SUNTRUST BANKS INC, 10-Q filed on 5/7/2015
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2015
Apr. 30, 2015
Entity Registrant Name
SUNTRUST BANKS INC 
 
Entity Central Index Key
0000750556 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q1 
 
Amendment Flag
false 
 
Entity Common Stock, Shares Outstanding
 
516,219,400 
Entity Well-known Seasoned Issuer
Yes 
 
Entity Voluntary Filers
No 
 
Entity Current Reporting Status
Yes 
 
Consolidated Statements of Income (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Interest Income
 
 
Interest and fees on loans
$ 1,091 
$ 1,151 
Interest and fees on loans held for sale
22 
15 
Interest and Dividend Income, Securities, Available-for-sale
140 
153 
Trading account interest and other
19 
17 
Total interest income
1,272 
1,336 
Interest Expense
 
 
Interest on deposits
56 
65 
Interest Expense, Long-term Debt
68 
58 
Interest on other borrowings
Total interest expense
132 
132 
Net, interest income
1,140 
1,204 
Provision for Loan, Lease, and Other Losses
55 
102 
Interest Income (Expense), after Provision for Loan Loss
1,085 
1,102 
Noninterest Income
 
 
Service charges on deposit accounts
151 
155 
Fees and Commissions, Other
89 
88 
Fees and Commissions, Credit and Debit Cards
80 
76 
Investment Banking Revenue
97 
88 
Trading Gain (Loss)
55 
49 
Fees and Commissions, Fiduciary and Trust Activities
84 
130 
Investment Advisory, Management and Administrative Fees
72 
71 
Fees and Commissions, Mortgage Banking
83 
43 
Servicing Fees, Net
43 
54 
Gain (Loss) on Sale of Securities, Net
(1)
Noninterest Income, Other Operating Income
63 
38 
Total noninterest income
817 
791 
Noninterest Expense
 
 
Employee compensation
633 
659 
Other Labor-related Expenses
138 
141 
Outside processing and software
189 
170 
Net occupancy expense
84 
86 
Equipment Expense
40 
44 
Federal Deposit Insurance Corporation Premium Expense
37 
40 
Marketing and Advertising Expense
27 
25 
Credit and collection services
18 
22 
Operating losses
14 
21 
Amortization of Intangible Assets and Impairment of Goodwill
Other Noninterest Expense
(93)
(146)
Noninterest Expense
1,280 
1,357 
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest
622 
536 
Income Tax Expense (Benefit)
191 
125 
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest
431 
411 
Net Income (Loss) Attributable to Noncontrolling Interest
Net Income (Loss) Attributable to Parent
429 
405 
Net Income (Loss) Available to Common Stockholders, Basic
$ 411 
$ 393 
Earnings Per Share, Diluted
$ 0.78 
$ 0.73 
Earnings Per Share, Basic
$ 0.79 
$ 0.74 
Common Stock, Dividends, Per Share, Declared
$ 0.20 
$ 0.10 
Weighted Average Number of Shares Outstanding, Diluted
526,837 
536,992 
Weighted Average Number of Shares Outstanding, Basic
521,020 
531,162 
Consolidated Statements of Comprehensive Income Consolidated Statement of Comprehensive Income (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
 
 
Net Income (Loss) Attributable to Parent
$ 429 
$ 405 
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax
86 
108 
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax
44 
(50)
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Adjustment, Net of Tax
(73)
31 
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent
57 
89 
Comprehensive Income (Loss), Net of Tax, Attributable to Parent
$ 486 
$ 494 
Consolidated Statements of Comprehensive Income Consolidated Statement of Comprehensive Income (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
 
 
Other Comprehensive Income (Loss), Available-for-sale Securities, Tax
$ 53 
$ 63 
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Tax
27 
(29)
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net Unamortized Gain (Loss) Arising During Period, Tax
$ (43)
$ 18 
Consolidated Balance Sheets (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Assets
 
 
Cash and Due from Banks
$ 6,483 
$ 7,047 
Federal Funds Sold and Securities Purchased under Agreements to Resell
1,233 
1,160 
Interest-bearing Deposits in Banks and Other Financial Institutions
22 
22 
Cash and cash equivalents
7,738 
8,229 
Trading assets
6,595 1
6,202 1
Available-for-sale Securities
26,761 2
26,770 2
Loans Held for Sale
3,404 3
3,232 3
Loans held for investment
132,380 4
133,112 4
Loans and Leases Receivable, Allowance
(1,893)
(1,937)
Net loans
130,487 
131,175 
Premises and equipment
1,494 
1,508 
Goodwill
6,337 
6,337 
Intangible Assets, Net (Excluding Goodwill)
1,193 
1,219 
Other Assets
5,872 
5,656 
Total assets
189,881 
190,328 
Liabilities and Shareholders' Equity
 
 
Noninterest-bearing consumer and commercial deposits
42,376 
41,096 
Interest-bearing Deposit Liabilities
102,047 
99,471 
Total deposits
144,423 
140,567 
Funds purchased
1,299 
1,276 
Securities Sold under Agreements to Repurchase
1,845 5
2,276 5
Other Short-term Borrowings
1,438 
5,634 
Long-term Debt
13,012 6
13,022 6
Trading liabilities
1,459 
1,227 
Other Liabilities
3,145 
3,321 
Total liabilities
166,621 
167,323 
Preferred Stock, Value, Outstanding
1,225 
1,225 
Common Stock, Value, Outstanding
550 
550 
Additional paid in capital
9,074 
9,089 
Retained earnings
13,600 
13,295 
Treasury stock, at cost, and other
(1,124)7
(1,032)7
Accumulated Other Comprehensive Income (Loss), Net of Tax
(65)
(122)
Total shareholders' equity
23,260 
23,005 
Total liabilities and shareholders' equity
189,881 
190,328 
Common Stock, Shares, Outstanding
522,031 8
524,540 8
Common shares authorized
750,000 
750,000 
Preferred Stock, Shares Outstanding
12 
12 
Preferred Stock, Shares Authorized
50,000 
50,000 
Treasury shares of common stock
27,890 
25,381 
Treasury Stock and Other
 
 
Liabilities and Shareholders' Equity
 
 
Treasury stock, at cost, and other
1,215 
 
Total shareholders' equity
(1,124)9
(1,032)9
Stockholders' Equity Attributable to Noncontrolling Interest
106 
108 
Variable Interest Entity, Primary Beneficiary [Member]
 
 
Assets
 
 
Loans held for investment
277 
288 
Liabilities and Shareholders' Equity
 
 
Long-term Debt
292 
302 
Restricted Stock [Member]
 
 
Liabilities and Shareholders' Equity
 
 
Common Stock, Shares, Outstanding
1,712 
2,930 
Trading Securities [Member]
 
 
Liabilities and Shareholders' Equity
 
 
Pledged Assets Separately Reported, Securities Pledged as Collateral, at Fair Value
1,207 
1,316 
Available-for-sale Securities [Member]
 
 
Liabilities and Shareholders' Equity
 
 
Pledged Assets Separately Reported, Securities Pledged as Collateral, at Fair Value
$ 0 
$ 369 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Loans Held-for-sale, Fair Value Disclosure
$ 2,077 
$ 1,892 
Loans Receivable, Fair Value Disclosure
268 
272 
Servicing Asset at Fair Value, Amount
1,181 
1,206 
Long-term Debt, Fair Value
1,281 
1,283 
Common stock, par value
$ 1.00 
$ 1.00 
Loans Receivable Held-for-sale, Net
3,404 1
3,232 1
Loans held for investment
132,380 2
133,112 2
Long-term Debt
13,012 3
13,022 3
Common Stock, Shares, Outstanding
522,031 4
524,540 4
Variable Interest Entity, Primary Beneficiary [Member]
 
 
Loans held for investment
277 
288 
Long-term Debt
292 
302 
Treasury Stock and Other
 
 
Stockholders' Equity Attributable to Noncontrolling Interest
106 
108 
Residential Portfolio Segment [Member]
 
 
Loans Receivable, Fair Value Disclosure
268 
272 
Loans held for investment
38,445 
38,775 
Restricted Stock [Member]
 
 
Common Stock, Shares, Outstanding
1,712 
2,930 
Trading Securities [Member]
 
 
Pledged Assets Separately Reported, Securities Pledged as Collateral, at Fair Value
1,207 
1,316 
Available-for-sale Securities [Member]
 
 
Pledged Assets Separately Reported, Securities Pledged as Collateral, at Fair Value
$ 0 
$ 369 
Consolidated Statements of Shareholders' Equity (USD $)
In Millions, except Share data, unless otherwise specified
Total
USD ($)
Preferred Stock [Member]
USD ($)
Common Stock [Member]
USD ($)
Additional Paid-in Capital [Member]
USD ($)
Retained Earnings [Member]
USD ($)
Treasury Stock and Other
USD ($)
Accumulated Other Comprehensive Income (Loss) [Member]
USD ($)
Common Stock [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, beginning of period at Dec. 31, 2013
$ 21,422 
$ 725 
$ 550 
$ 9,115 
$ 11,936 
$ (615)1
$ (289)2
 
Common Stock, Shares, Outstanding, beginning of period at Dec. 31, 2013
 
 
536,000,000 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to Parent
405 
 
 
 
405 
 
 
 
Other Comprehensive Income (Loss), Net of Tax
89 
 
 
 
 
 
89 2
 
Noncontrolling Interest, Period Increase (Decrease)
 
 
 
 
1
 
 
Dividends, Common Stock, Cash
(54)
 
 
 
(54)
 
 
 
Dividends, Preferred Stock, Cash3
(9)
 
 
 
(9)
 
 
 
Treasury Stock, Shares, Acquired
 
 
 
 
 
 
 
(1,000,000)
Treasury Stock, Value, Acquired, Cost Method
(50)
 
 
 
 
(50)1
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period
 
 
 
 
 
 
 
Stock Issued During Period, Value, Stock Options Exercised
(1)
 
 
(9)
 
1
 
 
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures
 
 
 
 
 
 
 
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures
 
 
 
(3)1
 
 
Adjustments to Additional Paid in Capital, Share-based Compensation, Restricted Stock Unit or Restricted Stock Award, Requisite Service Period Recognition
 
 
 
 
1
 
 
Stock Issued During Period, Shares, Employee Benefit Plan
 
 
 
 
 
 
 
Stock Issued During Period, Value, Employee Benefit Plan
(4)
 
 
(6)
 
1
 
 
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, end of period at Mar. 31, 2014
21,817 
725 
550 
9,107 
12,278 
(643)1
(200)2
 
Common Stock, Shares, Outstanding, end of period at Mar. 31, 2014
 
 
535,000,000 
 
 
 
 
 
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, beginning of period at Dec. 31, 2014
23,005 
1,225 
550 
9,089 
13,295 
(1,032)1
(122)2
 
Common Stock, Shares, Outstanding, beginning of period at Dec. 31, 2014
524,540,000 4
 
525,000,000 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to Parent
429 
 
 
 
429 
 
 
 
Other Comprehensive Income (Loss), Net of Tax
57 
 
 
 
 
 
57 2
 
Noncontrolling Interest, Period Increase (Decrease)
(2)
 
 
 
 
(2)1
 
 
Dividends, Common Stock, Cash
(105)
 
 
 
(105)
 
 
 
Dividends, Preferred Stock, Cash3
(17)
 
 
 
(17)
 
 
 
Treasury Stock, Shares, Acquired
 
 
 
 
 
 
 
(3,000,000)
Treasury Stock, Value, Acquired, Cost Method
(115)
 
 
 
 
(115)1
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period
 
 
 
 
 
 
 
Stock Issued During Period, Value, Stock Options Exercised
 
 
(10)
 
11 1
 
 
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures
 
 
 
 
 
 
 
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures
 
 
(5)
(2)
1
 
 
Adjustments to Additional Paid in Capital, Share-based Compensation, Restricted Stock Unit or Restricted Stock Award, Requisite Service Period Recognition
 
 
 
 
1
 
 
Stock Issued During Period, Shares, Employee Benefit Plan
 
 
 
 
 
 
 
Stock Issued During Period, Value, Employee Benefit Plan
 
 
 
1
 
 
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, end of period at Mar. 31, 2015
$ 23,260 
$ 1,225 
$ 550 
$ 9,074 
$ 13,600 
$ (1,124)1
$ (65)2
 
Common Stock, Shares, Outstanding, end of period at Mar. 31, 2015
522,031,000 4
 
522,000,000 
 
 
 
 
 
Consolidated Statements of Shareholders' Equity (Parenthetical) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Treasury Stock, Value
$ 1,124 1
 
Common stock dividends, per share
$ 0.20 
$ 0.10 
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax
384 
31 
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax
141 
229 
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax
(590)
(460)
Treasury Stock and Other
 
 
Treasury Stock, Value
(1,215)
(727)
Deferred Compensation Equity
(15)
(42)
Stockholders' Equity Attributable to Noncontrolling Interest
$ 106 
$ 126 
Series A Preferred Stock [Member]
 
 
Preferred Stock, Dividends, Per Share, Cash Paid
$ 1,000 
$ 1,000 
Series B Preferred Stock [Member]
 
 
Preferred Stock, Dividends, Per Share, Cash Paid
$ 1,000 
$ 1,000 
Series E Preferred Stock [Member]
 
 
Preferred Stock, Dividends, Per Share, Cash Paid
$ 1,469 
$ 1,469 
Series F Preferred Stock [Member]
 
 
Preferred Stock, Dividends, Per Share, Cash Paid
$ 1,406 
$ 0 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Cash Flows from Operating Activities:
 
 
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest
$ 431 
$ 411 
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
 
 
Depreciation, Amortization and Accretion, Net
201 
163 
Origination of Mortgage Servicing Rights (MSRs)
(46)
(32)
Provisions for credit losses and foreclosed property
58 
104 
Stock Option Compensation And Amortization Of Restricted Stock Compensation
19 
17 
Excess Tax Benefit from Share-based Compensation, Operating Activities
16 
Gain (Loss) on Sale of Securities, Net
Net gain on sale of assets
(102)
(70)
Net decrease/(increase) in loans held for sale
(108)
353 
Increase (Decrease) in Trading Securities
(322)
53 
Net (increase)/decrease in other assets
(340)
64 
Increase (Decrease) in Other Operating Liabilities
15 
(231)
Net Cash Provided by (Used in) Operating Activities
(210)
830 
Cash Flows from Investing Activities:
 
 
Proceeds from Maturities, Prepayments and Calls of Available-for-sale Securities
1,421 
762 
Proceeds from sales of securities available for sale
10 
69 
Purchases of securities available for sale
(1,344)
(1,436)
Proceeds from sales of trading securities
59 
Proceeds from (payments for) Originations and Purchases of Loans Held-for-investment
212 
(1,667)
Proceeds from sales of loans
411 
94 
Servicing Assets at Fair Value, Purchased
(64)
Capital expenditures
(33)
(34)
Payments related to acquisitions, including contingent consideration
(10)
(8)
Proceeds from Sale of Other Real Estate
86 
96 
Net cash (used in)/provided by investing activities
689 
(2,065)
Cash Flows from Financing Activities:
 
 
Net (decrease)/increase in total deposits
3,856 
3,197 
Net increase/(decrease) in funds purchased, securities sold under agreements to repurchase, and other short-term borrowings
(4,604)
(60)
Proceeds from Issuance of Long-term Debt
876 
Repayment of long-term debt
(14)
(28)
Payments for Repurchase of Common Stock
(115)
(50)
Common and preferred dividends paid
(115)
(63)
Stock option activity
22 
Net cash provided by/(used in) financing activities
(970)
3,879 
Net (decrease)/increase in cash and cash equivalents
(491)
2,644 
Cash and cash equivalents at beginning of period
8,229 
5,263 
Cash and cash equivalents at end of period
7,738 
7,907 
Supplemental Disclosures:
 
 
Transfer of Loans Held-for-sale to Portfolio Loans
11 
17 
Loans transferred from loans to loans held for sale
512 
115 
Transfer to Other Real Estate
$ 14 
$ 42 
Significant Accounting Policies
Significant Accounting Policies [Text Block]
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP 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 Company’s 2014 Annual Report on Form 10-K. There have been no significant changes to the Company’s accounting policies as disclosed in the 2014 Annual Report on Form 10-K.

Pending Accounting Pronouncements
The following table provides a brief description of recent accounting pronouncements that could have a material effect on the Company's financial statements:
Standard
Description
Date of Adoption
Effect on the Financial Statements or Other Significant Matters
Standards not yet adopted
 
 
ASU 2014-09, Revenue from Contracts with Customers
The ASU supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. The core principle of the ASU is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU may be adopted either retrospectively or on a modified retrospective basis to new contracts and existing contracts with remaining performance obligations as of the effective date.
January 1, 2017
The Company is continuing to evaluate the alternative methods of adoption and the anticipated effects on the financial statements and related disclosures.

ASU 2015-02, Amendments to the Consolidation Analysis
The ASU rescinds the indefinite deferral of previous amendments to ASC Topic 810 for certain entities and amends components of the consolidation analysis under ASC Topic 810 including evaluating limited partnerships and similar legal entities, evaluating fees paid to a decision maker or service provider as a variable interest, the effects of fee arrangements and/or related parties on the primary beneficiary determination and investment fund specific matters. The ASU may be adopted either retrospectively or on a modified retrospective basis and early adoption is permitted.
January 1, 2016
The Company is continuing to evaluate the impact of this ASU on the financial statements and related disclosures. The adoption is not expected to materially impact the Company's financial position, results of operations, or EPS.
Federal Funds Sold and Securities Borrowed or Purchased Under Agreements to Resell
Repurchase Agreements, Resale Agreements, Securities Borrowed, and Securities Loaned Disclosure [Text Block]
NOTE 2 - FEDERAL FUNDS SOLD AND SECURITIES FINANCING ACTIVITIES
Federal Funds Sold and Securities Borrowed or Purchased
Under Agreements to Resell
Fed funds sold and securities borrowed or purchased under agreements to resell were as follows:
(Dollars in millions)
March 31, 2015
 
December 31, 2014
Fed funds sold

$—

 

$38

Securities borrowed or purchased
262

 
290

Resell agreements
971

 
832

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

$1,233

 

$1,160


Securities purchased under agreements to resell are primarily collateralized by U.S. government or agency securities and are carried at the amounts at which securities will be subsequently resold. Securities borrowed are primarily collateralized by corporate securities. The Company takes possession of all securities purchased under agreements to resell and securities borrowed and performs a margin evaluation on the acquisition date based on market volatility, as necessary. It is the Company's policy to obtain possession of collateral with a fair value between 95% to 110% of the principal amount loaned under resell and securities borrowing agreements. At March 31, 2015 and December 31, 2014, the total market value of collateral held was $1.2 billion and $1.1 billion, of which $194 million and $222 million was repledged, respectively.
Securities Sold Under Agreements to Repurchase
Securities sold under agreements to repurchase are accounted for as secured borrowings. The following table presents the Company’s related activity, by collateral type and remaining contractual maturity:
 
March 31, 2015
 
December 31, 2014
(Dollars in millions)
Overnight and Continuous
 
Overnight and Continuous
 
Up to
30 days
 
Total
U.S. Treasury securities

$167

 

$376

 

$—

 

$376

Federal agency securities
101

 
231

 

 
231

MBS - agency
1,105

 
1,059

 
45

 
1,104

CP
101

 
238

 

 
238

Corporate and other debt securities
371

 
327

 

 
327

Total securities sold under agreements to repurchase

$1,845

 

$2,231

 

$45

 

$2,276


For these securities sold under agreements to repurchase, the Company would be obligated to provide additional collateral in the event of a significant decline in fair value of the collateral pledged. This risk is managed by monitoring the liquidity and credit quality of the collateral, as well as the maturity profile of the transactions.
Netting of Securities - Repurchase and Resell Agreements
The Company has various financial assets and financial liabilities that are subject to enforceable master netting agreements or similar agreements. The Company's derivatives that are subject to enforceable master netting agreements or similar agreements are discussed in Note 13, "Derivative Financial Instruments." The following table presents the Company's securities borrowed or purchased under agreements to resell and securities sold under agreements to repurchase subject to MRAs. Under the terms of the MRA, all transactions between the Company and a counterparty constitute a single business relationship such that in the event of default, the nondefaulting party is entitled to set off claims and apply property held against obligations owed. Any payments, deliveries, or other transfers may be applied against each other and presented net on the Company's Consolidated Balance Sheets, provided criteria are met that permit balance sheet netting. At March 31, 2015 and December 31, 2014, there were no such transactions subject to a legally enforceable MRA that were eligible for balance sheet netting.
Financial instrument collateral received or pledged related to exposures subject to legally enforceable MRAs are not netted on the Consolidated Balance Sheets, but are presented in the following table as a reduction to the net amount presented in the Consolidated Balance Sheets to derive the aggregate collateral deficits by counterparty. These collateral amounts presented are limited to the related recognized asset/liability balance, and accordingly, do not include excess collateral received/pledged.
(Dollars in millions)
Gross
Amount
 
Amount
Offset
 
Net Amount
Presented in
Consolidated
  Balance Sheets 1
 
Held/Pledged Financial
  Instruments 2
 
Net
Amount
March 31, 2015
 
 
 
 
 
 
 
 
 
Financial assets:
 
 
 
 
 
 
 
 
 
Securities borrowed or purchased under agreements to resell

$1,233

 

$—

 

$1,233

 

$1,225

 

$8

Financial liabilities:
 
 
 
 
 
 
 
 
 
Securities sold under agreements to repurchase
1,845

 

 
1,845

 
1,845

 

 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
Financial assets:
 
 
 
 
 
 
 
 
 
Securities borrowed or purchased under agreements to resell

$1,122

 

$—

 

$1,122

3 

$1,112

 

$10

Financial liabilities:
 
 
 
 
 
 
 
 
 
Securities sold under agreements to repurchase
2,276

 

 
2,276

 
2,276

 


1 None of the Company's repurchase or resell transactions met the right of setoff criteria for net balance sheet presentation at March 31, 2015 and December 31, 2014.
2 Represents collateral received or pledged, limited for presentation purposes to the amount of the related recognized asset or liability for each counterparty, and therefore, may be less than the aggregate amount of collateral actually held/pledged.
3 Excludes $38 million of Fed funds sold which are not subject to a master netting agreement at December 31, 2014.

Securities Available for Sale
Securities Available for Sale
NOTE 4SECURITIES AVAILABLE FOR SALE
Securities Portfolio Composition
 
March 31, 2015
(Dollars in millions)
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
U.S. Treasury securities

$2,110

 

$35

 

$—

 

$2,145

Federal agency securities
461

 
16

 
1

 
476

U.S. states and political subdivisions
183

 
9

 

 
192

MBS - agency
22,366

 
614

 
28

 
22,952

MBS - private
118

 
2

 
1

 
119

ABS
19

 
2

 

 
21

Corporate and other debt securities
37

 
2

 

 
39

Other equity securities 1
815

 
2

 

 
817

Total securities AFS

$26,109

 

$682

 

$30

 

$26,761

 
 
 
 
 
 
 
 
 
December 31, 2014
(Dollars in millions)
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
U.S. Treasury securities

$1,913

 

$9

 

$1

 

$1,921

Federal agency securities
471

 
15

 
2

 
484

U.S. states and political subdivisions
200

 
9

 

 
209

MBS - agency
22,573

 
558

 
83

 
23,048

MBS - private
122

 
2

 
1

 
123

ABS
19

 
2

 

 
21

Corporate and other debt securities
38

 
3

 

 
41

Other equity securities 1
921

 
2

 

 
923

Total securities AFS

$26,257

 

$600

 

$87

 

$26,770

1 At March 31, 2015, the fair value of other equity securities was comprised of the following: $207 million in FHLB of Atlanta stock, $402 million in Federal Reserve Bank of Atlanta stock, $201 million in mutual fund investments, and $7 million of other. At December 31, 2014, other equity securities was comprised of the following: $376 million in FHLB of Atlanta stock, $402 million in Federal Reserve Bank of Atlanta stock, $138 million in mutual fund investments, and $7 million of other.

The following table presents interest and dividends on securities AFS:
 
Three Months Ended March 31
(Dollars in millions)
2015
 
2014
Taxable interest

$128

 

$141

Tax-exempt interest
2

 
3

Dividends
10

 
9

Total interest and dividends

$140

 

$153



Securities AFS pledged to secure public deposits, repurchase agreements, trusts, and other funds had a fair value of $3.1 billion and $2.6 billion at March 31, 2015 and December 31, 2014, respectively.

The amortized cost and fair value of investments in debt securities at March 31, 2015, by estimated average life, are shown below. Receipt of 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 penalties.
 
Distribution of Maturities
(Dollars in millions)
1 Year
or Less
 
1-5
Years
 
5-10
Years
 
After 10
Years
 
Total
Amortized Cost:
 
 
 
 
 
 
 
 
 
U.S. Treasury securities

$200

 

$1,315

 

$595

 

$—

 

$2,110

Federal agency securities
87

 
205

 
36

 
133

 
461

U.S. states and political subdivisions
38

 
27

 
102

 
16

 
183

MBS - agency
2,524

 
12,008

 
4,168

 
3,666

 
22,366

MBS - private

 
118

 

 

 
118

ABS
15

 
3

 
1

 

 
19

Corporate and other debt securities
5

 
32

 

 

 
37

Total debt securities

$2,869

 

$13,708

 

$4,902

 

$3,815

 

$25,294

Fair Value:
 
 
 
 
 
 
 
 
 
U.S. Treasury securities

$203

 

$1,335

 

$607

 

$—

 

$2,145

Federal agency securities
88

 
215

 
38

 
135

 
476

U.S. states and political subdivisions
38

 
28

 
109

 
17

 
192

MBS - agency
2,679

 
12,343

 
4,249

 
3,681

 
22,952

MBS - private

 
119

 

 

 
119

ABS
14

 
5

 
2

 

 
21

Corporate and other debt securities
5

 
34

 

 

 
39

Total debt securities

$3,027

 

$14,079

 

$5,005

 

$3,833

 

$25,944

 Weighted average yield 1
1.67
%
 
2.26
%
 
2.69
%
 
2.81
%
 
2.43
%
1Average yields are based on amortized cost and presented on an FTE basis.

Securities in an Unrealized Loss Position
The Company held certain investment securities where amortized cost exceeded fair market value, resulting in unrealized loss positions. Market changes in interest rates and credit spreads may result in temporary unrealized losses as the market price of securities fluctuates. At March 31, 2015, 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 described in the Company's 2014 Annual
Report on Form 10-K.
 
March 31, 2015
 
Less than twelve months
 
Twelve months or longer
 
Total
(Dollars in millions)
Fair
Value
 
Unrealized
Losses
2
 
Fair
Value
 
Unrealized
Losses
2
 
Fair
Value
 
Unrealized
Losses
2
Temporarily impaired securities:
 
 
 
 
 
 
 
 
 
 
 
Federal agency securities

$47

 

$—

 

$52

 

$1

 

$99

 

$1

MBS - agency
2,339

 
9

 
1,175

 
19

 
3,514

 
28

ABS

 

 
14

 

 
14

 

Total temporarily impaired securities
2,386

 
9

 
1,241

 
20

 
3,627

 
29

OTTI securities 1:
 
 
 
 
 
 
 
 
 
 
 
MBS - private
67

 
1

 

 

 
67

 
1

Total OTTI securities
67

 
1

 

 

 
67

 
1

Total impaired securities

$2,453

 

$10

 

$1,241

 

$20

 

$3,694

 

$30


 
December 31, 2014
 
Less than twelve months
 
Twelve months or longer
 
Total
(Dollars in millions)
Fair
Value
 
Unrealized
 Losses 2
 
Fair
Value
 
Unrealized
Losses
2
 
Fair
Value
 
Unrealized
 Losses 2
Temporarily impaired securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities

$150

 

$1

 

$—

 

$—

 

$150

 

$1

Federal agency securities
20

 

 
132

 
2

 
152

 
2

MBS - agency
2,347

 
6

 
4,911

 
77

 
7,258

 
83

ABS

 

 
14

 

 
14

 

Total temporarily impaired securities
2,517

 
7

 
5,057

 
79

 
7,574

 
86

OTTI securities 1:
 
 
 
 
 
 
 
 
 
 
 
MBS - private
69

 
1

 

 

 
69

 
1

Total OTTI securities
69

 
1

 

 

 
69

 
1

Total impaired securities

$2,586

 

$8

 

$5,057

 

$79

 

$7,643

 

$87

1 Includes OTTI securities for which credit losses have been recorded in earnings in current or prior periods.
2 Unrealized losses less than $0.5 million are shown as zero.

At March 31, 2015, unrealized losses on securities that have been in a temporarily impaired position for longer than twelve months included agency MBS, federal agency securities, and one ABS collateralized by 2004 vintage home equity loans. Unrealized losses on federal agency securities and agency MBS securities at March 31, 2015 were due to market interest rates being higher than the securities' stated yield. The ABS continues to receive timely principal and interest payments, and is evaluated quarterly for credit impairment. Cash flow analysis shows that the underlying collateral can withstand highly stressed loss assumptions without incurring a credit loss.
The portion of unrealized losses on OTTI securities that relates to factors other than credit is recorded in AOCI. Losses related to credit impairment on these securities are determined through estimated cash flow analyses and have been recorded in earnings in current or prior periods.
Realized Gains and Losses and Other-than-Temporarily Impaired Securities
Net securities losses are comprised of gross realized gains, gross realized losses, and OTTI losses recognized in earnings. For both the three months ended March 31, 2015 and 2014, gross realized gains and losses were immaterial and there were no OTTI losses recognized in earnings.
Credit impairment that is determined through the use of 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 default rates, prepayment rates, and loss severities. If, based on this analysis, the security is in an unrealized loss position and 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.
The Company continues to reduce existing exposure on OTTI securities primarily through paydowns. In certain instances, the amount of impairment losses recognized in earnings includes credit losses on debt securities that exceeds the total unrealized losses, and as a result, the securities may have unrealized gains in AOCI relating to factors other than credit. Subsequent credit losses may be recorded on securities without a corresponding further decline in fair value when there has been a decline in expected cash flows.
During the three months ended March 31, 2015 and 2014, there was no credit impairment recognized on securities AFS still held at the end of each period. The accumulated balance of credit losses recognized in earnings on securities AFS held at period end for which a portion of OTTI was recognized in OCI was $25 million at both March 31, 2015 and 2014, all of which was recognized in prior periods. Subsequent credit losses may be recorded on securities without a corresponding further decline in fair value when there has been a decline in expected cash flows.
Loans
Loans
NOTE 5 - LOANS
Composition of Loan Portfolio
The composition of the Company's loan portfolio is shown in the following table:
(Dollars in millions)
March 31, 2015
 
December 31, 2014
Commercial loans:
 
 
 
C&I

$65,574

 

$65,440

CRE
6,389

 
6,741

Commercial construction
1,484

 
1,211

Total commercial loans
73,447

 
73,392

Residential loans:
 
 
 
Residential mortgages - guaranteed
655

 
632

Residential mortgages - nonguaranteed 1
23,419

 
23,443

Home equity products
13,954

 
14,264

Residential construction
417

 
436

Total residential loans
38,445

 
38,775

Consumer loans:
 
 
 
Guaranteed student loans
4,337

 
4,827

Other direct
4,937

 
4,573

Indirect
10,336

 
10,644

Credit cards
878

 
901

Total consumer loans
20,488

 
20,945

LHFI

$132,380

 

$133,112

LHFS 2

$3,404

 

$3,232

1 Includes $268 million and $272 million of LHFI carried at fair value at March 31, 2015 and December 31, 2014, respectively.
2 Includes $2.1 billion and $1.9 billion of LHFS carried at fair value at March 31, 2015 and December 31, 2014, respectively.
During the three months ended March 31, 2015 and 2014, the Company transferred $512 million and $115 million in LHFI to LHFS, and $11 million and $17 million in LHFS to LHFI, respectively. Additionally, during the three months ended March 31, 2015 and 2014, the Company sold $405 million and $85 million in loans and leases for gains of $6 million and $9 million, respectively.
At March 31, 2015 and December 31, 2014, the Company had $25.2 billion and $26.5 billion of net eligible loan collateral pledged to the Federal Reserve discount window to support $17.5 billion and $18.4 billion of available, unused borrowing capacity, respectively.
At March 31, 2015 and December 31, 2014, the Company had $31.0 billion and $31.2 billion of net eligible loan collateral pledged to the FHLB of Atlanta to support $24.5 billion and $24.3 billion of available borrowing capacity, respectively. The available FHLB borrowing capacity at March 31, 2015 was used to support $4.0 billion of long-term debt, $500 million of short-term debt, and $6.4 billion of letters of credit issued on the Company's behalf. At December 31, 2014, the available FHLB borrowing capacity was used to support $4.0 billion of long-term debt, $4.0 billion of short-term debt, and $7.9 billion of letters of credit issued on the Company's behalf.

Credit Quality Evaluation
The Company evaluates the credit quality of its loan portfolio by employing a dual internal risk rating system, which assigns both PD and LGD ratings to derive expected losses. Assignment of PD and LGD ratings are predicated upon numerous factors, including consumer credit risk scores, rating agency information, borrower/guarantor financial capacity, LTV ratios, collateral type, debt service coverage ratios, collection experience, other internal metrics/analyses, and/or qualitative assessments.
For the commercial portfolio, the Company believes that the most appropriate credit quality indicator is an individual loan’s risk assessment expressed according to the broad regulatory agency classifications of Pass or Criticized. The Company's risk rating system is granular, with multiple risk ratings in both the Pass and Criticized categories. Pass ratings reflect relatively low PDs, whereas, Criticized assets have higher PDs. The granularity in Pass ratings assists in the establishment of pricing, loan structures, approval requirements, reserves, and ongoing credit management requirements. The Company conforms to the following regulatory classifications for Criticized assets: Other Assets Especially Mentioned (or Special Mention), Adversely Classified, Doubtful, and Loss. However, for the purposes of disclosure, management believes the most meaningful distinction within the Criticized categories is between Accruing Criticized (which includes Special Mention and a portion of Adversely Classified) and Nonaccruing Criticized (which includes a portion of Adversely Classified and Doubtful and Loss). This distinction identifies those relatively higher risk loans for which there is a basis to believe that the Company will collect all amounts due from those where full collection is less certain.    Commercial risk ratings are refreshed at least annually, or more frequently as appropriate, based upon considerations such as market conditions, borrower characteristics, and portfolio trends. Additionally, management routinely reviews portfolio risk ratings, trends, and concentrations to support risk identification and mitigation activities.
For consumer and residential loans, the Company monitors credit risk based on indicators such as delinquencies and FICO scores. The Company believes that consumer credit risk, as assessed by the industry-wide FICO scoring method, is a relevant credit quality indicator. Borrower-specific 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.
For government-guaranteed loans, the Company monitors the credit quality based primarily on delinquency status, as it is a more relevant indicator of credit quality due to the government guarantee. At March 31, 2015 and December 31, 2014, 30% and 28%, respectively, of the guaranteed residential loan portfolio was current with respect to payments. At March 31, 2015 and December 31, 2014, 80% and 79%, respectively, of the guaranteed student loan portfolio was current with respect to payments. Loss exposure to the Company on these loans is mitigated by the government guarantee.


LHFI by credit quality indicator are shown in the tables below:
 
Commercial Loans
 
C&I
 
CRE
 
Commercial construction
(Dollars in millions)
March 31,
2015
 
December 31, 2014
 
March 31,
2015
 
December 31, 2014
 
March 31,
2015
 
December 31, 2014
Risk rating:
 
 
 
 
 
 
 
 
 
 
 
Pass

$64,295

 

$64,228

 

$6,265

 

$6,586

 

$1,468

 

$1,196

Criticized accruing
1,139

 
1,061

 
100

 
134

 
15

 
14

Criticized nonaccruing
140

 
151

 
24

 
21

 
1

 
1

Total

$65,574

 

$65,440

 

$6,389

 

$6,741

 

$1,484

 

$1,211


 
Residential Loans 1
 
Residential mortgages -
nonguaranteed
 
Home equity products
 
Residential construction
(Dollars in millions)
March 31,
2015
 
December 31, 2014
 
March 31,
2015
 
December 31, 2014
 
March 31,
2015
 
December 31, 2014
Current FICO score range:
 
 
 
 
 
 
 
 
 
 
 
700 and above

$18,752

 

$18,780

 

$11,245

 

$11,475

 

$327

 

$347

620 - 699
3,411

 
3,369

 
1,932

 
1,991

 
71

 
70

Below 620 2
1,256

 
1,294

 
777

 
798

 
19

 
19

Total

$23,419

 

$23,443

 

$13,954

 

$14,264

 

$417

 

$436


 
Consumer Loans 3
 
Other direct
 
Indirect
 
Credit cards
(Dollars in millions)
March 31,
2015
 
December 31, 2014
 
March 31,
2015
 
December 31, 2014
 
March 31,
2015
 
December 31, 2014
Current FICO score range:
 
 
 
 
 
 
 
 
 
 
 
700 and above

$4,345

 

$4,023

 

$7,324

 

$7,661

 

$613

 

$639

620 - 699
530

 
476

 
2,361

 
2,335

 
219

 
212

Below 620 2
62

 
74

 
651

 
648

 
46

 
50

Total

$4,937

 

$4,573

 

$10,336

 

$10,644

 

$878

 

$901


1 Excludes $655 million and $632 million of guaranteed residential loans at March 31, 2015 and December 31, 2014, respectively.
2 For 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.
3 Excludes $4.3 billion and $4.8 billion of guaranteed student loans at March 31, 2015 and December 31, 2014, respectively.

The payment status for the LHFI portfolio is shown in the tables below:

 
March 31, 2015
(Dollars in millions)
Accruing
Current
 
Accruing
30-89 Days
Past Due
 
Accruing
90+ Days
Past Due
 
 Nonaccruing 2
 
Total
Commercial loans:
 
 
 
 
 
 
 
 
 
C&I

$65,369

 

$44

 

$21

 

$140

 

$65,574

CRE
6,362

 
3

 

 
24

 
6,389

Commercial construction
1,483

 

 

 
1

 
1,484

Total commercial loans
73,214

 
47

 
21

 
165

 
73,447

Residential loans:
 
 
 
 
 
 
 
 
 
Residential mortgages - guaranteed
195

 
34

 
426

 

 
655

Residential mortgages - nonguaranteed 1
23,058

 
95

 
12

 
254

 
23,419

Home equity products
13,705

 
84

 

 
165

 
13,954

Residential construction
388

 
6

 

 
23

 
417

Total residential loans
37,346

 
219

 
438

 
442

 
38,445

Consumer loans:
 
 
 
 
 
 
 
 
 
Guaranteed student loans
3,454

 
372

 
511

 

 
4,337

Other direct
4,912

 
18

 
3

 
4

 
4,937

Indirect
10,260

 
74

 
1

 
1

 
10,336

Credit cards
866

 
6

 
6

 

 
878

Total consumer loans
19,492

 
470

 
521

 
5

 
20,488

Total LHFI

$130,052

 

$736

 

$980

 

$612

 

$132,380

1 Includes $268 million of loans carried at fair value, the majority of which were accruing current.
2 Nonaccruing loans past due 90 days or more totaled $379 million. Nonaccruing loans past due fewer than 90 days include modified nonaccrual loans reported as TDRs and performing second lien loans which are classified as nonaccrual when the first lien loan is nonperforming. 


 
December 31, 2014
(Dollars in millions)
Accruing
Current
 
Accruing
30-89 Days
Past Due
 
Accruing
90+ Days
Past Due
 
 Nonaccruing 2
 
Total
Commercial loans:
 
 
 
 
 
 
 
 
 
C&I

$65,246

 

$36

 

$7

 

$151

 

$65,440

CRE
6,716

 
3

 
1

 
21

 
6,741

Commercial construction
1,209

 
1

 

 
1

 
1,211

Total commercial loans
73,171

 
40

 
8

 
173

 
73,392

Residential loans:
 
 
 
 
 
 
 
 
 
Residential mortgages - guaranteed
176

 
34

 
422

 

 
632

Residential mortgages - nonguaranteed 1
23,067

 
108

 
14

 
254

 
23,443

Home equity products
13,989

 
101

 

 
174

 
14,264

Residential construction
402

 
7

 

 
27

 
436

Total residential loans
37,634

 
250

 
436

 
455

 
38,775

Consumer loans:
 
 
 
 
 
 
 
 
 
Guaranteed student loans