51        4  5      -        (4     -        -        -        51        3   

Corporate and other debt securities

    25        (25     -        -        -        -        -        -        -        -        -   

Equity securities

    151        -        151        6  5      -        (12     -        -        -        145        5   

Derivative contracts

    -        -        -        7        15  6      -        -        -        -        22        -   

Other

    18        (18     -        -        -        -        -        -        -        -        -   
                                                                                       

Total trading assets

    390        -        390        28  1      15        (45     -        -        -        388        13  1 
                                                                                       

Securities AFS

                     

U.S. states and political subdivisions

    132        -        132        -        -        (1     -        -        -        131        -   

MBS - private

    407        (29     378        (1     17        (25     -        -        -        369        (1

ABS

    -        102        102        1  5      (8     13        -        -        -        108        -   

Corporate and other debt securities

    78        (73     5        -        -        -        -        -        -        5        -   

Other equity securities

    705        -        705        -        -        -        -        -        -        705        -   
                                                                                       

Total securities AFS

    1,322        -        1,322        -  2      9        (13     -        -        -        1,318        (1 2 
                                                                                       

LHFS

    151        (151     -        -        -        -        -        -        -        -        -   

Residential loans

    -        142        142        (1 3      -        (19     10        20        -        152        (8 3 

Corporate and other loans

    -        9        9        -        -        -        -        -        -        9        -   

LHFI

    449        -        449        -        -        (13     (13     -        (1     422        2  4 

Other assets/(liabilities), net

    (35     -        (35     92  3      -        -        (67     -        -        (10     -   

Liabilities

                     

Trading liabilities

                     

Derivative contracts

    (46     -        (46     -        46  6      -        -        -        -        -        -   

1 Amounts included in earnings are recorded in trading account profits/(losses) and commissions.

2 Amounts included in earnings are recorded in net securities gains/(losses).

3 Amounts included in earnings are net of issuances, fair value changes, and expirations and are recorded in mortgage production related income.

4 Amounts are generally included in mortgage production related income. The mark on these loans is included in trading account profits and commissions.

5 Amounts included in earnings do not include losses accrued as a result of the ARS settlement discussed in Note 14, “Contingencies,” to the Consolidated Financial Statements.

6 Amount recorded in OCI is the effective portion of the cash flow hedges related to the Company’s probable forecasted sale of its shares of Coke stock as discussed in Note 11, “Derivative Financial Instruments,” to the Consolidated Financial Statements.

 

Non-recurring Fair Value Measurements

The following tables present the change in carrying value of those assets measured at fair value on a non-recurring basis, for which impairment was recognized. The table does not reflect the change in fair value attributable to any related economic hedges the Company may have used to mitigate the interest rate risk associated with LHFS and MSRs. The Company’s economic hedging activities for LHFS and MSRs are deployed at the portfolio level.

 

            Fair Value Measurement at
March 31, 2011
Using
               
(Dollars in millions)    Net
Carrying
Value
     Quoted Prices in
Active Markets
for Identical
Assets/Liabilities
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
            Valuation
Allowance
 
 

LHFS

     $328         $-         $74         $254            $-   

LHFI

     141         -         -         141            (31

OREO

     534         -         495         39            (107

Other Assets

     63         -         7         56            (2
            Fair Value Measurement at
December 31, 2010,
Using
               
(Dollars in millions)    Net
Carrying
Value
     Quoted Prices in
Active Markets
for Identical
Assets/Liabilities
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
            Valuation
Allowance
 
 

LHFS

     $333         $-         $142         $191            $-   

LHFI

     85         -         -         85            (15

OREO

     596         -         553         43            (116

Affordable Housing

     357         -         -         357            -   

Other Assets

     130         -         90         40            (20

The following is a discussion of the valuation techniques and inputs used in developing fair value measurements for assets classified as level 2 or level 3 that are measured at fair value on a non-recurring basis, based on the class as determined by the nature and risks of the instrument.

Loans Held for Sale

Level 2 LHFS consist primarily of conforming, residential mortgage loans and corporate loans that are accounted for at LOCOM. Level 3 LHFS consist of non-agency residential mortgage LHFS for which there is little or no secondary market activity and leases held for sale. These loans are valued consistent with the methodology discussed in the Recurring Fair Value Measurement section of this footnote. Leases held for sale are valued using internal estimates which incorporate market data when available. Due to the lack of current market data for comparable leases, these assets are considered level 3.

During the three months ended March 31, 2011, the Company transferred $47 million in NPLs, net of a $10 million incremental charge-off, that were previously designated as LHFI to LHFS in conjunction with the Company’s election to actively market these loans for sale. These loans were predominantly reported at amortized cost prior to transferring to LHFS; however, a portion of the NPLs was carried at fair value. The Company executed a similar transfer of $160 million in NPLs during the three months ended March 31, 2010; these loans were subsequently sold at prices approximating fair value.

Loans Held for Investment

LHFI consist primarily of nonperforming commercial real estate loans for which specific reserves have been recorded. As these loans have been classified as nonperforming, cash proceeds from the sale of the underlying collateral is the expected source of repayment for a majority of these loans. Accordingly, the fair value of these loans is derived from internal estimates of the underlying collateral incorporating market data when available. Due to the lack of market data for similar assets, these loans are considered level 3.

OREO

OREO is measured at the lower of cost or the fair value, less costs to sell. Level 2 OREO consists primarily of residential homes, commercial properties, and vacant lots and land for which current property-specific appraisals, broker pricing opinions, or other market information is available. Level 3 OREO consists of lots and land for which current property-specific values are not available. The Company values these properties using a pooled approach.

Affordable Housing

The Company evaluates its consolidated affordable housing partnership investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. An impairment is recorded when the carrying amount of the partnership exceeds its fair value. Fair value measurements for affordable housing investments are derived from internal models using market assumptions when available. Significant assumptions utilized in these models include cash flows, market capitalization rates and tax credit market pricing. Due to the lack of comparable sales in the marketplace, these valuations are considered level 3. No impairment was recorded during the three months ended March 31, 2011 and 2010.

Other Assets

Other assets consist of private equity investments, structured leasing products, other repossessed assets and assets under operating leases where the Company is the lessor.

Investments in private equity partnerships are valued based on the estimated expected remaining cash flows to be received from these assets discounted at a market rate that is commensurate with their risk profile. Based on the valuation methodology and the lack of observable inputs, these investments are considered level 3. During both the three months ended March 31, 2011 and 2010, the Company recorded impairment charges attributable to these investments of $2 million.

Structured leasing consists of assets held for sale under third party operating leases. These assets consist primarily of commercial buildings and are recorded at fair value less cost to sell. These assets are valued based on internal estimates which incorporate current market data for similar assets when available. Due to the lack of current market data for comparable assets, these assets are considered level 3. During the three months ended March 31, 2011, the Company recorded no impairment charges attributable to these assets. During the three months ended March 31, 2010 the Company recorded impairment charges attributable to these assets of $2 million.

Other repossessed assets consist of repossessed personal property that is measured at fair value less cost to sell. These assets are considered level 2 as their fair value is determined based on market comparables and broker opinions. During the three months ended March 31, 2011, the Company recorded no impairment charges attributable to these assets. During the three months ended March 31, 2010, the Company recorded $6 million in impairment charges attributable to these assets.

The Company monitors the fair value of assets under operating leases, where the Company is the lessor, and records impairment to the extent the carrying value is not recoverable and the fair value is less than its carrying value. Fair value is determined using collateral specific pricing digests, external appraisals and recent sales data from industry equipment dealers. As market data for similar assets is available and used in the valuation, these assets are considered level 2. During the three months ended March 31, 2011 and 2010, the Company recorded impairment charges of less than $1 million and $9 million, respectively, attributable to the fair value of various personal property under operating leases.

 

Fair Value of Financial Instruments

The carrying amounts and fair values of the Company’s financial instruments at March 31, 2011 and December 31, 2010 were as follows:

 

     March 31, 2011     December 31, 2010  
(Dollars in millions)    Carrying
Amount
    Fair
Value
    Carrying
Amount
    Fair
Value
 

Financial assets

        

Cash and cash equivalents

   $ 6,217      $ 6,217  (a)    $ 5,378      $ 5,378  (a) 

Trading assets

     6,289        6,289  (b)      6,175        6,175  (b) 

Securities AFS

     26,569        26,569  (b)      26,895        26,895  (b) 

LHFS

     2,165        2,165  (c)      3,501        3,501  (c) 

LHFI

     114,932        114,932        115,975        115,975   

Interest/credit adjustment on LHFI

     (2,854     (3,854     (2,974     (3,823
                                

LHFI, as adjusted for interest/credit risk

     112,078        111,078  (d)      113,001        112,152  (d) 

Market risk/liquidity adjustment on LHFI

     -        (3,767     -        (3,962
                                

LHFI, fully adjusted

   $ 112,078      $ 107,311  (d)    $ 113,001      $ 108,190  (d) 

Financial liabilities

        

Consumer and commercial deposits

   $ 121,559      $ 121,844  (e)    $ 120,025      $ 120,368  (e) 

Brokered deposits

     2,369        2,391  (f)      2,365        2,381  (f) 

Foreign deposits

     57        57  (f)      654        654  (f) 

Short-term borrowings

     6,121        6,117  (f)      5,821        5,815  (f) 

Long-term debt

     14,663        14,351  (f)      13,648        13,191  (f) 

Trading liabilities

     2,731        2,731  (b)      2,678        2,678  (b) 

The following methods and assumptions were used by the Company in estimating the fair value of financial instruments:

 

  (a)

Cash and cash equivalents are valued at their carrying amounts reported in the balance sheet, which are reasonable estimates of fair value due to the relatively short period to maturity of the instruments.

 

  (b)

Securities AFS, trading assets, and trading liabilities that are classified as level 1 are valued based on quoted market prices. For those instruments classified as level 2 or level 3, refer to the respective valuation discussions within this footnote.

 

  (c)

LHFS are generally valued based on observable current market prices or, if quoted market prices are not available, on quoted market prices of similar instruments. In instances when significant valuation assumptions are not readily observable in the market, instruments are valued based on the best available data in order to approximate fair value. This data may be internally-developed and considers risk premiums that a market participant would require under then-current market conditions. Refer to the LHFS section within this footnote for further discussion of the LHFS carried at fair value.

 

  (d)

LHFI fair values are based on a hypothetical exit price, which does not represent the estimated intrinsic value of the loan if held for investment. The assumptions used are expected to approximate those that a market participant purchasing the loans would use to value the loans, including a market risk premium and liquidity discount. Estimating the fair value of the loan portfolio when loan sales and trading markets are illiquid, or for certain loan types, nonexistent, requires significant judgment. Therefore, the estimated fair value can vary significantly depending on a market participant’s ultimate considerations and assumptions. The final value yields a market participant’s expected return on investment that is indicative of the current market conditions, but it does not take into consideration the Company’s estimated value from continuing to hold these loans or its lack of willingness to transact at these estimated values.

The Company estimated fair value based on estimated future cash flows discounted, initially, at current origination rates for loans with similar terms and credit quality, which derived an estimated value of 99% on the loan portfolio’s net carrying value as of March 31, 2011 and December 31, 2010. The value derived from origination rates likely does not represent an exit price; therefore, an incremental market risk and liquidity discount was subtracted from the initial value as of March 31, 2011 and December 31, 2010, respectively. The discounted value is a function of a market participant’s required yield in the current environment and is not a reflection of the expected cumulative losses on the loans. Loan prepayments are used to adjust future cash flows based on historical experience and prepayment model forecasts. The value of related accrued interest on loans approximates fair value; however, it is not included in the carrying amount or fair value of loans. The value of long-term customer relationships is not permitted under current U.S. GAAP to be included in the estimated fair value.

 

  (e)

Deposit liabilities with no defined maturity such as demand deposits, NOW/money market accounts, and savings accounts have a fair value equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for CDs are estimated using a discounted cash flow calculation that applies current interest rates to a schedule of aggregated expected maturities. The assumptions used in the discounted cash flow analysis are expected to approximate those that market participants would use in valuing deposits. The value of long-term relationships with depositors is not taken into account in estimating fair values.

 

  (f)

Fair values for foreign deposits, certain brokered deposits, short-term borrowings, and certain long-term debt are based on quoted market prices for similar instruments or estimated using discounted cash flow analysis and the Company’s current incremental borrowing rates for similar types of instruments. For brokered deposits and long-term debt that the Company carries at fair value, refer to the respective valuation sections within this footnote.

Reinsurance Arrangements and Guarantees
Reinsurance Arrangements and Guarantees

Note 13 – Reinsurance Arrangements and Guarantees

Reinsurance

The Company provides mortgage reinsurance on certain mortgage loans through contracts with several primary mortgage insurance companies. Under these contracts, the Company provides aggregate excess loss coverage in a mezzanine layer in exchange for a portion of the pool’s mortgage insurance premium. As of March 31, 2011, approximately $11.1 billion of mortgage loans were covered by such mortgage reinsurance contracts. The reinsurance contracts are intended to place limits on the Company’s maximum exposure to losses by defining the loss amounts ceded to the Company as well as by establishing trust accounts for each contract. The trust accounts, which are comprised of funds contributed by the Company plus premiums earned under the reinsurance contracts, are maintained to fund claims made under the reinsurance contracts. If claims exceed funds held in the trust accounts, the Company does not intend to make additional contributions beyond future premiums earned under the existing contracts.

At March 31, 2011, the total loss exposure ceded to the Company was approximately $443 million; however, the maximum amount of loss exposure based on funds held in each separate trust account, including net premiums due to the trust accounts, was limited to $114 million. Of this amount, $105 million of losses have been reserved for as of March 31, 2011, reducing the Company’s net remaining loss exposure to $9 million. The reinsurance reserve was $148 million as of December 31, 2010. The decrease in the reserve balance was due to claim payments made to the primary mortgage insurance companies during the first quarter. The Company’s evaluation of the required reserve amount includes an estimate of claims to be paid by the trust in relation to loans in default and an assessment of the sufficiency of future revenues, including premiums and investment income on funds held in the trusts, to cover future claims. Future reported losses may exceed $9 million, since future premium income will increase the amount of funds held in the trust; however, future cash losses, net of premium income, are not expected to exceed $9 million. The amount of future premium income is limited to the population of loans currently outstanding since additional loans are not being added to the reinsurance contracts; future premium income could be further curtailed to the extent the Company agrees to relinquish control of individual trusts to the mortgage insurance companies. Premium income, which totaled $8 million and $11 million for the three months ended March 31, 2011 and 2010, respectively, is reported as part of noninterest income. The related provision for losses, which totaled $7 million and $9 million for the three months ended March 31, 2011 and 2010, respectively, is reported as part of noninterest expense.

Guarantees

The Company has undertaken certain guarantee obligations in the ordinary course of business. The issuance of a guarantee imposes an obligation for the Company to stand ready to perform, and should certain triggering events occur, it also imposes an obligation to make future payments. Payments may be in the form of cash, financial instruments, other assets, shares of stock, or provisions of the Company’s services. The following discussion appends and updates certain guarantees disclosed in Note 18, “Reinsurance Arrangements and Guarantees,” to the Consolidated Financial Statements in the Company’s 2010 Annual Report on Form 10-K. In addition, the Company has entered into certain contracts that are similar to guarantees, but that are accounted for as derivatives (see Note 11, “Derivative Financial Instruments,” to the Consolidated Financial Statements).

 

Letters of Credit

Letters of credit are conditional commitments issued by the Company generally to guarantee the performance of a client to a third party in borrowing arrangements, such as CP, bond financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to clients and may be reduced by selling participations to third parties. The Company issues letters of credit that are classified as financial standby, performance standby, or commercial letters of credit. Commercial letters of credit are specifically excluded from the disclosure and recognition requirements.

As of March 31, 2011 and December 31, 2010, the maximum potential amount of the Company’s obligation was $5.9 billion and $6.4 billion, respectively, for financial and performance standby letters of credit. The Company has recorded $109 million in other liabilities for unearned fees related to these letters of credit as of March 31, 2011 and December 31, 2010. The Company’s outstanding letters of credit generally have a term of less than one year but may extend longer than one year. If a letter of credit is drawn upon, the Company may seek recourse through the client’s underlying obligation. If the client’s line of credit is also in default, the Company may take possession of the collateral securing the line of credit, where applicable. The Company monitors its credit exposure under standby letters of credit in the same manner as it monitors other extensions of credit in accordance with credit policies. Some standby letters of credit are designed to be drawn upon and others are drawn upon only under circumstances of dispute or default in the underlying transaction to which the Company is not a party. In all cases, the Company holds the right to reimbursement from the applicant and may or may not also hold collateral to secure that right. An internal assessment of the probability of default and loss severity in the event of default is assessed consistent with the methodologies used for all commercial borrowers. The management of credit risk regarding letters of credit leverages the risk rating process to focus higher visibility on the higher risk and higher dollar letters of credit. The associated reserve is a component of the unfunded commitment reserve recorded in other liabilities included in the allowance for credit losses as disclosed in Note 4, “Allowance for Credit Losses,” to the Consolidated Financial Statements.

Loan Sales

STM, a consolidated subsidiary of SunTrust, originates and purchases residential mortgage loans, a portion of which are sold to outside investors in the normal course of business, through a combination of whole loan sales to GSEs, Ginnie Mae, and non-agency investors, as well as a limited amount of Company sponsored securitizations. When mortgage loans are sold, representations and warranties regarding certain attributes of the loans sold are made to these third party purchasers. Subsequent to the sale, if a material underwriting deficiency or documentation defect is discovered, STM may be obligated to repurchase the mortgage loan or to reimburse the investor for losses incurred (make whole requests) if such deficiency or defect cannot be cured by STM within the specified period following discovery. These representations and warranties may extend through the life of the mortgage loan, up to 25 to 30 years; however, most demands occur within the first few years of origination. STM’s risk of loss under its representations and warranties is largely driven by borrower payment performance since investors will perform extensive reviews of delinquent loans as a means of mitigating losses.

Loan repurchase requests relate primarily to loans sold during the period from January 1, 2005 to March 31, 2011, which totaled $233.2 billion at the time of sale, consisting of $178.8 billion and $30.3 billion of agency and non-agency loans, respectively, as well as $24.1 billion of loans sold to Ginnie Mae. The composition of the remaining outstanding balance by vintage and type of buyer as of March 31, 2011 is shown in the following table.

 

     Remaining Outstanding Balance by Year of Sale  
(Dollars in billions)        2005              2006              2007              2008              2009              2010              2011              Total      

GSE

     $5.2         $6.3         $12.2         $13.6         $29.4         $17.6         $5.5         $89.8   

Ginnie Mae

     0.8         0.7         0.7         3.2         6.3         3.9         0.8         16.4   

Non-agency

     6.1         6.2         3.7         -         -         -         -         16.0   
                                                                       

Total

     $12.1         $13.2         $16.6         $16.8         $35.7         $21.5         $6.3         $122.2   
                                                                       

Non-agency loan sales include whole loans and loans sold in private securitization transactions. While representation and warranties have been made related to these sales, they differ in many cases from those made in connection with loans sold to the GSEs in that non-agency loans may not be required to meet the same underwriting standards and, in addition to identifying a representation or warranty breach, non-agency investors are generally required to demonstrate that the breach was material and directly related to the cause of default. Loans sold to Ginnie Mae are insured by either the FHA or VA. As servicer, we may elect to repurchase delinquent loans in accordance with Ginnie Mae guidelines; however, the loans continue to be insured. Although we indemnify FHA and VA for losses related to loans not originated in accordance with their guidelines, such occurrences are limited and no repurchase liability has been recorded for loans sold to Ginnie Mae.

Although the timing and volume has varied, repurchase and make whole requests have increased over the past several years. Repurchase request volume was $313 million during the three months ended March 31, 2011 and $1.1 billion, $1.1 billion, and $557 million during the years ended 2010, 2009, and 2008, respectively, and on a cumulative basis since 2005 has been $3.8 billion. The majority of these requests are from GSEs, with a limited number of requests having been received related to non-agency investors; repurchase requests from non-agency investors were $27 million during three months ended March 31, 2011 and $55 million, $99 million, and $148 million during the years ended 2010, 2009, and 2008, respectively. In addition, repurchase requests related to loans originated in 2006 and 2007 have consistently comprised the vast majority of total repurchase requests during the past three years. The repurchase and make whole requests received have been primarily due to material breaches of representations related to compliance with the applicable underwriting standards, including borrower misrepresentation and appraisal issues. STM performs a loan by loan review of all requests and demands have been and will continue to be contested to the extent they are not considered valid. At March 31, 2011, the unpaid principal balance of loans related to unresolved requests previously received from investors was $363 million, comprised of $326 million from the GSEs and $37 million from non-agency investors. Comparable amounts at December 31, 2010, were $293 million, comprised of $264 million from the GSEs and $29 million from non-agency investors.

As of March 31, 2011 and December 31, 2010, the liability for contingent losses related to sold loans totaled $270 million and $265 million, respectively. The liability is recorded in other liabilities in the Consolidated Balance Sheets, and the related repurchase costs are recognized in mortgage production related loss in the Consolidated Statements of Income/(Loss). The Company does not maintain any legal reserves with respect to mortgage repurchase activity because there is currently no litigation outstanding. The following table summarizes the changes in the Company’s reserve for mortgage loan repurchase losses:

 

       Three Months Ended March 31        
(Dollars in millions)    2011     2010    

Balance at beginning of period

     $265        $200     

Repurchase costs

     80        128     

Charge-offs

     (75     (118  
                  

Balance at end of period

     $270        $210     
                  

During the three months ended March 31, 2011 and 2010, the Company repurchased or otherwise settled mortgages with unpaid principal balances of $138 million and $204 million, respectively, related to investor demands. As of March 31, 2011 and December 31, 2010, the carrying value of outstanding repurchased mortgage loans, net of any allowance for loan losses, totaled $171 million and $153 million, respectively, of which $92 million and $86 million, respectively, were nonperforming.

STM also maintains a liability for contingent losses related to MSR sales, which totaled $7 million and $6 million as of March 31, 2011 and December 31, 2010, respectively.

Tax Credits Sold

SunTrust Community Capital, a SunTrust subsidiary, previously obtained state and federal tax credits through the construction and development of affordable housing properties and continues to obtain state and federal tax credits through investments as a limited partner in affordable housing developments. SunTrust Community Capital or its subsidiaries are limited and/or general partners in various partnerships established for the properties. If the partnerships generate tax credits, those credits may be sold to outside investors. As of March 31, 2011, SunTrust Community Capital has completed six tax credit sales containing guarantee provisions stating that SunTrust Community Capital will make payment to the outside investors if the tax credits become ineligible. SunTrust Community Capital also guarantees that the general partner under the transaction will perform on the delivery of the credits. The guarantees are expected to expire within a ten year period from inception. As of March 31, 2011, the maximum potential amount that SunTrust Community Capital could be obligated to pay under these guarantees is $37 million; however, SunTrust Community Capital can seek recourse against the general partner. Additionally, SunTrust Community Capital can seek reimbursement from cash flow and residual values of the underlying affordable housing properties provided that the properties retain value. As of March 31, 2011 and December 31, 2010, $7 million was accrued representing the remainder of tax credits to be delivered, and were recorded in other liabilities on the Consolidated Balance Sheets.

 

Other

In the normal course of business, the Company enters into indemnification agreements and provides standard representations and warranties in connection with numerous transactions. These transactions include those arising from securitization activities, underwriting agreements, merger and acquisition agreements, loan sales, contractual commitments, payment processing sponsorship agreements, and various other business transactions or arrangements. The extent of the Company’s obligations under these indemnification agreements depends upon the occurrence of future events; therefore, the Company’s potential future liability under these arrangements is not determinable.

Contingencies
Contingencies

Note 14 – Contingencies

Litigation and Regulatory Matters

The Company and its subsidiaries are parties to numerous claims and lawsuits arising in the course of their normal business activities, some of which involve claims for substantial amounts. The Company’s experience has shown that the damages alleged by plaintiffs or claimants are often overstated, unsubstantiated by legal theory, unsupported by the facts, and/or bear no relation to the ultimate award that a court might grant. In addition, the outcome of litigation and regulatory matters and timing of ultimate resolution are inherently difficult to predict. Because of these factors, the Company typically cannot provide a meaningful estimate of the range of reasonably possible outcomes of claims in the aggregate or by individual claim. On a case-by-case basis, however, reserves are established for those legal claims in which it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. In no cases are those accrual amounts material to the financial condition of the Company. The actual costs of resolving these claims may be substantially higher or lower than the amounts reserved.

For a limited number of legal matters in which the Company is involved, the Company is able to estimate a range of reasonably possible losses. For other matters for which a loss is probable or reasonably possible, such an estimate is not possible. For those matters where an estimate is reasonably possible, management currently estimates the aggregate range of reasonably possible losses as $100 million to $150 million in excess of the accrued liability, if any, related to those matters. This estimated range of reasonably possible losses represents the estimated possible losses over the life of such legal matters, which may span a currently indeterminable number of years, and is based on information currently available as of March 31, 2011. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from this estimate. Those matters for which an estimate is not possible are not included within this estimated range and, therefore, this estimated range does not represent the Company’s maximum loss exposure. Based on current knowledge, it is the opinion of management that liabilities arising from legal claims in excess of the amounts currently accrued, if any, will not have a material impact to the Company’s financial condition, results of operations, or cash flows. However, in light of the significant uncertainties involved in these matters, and the very large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to the Company’s results or cash flows for any given reporting period.

The following appends and updates certain litigation and regulatory matters disclosed in Note 21, “Contingencies,” to the Consolidated Financial Statements in the Company’s 2010 Annual Report on Form 10-K.

Auction Rate Securities Investigations and Claims

FINRA Auction Rate Securities Investigation

In September 2008, STRH and STIS entered into an “agreement in principle” with FINRA related to the sales and brokering of ARS by STRH and STIS. This agreement was non-binding and subject to the negotiation of a final settlement. The parties were unable to finalize this agreement and FINRA continued its investigation. At this time the Company believes that FINRA has completed its investigation and intends to recommend that charges be filed against both STRH and STIS. While the parties continue to engage in settlement discussions, the Company moved forward with ARS purchases from essentially the same categories of investors who would have been covered by the original agreement with FINRA as well as certain other investors not addressed by the agreement. As of March 31, 2011, the Company has purchased all ARS covered by the original agreement. The fair value of ARS purchased pursuant to the pending settlement, net of sales, redemptions and calls, is approximately $97 million and $147 million in trading securities and $116 million and $128 million in securities AFS, at March 31, 2011 and December 31, 2010, respectively. The losses related to the FINRA agreement were accrued in 2008; however, during the three months ended March 31, 2011 and 2010, the Company recognized gains relating to these ARS of $30 million and $8 million, respectively. These amounts are comprised of net trading gains and net securities gains resulting primarily from sales, calls and redemptions of both trading securities and securities AFS that were purchased from investors, as well as net mark to market gains on positions that continue to be held by the Company. Due to the pass-through nature of these security purchases, gains and losses are included in the Corporate Other and Treasury segment.

Other ARS Claims

Since April 2008, several arbitrations and individual lawsuits have been filed against STRH and STIS by parties who purchased ARS through these entities. Broadly stated, these complaints allege that STRH and STIS made misrepresentations about the nature of these securities and engaged in conduct designed to mask some of the liquidity risk associated with them. They also allege that STRH and STIS were aware of the risks and problems associated with these securities, and took steps in advance of the wave of auction failures to remove these securities from their own holdings. The claimants in these actions are seeking to recover the par value of the ARS in question as well as compensatory and punitive damages in unspecified amounts. The Company reserved $37 million and $29 million as of March 31, 2011 and December 31, 2010, respectively, for estimated probable losses related to ARS claims, and recognized those probable losses in trading account profits/(losses) and commissions in the Consolidated Statements of Income/(Loss).

SunTrust Mortgage, Inc. v United Guaranty Residential Insurance Company of North Carolina

STM filed a suit in the Eastern District of Virginia in July of 2009 against United Guaranty Residential Insurance Company of North Carolina (“UGRIC”) seeking payment involving denied mortgage insurance claims regarding second lien mortgages. STM’s claims are in two counts. Count One involves a common reason for denial of claims by UGRIC for a group of loans. Count Two involves a group of loans with individualized reasons for the claim denials asserted by UGRIC. The two counts filed by STM have been bifurcated for trial purposes. UGRIC has counterclaimed for declaratory relief involving interpretation of the insurance policy involving certain caps on the amount of claims covered, whether ongoing premium obligations exist after any caps are met, and the potential to accelerate any premiums that may be owed if UGRIC prevails on its counterclaim. UGRIC later disclaimed its argument for acceleration of premiums. The parties filed cross motions for summary judgment which all were denied in December 2010. The Court is expected to issue rulings on a variety of issues in the near future.

SunTrust Securities Class Action Litigation

Beginning in May 2009, the Company, STRH, SunTrust Capital IX and officers and directors of the Company and others were named in three putative class actions arising out of the offer and sale of approximately $690 million of SunTrust Capital IX 7.875% Trust Preferred Securities (“TRUPs”) of SunTrust Banks, Inc. The complaints alleged, among other things, that the relevant registration statement and accompanying prospectus misrepresented or omitted material facts regarding the Company’s allowance for loan and lease loss reserves, the Company’s capital position and its internal risk controls. Plaintiffs seek to recover alleged losses in connection with their investment in the TRUPs or to rescind their purchases of the TRUPs. These cases were consolidated under the caption Belmont Holdings Corp., et al., v. SunTrust Banks, Inc., et al., in the U.S. District Court for the Northern District of Georgia, Atlanta Division, and on November 30, 2009, a consolidated amended complaint was filed. On January 29, 2010, Defendants filed a motion to dismiss the consolidated amended complaint. This motion was granted, with leave to amend, on September 10, 2010. On October 8, 2010, the lead plaintiff filed an amended complaint in an attempt to address the pleading deficiencies identified in the Court’s dismissal decision. The Company filed a motion to dismiss the amended complaint on March 21, 2011 and expects that this motion will be fully briefed by the end of May 2011.

Consent Order with the Federal Reserve

On April 13, 2011 SunTrust Banks, Inc., SunTrust Bank and SunTrust Mortgage, Inc. entered into a Consent Order with the Federal Reserve in which SunTrust Banks, Inc., SunTrust Bank and SunTrust Mortgage, Inc. agreed to strengthen oversight of, and improve, risk management, internal audit and compliance programs concerning the residential mortgage loan servicing, loss mitigation and foreclosure activities of SunTrust Mortgage, Inc. Under the terms of the Consent Order, SunTrust Bank and SunTrust Mortgage, Inc. also agreed to retain an independent consultant to conduct a review of residential foreclosure actions pending at any time during the period from January 1, 2009 through December 31, 2010 for loans serviced by SunTrust Mortgage, Inc., to identify any errors, misrepresentations or deficiencies, determine whether any instances so identified resulted in financial injury, and then make any appropriate remediation, reimbursement or adjustment. Under the terms of the Consent Order, SunTrust Bank and SunTrust Mortgage, Inc. also agreed, among other things, to: (a) strengthen the coordination of communications between borrowers and SunTrust Mortgage, Inc. concerning ongoing loss mitigation and foreclosure activities; (b) submit a plan to enhance processes for oversight and management of third party vendors used in connection with residential mortgage servicing, loss mitigation and foreclosure activities; (c) enhance and strengthen the enterprise wide compliance program with respect to oversight of residential foreclosure loan servicing, loss mitigation and foreclosure activities; (d) ensure appropriate oversight of SunTrust Mortgage, Inc.’s activities with respect to Mortgage Electronic Registration System; (e) review and remediate, if necessary, SunTrust Mortgage, Inc.’s management information systems for its residential mortgage loan servicing, loss mitigation, and foreclosure activities; (f) improve the training of SunTrust Mortgage, Inc. officers and staff concerning applicable law, supervisory guidance and internal procedures concerning residential mortgage servicing, loss mitigation and foreclosure activities, including the single point of contact for foreclosure and loss mitigation; (g) enhance and strengthen the enterprise wide risk management program with respect to oversight of residential foreclosure loan servicing, loss mitigation and foreclosure activities; and (h) enhance and strengthen the internal audit program with respect to residential foreclosure loan servicing, loss mitigation and foreclosure activities. The full text of the Consent Order is available on the Federal Reserve’s website.

The Company completed an internal review of SunTrust Mortgage, Inc.’s residential foreclosure processes, and as a result of the review, steps have been taken to improve upon those processes. An independent consultant review will also be performed as required by the Consent Order, and until the results of that review are known, the Company cannot reasonably estimate financial reimbursements or adjustments. As a result of the Federal Reserve’s review of the Company’s residential mortgage loan servicing and foreclosure processing practices that preceded the Consent Order, the Federal Reserve announced that it believed monetary sanctions would be appropriate and it planned to announce monetary sanctions. The Federal Reserve has not made any further announcements nor has it provided the Company with information related to timing or amount of these potential monetary sanctions. Consequently, the amount cannot be reasonably estimated, and therefore, no accrual has been made.

Business Segment Reporting
Business Segment Reporting

Note 15 - Business Segment Reporting

The Company has six business segments used to measure business activities: Retail Banking, Diversified Commercial Banking, CRE, CIB, Mortgage, and W&IM with the remainder in Corporate Other and Treasury. The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by management. For a further discussion concerning SunTrust’s business segments, see Note 22, “Business Segment Reporting”, to the Consolidated Financial Statements in the Company’s 2010 Annual Report on Form 10-K.

Because the business segment results are presented based on management accounting practices, the transition to the consolidated results, which are prepared under U.S. GAAP, creates certain differences which are reflected in Reconciling Items.

For business segment reporting purposes, the basis of presentation in the accompanying discussion includes the following:

 

   

Net interest income – All net interest income is presented on a FTE basis. The revenue gross-up has been applied to tax-exempt loans and investments to make them comparable to other taxable products. The segments have also been matched maturity funds transfer priced, generating credits or charges based on the economic value or cost created by the assets and liabilities of each segment. The mismatch between funds credits and funds charges at the segment level resides in Reconciling Items. The change in the matched maturity funds mismatch is generally attributable to the corporate balance sheet management strategies.

 

   

Provision for credit losses - Represents net charge-offs by segment. The difference between the segment net charge-offs and the consolidated provision for credit losses is reported in Reconciling Items.

 

   

Provision/(benefit) for income taxes - Calculated using a nominal income tax rate for each segment. This calculation includes the impact of various income adjustments, such as the reversal of the FTE gross up on tax-exempt assets, tax adjustments, and credits that are unique to each business segment. The difference between the calculated provision/(benefit) for income taxes at the segment level and the consolidated provision/(benefit) for income taxes is reported in Reconciling Items.

The segment’s financial performance is comprised of direct financial results as well as various allocations that for internal management reporting purposes provide an enhanced view of analyzing the segment’s financial performance. The internal allocations include the following:

 

   

Operational Costs – Expenses are charged to the segments based on various statistical volumes multiplied by activity based cost rates. As a result of the activity based costing process, planned residual expenses are also allocated to the segments. The recoveries for the majority of these costs are in the Corporate Other and Treasury segment.

 

   

Support and Overhead Costs – Expenses not directly attributable to a specific segment are allocated based on various drivers (e.g., number of full-time equivalent employees and volume of loans and deposits). The recoveries for these allocations are in Corporate Other and Treasury.

 

   

Sales and Referral Credits – Segments may compensate another segment for referring or selling certain products. The majority of the revenue resides in the segment where the product is ultimately managed.

The application and development of management reporting methodologies is a dynamic process and is subject to periodic enhancements. The implementation of these enhancements to the internal management reporting methodology may materially affect the results disclosed for each segment with no impact on consolidated results. Whenever significant changes to management reporting methodologies take place, the impact of these changes is quantified and prior period information is reclassified wherever practicable.

 

    Three Months Ended March 31, 2011  
(Dollars in millions)   Retail
Banking
    Diversified
Commercial
Banking
    CRE     CIB     Mortgage     W&IM     Corporate
Other and
Treasury
    Reconciling
Items
    Consolidated  

Average total assets

    $40,544        $24,702        $8,913        $21,396        $34,538        $8,901        $33,123        $949        $173,066   

Average total liabilities

    76,298        21,397        1,471        17,480        3,693        13,406        16,272        (58     149,959   

Average total equity

    -        -        -        -        -        -        -        23,107        23,107   
                                                                       

Net interest income

    $623        $147        $35        $116        $125        $105        $137        ($39     $1,249   

FTE adjustment

    -        25        -        -        -        -        2        1        28   
                                                                       

Net interest income (FTE)1

    623        172        35        116        125        105        139        (38     1,277   

Provision for credit losses2

    216        8        108        (1     223        17        -        (124     447   
                                                                       

Net interest income after provision for credit losses

    407        164        (73     117        (98     88        139        86        830   

Noninterest income

    263        58        27        176        81        215        77        (14     883   

Noninterest expense

    628        114        109        147        252        237        (9     (13     1,465   
                                                                       

Income/(loss) before provision/(benefit) for income taxes

    42        108        (155     146        (269     66        225        85        248   

Provision/(benefit) for income taxes3

    16        39        (77     53        (103     22        78        33        61   
                                                                       

Net income/(loss) including income attributable to noncontrolling interest

    26        69        (78     93        (166     44        147        52        187   

Net income attributable to noncontrolling interest

    -        -        -        -        -        5        2        -        7   
                                                                       

Net income/(loss)

    $26        $69        ($78     $93        ($166     $39        $145        $52        $180   
                                                                       
    Three Months Ended March 31, 2010  
(Dollars in millions)   Retail
Banking
    Diversified
Commercial
Banking
    CRE     CIB     Mortgage     W&IM     Corporate
Other and
Treasury
    Reconciling
Items
    Consolidated  

Average total assets

    $38,513        $25,149        $11,927        $18,851        $34,702        $9,219        $32,712        $356        $171,429   

Average total liabilities

    73,789        21,554        1,961        14,266        3,325        11,962        21,906        328        149,091   

Average total equity

    -        -        -        -        -        -        -        22,338        22,338   
                                                                       

Net interest income

    $608        $130        $43        $83        $102        $95        $120        ($9     $1,172   

FTE adjustment

    -        27        -        -        -        -        3        -        30   
                                                                       

Net interest income (FTE)1

    608        157        43        83        102        95        123        (9     1,202   

Provision for credit losses2

    284        24        70        29        401        13        -        41        862   
                                                                       

Net interest income after provision for credit losses

    324        133        (27     54        (299     82        123        (50     340   

Noninterest income

    276        52        21        113        47        186        8        (5     698   

Noninterest expense

    601        116        93        110        254        222        (31     (4     1,361   
                                                                       

Income/(loss) before provision/(benefit) for income taxes

    (1     69        (99     57        (506     46        162        (51     (323

Provision/(benefit) for income taxes3

    (1     25        (57     21        (192     17        43        (20     (164
                                                                       

Net income/(loss) including income attributable to noncontrolling interest

    -        44        (42     36        (314     29        119        (31     (159

Net income attributable to noncontrolling interest

    -        -        -        -        -        -        2        -        2   
                                                                       

Net income/(loss)

    $-        $44        ($42     $36        ($314     $29        $117        ($31     ($161
                                                                       

1 Net interest income is FTE and is presented on a matched maturity funds transfer price basis for the line of business.

2 Provision for credit losses represents net charge-offs for the segments.

3 Includes regular income tax provision/(benefit) and taxable-equivalent income adjustment reversal.

Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income

Note 16 - Accumulated Other Comprehensive Income

Comprehensive income/(loss) was calculated as follows:

 

             Three Months Ended         
March 31
 
(Dollars in millions)    2011     2010  

Comprehensive income:

    

Net income/(loss)

     $180        ($161

OCI:

    

Change in unrealized gains/(losses) on securities, net of taxes

     (69     39   

Change in unrealized gains/(losses) on derivatives, net of taxes

     (125     122   

Change related to employee benefit plans

     3        75   
                

Total comprehensive income/(loss)

     ($11     $75   
                

The components of AOCI were as follows:

    
(Dollars in millions)    March 31
2011
    December 31
2010
 

Unrealized net gain on AFS securities

     $1,457        $1,526   

Unrealized net gain on derivative financial instruments

     407        532   

Employee benefit plans

     (439     (442
                

Total AOCI

     $1,425        $1,616   
                
Significant Accounting Policies (Policies)

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these financial statements, have been made.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could vary from these estimates. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

The Company evaluated subsequent events through the date its financial statements were issued.

These financial statements should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2010. Except for accounting policies that have been modified or recently adopted as described below, there have been no significant changes to the Company’s accounting policies as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2010.

Accounting Policies Recently Adopted and Pending Accounting Pronouncements

In January 2010, the FASB issued ASU 2010-06, an update to ASC 820-10, “Fair Value Measurements.” This update added a new requirement to disclose transfers in and out of level 1 and level 2 of the fair value hierarchy, along with the reasons for the transfers, and requires a gross presentation of purchases and sales of level 3 instruments. Additionally, the update clarifies that entities provide fair value measurement disclosures for each class of assets and liabilities and that entities provide enhanced disclosures around level 2 valuation techniques and inputs. The Company adopted the disclosure requirements for level 1 and level 2 transfers and the expanded fair value measurement and valuation disclosures effective January 1, 2010. The disclosure requirements for level 3 activities were effective for the interim reporting period ending March 31, 2011. The adoption of these disclosure requirements had no impact on the Company’s financial position, results of operations, and EPS.

In July 2010, the FASB issued ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” The update requires companies to provide more disclosures about the credit quality of their financing receivables, which include loans, lease receivables, and other long-term receivables, and the credit allowances held against them. The disclosure requirements that were effective as of December 31, 2010 are included in Note 3, “Loans,” and Note 4, “Allowance for Credit Losses,” to the Consolidated Financial Statements. Disclosures about activity that occurs during a reporting period were effective for the interim reporting period ending March 31, 2011 and are also included in Note 3, “Loans,” and Note 4, “Allowance for Credit Losses,” to the Consolidated Financial Statements. The adoption of the credit quality disclosures did not have an impact on the Company’s financial position, results of operations, and EPS.

In December 2010, the FASB issued ASU 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.” The update requires companies to perform a step 2 analysis if the carrying value of a reporting unit is zero or negative and if it is more likely than not that goodwill is impaired. The update is effective for goodwill impairment testing performed during 2011 with any resulting impairment charge recorded through a cumulative effect adjustment to beginning retained earnings. The Company has adopted the standard as of January 1, 2011 and will apply the new guidance to future goodwill impairment testing. The Company does not expect the standard to have a substantive impact on its goodwill impairment evaluation.

In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.” The update provides additional guidance to assist creditors in determining whether a restructuring of a receivable meets the criteria to be considered a TDR, both for purposes of recording impairment and disclosing TDRs. A restructuring of a credit arrangement constitutes a TDR if the restructuring constitutes a concession, and the debtor is experiencing financial difficulties. The clarifications for classification apply to all restructurings occurring on or after January 1, 2011. The measurement of impairment for those newly identified TDRs will be applied prospectively beginning in the third quarter of 2011. The related disclosures which were previously deferred will be required for the interim reporting period ending September 30, 2011. The Company is still in the process of evaluating the impact of the standard. However, we do not anticipate adoption to have a significant impact on the Company’s financial position, results of operations, and EPS.

Securities Available for Sale (Tables)

Securities AFS at March 31, 2011 and December 31, 2010 were as follows:

 

     March 31, 2011  
(Dollars in millions)    Amortized
Cost
     Unrealized
Gains
     Unrealized
Losses
     Fair
Value
 

U.S. Treasury securities

     $223         $-         $1         $222   

Federal agency securities

     3,829         13         26         3,816   

U.S. states and political subdivisions

     537         17         3         551   

MBS - agency

     17,679         348         32         17,995   

MBS - private

     355         2         19         338   

CDO securities

     77         -         -         77   

ABS

     710         14         4         720   

Corporate and other debt securities

     55         2         1         56   

Coke common stock

     -         1,990         -         1,990   

Other equity securities1

     803         1         -         804   
                                   

Total securities AFS

     $24,268         $2,387         $86         $26,569   
                                   
     December 31, 2010  
(Dollars in millions)    Amortized
Cost
     Unrealized
Gains
     Unrealized
Losses
     Fair
Value
 

U.S. Treasury securities

     $5,446         $115         $45         $5,516   

Federal agency securities

     1,883         19         7         1,895   

U.S. states and political subdivisions

     565         17         3         579   

MBS - agency

     14,014         372         28         14,358   

MBS - private

     378         3         34         347   

CDO securities

     50         -         -         50   

ABS

     798         15         5         808   

Corporate and other debt securities

     464         19         1         482   

Coke common stock

     -         1,973         -         1,973   

Other equity securities1

     886         1         -         887   
                                   

Total securities AFS

     $24,484         $2,534         $123         $26,895   
                                   

1At March 31, 2011, other equity securities included $298 million in FHLB of Atlanta stock (par value), $391 million in Federal Reserve Bank stock (par value), and $114 million in mutual fund investments (par value). At December 31, 2010, other equity securities included $298 million in FHLB of Atlanta stock (par value), $391 million in Federal Reserve Bank stock (par value), and $197 million in mutual fund investments (par value).

The amortized cost and fair value of investments in debt securities at March 31, 2011 by estimated average life are shown below. Actual cash flows may differ from estimated average lives and contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(Dollars in millions)    1 Year
or Less
     1-5
Years
     5-10
Years
     After 10
Years
     Total  

Distribution of Maturities:

              

Amortized Cost

              

U.S. Treasury securities

     $2         $221         $-         $-         $223   

Federal agency securities

     62         3,245         484         38         3,829   

U.S. states and political subdivisions

     127         279         48         83         537   

MBS - agency

     338         12,740         1,773         2,828         17,679   

MBS - private

     34         318         3         -         355   

CDO securities

     -         77         -         -         77   

ABS

     203         503         4         -         710   

Corporate and other debt securities

     6         6         17         26         55   
                                            

Total debt securities

     $772         $17,389         $2,329         $2,975         $23,465   
                                            

Fair Value

              

U.S. Treasury securities

     $2         $220         $-         $-         $222   

Federal agency securities

     62         3,230         487         37         3,816   

U.S. states and political subdivisions

     129         292         49         81         551   

MBS - agency

     348         13,001         1,806         2,840         17,995   

MBS - private

     32         303         3         -         338   

CDO securities

     -         77         -         -         77   

ABS

     209         507         4         -         720   

Corporate and other debt securities

     6         6         19         25         56   
                                            

Total debt securities

     $788         $17,636         $2,368         $2,983         $23,775   
                                            

Gross realized gains and losses on sales and OTTI on securities AFS during the periods were as follows:

 

     Three Months Ended March 31  
(Dollars in millions)    2011     2010  

Gross realized gains

     $143        $15   

Gross realized losses

     (78     (13

OTTI

     (1     (1
                

Net securities gains

     $64        $1   
                

Securities in a continuous unrealized loss position at March 31, 2011 and December 31, 2010 were as follows:

     March 31, 2011  
     Less than twelve months      Twelve months or longer      Total  
(Dollars in millions)    Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
 

Temporarily impaired securities

                 

U.S. Treasury securities

     $201         $1         $-         $-         $201         $1   

Federal agency securities

     3,402         26         -         -         3,402         26   

U.S. states and political subdivisions

     30         1         36         2         66         3   

MBS - agency

     4,770         32         -         -         4,770         32   

MBS - private

     3         -         24         2         27         2   

CDO securities

     27         -         -         -         27         -   

ABS

     -         -         13         3         13         3   

Corporate and other debt securities

     -         -         3         1         3         1   
                                                     

Total temporarily impaired securities

     8,433         60         76         8         8,509         68   

Other-than-temporarily impaired securities1

                 

MBS - private

     19         -         261         17         280         17   

ABS

     2         -         3         1         5         1   
                                                     

Total other-than-temporarily impaired securities

     21         -         264         18         285         18   
                                                     

Total impaired securities

     $8,454         $60         $340         $26         $8,794         $86   
                                                     
     December 31, 2010  
     Less than twelve months      Twelve months or longer      Total  
(Dollars in millions)    Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
 

Temporarily impaired securities

                 

U.S. Treasury securities

     $2,010         $45         $-         $-         $2,010         $45   

Federal agency securities

     1,426         7         -         -         1,426         7   

U.S. states and political subdivisions

     45         1         35         2         80         3   

MBS - agency

     3,497         28         -         -         3,497         28   

MBS - private

     18         -         17         3         35         3   

ABS

     -         -         14         4         14         4   

Corporate and other debt securities

     -         -         3         1         3         1   
                                                     

Total temporarily impaired securities

     6,996         81         69         10         7,065         91   

Other-than-temporarily impaired securities1

                 

MBS - private

     -         -         286         31         286         31   

ABS

     4         1         -         -         4         1   
                                                     

Total other-than-temporarily impaired securities

     4         1         286         31         290         32   
                                                     

Total impaired securities

     $7,000         $82         $355         $41         $7,355         $123   
                                                     

1 Includes OTTI for which credit losses have been recorded in earnings in current or prior periods.

The following is a rollforward of credit losses recognized in earnings for the three months ended March 31, 2011 and 2010, related to securities for which some portion of the OTTI loss remains in AOCI:

 

(Dollars in millions)       

Balance, as of January 1, 2010

   $ 22   

Additions/reductions1

     -   
        

Balance, as of March 31, 2010

   $ 22   
        

Balance, as of January 1, 2011

   $ 20   

Additions:

  

OTTI credit losses on previously impaired securities

     1   
        

Balance, as of March 31, 2011

   $ 21   
        

1 During the three months ended March 31, 2010, the Company recognized $1 million of OTTI through earnings on debt securities in which no portion of the OTTI loss was included in OCI at any time during the period. OTTI related to these securities are excluded from these amounts.

The following table presents a summary of the significant inputs used in determining the measurement of credit losses recognized in earnings for private MBS for the three months ended March, 31, 2011 and 2010:

 

     March 31, 2011     March 31, 2010  

Current default rate

     5 - 7     2 - 6

Prepayment rate

     13 - 19     15 - 22

Loss severity

     39 - 43     37 - 46
Loans (Tables)

The composition of the Company’s loan portfolio at March 31, 2011 and December 31, 2010 is shown in the following table:

 

(Dollars in millions)    March 31,
2011
     December 31,
2010
 

Commercial loans:

     

Commercial & industrial1

     $45,080         $44,753   

Commercial real estate

     6,043         6,167   

Commercial construction

     2,109         2,568   
                 

Total commercial loans

     53,232         53,488   

Residential loans:

     

Residential mortgages - guaranteed

     4,516         4,520   

Residential mortgages - nonguaranteed2

     23,443         23,959   

Home equity products

     16,382         16,751   

Residential construction

     1,208         1,291   
                 

Total residential loans

     45,549         46,521   

Consumer loans:

     

Guaranteed student loans

     4,477         4,260   

Other direct

     1,786         1,722   

Indirect

     9,469         9,499   

Credit cards

     419         485   
                 

Total consumer loans

     16,151         15,966   
                 

LHFI

     $114,932         $115,975   
                 

LHFS

     $2,165         $3,501   

1Includes $4 million of loans previously acquired from GB&T and carried at fair value at March 31, 2011 and December 31, 2010, respectively.

2Includes $453 million and $488 million of loans carried at fair value at March 31, 2011 and December 31, 2010, respectively.

LHFI by credit quality indicator are shown in the tables below. Student loans and residential mortgages that were guaranteed by government agencies and for which there was nominal risk of principal loss have been excluded from the tables.

 

     Commercial & industrial      Commercial real estate      Commercial construction  
(Dollars in millions)    March 31,
2011
     December 31,
2010
     March 31,
2011
     December 31,
2010
     March 31,
2011
     December 31,
2010
 

Credit rating:

                 

Pass

     $42,543         $42,140         $4,192         $4,316         $701         $836   

Criticized accruing

     1,952         2,029         1,416         1,509         565         771   

Criticized nonaccruing

     585         584         435         342         843         961   
                                                     

Total

     $45,080         $44,753         $6,043         $6,167         $2,109         $2,568   
                                                     
     Residential mortgages -
nonguaranteed
     Home equity products      Residential construction  
     March 31,
2011
     December 31,
2010
     March 31,
2011
     December 31,
2010
     March 31,
2011
     December 31,
2010
 

Current FICO score range:

                 

700 and above

     $15,660         $15,920         $11,436         $11,673         $791         $828   

620 - 699

     4,419         4,457         2,855         2,897         241         258   

Below 6201

     3,364         3,582         2,091         2,181         176         205   
                                                     

Total

     $23,443         $23,959         $16,382         $16,751         $1,208         $1,291   
                                                     
     Consumer - other direct2      Consumer - indirect      Consumer - credit cards  
     March 31,
2011
     December 31,
2010
     March 31,
2011
     December 31,
2010
     March 31,
2011
     December 31,
2010
 

Current FICO score range:

                 

700 and above

     $1,028         $973         $6,805         $6,780         $214         $258   

620 - 699

     229         231         1,784         1,799         133         149   

Below 6201

     100         105         880         920         72         78   
                                                     

Total

     $1,357         $1,309         $9,469         $9,499         $419         $485   
                                                     

1For substantially all loans with refreshed FICO scores below 620, the borrower’s FICO score at the time of origination exceeded 620 but has since deteriorated as the loan has seasoned.

2Excludes $429 million and $413 million as of March 31, 2011 and December 31, 2010, respectively, of private-label student loans with third party insurance.

The payment status for the LHFI portfolio at March 31, 2011 and December 31, 2010 is shown in the tables below:

 

     As of March 31, 2011  
(Dollars in millions)    Accruing
Current
     Accruing
30-89 Days
Past Due
     Accruing
90+ Days
Past Due
     Nonaccruing3      Total  

Commercial loans:

              

Commercial & industrial1

     $44,379         $99         $17         $585         $45,080   

Commercial real estate

     5,587         20         1         435         6,043   

Commercial construction

     1,253         10         3         843         2,109   
                                            

Total commercial loans

     51,219         129         21         1,863         53,232   

Residential loans:

              

Residential mortgages - guaranteed

     3,433         136         947         -         4,516   

Residential mortgages - nonguaranteed2

     21,558         381         46         1,458         23,443   

Home equity products

     15,800         239         -         343         16,382   

Residential construction

     892         36         5         275         1,208   
                                            

Total residential loans

     41,683         792         998         2,076         45,549   

Consumer loans:

              

Guaranteed student loans

     3,457         397         623         -         4,477   

Other direct

     1,750         20         5         11         1,786   

Indirect

     9,383         64         1         21         9,469   

Credit cards

     400         9         10         -         419   
                                            

Total consumer loans

     14,990         490         639         32         16,151   
                                            

Total LHFI

     $107,892         $1,411         $1,658         $3,971         $114,932   
                                            

1Includes $4 million in loans carried at fair value at March 31, 2011.

2Includes $453 million in loans carried at fair value at March 31, 2011.

3Total nonaccruing loans past due 90 days or more totaled $3.0 billion at March 31, 2011. Nonaccruing loans past due fewer than 90 days include modified nonaccrual loans reported as TDRs.

 

     As of December 31, 2010  
(Dollars in millions)    Accruing
Current
     Accruing
30-89 Days
Past Due
     Accruing
90+ Days
Past Due
     Nonaccruing3      Total  

Commercial loans:

              

Commercial & industrial1

     $44,046         $111         $12         $584         $44,753   

Commercial real estate

     5,794         27         4         342         6,167   

Commercial construction

     1,595         11         1         961         2,568   
                                            

Total commercial loans

     51,435         149         17         1,887         53,488   

Residential loans:

              

Residential mortgages - guaranteed

     3,469         167         884         -         4,520   

Residential mortgages - nonguaranteed2

     21,916         456         44         1,543         23,959   

Home equity products

     16,162         234         -         355         16,751   

Residential construction

     953         42         6         290         1,291   
                                            

Total residential loans

     42,500         899         934         2,188         46,521   

Consumer loans:

              

Guaranteed student loans

     3,281         383         596         -         4,260   

Other direct

     1,692         15         5         10         1,722   

Indirect

     9,400         74         -         25         9,499   

Credit cards

     460         12         13         -         485   
                                            

Total consumer loans

     14,833         484         614         35         15,966   
                                            

Total LHFI

     $108,768         $1,532         $1,565         $4,110         $115,975   
                                            

1Includes $4 million in loans carried at fair value at December 31, 2010.

2Includes $488 million in loans carried at fair value at December 31, 2010.

3Total nonaccruing loans past due 90 days or more totaled $3.3 billion at December 31, 2010. Nonaccruing loans past due fewer than 90 days include modified nonaccrual loans reported as TDRs.

A loan is considered impaired when it is probable that the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the agreement. Large commercial nonaccrual loans and certain consumer, residential, and commercial loans whose terms have been modified in a TDR are individually evaluated for impairment. Smaller-balance homogeneous loans that are collectively evaluated for impairment are not included in the following tables. Additionally, the tables below exclude student loans and residential mortgages that were guaranteed by government agencies and for which there was nominal risk of principal loss.

 

     As of March 31, 2011  
(Dollars in millions)    Unpaid
Principal
Balance
    Amortized
Cost1
    Related
Allowance
    Average
Amortized
Cost
    Interest
Income
Recognized2
 

Impaired loans with no related allowance recorded:

          

Commercial loans:

          

Commercial & industrial

     $112        $102        $-        $104        $-   

Commercial real estate

     80        64        -        57        -   

Commercial construction

     133        119        -        109        1   
                                        

Total commercial loans

     325        285        -        270        1   

Impaired loans with an allowance recorded:

          

Commercial loans:

          

Commercial & industrial

     195        175        46        172        -   

Commercial real estate

     140        120        33        118        -   

Commercial construction

     454        392        114        390        1   
                                        

Total commercial loans

     789        687        193        680        1   

Residential loans:

          

Residential mortgages - nonguaranteed

     2,803        2,452        310        2,463        22   

Home equity products

     516        486        96        407        5   

Residential construction

     228        196        25        200        2   
                                        

Total residential loans

     3,547        3,134        431        3,070        29   

Consumer loans:

          

Other direct

     12        12        2        10        -   
                                        

Total impaired loans

     $4,673        $4,118        $626        $4,030        $31   
                                        

1Amortized cost reflects charge-offs that have been recognized plus other amounts that have been applied to reduce net book balance.

2Of the total interest income recognized for the three months ended March 31, 2011, cash basis interest income was $6 million.

 

     As of December 31, 2010  
(Dollars in millions)    Unpaid
Principal
Balance
     Amortized
Cost1
     Related
Allowance
 

Impaired loans with no related allowance recorded:

        

Commercial loans:

        

Commercial & industrial

     $86         $67         $-   

Commercial real estate

     110         86         -   

Commercial construction

     67         52         -   
                          

Total commercial loans

     263         205         -   

Impaired loans with an allowance recorded:

        

Commercial loans:

        

Commercial & industrial

     123         96         18   

Commercial real estate

     103         81         19   

Commercial construction

     673         524         138   
                          

Total commercial loans

     899         701         175   

Residential loans:

        

Residential mortgages - nonguaranteed

     2,785         2,467         309   

Home equity products

     503         503         93   

Residential construction

     226         196         26   
                          

Total residential loans

     3,514         3,166         428   

Consumer loans:

        

Other direct

     11         11         2   
                          

Total impaired loans

     $4,687         $4,083         $605   
                          

1Amortized cost reflects charge-offs that have been recognized plus other amounts that have been applied to reduce net book balance.

Nonperforming assets at March 31, 2011 and December 31, 2010 are shown in the following table:

 

(Dollars in millions)    March 31,
2011
    December 31,
2010
 

Nonperforming Assets

    

Nonaccrual/NPLs:

    

Commercial loans:

    

Commercial & industrial1

     $585        $584   

Commercial real estate

     435        342   

Commercial construction

     843        961   

Residential loans:

    

Residential mortgages - nonguaranteed2

     1,458        1,543   

Home equity products

     343        355   

Residential construction

     275        290   

Consumer loans:

    

Other direct

     11        10   

Indirect

     21        25   
                

Total nonaccrual/NPLs

     3,971        4,110   

OREO3

     534        596   

Other repossessed assets

     16        52   

Nonperforming LHFS

     47        -   
                

Total nonperforming assets

     $4,568        $4,758   
                

1Includes $4 million of loans carried at fair value at March 31, 2011 and December 31, 2010, respectively.

2Includes $19 million and $24 million of loans carried at fair value at March 31, 2011 and December 31, 2010, respectively.

3Does not include foreclosed real estate related to serviced loans insured by the FHA or the VA. Insurance proceeds due from the FHA and the VA are recorded as a receivable in other assets until the funds are received and the property is conveyed.

Allowance for Credit Losses (Tables)

The allowance for credit losses consists of the ALLL and the reserve for unfunded commitments. Activity in the allowance for credit losses is summarized in the table below:

 

     Three Months Ended
March 31
 
(Dollars in millions)    2011     2010  

Balance at beginning of period

     $3,032        $3,235   

Provision for loan losses

     451        877   

Provision/(benefit) for unfunded commitments

     (4     (15

Loan charge-offs

     (615     (862

Loan recoveries

     44        41   
                

Balance at end of period

     $2,908        $3,276   
                

Components:

    

ALLL

     $2,854        $3,176   

Unfunded commitments reserve1

     54        100   
                

Allowance for credit losses

     $2,908        $3,276   
                

1The unfunded commitments reserve is separately recorded in other liabilities in the Consolidated Balance Sheets.

Activity in the ALLL by segment is presented in the tables below:

 

     Three Months Ended March 31, 2011  
(Dollars in millions)    Commercial     Residential     Consumer     Total  

Balance at beginning of period

     $1,303        $1,498        $173        $2,974   

Provision for loan losses

     108        322        21        451   

Loan charge-offs

     (185     (385     (45     (615

Loan recoveries

     29        5        10        44   
                                

Balance at end of period

     $1,255        $1,440        $159        $2,854   
                                
     Three Months Ended March 31, 2010  
(Dollars in millions)    Commercial     Residential     Consumer     Total  

Balance at beginning of period

     $1,353        $1,592        $175        $3,120   

Provision for loan losses

     215        601        61        877   

Loan charge-offs

     (192     (608     (62     (862

Loan recoveries

     23        5        13        41   
                                

Balance at end of period

     $1,399        $1,590        $187        $3,176   
                                
The Company’s LHFI portfolio and related ALLL at March 31, 2011 and December 31, 2010, respectively, is shown in the tables below:

 

     As of March 31, 2011  
     Commercial      Residential      Consumer      Total  
(Dollars in millions)    Carrying
Value
     Associated
ALLL
     Carrying
Value
     Associated
ALLL
     Carrying
Value
     Associated
ALLL
     Carrying
Value
     Associated
ALLL
 

Individually evaluated

     $972         $193         $3,134         $431         $12         $2         $4,118         $626   

Collectively evaluated

     52,256         1,062         41,962         1,009         16,139         157         110,357         2,228   
                                                                       

Total evaluated

     53,228         1,255         45,096         1,440         16,151         159         114,475         2,854   

LHFI at fair value

     4         -         453         -         -         -         457         -   
                                                                       

Total LHFI

     $53,232         $1,255         $45,549         $1,440         $16,151         $159         $114,932         $2,854   
                                                                       
     As of December 31, 2010  
     Commercial      Residential      Consumer      Total  
(Dollars in millions)    Carrying
Value
     Associated
ALLL
     Carrying
Value
     Associated
ALLL
     Carrying
Value
     Associated
ALLL
     Carrying
Value
     Associated
ALLL
 

Individually evaluated

     $906         $175         $3,166         $428         $11         $2         $4,083         $605   

Collectively evaluated

     52,578         1,128         42,867         1,070         15,955         171         111,400         2,369   
                                                                       

Total evaluated

     53,484         1,303         46,033         1,498         15,966         173         115,483         2,974   

LHFI at fair value

     4         -         488         -         -         -         492         -   
                                                                       

Total LHFI

     $53,488         $1,303         $46,521         $1,498         $15,966         $173         $115,975         $2,974   
                                                                       
Goodwill and Other Intangible Assets (Tables)
Changes in the Carrying Amounts of Other Intangible Assets

Changes in the carrying amounts of other intangible assets for three months ended March 31 are as follows:

 

Core Deposit Core Deposit Core Deposit Core Deposit Core Deposit
(Dollars in millions)    Core Deposit
Intangibles
    MSRs
LOCOM
    MSRs
Fair Value
    Other     Total  

Balance, January 1, 2010

     $104        $604        $936        $67        $1,711   

Designated at fair value (transfers from amortized cost)

     -        (604     604        -        -   

Amortization

     (9     -        -        (3     (12

MSRs originated

     -        -        66        -        66   

Changes in fair value

          

Due to fair value election

     -        -        145        -        145   

Due to changes in inputs or assumptions 1

     -        -        (45     -        (45

Other changes in fair value 2

     -        -        (65     -        (65
                                        

Balance, March 31, 2010

     $95        $-        $1,641        $64        $1,800   
                                        

Balance, January 1, 2011

     $67        $-        $1,439        $65        $1,571   

Amortization

     (8     -        -        (3     (11

MSRs originated

     -        -        88        -        88   

Sale of MSRs

     -        -        (7     -        (7

Changes in fair value

          

Due to changes in inputs or assumptions 1

     -        -        70        -        70   

Other changes in fair value 2

     -        -        (52     -        (52
                                        

Balance, March 31, 2011

     $59        $-        $1,538        $62        $1,659   
                                        

1 Primarily reflects changes in discount rates and prepayment speed assumptions, due to changes in interest rates.

2 Represents changes due to the collection of expected cash flows, net of accretion, due to passage of time.

Certain Transfers of Financial Assets, Mortgage Servicing Rights and Variable Interest Entities (Tables)

The following tables present certain information related to the Company’s asset transfers in which it has continuing economic involvement for the three months ended March 31:

 

     Three Months Ended March 31, 2011  
(Dollars in millions)    Residential
Mortgage
Loans
     Commercial
and Corporate
Loans
     Student
Loans
     CDO
Securities
     Total  

Cash flows on interests held

     $15         $-         $-         $1         $16   

Servicing or management fees

     1         3         -         -         4   
     Three Months Ended March 31, 2010  
(Dollars in millions)    Residential
Mortgage
Loans
     Commercial
and Corporate
Loans
     Student
Loans
     CDO
Securities
     Total  

Cash flows on interests held

     $14         $1         $3         $1         $19   

Servicing or management fees

     1         3         -         -         4   

 

Portfolio balances and delinquency balances based on accruing loans 90 days or more past due and all nonaccrual loans as of March 31, 2011 and December 31, 2010, and net charge-offs related to managed portfolio loans (both those that are owned by the Company and those that have been transferred) for three months ended March 31, 2011 and 2010 are as follows:

 

     Principal Balance      Past Due      Net Charge-offs  
(Dollars in millions)    March 31
2011
     December 31
2010
     March 31
2011
     December 31
2010
     For the Three Months Ended
March 31
 
               2011      2010  

Type of loan:

                 

Commercial

     $53,232         $53,488         $1,884         $1,904         $156         $169   

Residential

     45,549         46,521         3,074         3,122         380         603   

Consumer

     16,151         15,966         671         649         35         49   
                                                     

Total loan portfolio

     114,932         115,975         5,629         5,675         571         821   

Managed securitized loans

                 

Commercial

     2,032         2,244         54         44         -         -   

Residential

     1,179         1,245         95         96         13         11   
                                                     

Total managed loans

     $118,143         $119,464         $5,778         $5,815         $584         $832   
                                                     

A summary of the key characteristics, inputs, and economic assumptions used to estimate the fair value of the Company’s MSRs as of March 31, 2011 and December 31, 2010, and the sensitivity of the fair values to immediate 10% and 20% adverse changes in those assumptions are as follows:

 

(Dollars in millions)    March 31, 2011     December 31, 2010  

Fair value of retained MSRs

     $1,538        $1,439   

Prepayment rate assumption (annual)

     10     12

Decline in fair value from 10% adverse change

     $60        $50   

Decline in fair value from 20% adverse change

     102        95   

Discount rate (annual)

     12     12

Decline in fair value from 10% adverse change

     $75        $68   

Decline in fair value from 20% adverse change

     143        130   

Weighted-average life (in years)

     6.8        6.2   

Weighted-average coupon

     5.3     5.4
Net Income/(Loss) Per Share (Tables)
Reconciliation of Net Income/(Loss) to Net Income/(Loss) Available to Common Shareholders

A reconciliation of the difference between average basic common shares outstanding and average diluted common shares outstanding for the three months ended March 31, 2011 and 2010 is included below. Additionally, included below is a reconciliation of net income/(loss) to net income/(loss) available to common shareholders.

 

     Three Months Ended
March 31
 
(In millions, except per share data)            2011                     2010          

Net income/(loss)

     $180        ($161

Series A preferred dividends

     (2     (2

U.S. Treasury preferred dividends and accretion of discount

     (66     (66

Accelerated accretion associated with repurchase of preferred stock issued to the U.S. Treasury

     (74     -   
                

Net income/(loss) available to common shareholders

     $38        ($229
                

Average basic common shares

     500        495   

Effect of dilutive securities:

    

Stock options

     1        1   

Restricted stock

     3        2   
                

Average diluted common shares

     504        498   
                

Net income/(loss) per average common share - diluted

     $0.08        ($0.46
                

Net income/(loss) per average common share - basic

     $0.08        ($0.46
                
Long-Term Debt and Capital (Tables)
The Company's Capital Ratios
The Company’s capital ratios as of March 31, 2011 and December 31, 2010 are noted below.

 

         As of March 31, 2011             As of December 31, 2010      
(Dollars in millions)    Amount      Ratio     Amount      Ratio  

SunTrust Banks, Inc.

          

Tier 1 common

     $11,811         9.05     $10,737         8.08

Tier 1 capital

     14,363         11.00        18,156         13.67   

Total capital

     18,178         13.92        21,967         16.54   

Tier 1 leverage

        8.72           10.94   

SunTrust Bank

          

Tier 1 capital

     $13,477         10.48     $13,120         10.05

Total capital

     16,782         13.05        16,424         12.58   

Tier 1 leverage

        8.50           8.33   
Employee Benefit Plans (Tables)
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

 

         Three Months Ended March 31      
     2011     2010  

Dividend yield

     0.12     0.17

Expected stock price volatility

     34.54        56.23   

Risk-free interest rate (weighted average)

     2.72        2.84   

Expected life of options

     6 years        6 years   

Stock-based compensation expense recognized in noninterest expense was as follows:

 

     Three Months Ended March 31  
(Dollars in millions)    2011      2010  

Stock-based compensation expense:

     

Stock options

     $3         $4   

Restricted stock

     9         12   
                 

Total stock-based compensation expense

     $12         $16   
                 

 

     Three Months Ended March 31  
     2011     2010  
(Dollars in millions)    Retirement
Benefits
    Other
Postretirement
Benefits
    Retirement
Benefits
    Other
Postretirement
Benefits
 

Service cost

     $18        $-        $17        $-   

Interest cost

     32        3        32        3   

Expected return on plan assets

     (47     (2     (45     (2

Amortization of prior service cost

     (5     -        (3     -   

Recognized net actuarial loss

     10        -        15        -   
                                

Net periodic benefit cost

     $8        $1        $16        $1   
                                
Derivative Financial Instruments (Tables)

The tables below present the Company’s derivative positions at March 31, 2011 and December 31, 2010. The notional amounts in the tables are presented on a gross basis and have been classified within Asset Derivatives or Liability Derivatives based on the estimated fair value of the individual contract at March 31, 2011 and December 31, 2010. For purposes of the table below, the gross positive and gross negative fair value amounts associated with the respective notional amounts are presented without consideration of any netting agreements. For contracts constituting a combination of options that contain a written option and a purchased option (such as a collar), the notional amount of each option is presented separately, with the purchased notional amount generally being presented as an Asset Derivative and the written notional amount being presented as a Liability Derivative. The fair value of a combination of options is generally presented as a single value with the purchased notional amount if the combined fair value is positive, and with the written notional amount, if the combined fair value is negative.

     As of March 31, 2011  
     Asset Derivatives      Liability Derivatives  
(Dollars in millions)      Balance Sheet  
Classification
       Notional  
Amounts
      Fair Value          Balance Sheet  
Classification
       Notional  
Amounts
      Fair Value    

Derivatives designated in cash flow hedging relationships 5

               

Equity contracts hedging:

               

Securities AFS

     Trading assets         $1,547        $-         Trading liabilities         $1,547        $161   

Interest rate contracts hedging:

               

Floating rate loans

     Trading assets         13,400        858         Trading liabilities         950        20   
                                       

Total

        14,947        858            2,497        181   
                                       

Derivatives not designated as hedging instruments 6

  

            

Interest rate contracts covering:

               

Fixed rate debt

     Trading assets         1,274        43         Trading liabilities         60        4   

MSRs

     Other assets         24,335        117         Other liabilities         4,075        25   

LHFS, IRLCs, LHFI-FV

     Other assets         2,661  3      7         Other liabilities         2,144        9   

Trading activity

     Trading assets         140,528  1      3,743         Trading liabilities         110,135        3,433   

Foreign exchange rate contracts covering:

               

Foreign-denominated debt and commercial loans

     Trading assets         1,151        82         Trading liabilities         511        114   

Trading activity

     Trading assets         5,898        197         Trading liabilities         5,953        189   

Credit contracts covering:

               

Loans

     Trading assets         30        -         Trading liabilities         207        3   

Trading activity

     Trading assets         1,131  2      42         Trading liabilities         1,108  2      38   

Equity contracts - Trading activity

     Trading assets         5,775  1      669         Trading liabilities         9,007        827   

Other contracts:

               

IRLCs and other

     Other assets         2,205        24         Other liabilities         625  4      26  4 

Trading activity

     Trading assets         194        33         Trading liabilities         195        33   
                                       

Total

        185,182        4,957            134,020        4,701   
                                       

Total derivatives

        $200,129        $5,815            $136,517        $4,882   
                                       

1 Amounts include $24.7 billion and $0.6 billion of notional related to interest rate futures and equity futures, respectively. These futures contracts settle in cash daily and therefore no derivative asset or liability is recorded.

2 Asset and liability amounts include $1 million and $10 million, respectively, of notional from purchased and written interest rate swap risk participation agreements, respectively, which notional is calculated as the notional of the interest rate swap participated adjusted by the relevant risk weighted assets conversion factor.

3 Amount includes $0.4 billion of notional amounts related to interest rate futures. These futures contracts settle in cash daily and therefore no derivative asset or liability is recorded.

4 Includes a $23 million derivative liability recorded in other liabilities in the Consolidated Balance Sheets, related to a notional amount of $134 million. The notional amount is based on the number of Visa Class B shares, 3.2 million, the conversion ratio from Visa Class B common stock to Visa Class A common stock, and the Visa Class A common stock price at the derivative inception date of May 28, 2009. This derivative was established upon the sale of Visa Class B shares in the second quarter of 2009 as discussed in Note 18, “Reinsurance Arrangements and Guarantees,” to the Consolidated Financial Statements in the Company’s 2010 Annual Report on Form 10-K.

5 See “Cash Flow Hedges” in this Note for further discussion.

6 See “Economic Hedging and Trading Activities” in this Note for further discussion.

 

The table below presents the Company’s derivative positions at December 31, 2010.

 

     As of December 31, 2010  
     Asset Derivatives      Liability Derivatives  
(Dollars in millions)    Balance  Sheet
Classification
     Notional
Amounts
    Fair Value      Balance  Sheet
Classification
     Notional
Amounts
    Fair Value  

Derivatives designated in cash flow hedging relationships 5

               

Equity contracts hedging:

               

Securities AFS

     Trading assets         $1,547        $-         Trading liabilities         $1,547        $145   

Interest rate contracts hedging:

               

Floating rate loans

     Trading assets         15,350        947         Trading liabilities         500        10   
                                       

Total

        16,897        947            2,047        155   
                                       

Derivatives not designated as hedging instruments 6

               

Interest rate contracts covering:

               

Fixed rate debt

     Trading assets         1,273        41         Trading liabilities         60        4   

Corporate bonds and loans

        -        -         Trading liabilities         5        -   

MSRs

     Other assets         20,474        152         Other liabilities         6,480        73   

LHFS, IRLCs, LHFI-FV

     Other assets         7,269  3      92         Other liabilities         2,383        20   

Trading activity

     Trading assets         132,286  1      4,211         Trading liabilities         105,926        3,884   

Foreign exchange rate contracts covering:

               

Foreign-denominated debt and commercial loans

     Trading assets         1,083        17         Trading liabilities         495        128   

Trading activity

     Trading assets         2,691        92         Trading liabilities         2,818        91   

Credit contracts covering:

               

Loans

     Trading assets         15        -         Trading liabilities         227        2   

Trading activity

     Trading assets         1,094  2      39         Trading liabilities         1,039  2      34   

Equity contracts - Trading activity

     Trading assets         5,010  1      583         Trading liabilities         8,012        730   

Other contracts:

               

IRLCs and other

     Other assets         2,169        18         Other liabilities         2,196  4      42  4 

Trading activity

     Trading assets         111        11         Trading liabilities         111        11   
                                       

Total

        173,475        5,256            129,752        5,019   
                                       

Total derivatives

        $190,372        $6,203            $131,799        $5,174   
                                       

1 Amounts include $25.0 billion and $0.5 billion of notional related to interest rate futures and equity futures, respectively. These futures contracts settle in cash daily and therefore no derivative asset or liability is recorded.

2 Asset and liability amounts include $1 million and $8 million, respectively, of notional from purchased and written interest rate swap risk participation agreements, respectively, which notional is calculated as the notional of the interest rate swap participated adjusted by the relevant risk weighted assets conversion factor.

3 Amount includes $1.4 billion of notional amounts related to interest rate futures. These futures contracts settle in cash daily and therefore no derivative asset or liability is recorded.

4 Includes a $23 million derivative liability recorded in other liabilities in the Consolidated Balance Sheets, related to a notional amount of $134 million. The notional amount is based on the number of Visa Class B shares, 3.2 million, the conversion ratio from Visa Class B common stock to Visa Class A common stock, and the Visa Class A common stock price at the derivative inception date of May 28, 2009. This derivative was established upon the sale of Visa Class B shares in the second quarter of 2009 as discussed in Note 18, “Reinsurance Arrangements and Guarantees,” to the Consolidated Financial Statements in the Company’s 2010 Annual Report on Form 10-K.

5 See “Cash Flow Hedges” in this Note for further discussion.

6 See “Economic Hedging and Trading Activities” in this Note for further discussion.

The impacts of derivative financial instruments on the Consolidated Statements of Income/(Loss) and the Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2011 and 2010 are presented below. The impacts are segregated between those derivatives that are designated in hedging relationships and those that are used for economic hedging or trading purposes, with further identification of the underlying risks in the derivatives and the hedged items, where appropriate. The tables do not disclose the financial impact of the activities that these derivative instruments are intended to hedge, for both economic hedges and those instruments designated in formal, qualifying hedging relationships.

 

    Three Months Ended March 31, 2011  

(Dollars in millions)

Derivatives in cash flow hedging relationships

  Amount of pre-tax loss recognized in
OCI on Derivatives
(Effective Portion)
    Classification of gain reclassified
from AOCI into Income
(Effective Portion)
    Amount of pre-tax gain reclassified
from AOCI into Income
(Effective Portion) 1
 

Equity contracts hedging:

     

Securities AFS

    ($16       $-   

Interest rate contracts hedging:

     

Floating rate loans

    (27     Interest and fees on loans        113   
                 

Total

    ($43       $113   
                 

 

(Dollars in millions)

Derivatives not designated as hedging instruments

 

Classification of gain/(loss) recognized in Income on

Derivatives

  Amount of gain/(loss) recognized in
Income on Derivatives
 

Interest rate contracts covering:

   

Fixed rate debt

  Trading account profits/(losses) and commissions     $1   

MSRs

  Mortgage servicing related income     (43

LHFS, IRLCs, LHFI-FV

  Mortgage production related loss     (26

Trading activity

  Trading account profits/(losses) and commissions     4   

Foreign exchange rate contracts covering:

   

Foreign-denominated debt and commercial loans

  Trading account profits/(losses) and commissions     81   

Trading activity

  Trading account profits/(losses) and commissions     (1

Credit contracts covering:

   

Loans

  Trading account profits/(losses) and commissions     (1

Other

  Trading account profits/(losses) and commissions     4   

Equity contracts - trading activity

  Trading account profits/(losses) and commissions     3   

Other contracts:

   

IRLCs

  Mortgage production related loss     36   
         

Total

      $58   
         

1 During the three months ended March 31, 2011, the Company reclassified $41 million in pre-tax gains from AOCI into net interest income. These gains related to hedging relationships that have been previously terminated or de-designated.

 

 

    Three Months Ended March 31, 2010  

(Dollars in millions)

Derivatives in cash flow hedging relationships

  Amount of pre-tax gain recognized in
OCI on Derivatives
(Effective Portion)
    Classification of gain reclassified from
AOCI into Income
(Effective Portion)
    Amount of pre-tax gain reclassified
from AOCI into Income
(Effective Portion) 1
 

Equity contracts hedging:

     

Securities AFS

    $61          $-   

Interest rate contracts hedging:

     

Floating rate loans

    288        Interest and fees on loans        127   
                 

Total

    $349          $127   
                 

 

(Dollars in millions)

Derivatives not designated as hedging instruments

 

Classification of gain/(loss) recognized in Income on

Derivatives

  Amount of gain/(loss) recognized in
Income on Derivatives
 

Interest rate contracts covering:

   

Fixed rate debt

  Trading account profits/(losses) and commissions     $46   

Corporate bonds and loans

  Trading account profits/(losses) and commissions     (1

MSRs

  Mortgage servicing related income     76   

LHFS, IRLCs, LHFI-FV

  Mortgage production related income     (70

Trading activity

  Trading account profits/(losses) and commissions     30   

Foreign exchange rate contracts covering:

   

Foreign-denominated debt and commercial loans

  Trading account profits/(losses) and commissions     (96

Trading activity

  Trading account profits/(losses) and commissions     7   

Equity contracts - trading activity

  Trading account profits/(losses) and commissions     7   

Other contracts:

   

IRLCs

  Mortgage production related income     92   
         

Total

      $91   
         

1 During the three months ended March 31, 2010, the Company reclassified $29 million in pre-tax gains from AOCI into net interest income. These gains related to hedging relationships that have been previously terminated or de-designated.

Fair Value Election and Measurement (Tables)

The following tables present certain information regarding assets and liabilities measured at fair value on a recurring basis and the changes in fair value for those specific financial instruments in which fair value has been elected.

Recurring Fair Value Measurements

 

     Fair Value Measurements at
March 31, 2011
Using
 
(Dollars in millions)    Assets/Liabilities      Quoted
Prices In
Active
Markets
for
Identical
Assets/Liabilities
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Assets

           

Trading assets

           

U.S. Treasury securities

     $226         $226         $-         $-   

Federal agency securities

     438         -         438         -   

U.S. states and political subdivisions

     156         -         156         -   

MBS - agency

     221         -         221         -   

MBS - private

     2         -         -         2   

CDO securities

     45         -         3         42   

ABS

     37         -         32         5   

Corporate and other debt securities

     716         -         716         -   

CP

     53         -         53         -   

Equity securities

     156         2         98         56   

Derivative contracts

     2,758         222         2,536         -   

Trading loans

     1,481         -         1,481         -   
                                   

Total trading assets

     6,289         450         5,734         105   
                                   

Securities AFS

           

U.S. Treasury securities

     222         222         -         -   

Federal agency securities

     3,816         -         3,816         -   

U.S. states and political subdivisions

     551         -         478         73   

MBS - agency

     17,995         -         17,995         -   

MBS - private

     338         -         -         338   

CDO securities

     77         -         77         -   

ABS

     720         -         700         20   

Corporate and other debt securities

     56         -         51         5   

Coke common stock

     1,990         1,990         -         -   

Other equity securities

     804         -         114         690  3 
                                   

Total securities AFS

     26,569         2,212         23,231         1,126   
                                   

LHFS

           

Residential loans

     1,513         -         1,496         17   

Corporate and other loans

     324         -         324         -   
                                   

Total LHFS

     1,837         -         1,820         17   
                                   

LHFI

     457         -         -         457   

Other intangible assets 2

     1,538         -         -         1,538   

Other assets 1

     136         -         112         24   

Liabilities

           

Trading liabilities

           

U.S. Treasury securities

     540         540         -         -   

Corporate and other debt securities

     277         -         277         -   

Equity securities

     1         1         -         -   

Derivative contracts

     1,913         166         1,586         161   
                                   

Total trading liabilities

     2,731         707         1,863         161   
                                   

Brokered deposits

     1,181         -         1,181         -   

Long-term debt

     2,854         -         2,854         -   

Other liabilities 1

     48         -         22         26   

 

1 

These amounts include IRLCs and derivative financial instruments entered into by the Mortgage line of business to hedge its interest rate risk along with a derivative associated with the Company’s sale of Visa shares during ended December 31, 2009.

2 

This amount includes MSRs carried at fair value.

3 

Includes $298 million of FHLB of Atlanta stock stated at par value and $391 million of Federal Reserve FHLB of Atlanta stock stated at par value.

 

    Fair Value Measurements at
December 31, 2010
Using
 
(Dollars in millions)   Assets/Liabilities     Quoted
Prices In
Active
Markets
for
Identical
Assets/Liabilities
(Level 1)
    Significant
Other
Observable
Inputs
(Level 2)
    Significant
Unobservable
Inputs
(Level 3)
 

Assets

       

Trading assets

       

U.S. Treasury securities

    $187        $187        $-        $-   

Federal agency securities

    361        -        361        -   

U.S. states and political subdivisions

    123        -        123        -   

MBS - agency

    301        -        301        -   

MBS - private

    15        -        9        6   

CDO securities

    55        -        2        53   

ABS

    59        -        32        27   

Corporate and other debt securities

    743        -        743        -   

CP

    14        -        14        -   

Equity securities

    221        -        98        123   

Derivative contracts

    2,743        166        2,577        -   

Trading loans

    1,353        -        1,353        -   
                               

Total trading assets

    6,175        353        5,613        209   
                               

Securities AFS

       

U.S. Treasury securities

    5,516        5,516        -        -   

Federal agency securities

    1,895        -        1,895        -   

U.S. states and political subdivisions

    579        -        505        74   

MBS - agency

    14,358        -        14,358        -   

MBS - private

    347        -        -        347   

CDO securities

    50        -        50        -   

ABS

    808        -        788        20   

Corporate and other debt securities

    482        -        477        5   

Coke common stock

    1,973        1,973        -        -   

Other equity securities

    887        -        197        690  3 
                               

Total securities AFS

    26,895        7,489        18,270        1,136   
                               

LHFS

       

Residential loans

    2,847        -        2,845        2   

Corporate and other loans

    321        -        316        5   
                               

Total LHFS

    3,168        -        3,161        7   
                               

LHFI

    492        -        -        492   

Other intangible assets 2

    1,439        -        -        1,439   

Other assets 1

    241        -        223        18   

Liabilities

       

Trading liabilities

       

U.S. Treasury securities

    439        439        -        -   

Corporate and other debt securities

    398        -        398        -   

Derivative contracts

    1,841        120        1,576        145   
                               

Total trading liabilities

    2,678        559        1,974        145   
                               

Brokered deposits

    1,213        -        1,213        -   

Long-term debt

    2,837        -        2,837        -   

Other liabilities 1

    114        -        72        42   

 

1 

These amounts include IRLCs and derivative financial instruments entered into by the Mortgage line of business to hedge its interest rate risk along with a derivative associated with the Company’s sale of Visa shares during the year ended December 31, 2009.

2 

This amount includes MSRs carried at fair value.

3 

Includes $298 million of FHLB of Atlanta stock stated at par value and $391 million of Federal Reserve Bank FHLB of Atlanta stock stated at par value.

The following tables present the difference between the aggregate fair value and the aggregate unpaid principal balance of trading assets, LHFI, LHFS, brokered deposits, and long-term debt instruments for which the FVO has been elected. For LHFI and LHFS for which the FVO has been elected, the tables also include the difference between aggregate fair value and the aggregate unpaid principal balance of loans that are 90 days or more past due, as well as loans in nonaccrual status.

 

(Dollars in millions)   Aggregate
Fair Value
March  31, 2011
    Aggregate
Unpaid Principal
Balance under FVO

March 31, 2011
    Fair  Value
Over/(Under)
Unpaid Principal
 

Trading loans

    $1,481        $1,456        $25   

LHFI

    432        485        (53

Past due loans of 90 days or more

    2        4        (2

Nonaccrual loans

    23        42        (19

LHFS

    1,807        1,793        14   

Past due loans of 90 days or more

    15        15        -   

Nonaccrual loans

    15        28        (13

Brokered deposits

    1,181        1,142        39   

Long-term debt

    2,854        2,753        101   
(Dollars in millions)   Aggregate
Fair Value
December 31, 2010
    Aggregate
Unpaid Principal
Balance under FVO
December 31, 2010
    Fair Value
Over/(Under)
Unpaid Principal
 

Trading loans

    $1,353        $1,320        $33   

LHFI

    462        517        (55

Past due loans of 90 days or more

    2        4        (2

Nonaccrual loans

    28        54        (26

LHFS

    3,160        3,155        5   

Past due loans of 90 days or more

    2        2        -   

Nonaccrual loans

    6        25        (19

Brokered deposits

    1,213        1,188        25   

Long-term debt

    2,837        2,753        84   

The following tables present the change in fair value during the three months ended March 31, 2011 and 2010 of financial instruments for which the FVO has been elected. The tables do not reflect the change in fair value attributable to the related economic hedges the Company used to mitigate the market-related risks associated with the financial instruments. The changes in the fair value of economic hedges were also recorded in trading account profits/(losses) and commissions, mortgage production related loss, or mortgage servicing related income/(loss), as appropriate, and are designed to partially offset the change in fair value of the financial instruments referenced in the tables below. The Company’s economic hedging activities are deployed at both the instrument and portfolio level.

     Fair Value Gain/(Loss) for the Three Months Ended
March 31, 2011, for Items Measured at Fair Value Pursuant
to Election of the FVO
 
(Dollars in millions)    Trading
Account
Profits/(Losses)

and
Commissions
    Mortgage
Production
Related
Income 2
    Mortgage
Servicing
Related
Income
     Total
Changes in
Fair Values

Included in
Current-
Period
Earnings1
 

Assets

         

Trading loans

     $7        $-        $-         $7   

LHFS

     2        30        -         32   

LHFI

     3        (4     -         (1

MSRs

     -        2        17         19   

Liabilities

         

Brokered deposits

     (11     -        -         (11

Long-term debt

     (17     -        -         (17

1 Changes in fair value for the three months ended March 31, 2011 exclude accrued interest for the periods then ended. Interest income or interest expense on trading assets, LHFI, LHFS, brokered deposits and long-term debt that have been elected to be carried at fair value are recorded in interest income or interest expense in the Consolidated Statements of Income/(Loss) based on their contractual coupons. Certain trading assets do not have a contractually stated coupon and, for these securities, the Company records interest income based on the effective yield calculated upon acquisition of the securities.

2 For the three months ended March 31, 2011, income related to LHFS includes $86 million related to MSRs recognized upon the sale of loans reported at fair value. For the three months ended March 31, 2011, income related to MSRs includes $2 million of MSRs recognized upon the sale of loans reported at LOCOM. These MSRs are included in the table since the Company elected to report MSRs recognized in 2009 using the fair value method. Previously, MSRs were reported under the amortized cost method.

 

     Fair Value Gain/(Loss) for the Three Months Ended
March 31, 2010, for Items Measured at Fair Value Pursuant
to Election of the FVO
 
(Dollars in millions)    Trading
Account

Profits/(Losses)
and
Commissions
    Mortgage
Production
Related
Income 2
     Mortgage
Servicing
Related
Income
    Total
Changes in

Fair  Values
Included  in
Current-
Period
Earnings1
 

Assets

         

Trading loans

     $1        $-         $-        $1   

LHFS

     11        92         -        103   

Other intangible assets

     -        4         (109     (105

Liabilities

         

Brokered deposits

     (31     -         -        (31

Long-term debt

     (86     -         -        (86

1 Changes in fair value for the quarter ended March 31, 2010 exclude accrued interest for the periods then ended. Interest income or interest expense on trading assets, LHFI, LHFS, brokered deposits and long-term debt that have been elected to be carried at fair value are recorded in interest income or interest expense in the Consolidated Statements of Income/(Loss) based on their contractual coupons. Certain trading assets do not have a contractually stated coupon and, for these securities, the Company records interest income based on the effective yield calculated upon acquisition of those securities.

2 For the quarter ended March 31, 2010, income related to LHFS, includes $62 million related to MSRs recognized upon the sale of loans reported at fair value. For the quarter ended March 31, 2010, income related to MSRs includes $4 million of MSRs recognized upon the sale of loans reported at LOCOM. These MSRs are included in the table since the Company elected to report MSRs recognized in 2009 using the fair value method. Previously, MSRs were reported under the amortized cost method.

The following tables show a reconciliation of the beginning and ending balances for fair valued assets and liabilities measured on a recurring basis using significant unobservable inputs (other than MSRs which are disclosed in Note 5, “Goodwill and Other Intangible Assets”, to the Consolidated Financial Statements). Transfers into and out of the fair value hierarchy levels are assumed to be as of the end of the quarter in which the transfer occurred. None of the transfers into or out of level 3 have been the result of using alternative valuation approaches to estimate fair values.

 

Fair Value Measurements  

Using Significant Unobservable Inputs

 
(Dollars in millions)    Beginning
balance
January 1,
2011
    Included in
earnings
    OCI     Sales     Settlements     Transfers
to/from  other

balance sheet
line items
    Transfers
into
Level 3
     Transfers
out of
Level 3
    Fair value
March 31,
2011
    Change in unrealized
gains/(losses)

included in earnings
for the three months
ended March 31, 2011
related to financial
assets still held at
March 31, 2011
 

Assets

                     

Trading assets

                     

MBS - private

     $6        $2        $-        ($5     ($1     $-        $-         $-        $2        $-   

CDO securities

     53        31  5      -        (21     (1     (20     -         -        42        18  5 

ABS

     27        9  5      -        (31     -        -        -         -        5        2  5 

Equity securities

     123        8  5      -        -        (75     -        -         -        56        2   
                                                                                 

Total trading assets

     209        50  1      -        (57     (77     (20     -         -        105        22  1 
                                                                                 

Securities AFS

                     

U.S. states and political subdivisions

     74        -        -        -        (1     -        -         -        73        -   

MBS - private

     347        (1     18        -        (26     -        -         -        338        (1

ABS

     20        -        2        -        (2     -        -         -        20        -   

Corporate and other debt securities

     5        -        -        -        -        -        -         -        5        -   

Other equity securities

     690        -        -        -        -        -        -         -        690        -   
                                                                                 

Total securities AFS

     1,136        (1 2      20        -        (29     -        -         -        1,126        (1 ) 2 
                                                                                 

LHFS

                     

Residential loans

     2        (1 3      -        (2     (1     9        11         (1     17        (3

Corporate and other loans

     5        (1 7      -        -        -        (4     -         -        -        -   

LHFI

     492        (1 4      -        -        (23     (11     -         -        457        (2 ) 4 

Other assets/(liabilities), net

     (24     36  3      -        -        -        (14     -         -        (2     36  3 

Liabilities

                     

Trading liabilities

     (145     -        (16 ) 6      -        -        -        -         -        (161     -   

1 Amounts included in earnings are recorded in trading account profits/(losses) and commissions.

2 Amounts included in earnings are recorded in net securities gains.

3 Amounts included in earnings are net of issuances, fair value changes, and expirations and are recorded in mortgage production related income.

4 Amounts are generally included in mortgage production related income, however, the mark on certain fair value loans is included in trading account profits/(losses) and commissions.

5 Amounts included in earnings do not include losses accrued as a result of the ARS settlement discussed in Note 14, “Contingencies,” to the Consolidated Financial Statements.

6 Amount recorded in OCI is the effective portion of the cash flow hedges related to the Company’s probable forecasted sale of its shares of Coke common stock as discussed in Note 11, “Derivative Financial Instruments,” to the Consolidated Financial Statements.

7 Amounts included in earnings are recorded in other noninterest income.

 

Fair Value Measurements

Using Significant Unobservable Inputs

 
(Dollars in millions)   Ending
balance
December 31
2009
    Reclassifications     Beginning
balance
January 1
2010
    Included in
earnings
    Other
comprehensive
income
    Purchases,
sales,
issuances,
settlements,

maturities
paydowns, net
    Transfers
to/from other
balance sheet
line items
    Transfers
into
Level 3
    Transfers
out of
Level 3
    Fair value
March 31,
2010
    Change in  unrealized
gains/(losses)
included in earnings

for the three months
ended March 31, 2010
related to financial
assets still held
at March 31, 2010
 

Assets

                     

Trading assets

                     

U.S. states and political subdivisions

    $7        $-        $7        $-        $-        ($1     $-        $-        $-        $6        $-   

MBS - private

    14        (8     6        -        -        (1     -        -        -        5        -   

CDO securities

    175        -        175        11  5      -        (27     -        -        -        159        5   

ABS

    -        51        51        4  5      -        (4     -        -        -        51        3   

Corporate and other debt securities

    25        (25     -        -        -        -        -        -        -        -        -   

Equity securities

    151        -        151        6  5      -        (12     -        -        -        145        5   

Derivative contracts

    -        -        -        7        15  6      -        -        -        -        22        -   

Other

    18        (18     -        -        -        -        -        -        -        -        -   
                                                                                       

Total trading assets

    390        -        390        28  1      15        (45     -        -        -        388        13  1 
                                                                                       

Securities AFS

                     

U.S. states and political subdivisions

    132        -        132        -        -        (1     -        -        -        131        -   

MBS - private

    407        (29     378        (1     17        (25     -        -        -        369        (1

ABS

    -        102        102        1  5      (8     13        -        -        -        108        -   

Corporate and other debt securities

    78        (73     5        -        -        -        -        -        -        5        -   

Other equity securities

    705        -        705        -        -        -        -        -        -        705        -   
                                                                                       

Total securities AFS

    1,322        -        1,322        -  2      9        (13     -        -        -        1,318        (1 2 
                                                                                       

LHFS

    151        (151     -        -        -        -        -        -        -        -        -   

Residential loans

    -        142        142        (1 3      -        (19     10        20        -        152        (8 3 

Corporate and other loans

    -        9        9        -        -        -        -        -        -        9        -   

LHFI

    449        -        449        -        -        (13     (13     -        (1     422        2  4 

Other assets/(liabilities), net

    (35     -        (35     92  3      -        -        (67     -        -        (10     -   

Liabilities

                     

Trading liabilities

                     

Derivative contracts

    (46     -        (46     -        46  6      -        -        -        -        -        -   

1 Amounts included in earnings are recorded in trading account profits/(losses) and commissions.

2 Amounts included in earnings are recorded in net securities gains/(losses).

3 Amounts included in earnings are net of issuances, fair value changes, and expirations and are recorded in mortgage production related income.

4 Amounts are generally included in mortgage production related income. The mark on these loans is included in trading account profits and commissions.

5 Amounts included in earnings do not include losses accrued as a result of the ARS settlement discussed in Note 14, “Contingencies,” to the Consolidated Financial Statements.

6 Amount recorded in OCI is the effective portion of the cash flow hedges related to the Company’s probable forecasted sale of its shares of Coke stock as discussed in Note 11, “Derivative Financial Instruments,” to the Consolidated Financial Statements.

The following tables present the change in carrying value of those assets measured at fair value on a non-recurring basis, for which impairment was recognized. The table does not reflect the change in fair value attributable to any related economic hedges the Company may have used to mitigate the interest rate risk associated with LHFS and MSRs. The Company’s economic hedging activities for LHFS and MSRs are deployed at the portfolio level.

 

            Fair Value Measurement at
March 31, 2011
Using
               
(Dollars in millions)    Net
Carrying
Value
     Quoted Prices in
Active Markets
for Identical
Assets/Liabilities
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
            Valuation
Allowance
 
 

LHFS

     $328         $-         $74         $254            $-   

LHFI

     141         -         -         141            (31

OREO

     534         -         495         39            (107

Other Assets

     63         -         7         56            (2
            Fair Value Measurement at
December 31, 2010,
Using
               
(Dollars in millions)    Net
Carrying
Value
     Quoted Prices in
Active Markets
for Identical
Assets/Liabilities
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
            Valuation
Allowance
 
 

LHFS

     $333         $-         $142         $191            $-   

LHFI

     85         -         -         85            (15

OREO

     596         -         553         43            (116

Affordable Housing

     357         -         -         357            -   

Other Assets

     130         -         90         40            (20

The carrying amounts and fair values of the Company’s financial instruments at March 31, 2011 and December 31, 2010 were as follows:

 

     March 31, 2011     December 31, 2010  
(Dollars in millions)    Carrying
Amount
    Fair
Value
    Carrying
Amount
    Fair
Value
 

Financial assets

        

Cash and cash equivalents

   $ 6,217      $ 6,217  (a)    $ 5,378      $ 5,378  (a) 

Trading assets

     6,289        6,289  (b)      6,175        6,175  (b) 

Securities AFS

     26,569        26,569  (b)      26,895        26,895  (b) 

LHFS

     2,165        2,165  (c)      3,501        3,501  (c) 

LHFI

     114,932        114,932        115,975        115,975   

Interest/credit adjustment on LHFI

     (2,854     (3,854     (2,974     (3,823
                                

LHFI, as adjusted for interest/credit risk

     112,078        111,078  (d)      113,001        112,152  (d) 

Market risk/liquidity adjustment on LHFI

     -        (3,767     -        (3,962
                                

LHFI, fully adjusted

   $ 112,078      $ 107,311  (d)    $ 113,001      $ 108,190  (d) 

Financial liabilities

        

Consumer and commercial deposits

   $ 121,559      $ 121,844  (e)    $ 120,025      $ 120,368  (e) 

Brokered deposits

     2,369        2,391  (f)      2,365        2,381  (f) 

Foreign deposits

     57        57  (f)      654        654  (f) 

Short-term borrowings

     6,121        6,117  (f)      5,821        5,815  (f) 

Long-term debt

     14,663        14,351  (f)      13,648        13,191  (f) 

Trading liabilities

     2,731        2,731  (b)      2,678        2,678  (b) 

The following methods and assumptions were used by the Company in estimating the fair value of financial instruments:

 

  (a)

Cash and cash equivalents are valued at their carrying amounts reported in the balance sheet, which are reasonable estimates of fair value due to the relatively short period to maturity of the instruments.

 

  (b)

Securities AFS, trading assets, and trading liabilities that are classified as level 1 are valued based on quoted market prices. For those instruments classified as level 2 or level 3, refer to the respective valuation discussions within this footnote.

 

  (c)

LHFS are generally valued based on observable current market prices or, if quoted market prices are not available, on quoted market prices of similar instruments. In instances when significant valuation assumptions are not readily observable in the market, instruments are valued based on the best available data in order to approximate fair value. This data may be internally-developed and considers risk premiums that a market participant would require under then-current market conditions. Refer to the LHFS section within this footnote for further discussion of the LHFS carried at fair value.

 

  (d)

LHFI fair values are based on a hypothetical exit price, which does not represent the estimated intrinsic value of the loan if held for investment. The assumptions used are expected to approximate those that a market participant purchasing the loans would use to value the loans, including a market risk premium and liquidity discount. Estimating the fair value of the loan portfolio when loan sales and trading markets are illiquid, or for certain loan types, nonexistent, requires significant judgment. Therefore, the estimated fair value can vary significantly depending on a market participant’s ultimate considerations and assumptions. The final value yields a market participant’s expected return on investment that is indicative of the current market conditions, but it does not take into consideration the Company’s estimated value from continuing to hold these loans or its lack of willingness to transact at these estimated values.

The Company estimated fair value based on estimated future cash flows discounted, initially, at current origination rates for loans with similar terms and credit quality, which derived an estimated value of 99% on the loan portfolio’s net carrying value as of March 31, 2011 and December 31, 2010. The value derived from origination rates likely does not represent an exit price; therefore, an incremental market risk and liquidity discount was subtracted from the initial value as of March 31, 2011 and December 31, 2010, respectively. The discounted value is a function of a market participant’s required yield in the current environment and is not a reflection of the expected cumulative losses on the loans. Loan prepayments are used to adjust future cash flows based on historical experience and prepayment model forecasts. The value of related accrued interest on loans approximates fair value; however, it is not included in the carrying amount or fair value of loans. The value of long-term customer relationships is not permitted under current U.S. GAAP to be included in the estimated fair value.

 

  (e)

Deposit liabilities with no defined maturity such as demand deposits, NOW/money market accounts, and savings accounts have a fair value equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for CDs are estimated using a discounted cash flow calculation that applies current interest rates to a schedule of aggregated expected maturities. The assumptions used in the discounted cash flow analysis are expected to approximate those that market participants would use in valuing deposits. The value of long-term relationships with depositors is not taken into account in estimating fair values.

 

  (f)

Fair values for foreign deposits, certain brokered deposits, short-term borrowings, and certain long-term debt are based on quoted market prices for similar instruments or estimated using discounted cash flow analysis and the Company’s current incremental borrowing rates for similar types of instruments. For brokered deposits and long-term debt that the Company carries at fair value, refer to the respective valuation sections within this footnote.

Reinsurance Arrangements and Guarantees (Tables)
The composition of the remaining outstanding balance by vintage and type of buyer as of March 31, 2011 is shown in the following table.

 

     Remaining Outstanding Balance by Year of Sale  
(Dollars in billions)        2005              2006              2007              2008              2009              2010              2011              Total      

GSE

     $5.2         $6.3         $12.2         $13.6         $29.4         $17.6         $5.5         $89.8   

Ginnie Mae

     0.8         0.7         0.7         3.2         6.3         3.9         0.8         16.4   

Non-agency

     6.1         6.2         3.7         -         -         -         -         16.0   
                                                                       

Total

     $12.1         $13.2         $16.6         $16.8         $35.7         $21.5         $6.3         $122.2   
                                                                       
The following table summarizes the changes in the Company’s reserve for mortgage loan repurchase losses:

 

       Three Months Ended March 31        
(Dollars in millions)    2011     2010    

Balance at beginning of period

     $265        $200     

Repurchase costs

     80        128     

Charge-offs

     (75     (118  
                  

Balance at end of period

     $270        $210     
                  
Business Segment Reporting (Tables)
Business Segment Reporting

The application and development of management reporting methodologies is a dynamic process and is subject to periodic enhancements. The implementation of these enhancements to the internal management reporting methodology may materially affect the results disclosed for each segment with no impact on consolidated results. Whenever significant changes to management reporting methodologies take place, the impact of these changes is quantified and prior period information is reclassified wherever practicable.

 

    Three Months Ended March 31, 2011  
(Dollars in millions)   Retail
Banking
    Diversified
Commercial
Banking
    CRE     CIB     Mortgage     W&IM     Corporate
Other and
Treasury
    Reconciling
Items
    Consolidated  

Average total assets

    $40,544        $24,702        $8,913        $21,396        $34,538        $8,901        $33,123        $949        $173,066   

Average total liabilities

    76,298        21,397        1,471        17,480        3,693        13,406        16,272        (58     149,959   

Average total equity

    -        -        -        -        -        -        -        23,107        23,107   
                                                                       

Net interest income

    $623        $147        $35        $116        $125        $105        $137        ($39     $1,249   

FTE adjustment

    -        25        -        -        -        -        2        1        28   
                                                                       

Net interest income (FTE)1

    623        172        35        116        125        105        139        (38     1,277   

Provision for credit losses2

    216        8        108        (1     223        17        -        (124     447   
                                                                       

Net interest income after provision for credit losses

    407        164        (73     117        (98     88        139        86        830   

Noninterest income

    263        58        27        176        81        215        77        (14     883   

Noninterest expense

    628        114        109        147        252        237        (9     (13     1,465   
                                                                       

Income/(loss) before provision/(benefit) for income taxes

    42        108        (155     146        (269     66        225        85        248   

Provision/(benefit) for income taxes3

    16        39        (77     53        (103     22        78        33        61   
                                                                       

Net income/(loss) including income attributable to noncontrolling interest

    26        69        (78     93        (166     44        147        52        187   

Net income attributable to noncontrolling interest

    -        -        -        -        -        5        2        -        7   
                                                                       

Net income/(loss)

    $26        $69        ($78     $93        ($166     $39        $145        $52        $180   
                                                                       
    Three Months Ended March 31, 2010  
(Dollars in millions)   Retail
Banking
    Diversified
Commercial
Banking
    CRE     CIB     Mortgage     W&IM     Corporate
Other and
Treasury
    Reconciling
Items
    Consolidated  

Average total assets

    $38,513        $25,149        $11,927        $18,851        $34,702        $9,219        $32,712        $356        $171,429   

Average total liabilities

    73,789        21,554        1,961        14,266        3,325        11,962        21,906        328        149,091   

Average total equity

    -        -        -        -        -        -        -        22,338        22,338   
                                                                       

Net interest income

    $608        $130        $43        $83        $102        $95        $120        ($9     $1,172   

FTE adjustment

    -        27        -        -        -        -        3        -        30   
                                                                       

Net interest income (FTE)1

    608        157        43        83        102        95        123        (9     1,202   

Provision for credit losses2

    284        24        70        29        401        13        -        41        862   
                                                                       

Net interest income after provision for credit losses

    324        133        (27     54        (299     82        123        (50     340   

Noninterest income

    276        52        21        113        47        186        8        (5     698   

Noninterest expense

    601        116        93        110        254        222        (31     (4     1,361   
                                                                       

Income/(loss) before provision/(benefit) for income taxes

    (1     69        (99     57        (506     46        162        (51     (323

Provision/(benefit) for income taxes3

    (1     25        (57     21        (192     17        43        (20     (164
                                                                       

Net income/(loss) including income attributable to noncontrolling interest

    -        44        (42     36        (314     29        119        (31     (159

Net income attributable to noncontrolling interest

    -        -        -        -        -        -        2        -        2   
                                                                       

Net income/(loss)

    $-        $44        ($42     $36        ($314     $29        $117        ($31     ($161
                                                                       

1 Net interest income is FTE and is presented on a matched maturity funds transfer price basis for the line of business.

2 Provision for credit losses represents net charge-offs for the segments.

3 Includes regular income tax provision/(benefit) and taxable-equivalent income adjustment reversal.

Accumulated Other Comprehensive Income (Tables)

Comprehensive income/(loss) was calculated as follows:

 

             Three Months Ended         
March 31
 
(Dollars in millions)    2011     2010  

Comprehensive income:

    

Net income/(loss)

     $180        ($161

OCI:

    

Change in unrealized gains/(losses) on securities, net of taxes

     (69     39   

Change in unrealized gains/(losses) on derivatives, net of taxes

     (125     122   

Change related to employee benefit plans

     3        75   
                

Total comprehensive income/(loss)

     ($11     $75   
                

The components of AOCI were as follows:

    
(Dollars in millions)    March 31
2011
    December 31
2010
 

Unrealized net gain on AFS securities

     $1,457        $1,526   

Unrealized net gain on derivative financial instruments

     407        532   

Employee benefit plans

     (439     (442
                

Total AOCI

     $1,425        $1,616   
                
Securities Available for Sale (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Amortized Cost
$ 24,268 
$ 24,484 
Unrealized Gains
2,387 
2,534 
Unrealized Losses
86 
123 
Fair Value
26,569 
26,895 
US Treasury Securities
 
 
Amortized Cost
223 
5,446 
Unrealized Gains
 
115 
Unrealized Losses
45 
Fair Value
222 
5,516 
US Government Agencies Debt Securities
 
 
Amortized Cost
3,829 
1,883 
Unrealized Gains
13 
19 
Unrealized Losses
26 
Fair Value
3,816 
1,895 
US States and Political Subdivisions Debt Securities
 
 
Amortized Cost
537 
565 
Unrealized Gains
17 
17 
Unrealized Losses
Fair Value
551 
579 
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
 
 
Amortized Cost
17,679 
14,014 
Unrealized Gains
348 
372 
Unrealized Losses
32 
28 
Fair Value
17,995 
14,358 
Mortgage-backed Securities, Issued by Private Enterprises
 
 
Amortized Cost
355 
378 
Unrealized Gains
Unrealized Losses
19 
34 
Fair Value
338 
347 
Collateralized Debt Obligations
 
 
Amortized Cost
77 
50 
Fair Value
77 
50 
Asset-backed Securities
 
 
Amortized Cost
710 
798 
Unrealized Gains
14 
15 
Unrealized Losses
Fair Value
720 
808 
Corporate And Other Debt Securities
 
 
Amortized Cost
55 
464 
Unrealized Gains
19 
Unrealized Losses
Fair Value
56 
482 
Equity Securities, Coca Cola
 
 
Unrealized Gains
1,990 
1,973 
Fair Value
1,990 
1,973 
Equity Securities, Other
 
 
Amortized Cost
803 1
886 1
Unrealized Gains
1
1
Fair Value
$ 804 1
$ 887 1
Securities Available for Sale (Parenthetical) (Detail) (Equity Securities, Other, USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Federal Home Loan Bank ("FHLB") of Atlanta stock (par value)
$ 298 
$ 298 
Federal Reserve Bank stock (par value)
391 
391 
Mutual fund investments (par value)
$ 114 
$ 197 
Securities Available for Sale - Additional Information (Detail)
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Mar. 31, 2011
Mar. 31, 2010
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Fair value of pledged securities available for sale
4,900,000,000 
6,900,000,000 
 
 
 
Trading assets and cash equivalents, pledged
 
 
889,000,000 
 
 
Repurchase agreements
2,113,000,000 
2,180,000,000 
867,000,000 
 
 
Available for sale securities, fair market value
 
 
 
114,000,000 
1,000,000 
Amortized Cost and Fair Value of Investments in Debt Securities by Estimated Average Life (Detail) (USD $)
In Millions
Mar. 31, 2011
Distribution of Maturities: Amortized Cost, 1 Year or Less
$ 772 
Distribution of Maturities: Amortized Cost, 1-5 Years
17,389 
Distribution of Maturities: Amortized Cost, 5-10 Years
2,329 
Distribution of Maturities: Amortized Cost, After 10 Years
2,975 
Distribution of Maturities: Amortized Cost, Total
23,465 
Distribution of Maturities: Fair Value, 1 Year or Less
788 
Distribution of Maturities: Fair Value, 1-5 Years
17,636 
Distribution of Maturities: Fair Value, 5-10 Years
2,368 
Distribution of Maturities: Fair Value, After 10 Years
2,983 
Distribution of Maturities: Fair Value, Total
23,775 
US Treasury Securities
 
Distribution of Maturities: Amortized Cost, 1 Year or Less
Distribution of Maturities: Amortized Cost, 1-5 Years
221 
Distribution of Maturities: Amortized Cost, Total
223 
Distribution of Maturities: Fair Value, 1 Year or Less
Distribution of Maturities: Fair Value, 1-5 Years
220 
Distribution of Maturities: Fair Value, Total
222 
US Government Agencies Debt Securities
 
Distribution of Maturities: Amortized Cost, 1 Year or Less
62 
Distribution of Maturities: Amortized Cost, 1-5 Years
3,245 
Distribution of Maturities: Amortized Cost, 5-10 Years
484 
Distribution of Maturities: Amortized Cost, After 10 Years
38 
Distribution of Maturities: Amortized Cost, Total
3,829 
Distribution of Maturities: Fair Value, 1 Year or Less
62 
Distribution of Maturities: Fair Value, 1-5 Years
3,230 
Distribution of Maturities: Fair Value, 5-10 Years
487 
Distribution of Maturities: Fair Value, After 10 Years
37 
Distribution of Maturities: Fair Value, Total
3,816 
US States and Political Subdivisions Debt Securities
 
Distribution of Maturities: Amortized Cost, 1 Year or Less
127 
Distribution of Maturities: Amortized Cost, 1-5 Years
279 
Distribution of Maturities: Amortized Cost, 5-10 Years
48 
Distribution of Maturities: Amortized Cost, After 10 Years
83 
Distribution of Maturities: Amortized Cost, Total
537 
Distribution of Maturities: Fair Value, 1 Year or Less
129 
Distribution of Maturities: Fair Value, 1-5 Years
292 
Distribution of Maturities: Fair Value, 5-10 Years
49 
Distribution of Maturities: Fair Value, After 10 Years
81 
Distribution of Maturities: Fair Value, Total
551 
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
 
Distribution of Maturities: Amortized Cost, 1 Year or Less
338 
Distribution of Maturities: Amortized Cost, 1-5 Years
12,740 
Distribution of Maturities: Amortized Cost, 5-10 Years
1,773 
Distribution of Maturities: Amortized Cost, After 10 Years
2,828 
Distribution of Maturities: Amortized Cost, Total
17,679 
Distribution of Maturities: Fair Value, 1 Year or Less
348 
Distribution of Maturities: Fair Value, 1-5 Years
13,001 
Distribution of Maturities: Fair Value, 5-10 Years
1,806 
Distribution of Maturities: Fair Value, After 10 Years
2,840 
Distribution of Maturities: Fair Value, Total
17,995 
Mortgage-backed Securities, Issued by Private Enterprises
 
Distribution of Maturities: Amortized Cost, 1 Year or Less
34 
Distribution of Maturities: Amortized Cost, 1-5 Years
318 
Distribution of Maturities: Amortized Cost, 5-10 Years
Distribution of Maturities: Amortized Cost, Total
355 
Distribution of Maturities: Fair Value, 1 Year or Less
32 
Distribution of Maturities: Fair Value, 1-5 Years
303 
Distribution of Maturities: Fair Value, 5-10 Years
Distribution of Maturities: Fair Value, Total
338 
Collateralized Debt Obligations (CDO) Securities
 
Distribution of Maturities: Amortized Cost, 1-5 Years
77 
Distribution of Maturities: Amortized Cost, Total
77 
Distribution of Maturities: Fair Value, 1-5 Years
77 
Distribution of Maturities: Fair Value, Total
77 
Asset-backed Securities
 
Distribution of Maturities: Amortized Cost, 1 Year or Less
203 
Distribution of Maturities: Amortized Cost, 1-5 Years
503 
Distribution of Maturities: Amortized Cost, 5-10 Years
Distribution of Maturities: Amortized Cost, Total
710 
Distribution of Maturities: Fair Value, 1 Year or Less
209 
Distribution of Maturities: Fair Value, 1-5 Years
507 
Distribution of Maturities: Fair Value, 5-10 Years
Distribution of Maturities: Fair Value, Total
720 
Corporate And Other Debt Securities
 
Distribution of Maturities: Amortized Cost, 1 Year or Less
Distribution of Maturities: Amortized Cost, 1-5 Years
Distribution of Maturities: Amortized Cost, 5-10 Years
17 
Distribution of Maturities: Amortized Cost, After 10 Years
26 
Distribution of Maturities: Amortized Cost, Total
55 
Distribution of Maturities: Fair Value, 1 Year or Less
Distribution of Maturities: Fair Value, 1-5 Years
Distribution of Maturities: Fair Value, 5-10 Years
19 
Distribution of Maturities: Fair Value, After 10 Years
25 
Distribution of Maturities: Fair Value, Total
$ 56 
Gross Realized Gains and Losses on Sales and OTTI on Securities Available for Sale (Detail) (USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Gross realized gains
$ 143 
$ 15 
Gross realized losses
(78)
(13)
OTTI
(1)
(1)
Net securities gains
$ 64 
$ 1 
Securities with Unrealized Losses (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Temporarily Impaired Securities
 
 
Investments, Unrealized Loss Position [Line Items]
 
 
Less than twelve months, Fair Value
$ 8,433 
$ 6,996 
Less than twelve months, Unrealized Losses
60 
81 
Twelve months or longer, Fair Value
76 
69 
Twelve months or longer, Unrealized Losses
10 
Total, Fair Value
8,509 
7,065 
Total, Unrealized Losses
68 
91 
Impaired Securities
 
 
Investments, Unrealized Loss Position [Line Items]
 
 
Less than twelve months, Fair Value
8,454 
7,000 
Less than twelve months, Unrealized Losses
60 
82 
Twelve months or longer, Fair Value
340 
355 
Twelve months or longer, Unrealized Losses
26 
41 
Total, Fair Value
8,794 
7,355 
Total, Unrealized Losses
86 
123 
Other Than Temporarily Impaired Securities
 
 
Investments, Unrealized Loss Position [Line Items]
 
 
Less than twelve months, Fair Value
21 1
1
Less than twelve months, Unrealized Losses
 
1
Twelve months or longer, Fair Value
264 1
286 1
Twelve months or longer, Unrealized Losses
18 1
31 1
Total, Fair Value
285 1
290 1
Total, Unrealized Losses
18 1
32 1
US Treasury Securities | Temporarily Impaired Securities
 
 
Investments, Unrealized Loss Position [Line Items]
 
 
Less than twelve months, Fair Value
201 
2,010 
Less than twelve months, Unrealized Losses
45 
Total, Fair Value
201 
2,010 
Total, Unrealized Losses
45 
US Government Agencies Debt Securities | Temporarily Impaired Securities
 
 
Investments, Unrealized Loss Position [Line Items]
 
 
Less than twelve months, Fair Value
3,402 
1,426 
Less than twelve months, Unrealized Losses
26 
Total, Fair Value
3,402 
1,426 
Total, Unrealized Losses
26 
US States and Political Subdivisions Debt Securities | Temporarily Impaired Securities
 
 
Investments, Unrealized Loss Position [Line Items]
 
 
Less than twelve months, Fair Value
30 
45 
Less than twelve months, Unrealized Losses
Twelve months or longer, Fair Value
36 
35 
Twelve months or longer, Unrealized Losses
Total, Fair Value
66 
80 
Total, Unrealized Losses
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises | Temporarily Impaired Securities
 
 
Investments, Unrealized Loss Position [Line Items]
 
 
Less than twelve months, Fair Value
4,770 
3,497 
Less than twelve months, Unrealized Losses
32 
28 
Total, Fair Value
4,770 
3,497 
Total, Unrealized Losses
32 
28 
Mortgage-backed Securities, Issued by Private Enterprises | Other Than Temporarily Impaired Securities
 
 
Investments, Unrealized Loss Position [Line Items]
 
 
Less than twelve months, Fair Value
19 1
 
Twelve months or longer, Fair Value
261 1
286 1
Twelve months or longer, Unrealized Losses
17 1
31 1
Total, Fair Value
280 1
286 1
Total, Unrealized Losses
17 1
31 1
Mortgage-backed Securities, Issued by Private Enterprises | Temporarily Impaired Securities
 
 
Investments, Unrealized Loss Position [Line Items]
 
 
Less than twelve months, Fair Value
18 
Twelve months or longer, Fair Value
24 
17 
Twelve months or longer, Unrealized Losses
Total, Fair Value
27 
35 
Total, Unrealized Losses
Collateralized Debt Obligations | Temporarily Impaired Securities
 
 
Investments, Unrealized Loss Position [Line Items]
 
 
Less than twelve months, Fair Value
27 
 
Total, Fair Value
27 
 
Asset-backed Securities | Other Than Temporarily Impaired Securities
 
 
Investments, Unrealized Loss Position [Line Items]
 
 
Less than twelve months, Fair Value
1
1
Less than twelve months, Unrealized Losses
 
1
Twelve months or longer, Fair Value
1
 
Twelve months or longer, Unrealized Losses
1
 
Total, Fair Value
1
1
Total, Unrealized Losses
1
1
Asset-backed Securities | Temporarily Impaired Securities
 
 
Investments, Unrealized Loss Position [Line Items]
 
 
Twelve months or longer, Fair Value
13 
14 
Twelve months or longer, Unrealized Losses
Total, Fair Value
13 
14 
Total, Unrealized Losses
Corporate And Other Debt Securities | Temporarily Impaired Securities
 
 
Investments, Unrealized Loss Position [Line Items]
 
 
Twelve months or longer, Fair Value
Twelve months or longer, Unrealized Losses
Total, Fair Value
Total, Unrealized Losses
$ 1 
$ 1 
Significant Inputs Considered in Determining the Measurement of Credit Losses Recognized in Earnings for Private Residential MBS (Detail)
3 Months Ended
Mar. 31,
2011
2010
Lower Limit
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Current default rate
0.05 
0.02 
Prepayment rate
0.13 
0.15 
Loss severity
0.39 
0.37 
Upper Limit
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Current default rate
0.07 
0.06 
Prepayment rate
0.19 
0.22 
Loss severity
0.43 
0.46 
Composition of the Company's Loan Portfolio (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
$ 114,932 1
$ 115,975 1
Loans held for sale
2,165 2
3,501 2
Loans Held-for-Investment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
114,932 
115,975 
Loans Held-for-Investment | Commercial Portfolio Segment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
53,232 
53,488 
Loans Held-for-Investment | Commercial Portfolio Segment | Commercial and Industrial
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
45,080 3
44,753 3
Loans Held-for-Investment | Commercial Portfolio Segment | Commercial Real Estate
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
6,043 
6,167 
Loans Held-for-Investment | Commercial Portfolio Segment | Commercial Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
2,109 
2,568 
Loans Held-for-Investment | Residential Portfolio Segment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
45,549 
46,521 
Loans Held-for-Investment | Residential Portfolio Segment | Residential Guaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
4,516 
4,520 
Loans Held-for-Investment | Residential Portfolio Segment | Residential Nonguaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
23,443 4
23,959 4
Loans Held-for-Investment | Residential Portfolio Segment | Home Equity
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
16,382 
16,751 
Loans Held-for-Investment | Residential Portfolio Segment | Residential Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
1,208 
1,291 
Loans Held-for-Investment | Consumer Portfolio Segment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
16,151 
15,966 
Loans Held-for-Investment | Consumer Portfolio Segment | Guaranteed Student Loans
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
4,477 
4,260 
Loans Held-for-Investment | Consumer Portfolio Segment | Consumer Other Direct
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
1,786 
1,722 
Loans Held-for-Investment | Consumer Portfolio Segment | Consumer Indirect
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
9,469 
9,499 
Loans Held-for-Investment | Consumer Portfolio Segment | Consumer Credit Card
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
419 
485 
Loans Held-for-Sale
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans held for sale
2,165 
3,501 
Commercial Portfolio Segment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
53,232 
53,488 
Commercial Portfolio Segment | Commercial and Industrial
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
45,080 5
44,753 6
Commercial Portfolio Segment | Commercial Real Estate
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
6,043 
6,167 
Commercial Portfolio Segment | Commercial Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
2,109 
2,568 
Residential Portfolio Segment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
45,549 
46,521 
Residential Portfolio Segment | Residential Guaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
4,516 
4,520 
Residential Portfolio Segment | Residential Nonguaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
23,443 7
23,959 8
Residential Portfolio Segment | Home Equity
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
16,382 
16,751 
Residential Portfolio Segment | Residential Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
1,208 
1,291 
Consumer Portfolio Segment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
16,151 
15,966 
Consumer Portfolio Segment | Guaranteed Student Loans
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
4,477 
4,260 
Consumer Portfolio Segment | Consumer Other Direct
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
1,786 
1,722 
Consumer Portfolio Segment | Consumer Indirect
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
9,469 
9,499 
Consumer Portfolio Segment | Consumer Credit Card
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
419 
485 
Commercial and Industrial
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
45,080 
44,753 
Commercial Real Estate
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
6,043 
6,167 
Commercial Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
2,109 
2,568 
Residential Nonguaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
23,443 
23,959 
Home Equity
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
16,382 
16,751 
Residential Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
1,208 
1,291 
Consumer Other Direct
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
1,357 9
1,309 9
Consumer Indirect
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
9,469 
9,499 
Consumer Credit Card
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
$ 419 
$ 485 
Composition of the Company's Loan Portfolio (Parenthetical) (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans carried at fair value
$ 457 
$ 492 
Commercial Portfolio Segment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans carried at fair value
Commercial Portfolio Segment | Commercial and Industrial
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans carried at fair value
Residential Portfolio Segment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans carried at fair value
453 
488 
Residential Portfolio Segment | Residential Nonguaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans carried at fair value
$ 453 
$ 488 
Loans - Additional Information (Detail) (USD $)
3 Months Ended
Mar. 31, 2011
Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Value of loans transferred from LHFI to LHFS
122,000,000 
 
Incremental charge-off
615,000,000 
 
Loans held for investment sold
141,000,000 
 
Commitments to lend additional funds to debtors owing receivables
29,000,000 
15,000,000 
Residential Mortgage
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Concentration of credit risk, maximum exposure
45,500,000,000 
46,500,000,000 
Concentration of credit risk, maximum exposure, percentage of total loans
0.4 
0.4 
Government guaranteed
0.1 
0.1 
Residential Mortgage | Risk Level, High
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Concentration of credit risk, maximum exposure
16,100,000,000 
16,600,000,000 
Commitments to Extend Credit
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Concentration of credit risk, maximum exposure
13,400,000,000 
13,600,000,000 
Loan Origination Commitments
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Concentration of credit risk, maximum exposure
9,900,000,000 
9,200,000,000 
Interest Only Loans | Risk Level, High
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Concentration of credit risk, maximum exposure
12,700,000,000 
13,200,000,000 
Interest only period
10 
10 
Cross-Border Outstanding Loans
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Concentration of credit risk, maximum exposure
395,000,000 
446,000,000 
Residential Mortgage Loans Held For Sale | Non Performing Loans
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Value of loans transferred from LHFI to LHFS
57,000,000 
 
Incremental charge-off
10,000,000 
 
Accrual Loans
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing TDRs included in impaired loan balances
$ 2,500,000,000 
$ 2,500,000,000 
Accruing TDRs current
0.86 
0.85 
LHFI by Credit Quality Indicator (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
$ 114,932 1
$ 115,975 1
Pass | Commercial and Industrial
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
42,543 
42,140 
Pass | Commercial Real Estate
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
4,192 
4,316 
Pass | Commercial Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
701 
836 
Criticized, Accruing | Commercial and Industrial
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
1,952 
2,029 
Criticized, Accruing | Commercial Real Estate
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
1,416 
1,509 
Criticized, Accruing | Commercial Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
565 
771 
Criticized, Nonaccruing | Commercial and Industrial
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
585 
584 
Criticized, Nonaccruing | Commercial Real Estate
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
435 
342 
Criticized, Nonaccruing | Commercial Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
843 
961 
FICO Score 700 and Above | Residential Nonguaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
15,660 
15,920 
FICO Score 700 and Above | Home Equity
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
11,436 
11,673 
FICO Score 700 and Above | Residential Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
791 
828 
FICO Score 700 and Above | Consumer Other Direct
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
1,028 2
973 2
FICO Score 700 and Above | Consumer Indirect
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
6,805 
6,780 
FICO Score 700 and Above | Consumer Credit Card
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
214 
258 
FICO Score Between 620 and 699 | Residential Nonguaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
4,419 
4,457 
FICO Score Between 620 and 699 | Home Equity
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
2,855 
2,897 
FICO Score Between 620 and 699 | Residential Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
241 
258 
FICO Score Between 620 and 699 | Consumer Other Direct
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
229 2
231 2
FICO Score Between 620 and 699 | Consumer Indirect
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
1,784 
1,799 
FICO Score Between 620 and 699 | Consumer Credit Card
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
133 
149 
FICO Score Below 620 | Residential Nonguaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
3,364 3
3,582 3
FICO Score Below 620 | Home Equity
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
2,091 3
2,181 3
FICO Score Below 620 | Residential Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
176 3
205 3
FICO Score Below 620 | Consumer Other Direct
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
100 
105 
FICO Score Below 620 | Consumer Indirect
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
880 3
920 3
FICO Score Below 620 | Consumer Credit Card
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
72 3
78 3
Commercial and Industrial
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
45,080 
44,753 
Commercial Real Estate
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
6,043 
6,167 
Commercial Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
2,109 
2,568 
Residential Nonguaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
23,443 
23,959 
Home Equity
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
16,382 
16,751 
Residential Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
1,208 
1,291 
Consumer Other Direct
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
1,357 2
1,309 2
Consumer Indirect
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
9,469 
9,499 
Consumer Credit Card
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
$ 419 
$ 485 
LHFI by Credit Quality Indicator (Parenthetical) (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
$ 114,932 1
$ 115,975 1
Private Student Loans | Consumer Other Direct
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
429 
413 
Consumer Other Direct
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans Held for Investment
$ 1,357 2
$ 1,309 2
Payment Status for the LHFI Portfolio (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
$ 107,892 
$ 108,768 
Accruing 30-89 Days Past Due
1,411 
1,532 
Accruing 90+ Days Past Due
1,658 
1,565 
Nonaccruing
3,971 1
4,110 2
Total
114,932 3
115,975 3
Commercial Portfolio Segment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
51,219 
51,435 
Accruing 30-89 Days Past Due
129 
149 
Accruing 90+ Days Past Due
21 
17 
Nonaccruing
1,863 1
1,887 2
Total
53,232 
53,488 
Commercial Portfolio Segment | Commercial and Industrial
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
44,379 4
44,046 5
Accruing 30-89 Days Past Due
99 4
111 5
Accruing 90+ Days Past Due
17 4
12 5
Nonaccruing
585 
584 
Total
45,080 4
44,753 5
Commercial Portfolio Segment | Commercial Real Estate
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
5,587 
5,794 
Accruing 30-89 Days Past Due
20 
27 
Accruing 90+ Days Past Due
Nonaccruing
435 1
342 2
Total
6,043 
6,167 
Commercial Portfolio Segment | Commercial Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
1,253 
1,595 
Accruing 30-89 Days Past Due
10 
11 
Accruing 90+ Days Past Due
Nonaccruing
843 1
961 2
Total
2,109 
2,568 
Residential Portfolio Segment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
41,683 
42,500 
Accruing 30-89 Days Past Due
792 
899 
Accruing 90+ Days Past Due
998 
934 
Nonaccruing
2,076 1
2,188 2
Total
45,549 
46,521 
Residential Portfolio Segment | Residential Guaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
3,433 
3,469 
Accruing 30-89 Days Past Due
136 
167 
Accruing 90+ Days Past Due
947 
884 
Total
4,516 
4,520 
Residential Portfolio Segment | Residential Nonguaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
21,558 7
21,916 8
Accruing 30-89 Days Past Due
381 7
456 8
Accruing 90+ Days Past Due
46 7
44 8
Nonaccruing
1,458 
1,543 
Total
23,443 7
23,959 8
Residential Portfolio Segment | Home Equity
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
15,800 
16,162 
Accruing 30-89 Days Past Due
239 
234 
Nonaccruing
343 1
355 2
Total
16,382 
16,751 
Residential Portfolio Segment | Residential Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
892 
953 
Accruing 30-89 Days Past Due
36 
42 
Accruing 90+ Days Past Due
Nonaccruing
275 1
290 2
Total
1,208 
1,291 
Consumer Portfolio Segment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
14,990 
14,833 
Accruing 30-89 Days Past Due
490 
484 
Accruing 90+ Days Past Due
639 
614 
Nonaccruing
32 1
35 2
Total
16,151 
15,966 
Consumer Portfolio Segment | Guaranteed Student Loans
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
3,457 
3,281 
Accruing 30-89 Days Past Due
397 
383 
Accruing 90+ Days Past Due
623 
596 
Total
4,477 
4,260 
Consumer Portfolio Segment | Consumer Other Direct
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
1,750 
1,692 
Accruing 30-89 Days Past Due
20 
15 
Accruing 90+ Days Past Due
Nonaccruing
11 1
10 2
Total
1,786 
1,722 
Consumer Portfolio Segment | Consumer Indirect
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
9,383 
9,400 
Accruing 30-89 Days Past Due
64 
74 
Accruing 90+ Days Past Due
 
Nonaccruing
21 1
25 2
Total
9,469 
9,499 
Consumer Portfolio Segment | Consumer Credit Card
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Accruing Current
400 
460 
Accruing 30-89 Days Past Due
12 
Accruing 90+ Days Past Due
10 
13 
Total
419 
485 
Commercial and Industrial
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total
45,080 
44,753 
Commercial Real Estate
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total
6,043 
6,167 
Commercial Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total
2,109 
2,568 
Residential Nonguaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total
23,443 
23,959 
Home Equity
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total
16,382 
16,751 
Residential Construction
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total
1,208 
1,291 
Consumer Other Direct
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total
1,357 10
1,309 10
Consumer Indirect
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total
9,469 
9,499 
Consumer Credit Card
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total
$ 419 
$ 485 
Payment Status for the LHFI Portfolio (Parenthetical) (Detail) (USD $)
Mar. 31, 2011
Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans carried at fair value
$ 457,000,000 
$ 492,000,000 
Nonaccruing 90+ Days Past Due
3,000,000,000 
3,300,000,000 
Commercial Portfolio Segment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans carried at fair value
4,000,000 
4,000,000 
Commercial Portfolio Segment | Commercial and Industrial
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans carried at fair value
4,000,000 
4,000,000 
Residential Portfolio Segment
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans carried at fair value
453,000,000 
488,000,000 
Residential Portfolio Segment | Residential Nonguaranteed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Loans carried at fair value
$ 453,000,000 
$ 488,000,000 
LHFI Considered Impaired (Detail) (USD $)
In Millions
3 Months Ended
Mar. 31, 2011
Year Ended
Dec. 31, 2010
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
$ 4,673 
$ 4,687 
Amortized Cost
4,118 1
4,083 1
Related Allowance
626 
605 
Average Amortized Cost
4,030 
 
Interest Income Recognized
31 2
 
Commercial Portfolio Segment | Commercial and Industrial | Impaired Financing Receivable with No Related Allowance
 
 
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
112 
86 
Amortized Cost
102 1
67 1
Average Amortized Cost
104 
 
Commercial Portfolio Segment | Commercial and Industrial | Impaired Financing Receivable with Related Allowance
 
 
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
195 
123 
Amortized Cost
175 1
96 1
Related Allowance
46 
18 
Average Amortized Cost
172 
 
Commercial Portfolio Segment | Commercial Real Estate | Impaired Financing Receivable with No Related Allowance
 
 
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
80 
110 
Amortized Cost
64 1
86 1
Average Amortized Cost
57 
 
Commercial Portfolio Segment | Commercial Real Estate | Impaired Financing Receivable with Related Allowance
 
 
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
140 
103 
Amortized Cost
120 1
81 1
Related Allowance
33 
19 
Average Amortized Cost
118 
 
Commercial Portfolio Segment | Commercial Construction | Impaired Financing Receivable with No Related Allowance
 
 
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
133 
67 
Amortized Cost
119 1
52 1
Average Amortized Cost
109 
 
Interest Income Recognized
2
 
Commercial Portfolio Segment | Commercial Construction | Impaired Financing Receivable with Related Allowance
 
 
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
454 
673 
Amortized Cost
392 1
524 1
Related Allowance
114 
138 
Average Amortized Cost
390 
 
Interest Income Recognized
2
 
Commercial Portfolio Segment | Impaired Financing Receivable with No Related Allowance
 
 
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
325 
263 
Amortized Cost
285 1
205 1
Average Amortized Cost
270 
 
Interest Income Recognized
2
 
Commercial Portfolio Segment | Impaired Financing Receivable with Related Allowance
 
 
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
789 
899 
Amortized Cost
687 1
701 1
Related Allowance
193 
175 
Average Amortized Cost
680 
 
Interest Income Recognized
2
 
Residential Portfolio Segment | Residential Nonguaranteed | Impaired Financing Receivable with Related Allowance
 
 
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
2,803 
2,785 
Amortized Cost
2,452 1
2,467 1
Related Allowance
310 
309 
Average Amortized Cost
2,463 
 
Interest Income Recognized
22 2
 
Residential Portfolio Segment | Home Equity | Impaired Financing Receivable with Related Allowance
 
 
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
516 
503 
Amortized Cost
486 1
503 1
Related Allowance
96 
93 
Average Amortized Cost
407 
 
Interest Income Recognized
2
 
Residential Portfolio Segment | Residential Construction | Impaired Financing Receivable with Related Allowance
 
 
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
228 
226 
Amortized Cost
196 1
196 1
Related Allowance
25 
26 
Average Amortized Cost
200 
 
Interest Income Recognized
2
 
Residential Portfolio Segment | Impaired Financing Receivable with Related Allowance
 
 
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
3,547 
3,514 
Amortized Cost
3,134 1
3,166 1
Related Allowance
431 
428 
Average Amortized Cost
3,070 
 
Interest Income Recognized
29 2
 
Consumer Portfolio Segment | Consumer Other Direct | Impaired Financing Receivable with Related Allowance
 
 
Financing Receivable, Impaired [Line Items]
 
 
Unpaid Principal Balance
12 
11 
Amortized Cost
12 1
11 1
Related Allowance
Average Amortized Cost
10 
 
LHFI Considered Impaired (Parenthetical) (Detail) (USD $)
In Millions
3 Months Ended
Mar. 31, 2011
Financing Receivable, Impaired [Line Items]
 
Cash basis interest income
$ 6 
Nonperforming Assets (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Nonaccrual/NPLs
$ 3,971 1
$ 4,110 2
OREO
534 3
596 3
Other repossessed assets
16 
52 
Nonperforming LHFS
47 
 
Total nonperforming assets
4,568 
4,758 
Commercial Portfolio Segment
 
 
Nonaccrual/NPLs
1,863 1
1,887 2
Commercial Portfolio Segment | Commercial and Industrial
 
 
Nonaccrual/NPLs
585 
584 
Commercial Portfolio Segment | Commercial Real Estate
 
 
Nonaccrual/NPLs
435 1
342 2
Commercial Portfolio Segment | Commercial Construction
 
 
Nonaccrual/NPLs
843 1
961 2
Residential Portfolio Segment
 
 
Nonaccrual/NPLs
2,076 1
2,188 2
Residential Portfolio Segment | Residential Nonguaranteed
 
 
Nonaccrual/NPLs
1,458 
1,543 
Residential Portfolio Segment | Home Equity
 
 
Nonaccrual/NPLs
343 1
355 2
Residential Portfolio Segment | Residential Construction
 
 
Nonaccrual/NPLs
275 1
290 2
Consumer Portfolio Segment
 
 
Nonaccrual/NPLs
32 1
35 2
Consumer Portfolio Segment | Consumer Other Direct
 
 
Nonaccrual/NPLs
11 1
10 2
Consumer Portfolio Segment | Consumer Indirect
 
 
Nonaccrual/NPLs
$ 21 1
$ 25 2
Nonperforming Assets (Parenthetical) (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Loans carried at fair value
$ 457 
$ 492 
Residential Mortgage | Residential Portfolio Segment | Residential Nonguaranteed
 
 
Loans carried at fair value
19 
24 
Commercial Portfolio Segment
 
 
Loans carried at fair value
Commercial Portfolio Segment | Commercial and Industrial
 
 
Loans carried at fair value
Residential Portfolio Segment
 
 
Loans carried at fair value
453 
488 
Residential Portfolio Segment | Residential Nonguaranteed
 
 
Loans carried at fair value
$ 453 
$ 488 
Activity in the Allowance for Credit Losses (Detail) (Year, USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Balance at beginning of period
$ 3,032 
$ 3,235 
Provision for loan losses
451 
877 
Provision/(benefit) for unfunded commitments
(4)
(15)
Loan charge-offs
(615)
(862)
Loan recoveries
44 
41 
Balance at end of period
2,908 
3,276 
Components:
 
 
ALLL
2,854 
3,176 
Unfunded commitments reserve
54 1
100 1
Allowance for credit losses
$ 2,908 
$ 3,276 
Activity in the ALLL by segment (Detail) (USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Balance at beginning of period
$ 2,974 
$ 3,120 
Provision for loan losses
451 
877 
Loan charge-offs
(615)
(862)
Loan recoveries
44 
41 
Balance at end of period
2,854 
3,176 
Commercial Portfolio Segment
 
 
Balance at beginning of period
1,303 
1,353 
Provision for loan losses
108 
215 
Loan charge-offs
(185)
(192)
Loan recoveries
29 
23 
Balance at end of period
1,255 
1,399 
Residential Portfolio Segment
 
 
Balance at beginning of period
1,498 
1,592 
Provision for loan losses
322 
601 
Loan charge-offs
(385)
(608)
Loan recoveries
Balance at end of period
1,440 
1,590 
Consumer Portfolio Segment
 
 
Balance at beginning of period
173 
175 
Provision for loan losses
21 
61 
Loan charge-offs
(45)
(62)
Loan recoveries
10 
13 
Balance at end of period
$ 159 
$ 187 
Changes in the Carrying Amounts of Other Intangible Assets (Detail) (USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Beginning Balance
$ 1,571 
$ 1,711 
Amortization
(11)
(12)
MSRs originated
88 
66 
Sale of MSRs
(7)
 
Changes in fair value
 
 
Due to fair value election
 
145 
Due to changes in inputs or assumptions
70 1
(45)1
Other changes in fair value
(52)2
(65)2
Ending Balance
1,659 
1,800 
Core Deposits
 
 
Beginning Balance
67 
104 
Amortization
(8)
(9)
Changes in fair value
 
 
Ending Balance
59 
95 
Mortgage Servicing Rights, Amortized Cost
 
 
Beginning Balance
 
604 
Designated at fair value (transfers from amortized cost)
 
(604)
Mortgage Servicing Rights, Fair Value
 
 
Beginning Balance
1,439 
936 
Designated at fair value (transfers from amortized cost)
 
604 
MSRs originated
88 
66 
Sale of MSRs
(7)
 
Changes in fair value
 
 
Due to fair value election
 
145 
Due to changes in inputs or assumptions
70 1
(45)1
Other changes in fair value
(52)2
(65)2
Ending Balance
1,538 
1,641 
Other Intangible Assets
 
 
Beginning Balance
65 
67 
Amortization
(3)
(3)
Changes in fair value
 
 
Ending Balance
$ 62 
$ 64 
Certain Transfers of Financial Assets, Mortgage Servicing Rights and Variable Interest Entities - Additional Information (Detail)
3 Months Ended
Mar. 31,
3 Months Ended
Mar. 31,
3 Months Ended
Mar. 31,
3 Months Ended
Mar. 31,
2011
2010
Dec. 31, 2010
Mar. 31, 2011
Mar. 31, 2011
Year Ended
Dec. 31, 2007
Mar. 31, 2011
3 Months Ended
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
2011
2010
Dec. 31, 2010
2011
2010
Dec. 31, 2010
2011
2010
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Residential mortgage loans sold, pre-tax gains
12,000,000 
85,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of the residual interest
186,000,000 
 
193,000,000 
167,000,000 
19,000,000 
 
 
 
 
42,000,000 
25,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
616,000,000 
 
651,000,000 
 
 
 
307,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,000,000 
8,000,000 
387,000,000 
394,000,000 
 
Total liabilities
 
 
 
 
 
 
279,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000 
1,000,000 
111,000,000 
123,000,000 
 
Accrued contingent losses related to representations and warranties
91,000,000 
 
81,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sale of corporate loans to multi-seller commercial paper conduits
 
 
 
 
 
1,900,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Company completed a structured sale of corporate loans to multi-seller commercial paper conduits, which are VIEs administered by unrelated third parties, from which it retained a residual interest in the pool of loans transferred, percent
 
 
 
 
 
0.03 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans held
 
 
 
 
 
 
324,000,000 
470,000,000 
479,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt issued
 
 
 
 
 
 
289,000,000 
465,000,000 
474,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
754,000,000 
Recourse to the federal government
 
 
 
 
 
 
 
To the extent that losses occur on the SPE's assets, the SPE has recourse to the federal government as the guarantor up to a maximum guarantee amount of 97%. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The total amount of loans serviced by the Company as a result of securitization transactions
 
 
 
 
 
 
 
 
 
 
 
120,300,000,000 
 
119,200,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Servicing fees and late fees
 
 
 
 
 
 
 
 
 
 
 
86,000,000 
92,000,000 
 
92,000,000 
99,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total unpaid principal amount of mortgaged loans serviced
 
 
 
 
 
 
 
 
 
 
 
 
 
 
164,500,000,000 
 
167,200,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Included in these amounts of loans serviced for third parties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
132,700,000,000 
 
134,100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage loans sold
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,700,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adoption of VIE consolidation guidance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Company's activities with Three Pillars generated total fee revenue for the Company, net of direct salary and administrative costs incurred by the Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16,000,000 
15,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial paper issued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
163,000,000 
99,000,000 
 
 
 
 
 
 
 
 
 
 
 
Funding commitments extended by Three Pillars to its customers, almost all of which renew annually
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,800,000,000 
4,100,000,000 
 
 
 
 
 
 
 
 
 
 
 
Assets supporting those commitments have a weighted average life (years)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.4 
2.3 
 
 
 
 
 
 
 
 
 
 
 
The majority of the commitments that have been originated by companies operating across a number of industries which collateralize, percent of the outstanding commitments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.42 
0.48 
0.16 
0.14 
 
 
 
 
 
 
 
Weighted average lives (days)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11 
Credit enhancement requirements as a percent of aggregate commitments of Three Pillars
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.1 
 
 
 
 
 
 
 
 
 
 
 
 
Other assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
201,000,000 
202,000,000 
 
 
 
 
 
Maximum exposure to loss from variable interest entity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,900,000,000 
4,200,000,000 
 
 
 
 
462,000,000 
458,000,000 
 
 
 
 
 
Loans issued by the Company to the limited partnerships
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
228,000,000 
222,000,000 
 
 
 
 
 
Asset Transfers in Which the Company has Continuing Economic Involvement (Detail) (USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Cash flows on interests held
$ 16 
$ 19 
Servicing or management fees
Residential Mortgage
 
 
Cash flows on interests held
15 
14 
Servicing or management fees
Commercial and Corporate Loans
 
 
Cash flows on interests held
 
Servicing or management fees
Consumer Loan
 
 
Cash flows on interests held
 
Collateralized Debt Obligations
 
 
Cash flows on interests held
$ 1 
$ 1 
Summary of the Key Characteristics, Inputs, and Economic Assumptions Used to Estimate the Fair Value of the Company's MSRs (Detail) (Estimate of Fair Value, Fair Value Disclosure, USD $)
In Millions
3 Months Ended
Mar. 31, 2011
Year Ended
Dec. 31, 2010
Fair value of retained MSRs
$ 1,538 
$ 1,439 
Prepayment rate assumption (annual)
0.10 
0.12 
Decline in fair value from 10% adverse change
60 
50 
Decline in fair value from 20% adverse change
102 
95 
Discount rate (annual)
0.12 
0.12 
Decline in fair value from 10% adverse change
75 
68 
Decline in fair value from 20% adverse change
$ 143 
$ 130 
Weighted-average life (in years)
6.8 
6.2 
Weighted-average coupon
0.053 
0.054 
Earnings/ (Loss) Per Share - Additional Information (Detail)
In Millions
Mar. 31, 2011
Mar. 31, 2010
Equivalent shares related to common stock options and common stock warrants outstanding were excluded from the computations of diluted income/(loss) per average common share because they would have been antidilutive
32 
32 
Reconciliation of Net Income/(Loss) to Net Income/(Loss) Available to Common Shareholders (Detail) (USD $)
In Millions, except Per Share data
3 Months Ended
Mar. 31,
2011
2010
Net income/(loss)
$ 180 
$ (161)
Series A preferred dividends
(2)
(2)
U.S. Treasury preferred dividends and accretion of discount
(66)
(66)
Accelerated accretion associated with repurchase of preferred stock issued to the U.S. Treasury
(74)
 
Net income/(loss) available to common shareholders
38 
(229)
Average basic common shares
500 
495 
Effect of dilutive securities:
 
 
Stock options
Restricted stock
Average diluted common shares
504 
498 
Net income/(loss) per average common share - diluted
0.08 1
(0.46)1
Net income/(loss) per average common share - basic
$ 0.08 
$ (0.46)
Long-Term Debt and Capital - Additional Information (Detail) (USD $)
3 Months Ended
Mar. 31, 2011
Common stock offerings
$ 1,016,000,000 
Long-term debt
14,663,000,000 1
Senior notes, issued
1,000,000,000 
Senior notes, issuance interest rate
0.036 
Senior notes, due date
2016 
Floating rate euro denominated notes, repayment
120,000,000 
Common stock offerings, increase in common equity
1,000,000,000 
Transactions that decreased common equity
(3,900,000,000)
Common stock offerings, new common shares
35,000,000 
Repurchase of Fixed Rate Cumulative Preferred Stock, series C
4,850,000,000 
Repurchase of Series C & D preferred stock, accelerating the outstanding discount accretion
(74,000,000)
Senior Notes
 
Senior debt offerings
1,000,000,000 
Series C Preferred Stock
 
Repurchase of Fixed Rate Cumulative Preferred Stock, series C
3,500,000,000 
Series D Preferred Stock
 
Repurchase of Fixed Rate Cumulative Preferred Stock, series C
1,400,000,000 
Series C and Series D Preferred Stock
 
Repurchase of Series C & D preferred stock, accelerating the outstanding discount accretion
(74,000,000)
Group 1
 
Warrant issued to purchase common stock, shares
11,891,280 
Warrant issued, initial exercise price
44.15 
Group 2
 
Warrant issued to purchase common stock, shares
6,008,902 
Warrant issued, initial exercise price
$ 33.70 
The Company's Capital Ratios (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Tier 1 common
$ 11,811 
$ 10,737 
Tier 1 capital
14,363 
18,156 
Total capital
18,178 
21,967 
Tier 1 common
0.0905 
0.0808 
Tier 1 capital
0.11 
0.1367 
Total capital
0.1392 
0.1654 
Tier 1 leverage
0.0872 
0.1094 
Sun Trust Bank
 
 
Tier 1 capital
13,477 
13,120 
Total capital
$ 16,782 
$ 16,424 
Tier 1 capital
0.1048 
0.1005 
Total capital
0.1305 
0.1258 
Tier 1 leverage
0.085 
0.0833 
Income Taxes - Additional Information (Detail)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Dec. 31, 2010
Provision/(benefit) for income taxes
33 
(194)
 
Effective tax rates
0.155 
(0.547)
 
Gross cumulative unrecognized tax benefits
99 
 
102 
Amount that would affect the Company's effective tax rate, if recognized
67 
 
 
Recognized a gross liability for interest related to its UTBs
21 
 
21 
Interest expense (income) related to UTBs
(5)
 
Reasonably possible decrease in UTBs during the next 12 months
(10)
 
 
Federal returns examined by the IRS
As of March 31, 2011, the Company’s federal returns through 2006 have been examined by the IRS and all issues have been resolved. The Company’s 2007 through 2009 federal income tax returns are currently under examination by the IRS. 
 
 
Employee Benefit Plans - Additional Information (Detail) (USD $)
In Millions, except Share data
3 Months Ended
Mar. 31,
2011
2010
LTI deferred cash plan - expense
$ 9 
$ 6 
Recognized stock-based compensation tax benefit
Salary shares
Specifically, the Company paid additional base salary amounts in the form of stock (salary shares) to the senior executive officers and other employees who were among the next 20 most highly-compensated employees. 
 
Supplemental Retirement Benefit plans, anticipated employer contributions/benefit payments
22 
 
Supplemental Retirement Benefit plans, actual contributions/benefit payments
 
Contributed to the Postretirement Welfare Plan
 
Expects to receive a Medicare Subsidy reimbursement
 
Accrual related to salary shares
 
Options granted
404,745 
 
Weighted average prices of option grants
32.27 
 
Fair value of options granted per share
$ 12.20 
$ 12.75 
Pension Plans, Defined Benefit
 
 
Expected long-term rate of return on plan assets
0.0775 
 
Other Postretirement Benefit Plans, Defined Benefit
 
 
Expected long-term rate of return on plan assets
0.0675 
 
Restricted Stock
 
 
Restricted stock granted
1,243,138 
 
Weighted average prices of restricted stock grants
32.18 
 
Assumptions Used in Estimating the Grant Date Fair Value of Options Using the Black-Scholes Option Pricing Model (Detail)
3 Months Ended
Mar. 31,
2011
2010
Dividend yield
0.0012 
0.0017 
Expected stock price volatility
0.3454 
0.5623 
Risk-free interest rate (weighted average)
0.0272 
0.0284 
Expected life of options
Stock-Based Compensation Expense Recognized in Noninterest Expense (Detail) (USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Stock-based compensation expense:
 
 
Stock options
$ 3 
$ 4 
Restricted stock
12 
Total stock-based compensation expense
$ 12 
$ 16 
Net Periodic Benefit Cost (Detail) (USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Pension Plans, Defined Benefit
 
 
Service cost
$ 18 
$ 17 
Interest cost
32 
32 
Expected return on plan assets
(47)
(45)
Amortization of prior service cost
(5)
(3)
Recognized net actuarial loss
10 
15 
Net periodic benefit cost
16 
Other Postretirement Benefit Plans, Defined Benefit
 
 
Interest cost
Expected return on plan assets
(2)
(2)
Net periodic benefit cost
$ 1 
$ 1 
Derivative Financial Instruments - Additional Information (Detail)
Share data in Millions
3 Months Ended
Mar. 31,
3 Months Ended
Sep. 30,
2011
2010
2008
2008
2008
Mar. 31, 2011
Dec. 31, 2010
3 Months Ended
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Mar. 31, 2011
Mar. 31, 2011
Mar. 31, 2011
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Derivative asset positions
 
 
 
 
 
 
 
1,500,000,000 
1,600,000,000 
 
 
 
 
 
 
 
 
 
 
 
Net derivative asset positions to which the Company was exposed to risk of its counterparties, netted by counterparty where formal netting arrangements exist
 
 
 
 
 
 
 
2,700,000,000 
2,800,000,000 
 
 
 
 
 
 
 
 
 
 
 
Collateral held by the Company against derivative asset positions
 
 
 
 
 
 
 
1,200,000,000 
1,200,000,000 
 
 
 
 
 
 
 
 
 
 
 
Adjusted the fair value of its net derivative asset position for estimates of counterparty credit risk
 
 
 
 
 
 
 
31,000,000 
33,000,000 
 
 
 
 
 
 
 
 
 
 
 
Gross notional amounts
 
 
 
 
 
 
 
 
 
 
 
 
 
75,000,000 
87,000,000 
 
 
1,000,000,000 
969,000,000 
 
Derivative asset positions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
38,000,000 
34,000,000 
 
Derivative liability positions
 
 
 
 
 
 
 
949,000,000 
1,100,000,000 
11,000,000 
945,000,000 
 
 
 
 
 
 
36,000,000 
32,000,000 
 
Collateral held
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
241,000,000 
268,000,000 
 
Posted collateral
 
 
 
 
 
 
 
 
 
6,000,000 
882,000,000 
 
 
 
 
 
 
 
 
 
Senior long-term debt ratings from three of the major ratings agencies
 
 
 
 
 
 
 
A3/BBB+ 
 
 
 
 
 
 
 
 
 
 
 
 
Posted collateral
 
 
 
 
 
 
 
 
 
 
 
24,000,000 
14,000,000 
 
 
 
 
 
 
 
Derivative remaining terms, lower limit
 
 
 
 
 
 
 
 
 
 
 
 
 
P1Y 
 
P2M 
 
 
 
P1Y 
Derivative remaining terms, higher limit
 
 
 
 
 
 
 
 
 
 
 
 
 
P5Y 
 
P7M 
 
 
 
P5Y 
Weighted average on the maximum estimated exposure (in years)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
P3.3Y 
 
 
 
P3.1Y 
Deferred net gains on derivatives that are recorded in AOCI are expected to be reclassified to net interest income over the next twelve months in connection with the recognition of interest income or interest expense on these hedged items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
342,000,000 
Maximum exposure
 
 
 
 
 
 
 
 
 
 
 
 
 
77,000,000 
99,000,000 
75,000,000 
74,000,000 
 
 
 
Fair values of written CDS
 
 
 
 
 
4,000,000 
3,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Executed equity forward agreements, underlying shares
 
 
30 
23 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconized ineffectiveness which was recorded in trading account profits and commissions
1,000,000 
7,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Positions (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Derivative Financial Instruments, Assets
 
 
Derivatives designated in cash flow hedging relationships, notional amount
$ 14,947 1
$ 16,897 1
Derivatives not designated as hedging instruments, notional amount
185,182 2
173,475 2
Notional amount of derivatives
200,129 
190,372 
Asset derivatives designated in cash flow hedging relationships, fair value
858 1
947 1
Asset derivatives not designated as hedging instruments, fair value
4,957 2
5,256 2
Derivative asset positions, fair value
5,815 
6,203 
Derivative Financial Instruments, Assets | Equity Contract | Available-for-Sale Securities | Trading Account Assets
 
 
Derivatives designated in cash flow hedging relationships, notional amount
1,547 1
1,547 1
Derivative Financial Instruments, Assets | Equity Contract | Trading Activity | Trading Account Assets
 
 
Derivatives not designated as hedging instruments, notional amount
5,775 
5,010 
Asset derivatives not designated as hedging instruments, fair value
669 2
583 2
Derivative Financial Instruments, Assets | Interest Rate Contract | Floating Rate Loans | Trading Account Assets
 
 
Derivatives designated in cash flow hedging relationships, notional amount
13,400 1
15,350 1
Asset derivatives designated in cash flow hedging relationships, fair value
858 1
947 1
Derivative Financial Instruments, Assets | Interest Rate Contract | Fixed Income Interest Rate | Trading Account Assets
 
 
Derivatives not designated as hedging instruments, notional amount
1,274 2
1,273 2
Asset derivatives not designated as hedging instruments, fair value
43 2
41 2
Derivative Financial Instruments, Assets | Interest Rate Contract | Mortgage Servicing Rights | Other Assets
 
 
Derivatives not designated as hedging instruments, notional amount
24,335 2
20,474 2
Asset derivatives not designated as hedging instruments, fair value
117 2
152 2
Derivative Financial Instruments, Assets | Interest Rate Contract | Loans | Other Assets
 
 
Derivatives not designated as hedging instruments, notional amount
2,661 
7,269 
Asset derivatives not designated as hedging instruments, fair value
2
92 2
Derivative Financial Instruments, Assets | Interest Rate Contract | Trading Activity | Trading Account Assets
 
 
Derivatives not designated as hedging instruments, notional amount
140,528 
132,286 
Asset derivatives not designated as hedging instruments, fair value
3,743 2
4,211 2
Derivative Financial Instruments, Assets | Foreign Exchange Contract | Trading Activity | Trading Account Assets
 
 
Derivatives not designated as hedging instruments, notional amount
5,898 2
2,691 2
Asset derivatives not designated as hedging instruments, fair value
197 2
92 2
Derivative Financial Instruments, Assets | Foreign Exchange Contract | Foreign-Denominated Debt and Commercial Loans | Trading Account Assets
 
 
Derivatives not designated as hedging instruments, notional amount
1,151 2
1,083 2
Asset derivatives not designated as hedging instruments, fair value
82 2
17 2
Derivative Financial Instruments, Assets | Credit Risk Contract | Loans | Trading Account Assets
 
 
Derivatives not designated as hedging instruments, notional amount
30 2
15 2
Derivative Financial Instruments, Assets | Credit Risk Contract | Trading Activity | Trading Account Assets
 
 
Derivatives not designated as hedging instruments, notional amount
1,131 
1,094 
Asset derivatives not designated as hedging instruments, fair value
42 2
39 2
Derivative Financial Instruments, Assets | Other Contract | Loans | Other Assets
 
 
Derivatives not designated as hedging instruments, notional amount
2,205 2
2,169 2
Asset derivatives not designated as hedging instruments, fair value
24 2
18 2
Derivative Financial Instruments, Assets | Other Contract | Trading Activity | Trading Account Assets
 
 
Derivatives not designated as hedging instruments, notional amount
194 2
111 2
Asset derivatives not designated as hedging instruments, fair value
33 2
11 2
Derivative Financial Instruments, Liabilities
 
 
Derivatives designated in cash flow hedging relationships, notional amount
2,497 1
2,047 1
Derivatives not designated as hedging instruments, notional amount
134,020 2
129,752 2
Notional amount of derivatives
136,517 
131,799 
Liability derivatives designated in cash flow hedging relationships, fair value
181 1
155 1
Liability derivatives not designated as hedging instruments, fair value
4,701 2
5,019 2
Derivative liability positions, fair value
4,882 
5,174 
Derivative Financial Instruments, Liabilities | Equity Contract | Available-for-Sale Securities | Trading Liabilities
 
 
Derivatives designated in cash flow hedging relationships, notional amount
1,547 1
1,547 1
Liability derivatives designated in cash flow hedging relationships, fair value
161 1
145 1
Derivative Financial Instruments, Liabilities | Equity Contract | Trading Activity | Trading Liabilities
 
 
Derivatives not designated as hedging instruments, notional amount
9,007 2
8,012 2
Liability derivatives not designated as hedging instruments, fair value
827 2
730 2
Derivative Financial Instruments, Liabilities | Interest Rate Contract | Floating Rate Loans | Trading Liabilities
 
 
Derivatives designated in cash flow hedging relationships, notional amount
950 1
500 1
Liability derivatives designated in cash flow hedging relationships, fair value
20 1
10 1
Derivative Financial Instruments, Liabilities | Interest Rate Contract | Fixed Income Interest Rate | Trading Liabilities
 
 
Derivatives not designated as hedging instruments, notional amount
60 2
60 2
Liability derivatives not designated as hedging instruments, fair value
2
2
Derivative Financial Instruments, Liabilities | Interest Rate Contract | Mortgage Servicing Rights | Other Liabilities
 
 
Derivatives not designated as hedging instruments, notional amount
4,075 2
6,480 2
Liability derivatives not designated as hedging instruments, fair value
25 2
73 2
Derivative Financial Instruments, Liabilities | Interest Rate Contract | Loans | Other Liabilities
 
 
Derivatives not designated as hedging instruments, notional amount
2,144 2
2,383 2
Liability derivatives not designated as hedging instruments, fair value
2
20 2
Derivative Financial Instruments, Liabilities | Interest Rate Contract | Trading Activity | Trading Liabilities
 
 
Derivatives not designated as hedging instruments, notional amount
110,135 2
105,926 2
Liability derivatives not designated as hedging instruments, fair value
3,433 2
3,884 2
Derivative Financial Instruments, Liabilities | Interest Rate Contract | Corporate Bonds and Loans | Trading Liabilities
 
 
Derivatives not designated as hedging instruments, notional amount
 2
2
Derivative Financial Instruments, Liabilities | Foreign Exchange Contract | Trading Activity | Trading Liabilities
 
 
Derivatives not designated as hedging instruments, notional amount
5,953 2
2,818 2
Liability derivatives not designated as hedging instruments, fair value
189 2
91 2
Derivative Financial Instruments, Liabilities | Foreign Exchange Contract | Foreign-Denominated Debt and Commercial Loans | Trading Liabilities
 
 
Derivatives not designated as hedging instruments, notional amount
511 2
495 2
Liability derivatives not designated as hedging instruments, fair value
114 2
128 2
Derivative Financial Instruments, Liabilities | Credit Risk Contract | Loans | Trading Liabilities
 
 
Derivatives not designated as hedging instruments, notional amount
207 2
227 2
Liability derivatives not designated as hedging instruments, fair value
2
2
Derivative Financial Instruments, Liabilities | Credit Risk Contract | Trading Activity | Trading Liabilities
 
 
Derivatives not designated as hedging instruments, notional amount
1,108 
1,039 
Liability derivatives not designated as hedging instruments, fair value
38 2
34 2
Derivative Financial Instruments, Liabilities | Other Contract | Loans | Other Liabilities
 
 
Derivatives not designated as hedging instruments, notional amount
625 
2,196 
Liability derivatives not designated as hedging instruments, fair value
26 
42 
Derivative Financial Instruments, Liabilities | Other Contract | Trading Activity | Trading Liabilities
 
 
Derivatives not designated as hedging instruments, notional amount
195 2
111 2
Liability derivatives not designated as hedging instruments, fair value
$ 33 2
$ 11 2
Derivative Positions (Parenthetical) (Detail)
Share data in Millions
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
3 Months Ended
Jun. 30, 2009
Notional amounts related to interest rate futures
 
 
24,700,000,000 
25,000,000,000 
400,000,000 
1,400,000,000 
 
Notional related to equity futures
 
 
600,000,000 
500,000,000 
 
 
 
Asset amount notional from purchased and written interest rate swap risk participation agreements
 
 
1,000,000 
1,000,000 
 
 
 
Liability amount notional from purchased and written interest rate swap risk participation agreements
 
 
10,000,000 
8,000,000 
 
 
 
Derivative liability recorded in other liabilities, established upon the sale of Visa Class B shares
23,000,000 
23,000,000 
 
 
 
 
 
Notional amount, established upon the sale of Visa Class B shares
134,000,000 
134,000,000 
 
 
 
 
 
Shares of Class B Visa Inc. common stock sold to another financial institution, shares
 
 
 
 
 
 
Impacts of Derivative Financial Instruments on the Consolidated Statements of Income/(Loss) and the Consolidated Statements of Shareholders' Equity (Detail) (USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Nondesignated
 
 
Amount of gain/(loss) on derivatives recognized in income
$ 58 
$ 91 
Nondesignated | Trading Account Profits and Commissions | Fixed Income Interest Rate | Interest Rate Contract
 
 
Amount of gain/(loss) on derivatives recognized in income
46 
Nondesignated | Trading Account Profits and Commissions | Loans | Credit Risk Contract
 
 
Amount of gain/(loss) on derivatives recognized in income
(1)
 
Nondesignated | Trading Account Profits and Commissions | Trading Activity | Interest Rate Contract
 
 
Amount of gain/(loss) on derivatives recognized in income
30 
Nondesignated | Trading Account Profits and Commissions | Trading Activity | Equity Contract
 
 
Amount of gain/(loss) on derivatives recognized in income
Nondesignated | Trading Account Profits and Commissions | Trading Activity | Foreign Exchange Contract
 
 
Amount of gain/(loss) on derivatives recognized in income
(1)
Nondesignated | Trading Account Profits and Commissions | Foreign-Denominated Debt and Commercial Loans | Foreign Exchange Contract
 
 
Amount of gain/(loss) on derivatives recognized in income
81 
(96)
Nondesignated | Trading Account Profits and Commissions | Interest Rate Contract | Corporate Debt Securities
 
 
Amount of gain/(loss) on derivatives recognized in income
 
(1)
Nondesignated | Trading Account Profits and Commissions | Credit Risk Contract | Other Member
 
 
Amount of gain/(loss) on derivatives recognized in income
 
Nondesignated | Mortgage Servicing Income | Mortgage Servicing Rights | Interest Rate Contract
 
 
Amount of gain/(loss) on derivatives recognized in income
(43)
76 
Nondesignated | Mortgage Production Income | Loans | Interest Rate Contract
 
 
Amount of gain/(loss) on derivatives recognized in income
(26)
(70)
Nondesignated | Mortgage Production Income | Loans | Other Contract
 
 
Amount of gain/(loss) on derivatives recognized in income
36 
92 
Interest Income, Interest and Fees on Loans | Floating Rate Loans | Interest Rate Contract | Cash Flow Hedging
 
 
Amount of pre-tax gain/(loss) reclassified from AOCI into income (effective portion)
113 1
127 2
Available-for-Sale Securities | Equity Contract | Cash Flow Hedging
 
 
Amount of pre-tax gain/(loss) recognized in OCI on derivative (effective portion)
(16)
61 
Floating Rate Loans | Interest Rate Contract | Cash Flow Hedging
 
 
Amount of pre-tax gain/(loss) recognized in OCI on derivative (effective portion)
(27)
288 
Cash Flow Hedging
 
 
Amount of pre-tax gain/(loss) recognized in OCI on derivative (effective portion)
(43)
349 
Amount of pre-tax gain/(loss) reclassified from AOCI into income (effective portion)
$ 113 1
$ 127 2
Impacts of Derivative Financial Instruments on the Consolidated Statements of Income/(Loss) and the Consolidated Statements of Shareholders' Equity (Parenthetical) (Detail) (Cash Flow Hedging, USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Interest Income (Expense), Net | Cash Flow Hedging
 
 
Reclassified in pre-tax gains from AOCI into net interest income
$ 41 
$ 29 
Cash Flow Hedging
 
 
Reclassified in pre-tax gains from AOCI into net interest income
$ 113 1
$ 127 2
Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Assets
 
 
Trading assets
$ 6,289 
$ 6,175 
Loans held for sale
1,837 
3,168 
LHFI
457 
492 
Other intangible assets
1,538 1
1,439 2
Other assets
136 3
241 4
Liabilities
 
 
Total trading liabilities
2,731 
2,678 
Brokered deposits
1,181 
1,213 
Long-term debt
2,854 
2,837 
Other liabilities
48 3
114 4
Fair Value, Inputs, Level 1
 
 
Assets
 
 
Trading assets
450 
353 
Liabilities
 
 
Total trading liabilities
707 
559 
Fair Value, Inputs, Level 1 | Available-for-Sale Securities
 
 
Assets
 
 
Securities available for sale
2,212 
7,489 
Fair Value, Inputs, Level 1 | Available-for-Sale Securities | US Treasury Securities
 
 
Assets
 
 
Securities available for sale
222 
5,516 
Fair Value, Inputs, Level 1 | Available-for-Sale Securities | Equity Securities, Coca Cola
 
 
Assets
 
 
Securities available for sale
1,990 
1,973 
Fair Value, Inputs, Level 1 | US Treasury Securities
 
 
Assets
 
 
Trading assets
226 
187 
Liabilities
 
 
Total trading liabilities
540 
439 
Fair Value, Inputs, Level 1 | Equity Securities
 
 
Assets
 
 
Trading assets
 
Liabilities
 
 
Total trading liabilities
 
Fair Value, Inputs, Level 1 | Derivative Financial Instruments, Assets
 
 
Assets
 
 
Trading assets
222 
166 
Fair Value, Inputs, Level 1 | Derivative Financial Instruments, Liabilities
 
 
Liabilities
 
 
Total trading liabilities
166 
120 
Fair Value, Inputs, Level 2
 
 
Assets
 
 
Trading assets
5,734 
5,613 
Loans held for sale
1,820 
3,161 
Other assets
112 3
223 4
Liabilities
 
 
Total trading liabilities
1,863 
1,974 
Brokered deposits
1,181 
1,213 
Long-term debt
2,854 
2,837 
Other liabilities
22 3
72 4
Fair Value, Inputs, Level 2 | Available-for-Sale Securities
 
 
Assets
 
 
Securities available for sale
23,231 
18,270 
Fair Value, Inputs, Level 2 | Available-for-Sale Securities | US Government Agencies Debt Securities
 
 
Assets
 
 
Securities available for sale
3,816 
1,895 
Fair Value, Inputs, Level 2 | Available-for-Sale Securities | US States and Political Subdivisions Debt Securities
 
 
Assets
 
 
Securities available for sale
478 
505 
Fair Value, Inputs, Level 2 | Available-for-Sale Securities | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
 
 
Assets
 
 
Securities available for sale
17,995 
14,358 
Fair Value, Inputs, Level 2 | Available-for-Sale Securities | Collateralized Debt Obligations
 
 
Assets
 
 
Securities available for sale
77 
50 
Fair Value, Inputs, Level 2 | Available-for-Sale Securities | Asset-backed Securities
 
 
Assets
 
 
Securities available for sale
700 
788 
Fair Value, Inputs, Level 2 | Available-for-Sale Securities | Corporate And Other Debt Securities
 
 
Assets
 
 
Securities available for sale
51 
477 
Fair Value, Inputs, Level 2 | Available-for-Sale Securities | Equity Securities, Other
 
 
Assets
 
 
Securities available for sale
114 
197 
Fair Value, Inputs, Level 2 | US Government Agencies Debt Securities
 
 
Assets
 
 
Trading assets
438 
361 
Fair Value, Inputs, Level 2 | US States and Political Subdivisions Debt Securities
 
 
Assets
 
 
Trading assets
156 
123 
Fair Value, Inputs, Level 2 | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
 
 
Assets
 
 
Trading assets
221 
301 
Fair Value, Inputs, Level 2 | Mortgage-backed Securities, Issued by Private Enterprises
 
 
Assets
 
 
Trading assets
 
Fair Value, Inputs, Level 2 | Collateralized Debt Obligations
 
 
Assets
 
 
Trading assets
Fair Value, Inputs, Level 2 | Asset-backed Securities
 
 
Assets
 
 
Trading assets
32 
32 
Fair Value, Inputs, Level 2 | Corporate And Other Debt Securities
 
 
Assets
 
 
Trading assets
716 
743 
Liabilities
 
 
Total trading liabilities
277 
398 
Fair Value, Inputs, Level 2 | Commercial Paper
 
 
Assets
 
 
Trading assets
53 
14 
Fair Value, Inputs, Level 2 | Equity Securities
 
 
Assets
 
 
Trading assets
98 
98 
Fair Value, Inputs, Level 2 | Derivative Financial Instruments, Assets
 
 
Assets
 
 
Trading assets
2,536 
2,577 
Fair Value, Inputs, Level 2 | Trading Loans
 
 
Assets
 
 
Trading assets
1,481 
1,353 
Fair Value, Inputs, Level 2 | Residential Mortgage Loans Held For Sale
 
 
Assets
 
 
Loans held for sale
1,496 
2,845 
Fair Value, Inputs, Level 2 | Corporate and Other
 
 
Assets
 
 
Loans held for sale
324 
316 
Fair Value, Inputs, Level 2 | Derivative Financial Instruments, Liabilities
 
 
Liabilities
 
 
Total trading liabilities
1,586 
1,576 
Fair Value, Inputs, Level 3
 
 
Assets
 
 
Trading assets
105 
209 
Loans held for sale
17 
LHFI
457 
492 
Other intangible assets
1,538 1
1,439 2
Other assets
24 3
18 4
Liabilities
 
 
Total trading liabilities
161 
145 
Other liabilities
26 3
42 4
Fair Value, Inputs, Level 3 | Available-for-Sale Securities
 
 
Assets
 
 
Securities available for sale
1,126 
1,136 
Fair Value, Inputs, Level 3 | Available-for-Sale Securities | US States and Political Subdivisions Debt Securities
 
 
Assets
 
 
Securities available for sale
73 
74 
Fair Value, Inputs, Level 3 | Available-for-Sale Securities | Mortgage-backed Securities, Issued by Private Enterprises
 
 
Assets
 
 
Securities available for sale
338 
347 
Fair Value, Inputs, Level 3 | Available-for-Sale Securities | Asset-backed Securities
 
 
Assets
 
 
Securities available for sale
20 
20 
Fair Value, Inputs, Level 3 | Available-for-Sale Securities | Corporate And Other Debt Securities
 
 
Assets
 
 
Securities available for sale
Fair Value, Inputs, Level 3 | Available-for-Sale Securities | Equity Securities, Other
 
 
Assets
 
 
Securities available for sale
690 5
690 6
Fair Value, Inputs, Level 3 | Mortgage-backed Securities, Issued by Private Enterprises
 
 
Assets
 
 
Trading assets
Fair Value, Inputs, Level 3 | Collateralized Debt Obligations
 
 
Assets
 
 
Trading assets
42 
53 
Fair Value, Inputs, Level 3 | Asset-backed Securities
 
 
Assets
 
 
Trading assets
27 
Fair Value, Inputs, Level 3 | Equity Securities
 
 
Assets
 
 
Trading assets
56 
123 
Fair Value, Inputs, Level 3 | Residential Mortgage Loans Held For Sale
 
 
Assets
 
 
Loans held for sale
17 
Fair Value, Inputs, Level 3 | Corporate and Other
 
 
Assets
 
 
Loans held for sale
 
Fair Value, Inputs, Level 3 | Derivative Financial Instruments, Liabilities
 
 
Liabilities
 
 
Total trading liabilities
161 
145 
Available-for-Sale Securities
 
 
Assets
 
 
Securities available for sale
26,569 
26,895 
Available-for-Sale Securities | US Treasury Securities
 
 
Assets
 
 
Securities available for sale
222 
5,516 
Available-for-Sale Securities | US Government Agencies Debt Securities
 
 
Assets
 
 
Securities available for sale
3,816 
1,895 
Available-for-Sale Securities | US States and Political Subdivisions Debt Securities
 
 
Assets
 
 
Securities available for sale
551 
579 
Available-for-Sale Securities | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
 
 
Assets
 
 
Securities available for sale
17,995 
14,358 
Available-for-Sale Securities | Mortgage-backed Securities, Issued by Private Enterprises
 
 
Assets
 
 
Securities available for sale
338 
347 
Available-for-Sale Securities | Collateralized Debt Obligations
 
 
Assets
 
 
Securities available for sale
77 
50 
Available-for-Sale Securities | Asset-backed Securities
 
 
Assets
 
 
Securities available for sale
720 
808 
Available-for-Sale Securities | Corporate And Other Debt Securities
 
 
Assets
 
 
Securities available for sale
56 
482 
Available-for-Sale Securities | Equity Securities, Coca Cola
 
 
Assets
 
 
Securities available for sale
1,990 
1,973 
Available-for-Sale Securities | Equity Securities, Other
 
 
Assets
 
 
Securities available for sale
804 
887 
US Treasury Securities
 
 
Assets
 
 
Trading assets
226 
187 
Liabilities
 
 
Total trading liabilities
540 
439 
US Government Agencies Debt Securities
 
 
Assets
 
 
Trading assets
438 
361 
US States and Political Subdivisions Debt Securities
 
 
Assets
 
 
Trading assets
156 
123 
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
 
 
Assets
 
 
Trading assets
221 
301 
Mortgage-backed Securities, Issued by Private Enterprises
 
 
Assets
 
 
Trading assets
15 
Collateralized Debt Obligations
 
 
Assets
 
 
Trading assets
45 
55 
Asset-backed Securities
 
 
Assets
 
 
Trading assets
37 
59 
Corporate And Other Debt Securities
 
 
Assets
 
 
Trading assets
716 
743 
Liabilities
 
 
Total trading liabilities
277 
398 
Commercial Paper
 
 
Assets
 
 
Trading assets
53 
14 
Equity Securities
 
 
Assets
 
 
Trading assets
156 
221 
Liabilities
 
 
Total trading liabilities
 
Derivative Financial Instruments, Assets
 
 
Assets
 
 
Trading assets
2,758 
2,743 
Trading Loans
 
 
Assets
 
 
Trading assets
1,481 
1,353 
Residential Mortgage Loans Held For Sale
 
 
Assets
 
 
Loans held for sale
1,513 
2,847 
Corporate and Other
 
 
Assets
 
 
Loans held for sale
324 
321 
Derivative Financial Instruments, Liabilities
 
 
Liabilities
 
 
Total trading liabilities
$ 1,913 
$ 1,841 
Assets and Liabilities Measured at Fair Value on a Recurring Basis (Parenthetical) (Detail) (Equity Securities, Other, USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Federal Home Loan Bank (FHLB) of Atlanta stock stated at par value
$ 298 
$ 298 
Federal Reserve Bank stock stated at par value
$ 391 
$ 391 
Fair Value Option Elected, Difference Between the Aggregate Fair Value and the Aggregate Unpaid Principal Balance (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
LHFS
$ 1,837 
$ 3,168 
Brokered deposits
1,181 
1,213 
Aggregate Fair Value Under Fair Value Option
 
 
Trading loans
1,481 
1,353 
LHFI
432 
462 
Past due loans of 90 days or more
Nonaccrual loans
23 
28 
LHFS
1,807 
3,160 
Past due loans of 90 days or more
15 
Nonaccrual loans
15 
Brokered deposits
1,181 
1,213 
Long-term debt
2,854 
2,837 
Aggregate Unpaid Principal Balance Under Fair Value Option
 
 
Trading loans
1,456 
1,320 
LHFI
485 
517 
Past due loans of 90 days or more
Nonaccrual loans
42 
54 
LHFS
1,793 
3,155 
Past due loans of 90 days or more
15 
Nonaccrual loans
28 
25 
Brokered deposits
1,142 
1,188 
Long-term debt
2,753 
2,753 
Fair Value Over/(Under) Unpaid Principal
 
 
Trading loans
25 
33 
LHFI
(53)
(55)
Past due loans of 90 days or more
(2)
(2)
Nonaccrual loans
(19)
(26)
LHFS
14 
Nonaccrual loans
(13)
(19)
Brokered deposits
39 
25 
Long-term debt
$ 101 
$ 84 
Change in Fair Value of Financial Instruments for which the FVO has been Elected (Detail) (USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Trading Account Profits and Commissions | Trading Account Assets
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
$ 7 
$ 1 
Trading Account Profits and Commissions | Loans Held-for-Sale
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
11 
Trading Account Profits and Commissions | Loans Held-for-Investment
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
 
Trading Account Profits and Commissions | Brokered Deposits
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
(11)
(31)
Trading Account Profits and Commissions | Long-Term Debt
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
(17)
(86)
Mortgage Production Income | Loans Held-for-Sale
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
30 1
92 2
Mortgage Production Income | Loans Held-for-Investment
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
(4)1
 
Mortgage Production Income | Other Intangible Assets
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
1
2
Mortgage Servicing Income | Other Intangible Assets
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
17 
(109)
Trading Account Assets
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
3
4
Loans Held-for-Sale
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
32 3
103 4
Loans Held-for-Investment
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
(1)3
 
Other Intangible Assets
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
19 3
(105)4
Brokered Deposits
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
(11)3
(31)4
Long-Term Debt
 
 
Fair Value Gain/(Loss) for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
$ (17)3
$ (86)4
Change in Fair Value of Financial Instruments for which the FVO has been Elected (Parenthetical) (Detail) (Mortgage Production Income, USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Loans Held-for-Sale | Mortgage Production Income
 
 
Income recognized upon the sale of loans
$ 86 
$ 62 
Other Intangible Assets | Mortgage Production Income
 
 
Income recognized upon the sale of loans
$ 2 
$ 4 
Fair Value Measurement and Election - Additional Information (Detail)
In Millions, except Per Share data
3 Months Ended
Mar. 31,
2011
2010
Dec. 31, 2010
Proceeds from sale of retained interest
20 
 
 
Loans carried at fair value
457 
 
492 
Loans held for investment
457 
 
492 
Incremental charge-off
615 
862 
 
Lower Limit
 
 
 
Probable forecasted sale of Coke
6.5 
 
 
Upper Limit
 
 
 
Probable forecasted sale of Coke
 
 
Residential Mortgage Loans Held For Sale | Non Performing Loans
 
 
 
Transferred loans that were previously designated as held for investment to held for sale
47 
160 
 
Incremental charge-off
10 
 
 
Residential Mortgage Loans Held For Sale | Fair Value, Inputs, Level 2
 
 
 
Recognized losses due to changes in fair value attributable to borrower-specific credit risk
 
Structured Investment Vehicle | Collateralized Debt Obligations
 
 
 
Proceeds from sale of trading assets
21 
 
 
Asset-backed Securities | Trading Assets | Fair Value, Inputs, Level 2
 
 
 
Transferred out of level 3 in the fair value hierarchy
32 
 
 
Asset-backed Securities | Available-for-Sale Securities | Fair Value, Inputs, Level 2
 
 
 
Transferred out of level 3 in the fair value hierarchy
93 
 
 
Asset-backed Securities | Student Loans
 
 
 
Government guarantee
0.97 
 
 
Equity Securities | Fair Value, Inputs, Level 3
 
 
 
FHLB stock and Federal Reserve Bank stock
690 
 
690 
Equity Securities, Coca Cola | Fair Value, Inputs, Level 3
 
 
 
Derivative in a liability position, fair value
161 
 
145 
Trading Account Assets | Fair Value, Inputs, Level 2
 
 
 
Trading loans were outstanding
441 
 
381 
Corporate and Other | Fair Value, Inputs, Level 3
 
 
 
Loans that were acquired through the acquisition of GB&T
 
 
Residential Mortgage Loans | Nonmarketable securities | Fair Value, Inputs, Level 3
 
 
 
Loans held for investment
453 
 
 
Brokered Deposits | Fair Value, Inputs, Level 2
 
 
 
Recognized gains (losses) on liabilities due to changes in its own credit spread
(14)
(16)
 
Long-Term Debt | Fair Value, Inputs, Level 2
 
 
 
Recognized gains (losses) on liabilities due to changes in its own credit spread
19 
80 
 
Private Equity Funds | Other Assets | Fair Value, Inputs, Level 3
 
 
 
Impairment charge
 
Repossessed Personal Property | Other Assets | Fair Value, Inputs, Level 2
 
 
 
Impairment charge
 
Collateralized Debt Obligations | Interests in Company Sponsored Securitizations
 
 
 
Trust preferred securitization interests
42 
 
 
US States and Political Subdivisions Debt Securities | Fair Value, Inputs, Level 2
 
 
 
Percentage of available for sale securites rated AAA or AA
0.99 
 
 
Total Return Swap | Fair Value, Inputs, Level 2
 
 
 
Loans carried at fair value
1,000 
 
972 
Interest Rate Lock Commitments
 
 
 
Transferred out of level 3 in the fair value hierarchy
14 
 
 
Collateralized Loan Obligations | Fair Value, Inputs, Level 2
 
 
 
Issued securities contained in a consolidated CLO at fair value in order to recognize the nonrecourse nature of these liabilities
289 
 
 
Other Assets | Fair Value, Inputs, Level 3 | Operating Lease Expense
 
 
 
Impairment charge
 
Fair Value, Inputs, Level 2 | Personal Property Under Operating Leases
 
 
 
Impairment charge
 
Reconciliation of the Beginning and Ending Balances for Fair Valued Assets and Liabilities Measured on a Recurring Basis Using Significant Unobservable Inputs (Detail)
In Millions
3 Months Ended
Mar. 31,
3 Months Ended
Mar. 31,
2011
2010
2011
2010
2011
2010
2011
2010
2010
Mar. 31, 2011
Dec. 31, 2010
3 Months Ended
Mar. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
2011
2010
2011
2010
2011
2010
2010
2011
2010
2011
2010
2010
2011
2010
2010
2010
2011
2010
2010
2011
2010
2011
2010
2011
2010
Beginning balance
1,136 
1,322 
74 
132 
347 
407 
20 
 
78 
705 
690 
690 
(24)
(35)
(145)
(46)
209 
390 
14 
27 
 
25 
123 
151 
 
18 
53 
175 
151 
 
 
492 
449 
Reclassifications
 
 
 
 
 
(29)
 
102 
(73)
 
 
 
 
 
 
 
 
 
 
 
 
 
(8)
 
51 
(25)
 
 
 
(18)
 
 
(151)
 
142 
 
 
 
Beginning balance, restated
 
1,322 
 
132 
 
378 
 
102 
 
 
705 
 
 
 
(35)
 
(46)
 
390 
 
 
51 
 
 
151 
 
 
 
175 
 
 
142 
 
 
449 
Included in earnings
(1)1
 
 
 
(1)
(1)
 
2
 
 
 
 
 
 
36 3
92 3
 
 
50 4
28 4
 
 
2
2
 
2
2
 
31 2
11 2
 
(1)3
(1)3
(1)5
 
(1)6
 
OCI
20 
 
 
18 
17 
(8)
 
 
 
 
 
 
 
 
(16)7
46 8
 
15 
 
 
 
 
 
 
 
 
15 8
 
 
 
 
 
 
 
 
 
 
Purchases, sales, issuances, settlements, maturities paydowns, net
 
(13)
 
(1)
 
(25)
 
13 
 
 
 
 
 
 
 
 
 
 
 
(45)
(1)
 
(1)
 
(4)
 
 
(12)
 
 
 
(27)
 
 
(19)
 
 
 
(13)
Sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(57)
 
 
(5)
 
(31)
 
 
 
 
 
 
(21)
 
 
(2)
 
 
 
 
 
Settlements
(29)
 
(1)
 
(26)
 
(2)
 
 
 
 
 
 
 
 
 
 
 
(77)
 
 
(1)
 
 
 
 
(75)
 
 
 
(1)
 
 
(1)
 
 
 
(23)
 
Transfers to/from other balance sheet line items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(14)
(67)
 
 
(20)
 
 
 
 
 
 
 
 
 
 
 
(20)
 
 
10 
(4)
 
(11)
(13)
Transfers into Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11 
20 
 
 
 
 
Transfers out of Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
 
 
 
 
(1)
Fair value, ending balance
1,126 
1,318 
73 
131 
338 
369 
20 
108 
705 
690 
690 
(2)
(10)
(161)
 
105 
388 
51 
 
56 
145 
22 
 
42 
159 
 
17 
152 
 
457 
422 
Change in unrealized gains / (losses) included in earnings for the period related to financial assets still held at the end of period
(1)1
(1)9
 
 
(1)
(1)
 
 
 
 
 
 
 
 
36 3
 
 
 
22 4
13 4
 
 
 
2
 
 
 
18 2
 
(3)
(8)3
 
 
(2)6
10
Carrying Value of Those Assets Measured at Fair Value on a Non-Recurring Basis (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Valuation Allowance | Loans Held-for-Investment
 
 
Assets measured at fair value on a non-recurring basis
$ (31)
$ (15)
Valuation Allowance | Other Real Estate Owned
 
 
Assets measured at fair value on a non-recurring basis
(107)
(116)
Valuation Allowance | Other Assets
 
 
Assets measured at fair value on a non-recurring basis
(2)
(20)
Loans Held-for-Sale
 
 
Assets measured at fair value on a non-recurring basis
328 
333 
Loans Held-for-Sale | Fair Value, Inputs, Level 2
 
 
Assets measured at fair value on a non-recurring basis
74 
142 
Loans Held-for-Sale | Fair Value, Inputs, Level 3
 
 
Assets measured at fair value on a non-recurring basis
254 
191 
Loans Held-for-Investment
 
 
Assets measured at fair value on a non-recurring basis
141 
85 
Loans Held-for-Investment | Fair Value, Inputs, Level 3
 
 
Assets measured at fair value on a non-recurring basis
141 
85 
Other Real Estate Owned
 
 
Assets measured at fair value on a non-recurring basis
534 
596 
Other Real Estate Owned | Fair Value, Inputs, Level 2
 
 
Assets measured at fair value on a non-recurring basis
495 
553 
Other Real Estate Owned | Fair Value, Inputs, Level 3
 
 
Assets measured at fair value on a non-recurring basis
39 
43 
Affordable Housing
 
 
Assets measured at fair value on a non-recurring basis
 
357 
Affordable Housing | Fair Value, Inputs, Level 3
 
 
Assets measured at fair value on a non-recurring basis
 
357 
Other Assets
 
 
Assets measured at fair value on a non-recurring basis
63 
130 
Other Assets | Fair Value, Inputs, Level 2
 
 
Assets measured at fair value on a non-recurring basis
90 
Other Assets | Fair Value, Inputs, Level 3
 
 
Assets measured at fair value on a non-recurring basis
$ 56 
$ 40 
Carrying Amounts and Fair Values of the Company's Financial Instruments (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Carrying (Reported) Amount, Fair Value Disclosure
 
 
Financial assets
 
 
Cash and cash equivalents
$ 6,217 
$ 5,378 
Trading assets
6,289 
6,175 
Securities AFS
26,569 
26,895 
LHFS
2,165 
3,501 
LHFI
114,932 
115,975 
Interest/credit adjustment on LHFI
(2,854)
(2,974)
LHFI, as adjusted for interest/credit risk
112,078 
113,001 
LHFI, fully adjusted
112,078 
113,001 
Financial liabilities
 
 
Consumer and commercial deposits
121,559 
120,025 
Brokered deposits
2,369 
2,365 
Foreign deposits
57 
654 
Short-term borrowings
6,121 
5,821 
Long-term debt
14,663 
13,648 
Trading liabilities
2,731 
2,678 
Estimate of Fair Value, Fair Value Disclosure
 
 
Financial assets
 
 
Cash and cash equivalents
6,217 1
5,378 1
Trading assets
6,289 2
6,175 2
Securities AFS
26,569 2
26,895 2
LHFS
2,165 3
3,501 3
LHFI
114,932 
115,975 
Interest/credit adjustment on LHFI
(3,854)
(3,823)
LHFI, as adjusted for interest/credit risk
111,078 4
112,152 4
Market risk/liquidity adjustment on LHFI
(3,767)
(3,962)
LHFI, fully adjusted
107,311 4
108,190 4
Financial liabilities
 
 
Consumer and commercial deposits
121,844 5
120,368 5
Brokered deposits
2,391 6
2,381 6
Foreign deposits
57 6
654 6
Short-term borrowings
6,117 6
5,815 6
Long-term debt
14,351 6
13,191 6
Trading liabilities
$ 2,731 2
$ 2,678 2
[4] LHFI fair values are based on a hypothetical exit price, which does not represent the estimated intrinsic value of the loan if held for investment. The assumptions used are expected to approximate those that a market participant purchasing the loans would use to value the loans, including a market risk premium and liquidity discount. Estimating the fair value of the loan portfolio when loan sales and trading markets are illiquid, or for certain loan types, nonexistent, requires significant judgment. Therefore, the estimated fair value can vary significantly depending on a market participant's ultimate considerations and assumptions. The final value yields a market participant's expected return on investment that is indicative of the current market conditions, but it does not take into consideration the Company's estimated value from continuing to hold these loans or its lack of willingness to transact at these estimated values. The Company estimated fair value based on estimated future cash flows discounted, initially, at current origination rates for loans with similar terms and credit quality, which derived an estimated value of 99% on the loan portfolio's net carrying value as of March 31, 2011 and December 31, 2010. The value derived from origination rates likely does not represent an exit price; therefore, an incremental market risk and liquidity discount was subtracted from the initial value as of March 31, 2011 and December 31, 2010, respectively. The discounted value is a function of a market participant's required yield in the current environment and is not a reflection of the expected cumulative losses on the loans. Loan prepayments are used to adjust future cash flows based on historical experience and prepayment model forecasts. The value of related accrued interest on loans approximates fair value; however, it is not included in the carrying amount or fair value of loans. The value of long-term customer relationships is not permitted under current U.S. GAAP to be included in the estimated fair value.
Carrying Amounts and Fair Values of the Company's Financial Instruments (Parenthetical) (Detail)
Mar. 31, 2011
Dec. 31, 2010
Estimated fair value of loan portfolio's net carrying value
0.99 
0.99 
Reinsurance Arrangements and Guarantees - Additional Information (Detail)
Year Ended
Dec. 31,
3 Months Ended
Mar. 31,
3 Months Ended
Mar. 31,
Year Ended
Dec. 31,
3 Months Ended
Mar. 31, 2011
2010
2009
2008
Mar. 31, 2011
Mar. 31, 2011
2011
2010
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
2011
2010
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Dec. 31, 2010
3 Months Ended
Mar. 31, 2011
2010
2009
2008
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2011
Mortgage loans were covered by such mortgage reinsurance contracts
 
 
 
 
 
 
11,100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loss exposure ceded to the Company
 
 
 
 
 
 
443,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum amount of loss exposure based on funds held in each separate trust account, including net premiums due to the trust accounts
 
 
 
 
 
 
114,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum amount of loss exposure based on funds held in each separate trust account, reserved for reducing the Company's net remaining loss exposure
 
 
 
 
 
 
105,000,000 
 
148,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net remaining loss exposure
 
 
 
 
 
 
9,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future reported losses
 
 
 
 
 
9,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future cash losses
 
 
 
 
 
9,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premium income, mortgage reinsurance
 
 
 
 
 
 
8,000,000 
11,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for losses, mortgage reinsurance
 
 
 
 
 
 
7,000,000 
9,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum potential amount obligation
 
 
 
 
 
 
 
 
 
5,900,000,000 
6,400,000,000 
 
 
 
 
 
 
 
 
 
37,000,000 
 
 
 
 
 
 
 
 
Guarantee obligations, carrying value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,000,000 
7,000,000 
 
 
 
 
 
 
 
Guarantee obligations, carrying value
 
 
 
 
 
 
 
 
 
109,000,000 
109,000,000 
270,000,000 
265,000,000 
7,000,000 
6,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans sold from January 1, 2005 to March 31, 2011
233,200,000,000 
 
 
 
233,200,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30,300,000,000 
 
 
 
178,800,000,000 
 
24,100,000,000 
Repurchase request volume
313,000,000 
1,100,000,000 
1,100,000,000 
557,000,000 
3,800,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27,000,000 
55,000,000 
99,000,000 
148,000,000 
 
 
 
Unpaid principal balance of loans related to unresolved requests previously received from investors
363,000,000 
293,000,000 
 
 
363,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37,000,000 
29,000,000 
 
 
326,000,000 
264,000,000 
 
Repurchased or otherwise settled mortgages
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
138,000,000 
204,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
Repurchased mortgage loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
171,000,000 
 
153,000,000 
92,000,000 
86,000,000 
 
 
 
 
 
 
 
 
 
Outstanding Balance of Loans Sold by Vintage and Type of Buyer (Detail) (USD $)
In Billions
Mar. 31, 2011
Outstanding balance remaining of loans sold to outside investors
$ 122 
Vintage 2005
 
Outstanding balance remaining of loans sold to outside investors
12 
Vintage 2005 | Non-Agency Securities
 
Outstanding balance remaining of loans sold to outside investors
Vintage 2005 | Agency Securities
 
Outstanding balance remaining of loans sold to outside investors
Vintage 2005 | Ginnie Mae
 
Outstanding balance remaining of loans sold to outside investors
Vintage 2006
 
Outstanding balance remaining of loans sold to outside investors
13 
Vintage 2006 | Non-Agency Securities
 
Outstanding balance remaining of loans sold to outside investors
Vintage 2006 | Agency Securities
 
Outstanding balance remaining of loans sold to outside investors
Vintage 2006 | Ginnie Mae
 
Outstanding balance remaining of loans sold to outside investors
Vintage 2007
 
Outstanding balance remaining of loans sold to outside investors
17 
Vintage 2007 | Non-Agency Securities
 
Outstanding balance remaining of loans sold to outside investors
Vintage 2007 | Agency Securities
 
Outstanding balance remaining of loans sold to outside investors
12 
Vintage 2007 | Ginnie Mae
 
Outstanding balance remaining of loans sold to outside investors
Vintage 2008
 
Outstanding balance remaining of loans sold to outside investors
17 
Vintage 2008 | Agency Securities
 
Outstanding balance remaining of loans sold to outside investors
14 
Vintage 2008 | Ginnie Mae
 
Outstanding balance remaining of loans sold to outside investors
Vintage 2009
 
Outstanding balance remaining of loans sold to outside investors
36 
Vintage 2009 | Agency Securities
 
Outstanding balance remaining of loans sold to outside investors
29 
Vintage 2009 | Ginnie Mae
 
Outstanding balance remaining of loans sold to outside investors
Vintage 2010
 
Outstanding balance remaining of loans sold to outside investors
22 
Vintage 2010 | Agency Securities
 
Outstanding balance remaining of loans sold to outside investors
18 
Vintage 2010 | Ginnie Mae
 
Outstanding balance remaining of loans sold to outside investors
Fiscal Year 2011
 
Outstanding balance remaining of loans sold to outside investors
Fiscal Year 2011 | Agency Securities
 
Outstanding balance remaining of loans sold to outside investors
Fiscal Year 2011 | Ginnie Mae
 
Outstanding balance remaining of loans sold to outside investors
Non-Agency Securities
 
Outstanding balance remaining of loans sold to outside investors
16 
Agency Securities
 
Outstanding balance remaining of loans sold to outside investors
90 
Ginnie Mae
 
Outstanding balance remaining of loans sold to outside investors
$ 16 
Mortgage Loan Repurchase Losses (Detail) (USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Reserve for mortgage loan repurchase losses
 
 
Balance at beginning of period
$ 265 
$ 200 
Repurchase costs
80 
128 
Charge-offs
(75)
(118)
Balance at end of period
$ 270 
$ 210 
Contingencies - Additional Information (Detail)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Mar. 31, 2011
Mar. 31, 2011
Mar. 31, 2010
May 31, 2009
Mar. 31, 2011
Aggregate range of reasonably possible losses on legal matters in excess of the accrued liability
 
 
100 
 
 
 
150 
Fair value of ARS purchased pursuant to the pending settlement, trading securities
97 
147 
 
 
 
 
 
Fair value of ARS purchased pursuant to the pending settlement, available for sale securities
116 
128 
 
 
 
 
 
Total gain (loss) relating to the ARS agreements recognized
30 
 
 
 
 
 
Reserved for the remaining probable loss that could be reasonably estimated
 
 
 
37 
29 
 
 
Number of putative class actions arising out of the offer and sale of SunTrust Capital IX 7.875% Trust Preferred Securities (TRUPs) of SunTrust Banks, Inc
 
 
 
 
 
 
Amount sold related to loss contingency
 
 
 
 
 
690 
 
Business Segment Reporting (Detail) (USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Average total assets
$ 173,066 
$ 171,429 
Average total liabilities
149,959 
149,091 
Average total equity
23,107 
22,338 
Net interest income
1,249 
1,172 
FTE adjustment
28 
30 
Net interest income (FTE)
1,277 1
1,202 1
Provision for credit losses
447 2
862 2
Net interest income after provision for credit losses
830 
340 
Noninterest income
883 
698 
Noninterest expense
1,465 
1,361 
Income/(loss) before provision/(benefit) for income taxes
248 
(323)
Provision/(benefit) for income taxes
61 3
(164)3
Net income/(loss) including income attributable to noncontrolling interest
187 
(159)
Net income attributable to noncontrolling interest
Net income/(loss)
180 
(161)
Retail Banking
 
 
Average total assets
40,544 
38,513 
Average total liabilities
76,298 
73,789 
Net interest income
623 
608 
Net interest income (FTE)
623 1
608 1
Provision for credit losses
216 2
284 2
Net interest income after provision for credit losses
407 
324 
Noninterest income
263 
276 
Noninterest expense
628 
601 
Income/(loss) before provision/(benefit) for income taxes
42 
(1)
Provision/(benefit) for income taxes
16 3
(1)3
Net income/(loss) including income attributable to noncontrolling interest
26 
 
Net income/(loss)
26 
 
Diversified Commercial Banking
 
 
Average total assets
24,702 
25,149 
Average total liabilities
21,397 
21,554 
Net interest income
147 
130 
FTE adjustment
25 
27 
Net interest income (FTE)
172 1
157 1
Provision for credit losses
2
24 2
Net interest income after provision for credit losses
164 
133 
Noninterest income
58 
52 
Noninterest expense
114 
116 
Income/(loss) before provision/(benefit) for income taxes
108 
69 
Provision/(benefit) for income taxes
39 3
25 3
Net income/(loss) including income attributable to noncontrolling interest
69 
44 
Net income/(loss)
69 
44 
Commercial Real Estate
 
 
Average total assets
8,913 
11,927 
Average total liabilities
1,471 
1,961 
Net interest income
35 
43 
Net interest income (FTE)
35 1
43 1
Provision for credit losses
108 2
70 2
Net interest income after provision for credit losses
(73)
(27)
Noninterest income
27 
21 
Noninterest expense
109 
93 
Income/(loss) before provision/(benefit) for income taxes
(155)
(99)
Provision/(benefit) for income taxes
(77)3
(57)3
Net income/(loss) including income attributable to noncontrolling interest
(78)
(42)
Net income/(loss)
(78)
(42)
Corporate and Investment Banking
 
 
Average total assets
21,396 
18,851 
Average total liabilities
17,480 
14,266 
Net interest income
116 
83 
Net interest income (FTE)
116 1
83 1
Provision for credit losses
(1)2
29 2
Net interest income after provision for credit losses
117 
54 
Noninterest income
176 
113 
Noninterest expense
147 
110 
Income/(loss) before provision/(benefit) for income taxes
146 
57 
Provision/(benefit) for income taxes
53 3
21 3
Net income/(loss) including income attributable to noncontrolling interest
93 
36 
Net income/(loss)
93 
36 
Mortgage
 
 
Average total assets
34,538 
34,702 
Average total liabilities
3,693 
3,325 
Net interest income
125 
102 
Net interest income (FTE)
125 1
102 1
Provision for credit losses
223 2
401 2
Net interest income after provision for credit losses
(98)
(299)
Noninterest income
81 
47 
Noninterest expense
252 
254 
Income/(loss) before provision/(benefit) for income taxes
(269)
(506)
Provision/(benefit) for income taxes
(103)3
(192)3
Net income/(loss) including income attributable to noncontrolling interest
(166)
(314)
Net income/(loss)
(166)
(314)
Wealth and Investment Management
 
 
Average total assets
8,901 
9,219 
Average total liabilities
13,406 
11,962 
Net interest income
105 
95 
Net interest income (FTE)
105 1
95 1
Provision for credit losses
17 2
13 2
Net interest income after provision for credit losses
88 
82 
Noninterest income
215 
186 
Noninterest expense
237 
222 
Income/(loss) before provision/(benefit) for income taxes
66 
46 
Provision/(benefit) for income taxes
22 3
17 3
Net income/(loss) including income attributable to noncontrolling interest
44 
29 
Net income attributable to noncontrolling interest
 
Net income/(loss)
39 
29 
Corporate Other and Treasury
 
 
Average total assets
33,123 
32,712 
Average total liabilities
16,272 
21,906 
Net interest income
137 
120 
FTE adjustment
Net interest income (FTE)
139 1
123 1
Net interest income after provision for credit losses
139 
123 
Noninterest income
77 
Noninterest expense
(9)
(31)
Income/(loss) before provision/(benefit) for income taxes
225 
162 
Provision/(benefit) for income taxes
78 3
43 3
Net income/(loss) including income attributable to noncontrolling interest
147 
119 
Net income attributable to noncontrolling interest
Net income/(loss)
145 
117 
Reconciling Items
 
 
Average total assets
949 
356 
Average total liabilities
(58)
328 
Average total equity
23,107 
22,338 
Net interest income
(39)
(9)
FTE adjustment
 
Net interest income (FTE)
(38)1
(9)1
Provision for credit losses
(124)2
41 2
Net interest income after provision for credit losses
86 
(50)
Noninterest income
(14)
(5)
Noninterest expense
(13)
(4)
Income/(loss) before provision/(benefit) for income taxes
85 
(51)
Provision/(benefit) for income taxes
33 3
(20)3
Net income/(loss) including income attributable to noncontrolling interest
52 
(31)
Net income/(loss)
$ 52 
$ (31)
Comprehensive Income (Detail) (USD $)
In Millions
3 Months Ended
Mar. 31,
2011
2010
Comprehensive income:
 
 
Net income/(loss)
$ 180 
$ (161)
OCI:
 
 
Change in unrealized gains/(losses) on securities, net of taxes
(69)
39 
Change in unrealized gains/(losses) on derivatives, net of taxes
(125)
122 
Change related to employee benefit plans
75 
Total comprehensive income/(loss)
$ (11)
$ 75 
Components of Accumulated Other Comprehensive Income (Detail) (USD $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Unrealized net gain on AFS securities
$ 1,457 
$ 1,526 
Unrealized net gain on derivative financial instruments
407 
532 
Employee benefit plans
(439)
(442)
Total AOCI
$ 1,425 
$ 1,616