SUNTRUST BANKS INC, 10-Q filed on 11/4/2011
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2011
Oct. 31, 2011
Document Type
10-Q 
 
Amendment Flag
FALSE 
 
Document Period End Date
Sep. 30, 2011 
 
Document Fiscal Year Focus
2011 
 
Document Fiscal Period Focus
Q3 
 
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
 
536,997,314 
Consolidated Statements of Income (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Interest Income
 
 
 
 
Interest and fees on loans
$ 1,296 
$ 1,330 
$ 3,910 
$ 3,964 
Interest and fees on loans held for sale
21 
36 
71 
102 
Interest and dividends on securities available for sale:
 
 
 
 
Taxable interest
175 
189 
517 
532 
Tax-exempt interest
16 
25 
Dividends
20 1
19 1
61 1
57 1
Trading account interest
21 
23 
63 
67 
Total interest income
1,538 
1,604 
4,638 
4,747 
Interest Expense
 
 
 
 
Interest on deposits
154 
214 
485 
672 
Interest on long-term debt
110 
138 
347 
451 
Interest on trading liabilities
22 
23 
Interest on repurchase agreements
Interest on other short-term borrowings
10 
Total interest expense
275 
366 
867 
1,160 
Net interest income
1,263 
1,238 
3,771 
3,587 
Provision for credit losses
347 
615 
1,186 
2,138 
Net interest income after provision for credit losses
916 
623 
2,585 
1,449 
Noninterest Income
 
 
 
 
Service charges on deposit accounts
176 
184 
509 
588 
Other charges and fees
130 
137 
386 
399 
Card fees
104 
96 
309 
277 
Trust and investment management income
134 
124 
404 
373 
Retail investment services
58 
52 
175 
147 
Mortgage production related income
54 
133 
56 
86 
Mortgage servicing related income
58 
132 
202 
290 
Investment banking income
68 
96 
231 
210 
Trading account profits/(losses) and commissions
66 
(22)
171 
80 
Net securities gains
2
69 2
98 2
128 2
Other noninterest income
53 
46 
157 
119 
Total noninterest income
903 
1,047 
2,698 
2,697 
Noninterest Expense
 
 
 
 
Employee compensation
642 
597 
1,898 
1,729 
Employee benefits
108 
112 
354 
354 
Outside processing and software
164 
157 
484 
463 
Net occupancy expense
90 
92 
268 
273 
Regulatory assessments
80 
67 
232 
197 
Other real estate expense
62 
78 
195 
210 
Credit and collection services
71 
69 
182 
208 
Equipment expense
44 
45 
132 
128 
Marketing and customer development
41 
43 
125 
121 
Operating losses
72 
27 
161 
57 
Amortization of intangible assets
11 
13 
34 
39 
Net (gain)/loss on extinguishment of debt
(1)
12 
(3)
67 
Other noninterest expense
176 
187 
505 
516 
Total noninterest expense
1,560 
1,499 
4,567 
4,362 
Income/(loss) before provision/(benefit) for income taxes
259 
171 
716 
(216)
Provision/(benefit) for income taxes
45 
14 
136 
(230)
Net income/(loss) including income attributable to noncontrolling interest
214 
157 
580 
14 
Net (loss)/income attributable to noncontrolling interest
(1)
Net income
215 
153 
573 
Net income/(loss) available to common shareholders
$ 211 
$ 84 
$ 424 
$ (201)
Net income/(loss) per average common share
 
 
 
 
Diluted
$ 0.39 3
$ 0.17 3
$ 0.81 3
$ (0.41)4
Basic
$ 0.40 
$ 0.17 
$ 0.81 
$ (0.41)
Dividends declared per common share
$ 0.05 
$ 0.01 
$ 0.07 
$ 0.03 
Average common shares - diluted
535,395 
498,802 
524,888 
498,515 
Average common shares - basic
531,928 
495,501 
521,248 
495,243 
Consolidated Statements of Income (Parenthetical) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Dividends on common stock of The Coca-Cola Company
$ 14 
$ 13 
$ 42 
$ 40 
Net impairment losses recognized in earnings
$ 0 
$ 0 
$ 2 
$ 2 
Consolidated Balance Sheets (USD $)
In Millions
Sep. 30, 2011
Dec. 31, 2010
Assets
 
 
Cash and due from banks
$ 4,637 
$ 4,296 
Interest-bearing deposits in other banks
21 
24 
Funds sold and securities purchased under agreements to resell
842 
1,058 
Cash and cash equivalents
5,500 
5,378 
Trading assets
6,288 
6,175 
Securities available for sale
27,502 
26,895 
Loans held for sale (loans at fair value: $1,675 as of September 30, 2011 and $3,168 as of December 31, 2010)
2,243 1
3,501 1
Loans (loans at fair value: $452 as of September 30, 2011 and $492 as of December 31, 2010)
117,475 
115,975 
Allowance for loan and lease losses
(2,600)
(2,974)
Net loans
114,875 
113,001 
Premises and equipment
1,559 
1,620 
Goodwill
6,344 
6,323 
Other intangible assets (MSRs at fair value: $1,033 as of September 30, 2011 and $1,439 as of December 31, 2010)
1,138 
1,571 
Other real estate owned
509 
596 
Other assets
6,595 
7,814 
Total assets
172,553 
172,874 
Liabilities and Shareholders' Equity
 
 
Noninterest-bearing consumer and commercial deposits
32,447 
27,290 
Interest-bearing consumer and commercial deposits
91,486 
92,735 
Total consumer and commercial deposits
123,933 
120,025 
Brokered deposits (CDs at fair value: $1,056 as of September 30, 2011 and $1,213 of December 31, 2010)
2,283 
2,365 
Foreign deposits
35 
654 
Total deposits
126,251 
123,044 
Funds purchased
998 
951 
Securities sold under agreements to repurchase
2,016 
2,180 
Other short-term borrowings
3,218 
2,690 
Long-term debt(debt at fair value: $2,016 as of September 30, 2011 and $2,837 as of December 31, 2010)
13,544 2
13,648 2
Trading liabilities
1,735 
2,678 
Other liabilities
4,591 
4,553 
Total liabilities
152,353 
149,744 
Preferred stock, no par value
172 
4,942 
Common stock, $1.00 par value
550 
515 
Additional paid in capital
9,314 
8,403 
Retained earnings
8,933 
8,542 
Treasury stock, at cost, and other
(795)
(888)
Accumulated other comprehensive income, net of tax
2,026 
1,616 
Total shareholders' equity
20,200 
23,130 
Total liabilities and shareholders' equity
$ 172,553 
$ 172,874 
Common shares outstanding
537,001 
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
12,919 
14,231 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Per Share data
Sep. 30, 2011
Dec. 31, 2010
Loans held for sale
$ 1,675 1
$ 3,168 1
Loans held for sale (loans at fair value: $1,675 as of September 30, 2011 and $3,168 as of December 31, 2010)
2,243 2
3,501 2
Loans carried at fair value
452 
492 
Loans (loans at fair value: $452 as of September 30, 2011 and $492 as of December 31, 2010)
117,475 
115,975 
Other intangible assets, MSRs at fair value
1,033 
1,439 
Debt issued
13,544 3
13,648 3
Brokered deposits
1,056 
1,213 
Long-term debt, fair value
2,016 
2,837 
Common stock, par value
$ 1 
$ 1 
Variable Interest Entity, Primary Beneficiary
 
 
Loans held for sale (loans at fair value: $1,675 as of September 30, 2011 and $3,168 as of December 31, 2010)
311 
316 
Loans (loans at fair value: $452 as of September 30, 2011 and $492 as of December 31, 2010)
3,161 
2,869 
Debt issued
728 3
764 3
Long-term debt, fair value
$ 285 
$ 290 
Consolidated Statements of Shareholders' Equity (USD $)
In Millions
Total
Preferred Stock
Common Stock
Additional Paid in Capital
Retained Earnings
Treasury Stock and Other
Accumulated Other Comprehensive Income
Beginning Balance at Dec. 31, 2009
$ 22,531 
$ 4,917 
$ 515 
$ 8,521 
$ 8,563 
$ (1,055)1
$ 1,070 
Beginning Balance (in shares) at Dec. 31, 2009
 
 
499 
 
 
 
 
Net income (loss)
 
 
 
 
 
Other comprehensive income:
 
 
 
 
 
 
 
Change in unrealized gains (losses) on securities, net of taxes
472 
 
 
 
 
 
472 
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax
438 
 
 
 
 
 
 
Change in unrealized gains (losses) on derivatives, net of taxes
438 
 
 
 
 
 
438 
Change related to employee benefit plans
85 
 
 
 
 
 
85 
Total comprehensive income
1,000 
 
 
 
 
 
 
Change in noncontrolling interest
(2)
 
 
 
 
(2)1
 
Common stock dividends, $0.07 in 2011 and $.03 in 2010 per share
(15)
 
 
 
(15)
 
 
Series A preferred dividends, $3,044 in 2011 and 2010 per share
(6)
 
 
 
(6)
 
 
U.S. Treasury preferred stock dividends, $1,236 in 2011 and $3,750 in 2010 per share
(182)
 
 
 
(182)
 
 
Accretion of discount for preferred stock issued to U.S. Treasury
 
18 
 
 
(18)
 
 
Purchase of outstanding warrants
 
 
 
 
 
 
Stock compensation expense
18 
 
 
18 
 
 
 
Restricted stock activity (in shares)
 
 
 
 
 
 
Restricted stock activity
(30)
 
 
(73)
 
43 1
 
Amortization of restricted stock compensation
31 
 
 
 
 
31 1
 
Issuance of stock for employee benefit plans and other
11 
 
 
(23)
31 1
 
Fair value election of MSRs
89 
 
 
 
89 
 
 
Adoption of VIE consolidation guidance
(7)
 
 
 
(7)
 
 
Ending Balance at Sep. 30, 2010
23,438 
4,935 
515 
8,443 
8,432 
(952)1
2,065 
Ending Balance (in shares) at Sep. 30, 2010
 
 
500 
 
 
 
 
Beginning Balance at Dec. 31, 2010
23,130 
4,942 
515 
8,403 
8,542 
(888)1
1,616 
Beginning Balance (in shares) at Dec. 31, 2010
 
 
500 
 
 
 
 
Net income (loss)
573 
 
 
 
573 
 
 
Other comprehensive income:
 
 
 
 
 
 
 
Change in unrealized gains (losses) on securities, net of taxes
294 
 
 
 
 
 
294 
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax
129 
 
 
 
 
 
129 
Change in unrealized gains (losses) on derivatives, net of taxes
129 
 
 
 
 
 
 
Change related to employee benefit plans
(13)
 
 
 
 
 
(13)
Total comprehensive income
983 
 
 
 
 
 
 
Change in noncontrolling interest
(8)
 
 
 
 
(8)1
 
Common stock dividends, $0.07 in 2011 and $.03 in 2010 per share
(37)
 
 
 
(37)
 
 
Series A preferred dividends, $3,044 in 2011 and 2010 per share
(5)
 
 
 
(5)
 
 
U.S. Treasury preferred stock dividends, $1,236 in 2011 and $3,750 in 2010 per share
(60)
 
 
 
(60)
 
 
Accretion of discount for preferred stock issued to U.S. Treasury
 
 
 
(6)
 
 
Repurchase of preferred stock issued to U.S. Treasury
(4,850)
(4,776)
 
 
(74)
 
 
Purchase of outstanding warrants
(11)
 
 
(11)
 
 
 
Issuance of common stock (in shares)
 
 
35 
 
 
 
 
Issuance of common stock
1,017 
 
35 
982 
 
 
 
Stock compensation expense
 
 
 
 
 
Restricted stock activity (in shares)
 
 
 
 
 
 
Restricted stock activity
(8)
 
 
(57)
 
49 1
 
Amortization of restricted stock compensation
25 
 
 
 
 
25 1
 
Issuance of stock for employee benefit plans and other
15 
 
 
(12)
 
27 1
 
Ending Balance at Sep. 30, 2011
$ 20,200 
$ 172 
$ 550 
$ 9,314 
$ 8,933 
$ (795)1
$ 2,026 
Ending Balance (in shares) at Sep. 30, 2011
 
 
537 
 
 
 
 
Consolidated Statements of Shareholders' Equity (Parenthetical) (USD $)
In Millions, except Per Share data
9 Months Ended
Sep. 30,
2011
2010
Common stock dividends, per share
$ 0.07 
$ 0.03 
Series A preferred stock dividends, per share
$ 3,044 
$ 3,044 
U.S. Treasury preferred stock dividends, per share
$ 1,236 
$ 3,750 
Treasury Stock and Other
 
 
Ending Balance, treasury stock
$ (858)
$ (1,014)
Ending Balance, compensation element of restricted stock
(58)
(44)
Ending Balance, noncontrolling interest
$ 121 
$ 106 
Consolidated Statements of Cash Flows (USD $)
In Millions
9 Months Ended
Sep. 30,
2011
2010
Cash Flows from Operating Activities:
 
 
Net income including income attributable to noncontrolling interest
$ 580 
$ 14 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation, amortization, and accretion
563 
600 
Origination of mortgage servicing rights
(183)
(198)
Provisions for credit losses and foreclosed property
1,309 
2,277 
Amortization of restricted stock compensation
25 
31 
Net (gain)/loss on extinguishment of debt
(3)
67 
Net securities gains
(98)1
(128)1
Net gain on sale of assets
(309)
(440)
Net decrease in loans held for sale
2,146 
1,296 
Net increase in other assets
(556)
(185)
Net increase in other liabilities
265 
513 
Net cash provided by operating activities
3,739 
3,847 
Cash Flows from Investing Activities:
 
 
Proceeds from maturities, calls, and paydowns of securities available for sale
3,903 
4,040 
Proceeds from sales of securities available for sale
11,585 
14,102 
Purchases of securities available for sale
(15,664)
(19,779)
Proceeds from maturities, calls, and paydowns of trading securities
132 
88 
Proceeds from sales of trading securities
102 
93 
Net increase in loans including purchases of loans
(5,018)
(2,662)
Proceeds from sales of loans
499 
696 
Capital expenditures
(78)
(156)
Contingent consideration and other payments related to acquisitions
(20)
(4)
Proceeds from the sale of other assets
481 
568 
Net cash used by investing activities
(4,078)
(3,014)
Cash Flows from Financing Activities:
 
 
Net increase/(decrease) in total deposits
3,207 
(1,518)
Net increase in funds purchased, securities sold under agreements to repurchase, and other short-term borrowings
1,416 
1,011 
Proceeds from the issuance of long-term debt
1,039 
500 
Repayment of long-term debt
(1,255)
(3,466)
Proceeds from the issuance of common stock
1,017 
Repurchase of preferred stock
(4,850)
Purchase of outstanding warrants
(11)
Common and preferred dividends paid
(102)
(202)
Net cash provided by/(used in) financing activities
461 
(3,675)
Net increase/(decrease) in cash and cash equivalents
122 
(2,842)
Cash and cash equivalents at beginning of period
5,378 
6,997 
Cash and cash equivalents at end of period
5,500 
4,155 
Supplemental Disclosures:
 
 
Loans transferred from loans held for sale to loans
53 
111 
Loans transferred from loans to loans held for sale
657 
296 
Loans transferred from loans to other real estate owned
570 
870 
Accretion of discount for preferred stock issued to the U.S. Treasury
80 
18 
Total assets of newly consolidated VIEs at January 1, 2010
$ 0 
$ 2,541 
Significant Accounting Policies
Significant Accounting Policies
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES
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 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2010.
Loans
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are considered LHFI. The Company’s loan balance is comprised of loans held in portfolio, including commercial loans, consumer loans, and residential loans. Interest income on all types of loans, except those classified as nonaccrual, is accrued based upon the outstanding principal amounts using the effective yield method.
Commercial loans (commercial & industrial, commercial real estate, and commercial construction) are considered to be past due when payment is not received from the borrower by the contractually specified due date. The Company typically classifies commercial loans as nonaccrual when one of the following events occurs: (i) interest or principal has been past due 90 days or more, unless the loan is both well secured and in the process of collection; (ii) collection of recorded interest or principal is not anticipated; or (iii) income for the loan is recognized on a cash basis due to the deterioration in the financial condition of the debtor. When a loan is placed on nonaccrual, unpaid interest is reversed against interest income. Interest income on nonaccrual loans, if recognized, is recognized after the principal has been reduced to zero. If and when commercial borrowers demonstrate the ability to repay a loan in accordance with the contractual terms of a loan classified as nonaccrual, the loan may be returned to accrual status, upon meeting all regulatory, accounting, and internal policy requirements.
Consumer loans (guaranteed student loans, other direct, indirect, and credit card) are considered to be past due when payment is not received from the borrower by the contractually specified due date. Other direct and indirect loans are typically placed on nonaccrual when payments have been past due for 90 days or more except when the borrower has declared bankruptcy, in which case, they are moved to nonaccrual status once they become 60 days past due. Credit card loans are never placed on nonaccrual status but rather are charged off once they are 180 days past due. Guaranteed student loans continue to accrue interest regardless of delinquency status because collection of principal and interest is reasonably assured. When a loan is placed on nonaccrual, unpaid interest is reversed against interest income. Interest income on nonaccrual loans, if recognized, is recognized after the principal has been reduced to zero. Nonaccrual consumer loans are typically returned to accrual status once they are no longer past due.
Residential loans (guaranteed residential mortgages, nonguaranteed residential mortgages, home equity products, and residential construction) are considered to be past due when a monthly payment is due and unpaid for one month. Nonguaranteed residential mortgages and residential construction loans are generally placed on nonaccrual when payments are 120 days past due. Home equity products are generally placed on nonaccrual when payments are 90 days past due. The exception for nonguaranteed residential mortgages, residential construction loans, and home equity products is when the borrower has declared bankruptcy, in which case, they are moved to nonaccrual status once they become 60 days past due. Guaranteed residential mortgages continue to accrue interest regardless of delinquency status because collection of principal and interest is reasonably assured. When a loan is placed on nonaccrual, unpaid interest is reversed against interest income. Interest income on nonaccrual loans, if recognized, is recognized on a cash basis. Nonaccrual residential loans are typically returned to accrual status once they no longer meet the delinquency threshold that resulted in them initially being moved to nonaccrual status.

TDRs are loans in which the borrower is experiencing financial difficulty and the Company has granted an economic concession to the borrower. To date, the Company’s TDRs have been predominantly first and second lien residential mortgages and home equity lines of credit. Prior to modifying a borrower’s loan terms, the Company performs an evaluation of the borrower’s financial condition and ability to service under the potential modified loan terms. The types of concessions granted are generally interest rate reductions and/or term extensions. If a loan is accruing at the time of modification, the loan remains on accrual status and is subject to the Company’s charge-off and nonaccrual policies. See the “Allowance for Credit Losses” section within this Note for further information regarding these policies. If a loan is on nonaccrual before it is determined to be a TDR then the loan remains on nonaccrual. TDRs may be returned to accrual status if there has been at least a six month sustained period of repayment performance by the borrower. Consistent with regulatory guidance, upon sustained performance and classification as a TDR through the Company’s year end, the loan will be removed from TDR status as long as the modified terms were market-based at the time of modification. Generally, once a residential loan becomes a TDR, we expect that the loan will likely continue to be reported as a TDR for its remaining life even after returning to accruing status as the modified rates and terms at the time of modification were typically more favorable than those generally available in the market. Interest income recognition on impaired loans is dependent upon nonaccrual status, TDR designation, and loan type as discussed above.
For loans accounted for at amortized cost, fees and incremental direct costs associated with the loan origination and pricing process, as well as premiums and discounts, are deferred and amortized as level yield adjustments over the respective loan terms. Premiums for purchased credit cards are amortized on a straight-line basis over one year. Fees received for providing loan commitments that result in funded loans are recognized over the term of the loan as an adjustment of the yield. If a loan is never funded, the commitment fee is recognized into noninterest income at the expiration of the commitment period. Origination fees and costs are recognized in noninterest income and expense at the time of origination for newly-originated loans that are accounted for at fair value. See Note 3, “Loans,” for additional information.
Allowance for Credit Losses
The Allowance for Credit Losses is composed of the ALLL and the reserve for unfunded commitments. The Company’s ALLL is the amount considered adequate to absorb probable losses within the portfolio based on management’s evaluation of the size and current risk characteristics of the loan portfolio. In addition to the review of credit quality through ongoing credit review processes, the Company employs a variety of modeling and estimation techniques to measure credit risk and construct an appropriate and adequate ALLL. Numerous asset quality measures, both quantitative and qualitative, are considered in estimating the ALLL. Such evaluation considers numerous factors for each of the loan portfolio segments, including, but not limited to net charge-off trends, internal risk ratings, changes in internal risk ratings, loss forecasts, collateral values, geographic location, delinquency rates, nonperforming and restructured loan status, origination channel, product mix, underwriting practices, industry conditions, and economic trends. In addition to these factors, refreshed FICO scores are considered for consumer and residential loans and single name borrower concentration is considered for commercial loans. These credit quality factors are incorporated into various loss estimation models and analytical tools utilized in the ALLL process and/or are qualitatively considered in evaluating the overall reasonableness of the ALLL.
Large commercial (all loan classes) nonaccrual loans and certain consumer (other direct), residential (nonguaranteed residential mortgages, home equity products, and residential construction), and commercial (all classes) loans whose terms have been modified in a TDR are individually identified for evaluation of impairment. 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. If necessary, a specific allowance is established for individually evaluated impaired loans. The specific allowance established for these loans is based on a thorough analysis of the most probable source of repayment, including the present value of the loan’s expected future cash flows, the loan’s estimated market value, or the estimated fair value of the underlying collateral depending on the most likely source of repayment. Any change in the present value attributable to the passage of time is recognized through the provision for credit losses.
General allowances are established for loans and leases grouped into pools based on similar characteristics. In this process, general allowance factors are based on an analysis of historical charge-off experience, portfolio trends, regional and national economic conditions, and expected loss given default derived from the Company’s internal risk rating process. Other adjustments may be made to the ALLL after an assessment of internal and external influences on credit quality that are not fully reflected in the historical loss or other risk rating data. These influences may include elements such as changes in credit underwriting, concentration risk, macroeconomic conditions, and/or recent observable asset quality trends.
The Company’s charge-off policy meets regulatory minimums. Losses on unsecured consumer loans are recognized at 90 days past due compared to the regulatory loss criteria of 120 days past due. Losses, as appropriate, on secured consumer loans, including residential real estate, are typically recognized between 120 and 180 days past due, depending on the collateral type, in compliance with the FFIEC guidelines. Loans that have been partially charged-off remain on nonperforming status, regardless of collateral value, until specific borrower performance criteria are met.
The Company uses numerous sources of information in order to make an appropriate evaluation of a property’s value. Estimated collateral valuations are based on appraisals, broker price opinions, recent sales of foreclosed properties, automated valuation models, other property-specific information, and relevant market information, supplemented by the Company’s internal property valuation professionals. The value estimate is based on an orderly disposition and marketing period of the property. In limited instances, the Company adjusts externally provided appraisals for justifiable and well-supported reasons, such as an appraiser not being aware of certain property-specific factors or recent sales information. Appraisals generally represent the “as is” value of the property but may be adjusted based on the intended disposition strategy of the property.
For commercial real estate loans secured by property, an acceptable third-party appraisal or other form of evaluation, as permitted by regulation, is obtained prior to the origination of the loan and upon a subsequent transaction involving a material change in terms. In addition, updated valuations may be obtained during the life of a transaction, as appropriate, such as when a loan's performance materially deteriorates. In situations where an updated appraisal has not been received or a formal evaluation performed, the Company monitors factors that can positively or negatively impact property value, such as the date of the last valuation, the volatility of property values in specific markets, changes in the value of similar properties, and changes in the characteristics of individual properties. Changes in collateral value affect the ALLL through the risk rating or impaired loan evaluation process. Charge-offs are recognized when the amount of the loss is quantifiable and timing is known. The charge-off is measured based on the difference between the loan’s carrying value, including deferred fees, and the estimated net realizable value of the loan, net of estimated selling costs. When assessing property value for the purpose of determining a charge-off, a third-party appraisal or an independently derived internal evaluation is generally employed.
For mortgage loans secured by residential property where the Company is proceeding with a foreclosure action, a new valuation is obtained prior to the loan becoming 180 days past due and, if required, the loan is written down to net realizable value, net of estimated selling costs. In the event the Company decides not to proceed with a foreclosure action, the full balance of the loan is charged-off. If a loan remains in the foreclosure process for 12 months past the original charge-off, typically at 180 days past due, the Company obtains a new valuation and, if required, writes the loan down to the new valuation, less estimated selling costs. At foreclosure, a new valuation is obtained and the loan is transferred to OREO at the new valuation less estimated selling costs; any loan balance in excess of the transfer value is charged-off. Estimated declines in value of the residential collateral between these formal evaluation events are captured in the ALLL based on changes in the house price index in the applicable metropolitan statistical area or other market information.
In addition to the ALLL, the Company also estimates probable losses related to unfunded lending commitments, such as letters of credit and binding unfunded loan commitments. Unfunded lending commitments are analyzed and segregated by risk similar to funded loans based on the Company’s internal risk rating scale. These risk classifications, in combination with an analysis of historical loss experience, probability of commitment usage, existing economic conditions, and any other pertinent information, result in the estimation of the reserve for unfunded lending commitments. The reserve for unfunded lending commitments is reported on the Consolidated Balance Sheets in other liabilities and through the third quarter of 2009, the provision associated with changes in the unfunded lending commitment reserve was reported in the Consolidated Statements of Income in noninterest expense. Beginning in the fourth quarter of 2009, the Company began recording changes in the unfunded lending commitment reserve in the provision for credit losses. See Note 4, “Allowance for Credit Losses,” for additional information.
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 ASU requires the disclosure of transfers in and out of level 1 and 2 of the fair value hierarchy, along with the reasons for the transfers and a gross presentation of purchases and sales of level 3 instruments. Additionally, the ASU requires fair value measurement disclosures for each class of assets and liabilities and enhanced disclosures around level 2 valuation techniques and inputs. The Company adopted the disclosure requirements for level 1 and 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 required disclosures are included in Note 12, “Fair Value Election and Measurement.” The adoption of these disclosure requirements had no impact on the Company’s financial position, results of operations, or 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 ASU requires more disclosures about the credit quality of 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.” Disclosures about activity that occurs during a reporting period were effective for the interim reporting period ending March 31, 2011 are also included in Note 3, “Loans,” and Note 4, “Allowance for Credit Losses.” The adoption of the ASU did not have an impact on the Company’s financial position, results of operations, or 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 step 2 of the goodwill impairment analysis if the carrying value of a reporting unit is zero or negative and it is more likely than not that goodwill for that reporting unit is impaired. The adoption of the ASU as of January 1, 2011 did not have an impact on the Company’s financial position, results of operations, or EPS.
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 ASU provides additional guidance to assist creditors in determining whether a modification of a receivable meets the criteria to be considered a TDR, both for purposes of recognizing loan losses and additional disclosures regarding TDRs. A modification of a credit arrangement constitutes a TDR if the debtor is experiencing financial difficulties and the Company grants a concession to the debtor that it would not otherwise consider. The clarifications for classification apply to all restructurings occurring on or after January 1, 2011. The measurement of impairment for those newly identified TDRs was applied prospectively beginning on July 1, 2011. The related disclosures, which were previously deferred by ASU 2011-01, were required for the interim reporting period ending September 30, 2011 and subsequent reporting periods. The required disclosures and impact as a result of adoption are included in Note 3, “Loans.” The adoption of the ASU did not have a significant impact on the Company’s financial position, results of operations, or EPS.
In April 2011, the FASB issued ASU 2011-03, “Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements.” A repurchase agreement is a transaction in which a company sells financial instruments to a buyer, typically in exchange for cash, and simultaneously enters into an agreement to repurchase the same or substantially the same financial instruments from the buyer at a stated price plus accrued interest at a future date. The determination of whether the transaction is accounted for as a sale or a collateralized financing is determined by assessing whether the seller retains effective control of the financial instrument. The ASU changes the assessment of effective control by removing the criterion that requires the seller to have the ability to repurchase or redeem financial assets with substantially the same terms, even in the event of default by the buyer and the collateral maintenance implementation guidance related to that criterion. The Company will apply the new guidance to repurchase agreements entered into or amended after January 1, 2012. The Company does not expect the ASU to have a significant impact on the Company’s financial position, results of operations, or EPS.
In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” The primary purpose of the ASU is to conform the language in the fair value measurements guidance in U.S. GAAP and IFRS. The ASU also clarifies how to apply existing fair value measurement and disclosure requirements. Further, the ASU requires additional disclosures about transfers between level 1 and 2 of the fair value hierarchy, quantitative information for level 3 inputs, and the level of the fair value measurement hierarchy for items that are not measured at fair value in the statement of financial position but for which the fair value is required to be disclosed. The ASU is effective for the interim reporting period ending March 31, 2012. The Company is evaluating the impact of the ASU; however, it is not expected to have a significant impact on the Company’s financial position, results of operations, or EPS.
In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” The ASU requires presentation of the components of comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements. The update does not change the items presented in OCI and does not affect the calculation or reporting of EPS. The guidance is effective on January 1, 2012 and must be applied retrospectively for all periods presented. The Company is in the process of evaluating the presentation options; however, adoption of the ASU will not have an impact on the Company’s financial position, results of operations, or EPS.
In September 2011, the FASB issued ASU 2011-08, “Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment.” The ASU amends interim and annual goodwill impairment testing requirements. Under the ASU, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The more likely than not threshold is defined as having a likelihood of more than 50 percent. The guidance is effective for annual and interim goodwill impairment tests beginning January 1, 2012 with early adoption permitted. The Company has not elected to early adopt the amendments; however, adoption of the ASU will not have an impact on the Company's financial position, results of operations, or EPS.


Securities Available for Sale
Securities Available for Sale
NOTE 2 – SECURITIES AVAILABLE FOR SALE
Securities Portfolio Composition

 
September 30, 2011
(Dollars in millions)
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
U.S. Treasury securities

$374

 

$12

 

$—

 

$386

Federal agency securities
2,527

 
118

 

 
2,645

U.S. states and political subdivisions
471

 
21

 
2

 
490

MBS - agency
19,302

 
728

 

 
20,030

MBS - private
319

 
1

 
33

 
287

CDO/CLO securities
337

 

 
5

 
332

ABS
534

 
13

 
7

 
540

Corporate and other debt securities
53

 
2

 
1

 
54

Coke common stock

 
2,027

 

 
2,027

Other equity securities1
710

 
1

 

 
711

Total securities AFS

$24,627

 

$2,923

 

$48

 

$27,502

 
 
 
 
 
 
 
 
 
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/CLO 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 September 30, 2011, other equity securities included the following securities at cost: $171 million in FHLB of Atlanta stock, $391 million in Federal Reserve Bank stock, and $148 million in mutual fund investments. At December 31, 2010, other equity securities included the following securities at cost: $298 million in FHLB of Atlanta stock, $391 million in Federal Reserve Bank stock, and $197 million in mutual fund investments.
Securities AFS that were pledged to secure public deposits, repurchase agreements, trusts, and other funds had a fair value of $7.9 billion and $6.9 billion as of September 30, 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.” The Company has also pledged $1.1 billion and $823 million of certain trading assets and cash equivalents to secure $1.0 billion and $793 million of repurchase agreements as of September 30, 2011 and December 31, 2010, respectively.
The amortized cost and fair value of investments in debt securities at September 30, 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

$9

 

$213

 

$152

 

$—

 

$374

Federal agency securities
73

 
2,209

 
189

 
56

 
2,527

U.S. states and political subdivisions
136

 
245

 
26

 
64

 
471

MBS - agency
1,101

 
11,236

 
4,050

 
2,915

 
19,302

MBS - private
31

 
141

 
130

 
17

 
319

CDO/CLO securities

 
237

 
100

 

 
337

ABS
328

 
204

 
2

 

 
534

Corporate and other debt securities
7

 
4

 
17

 
25

 
53

Total debt securities

$1,685

 

$14,489

 

$4,666

 

$3,077

 

$23,917


Fair Value
 
 
 
 
 
 
 
 
 
U.S. Treasury securities

$9

 

$224

 

$153

 

$—

 

$386

Federal agency securities
74

 
2,309

 
204

 
58

 
2,645

U.S. states and political subdivisions
139

 
260

 
27

 
64

 
490

MBS - agency
1,138

 
11,644

 
4,246

 
3,002

 
20,030

MBS - private
28

 
129

 
114

 
16

 
287

CDO/CLO securities

 
234

 
98

 

 
332

ABS
335

 
203

 
2

 

 
540

Corporate and other debt securities
7

 
4

 
18

 
25

 
54

Total debt securities

$1,730

 

$15,007

 

$4,862

 

$3,165

 

$24,764



Securities in an Unrealized Loss Position
The Company held certain investment securities having unrealized loss positions. Market changes in interest rates and credit spreads will result in temporary unrealized losses as the market price of securities fluctuates. As of September 30, 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.
 
September 30, 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
 
 
 
 
 
 
 
 
 
 
 
Federal agency securities

$34

 

$—

 

$—

 

$—

 

$34

 

$—

U.S. states and political subdivisions
2

 

 
32

 
2

 
34

 
2

MBS - agency
52

 

 

 

 
52

 

MBS - private
9

 

 
22

 
3

 
31

 
3

CDO/CLO securities
333

 
5

 

 

 
333

 
5

ABS

 

 
11

 
5

 
11

 
5

Corporate and other debt securities

 

 
2

 
1

 
2

 
1

Total temporarily impaired securities

430

 
5

 
67

 
11

 
497

 
16

Other-than-temporarily impaired securities1
 
 
 
 
 
 
 
 
 
 
 
MBS - private
18

 
1

 
220

 
29

 
238

 
30

ABS
3

 
1

 
2

 
1

 
5

 
2

Total other-than-temporarily impaired securities
21

 
2

 
222

 
30

 
243

 
32

Total impaired securities

$451

 

$7

 

$289

 

$41

 

$740

 

$48

 
 
 
 
 
 
 
 
 
 
 
 
 
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

1Includes OTTI securities for which credit losses have been recorded in earnings in current or prior periods.
Unrealized losses on securities that have been other-than-temporarily impaired are the result of factors other than credit, and therefore, are recorded in OCI. Losses related to credit impairment on these securities is determined through estimated cash flow analyses and have been recorded in earnings in current or prior periods. The unrealized OTTI loss relating to private MBS as of September 30, 2011, includes purchased and retained interests from 2007 vintage securitizations. The unrealized OTTI loss relating to ABS is related to four securities within the portfolio that are 2003 and 2004 vintage home equity issuances. 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.



Realized Gains and Losses and Other than Temporarily Impaired

 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions)
2011
 
2010
 
2011
 
2010
Gross realized gains

$4

 

$69

 

$180

 

$147

Gross realized losses
(2
)
 

 
(80
)
 
(17
)
OTTI

 

 
(2
)
 
(2
)
Net securities gains

$2

 

$69

 

$98

 

$128



The securities that gave rise to the credit impairment recognized during the nine months ended September 30, 2011 consisted of private MBS with a fair value of $176 million at September 30, 2011. The securities impacted by credit impairment during the nine months ended September 30, 2010, consisted of private MBS with a fair value of $1 million as of September 30, 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 nine months ended September 30, 2011 and 2010, all OTTI recognized in earnings on private MBS have underlying collateral of residential mortgage loans securitized in 2007. The majority of the OTTI was taken on private MBS which were originated by the Company and, therefore, have geographic concentrations in the Company’s primary footprint. Additionally, the Company has not purchased new private MBS during the nine months ended September 30, 2011, and continues to reduce existing exposure primarily through paydowns. 

 
Three Months Ended September 30
 
Nine Months Ended September 30
 
2011
 
2010
 
2011
 
2010
(Dollars in millions)
 
 
 
 
MBS - Private    
 
MBS - Private    
OTTI1

$—

 

$—

 

$3

 

$2

Portion of losses recognized in OCI (before taxes)

 

 
(1
)
 

Net impairment losses recognized in earnings

$—

 

$—

 

$2

 

$2

1 The initial OTTI amount represents the excess of the amortized cost over the fair value of AFS debt securities. For subsequent impairments of the same security, amount represents additional declines in the fair value subsequent to the previously recorded OTTI, if applicable, until such time the security is no longer in an unrealized loss position.
The following is a rollforward of credit losses recognized in earnings for the nine months ended September 30, 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, 2011

$20

Additions:
 
OTTI credit losses on previously impaired securities
2

Reductions:
 
Increases in expected cash flows recognized over the remaining life of the securities
(1
)
Balance, as of September 30, 2011

$21

 
 
Balance, as of January 1, 2010

$22

Additions/Reductions:1
 
Increases in expected cash flows recognized over the remaining life of the securities
(1
)
Balance, as of September 30, 2010

$21

1 During the nine months ended September 30, 2010, the Company recognized $2 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 this amount.

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 nine months ended September 30, 2011 and September 30, 2010:
 
 
September 30, 2011
 
September 30, 2010
Current default rate
4 - 8%
 
2 - 7%
Prepayment rate
12 - 22%
 
14 - 22%
Loss severity
39 - 44%
 
37 - 46%


Loans
Loans
NOTE 3 - LOANS
Composition of Loan Portfolio  
(Dollars in millions)
September 30,
2011
 
December 31,
2010
Commercial loans:
 
 
 
 Commercial & industrial1

$47,985

 

$44,753

Commercial real estate
5,330

 
6,167

Commercial construction
1,390

 
2,568

Total commercial loans
54,705

 
53,488

Residential loans:
 
 
 
Residential mortgages - guaranteed
4,449

 
4,520

 Residential mortgages - nonguaranteed2
23,517

 
23,959

Home equity products
15,980

 
16,751

Residential construction
1,046

 
1,291

Total residential loans
44,992

 
46,521

Consumer loans:
 
 
 
Guaranteed student loans
5,333

 
4,260

Other direct
1,945

 
1,722

Indirect
10,003

 
9,499

Credit cards
497

 
485

Total consumer loans
17,778

 
15,966

LHFI

$117,475

 

$115,975

LHFS

$2,243

 

$3,501

1Includes $3 million and $4 million of loans carried at fair value at September 30, 2011 and December 31, 2010, respectively.
2Includes $449 million and $488 million of loans carried at fair value at September 30, 2011 and December 31, 2010, respectively.

During the nine months ended September 30, 2011, the Company transferred $657 million in LHFI to LHFS. Additionally, during the nine months ended September 30, 2011, the Company sold $479 million in loans and leases that had been held for investment at December 31, 2010 for a gain of $20 million. There were no other material sales of LHFI during the period.
Credit Quality Evaluation
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. Loans are rated pass or criticized based on the borrower’s willingness and ability to contractually perform along with the estimated net losses the Company would incur in the event of default. Criticized loans have a higher probability of default. As a result, criticized loans are further categorized into accruing and nonaccruing, representing management’s assessment of the collectibility of principal and interest. Ratings for 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. However, for student loans which are guaranteed by a federal agency, the Company does not utilize FICO scores as the Company does not originate government guaranteed student loans. For guaranteed student loans, the Company monitors the credit quality based primarily on delinquency status, which it believes is the most appropriate indicator of credit quality. As of September 30, 2011 and December 31, 2010, 80% and 77%, respectively, of the guaranteed student loan portfolio was current with respect to payments; however, the loss exposure to the Company was mitigated by the government guarantee.

LHFI by credit quality indicator are shown in the tables below:
 
Commercial & industrial
 
Commercial real estate
 
Commercial construction
(Dollars in millions)
September 30, 2011
 
December 31,
2010
 
September 30, 2011
 
December 31,
2010
 
September 30, 2011
 
December 31,
2010
Credit rating:
 
 
 
 
 
 
 
 
 
 
 
Pass

$45,823

 

$42,140

 

$3,763

 

$4,316

 

$600

 

$836

Criticized accruing
1,682

 
2,029

 
1,227

 
1,509

 
405

 
771

Criticized nonaccruing
480

 
584

 
340

 
342

 
385

 
961

Total

$47,985

 

$44,753

 

$5,330

 

$6,167

 

$1,390

 

$2,568

 
 
Residential mortgages  -
   nonguaranteed 2
 
Home equity products
 
Residential construction
(Dollars in millions)
September 30, 2011
 
December 31,
2010
 
September 30, 2011
 
December 31,
2010
 
September 30, 2011
 
December 31,
2010
Current FICO score range:
 
 
 
 
 
 
 
 
 
 
700 and above

$16,205

 

$15,920

 

$11,348

 

$11,673

 

$695

 

$828

620 - 699
4,184

 
4,457

 
2,857

 
2,897

 
215

 
258

  Below 6201
3,128

 
3,582

 
1,775

 
2,181

 
136

 
205

Total

$23,517

 

$23,959

 

$15,980

 

$16,751

 

$1,046

 

$1,291

 
 
Consumer  - other direct3
 
Consumer - indirect
 
Consumer - credit cards
(Dollars in millions)
September 30, 2011
 
December 31,
2010
 
September 30, 2011
 
December 31,
2010
 
September 30, 2011
 
December 31,
2010
Current FICO score range:
 
 
 
 
 
 
 
 
 
 
700 and above

$1,187

 

$973

 

$7,530

 

$6,780

 

$278

 

$258

620 - 699
231

 
231

 
1,764

 
1,799

 
148

 
149

  Below 6201
86

 
105

 
709

 
920

 
71

 
78

Total

$1,504

 

$1,309

 

$10,003

 

$9,499

 

$497

 

$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 $4.4 billion and $4.5 billion at September 30, 2011 and December 31, 2010, respectively, of federally guaranteed residential loans. At both September 30, 2011 and December 31, 2010, the majority of these loans had FICO scores of 700 and above.
3Excludes $441 million and $413 million as of September 30, 2011 and December 31, 2010, respectively, of private-label student loans with third party insurance. At both September 30, 2011 and December 31, 2010, the majority of these loans had FICO scores of 700 and above.

The payment status for the LHFI portfolio is shown in the tables below:
 
As of September 30, 2011
(Dollars in millions)
Accruing
Current
 
Accruing
30-89 Days
Past Due
 
Accruing
90+ Days
Past Due
 
  Nonaccruing3   
 
Total
Commercial loans:
 
 
 
 
 
 
 
 
 
   Commercial & industrial1

$47,366

 

$74

 

$66

 

$479

 

$47,985

Commercial real estate
4,979

 
9

 
1

 
341

 
5,330

Commercial construction
1,004

 
1

 

 
385

 
1,390

Total commercial loans
53,349

 
84

 
67

 
1,205

 
54,705

Residential loans:
 
 
 
 
 
 
 
 
 
Residential mortgages - guaranteed
3,237

 
179

 
1,033

 

 
4,449

   Residential mortgages - nonguaranteed2
21,728

 
342

 
30

 
1,417

 
23,517

Home equity products
15,417

 
223

 

 
340

 
15,980

Residential construction
771

 
22

 
3

 
250

 
1,046

Total residential loans
41,153

 
766

 
1,066

 
2,007

 
44,992

Consumer loans:
 
 
 
 
 
 
 
 
 
Guaranteed student loans
4,245

 
413

 
675

 

 
5,333

Other direct
1,918

 
15

 
5

 
7

 
1,945

Indirect
9,919

 
60

 
4

 
20

 
10,003

Credit cards
482

 
8

 
7

 

 
497

Total consumer loans
16,564

 
496

 
691

 
27

 
17,778

Total LHFI

$111,066

 

$1,346

 

$1,824

 

$3,239

 

$117,475

1Includes $3 million of loans carried at fair value.
2Includes $449 million of loans carried at fair value.
3Total nonaccruing loans past due 90 days or more totaled $2.5 billion. 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

Consum