SUNTRUST BANKS INC, 10-Q filed on 10/31/2019
Quarterly Report
v3.19.3
Document and Entity Information - $ / shares
9 Months Ended
Sep. 30, 2019
Oct. 28, 2019
Dec. 31, 2018
Entity Registrant Name SunTrust Banks, Inc.    
Entity Central Index Key 0000750556    
Document Type 10-Q    
Document Quarterly Report true    
Document Transition Report false    
Document Period End Date Sep. 30, 2019    
Entity File Number 001-08918    
Entity Incorporation, State or Country Code GA    
Entity Tax Identification Number 58-1575035    
Entity Address, Address Line One 303 Peachtree Street, N.E.    
Entity Address, City or Town Atlanta    
Entity Address, State or Province GA    
Entity Address, Postal Zip Code 30308    
City Area Code (800)    
Local Phone Number 786-8787    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Shell Company false    
Current Fiscal Year End Date --12-31    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus Q3    
Amendment Flag false    
Entity Common Stock, Shares Outstanding   444,039,931  
Common Stock, Par or Stated Value Per Share $ 1.00   $ 1.00
NEW YORK STOCK EXCHANGE, INC. [Member]      
Title of 12(b) Security Common Stock    
Trading Symbol STI    
Security Exchange Name NYSE    
Preferred Class A [Member] | NEW YORK STOCK EXCHANGE, INC. [Member]      
Title of 12(b) Security [1] Perpetual Preferred Stock, Series A    
Trading Symbol STI PRA    
Security Exchange Name NYSE    
Preferred Class B [Member] | NEW YORK STOCK EXCHANGE, INC. [Member]      
Title of 12(b) Security [2] Perpetual Preferred Stock, Series B    
Trading Symbol STI/PRI    
Security Exchange Name NYSE    
[1] Depositary Shares, Each Representing a 1/4000th Interest in a Share of Perpetual Preferred Stock, Series A.
[2] 5.853% Fixed-to-Floating Rate Normal Preferred Purchase Securities of SunTrust Preferred Capital I (representing interests in shares of Perpetual Preferred Stock, Series B).
v3.19.3
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Interest Income        
Interest and Fee Income, Loans and Leases Held-in-portfolio $ 1,708 $ 1,549 $ 5,125 $ 4,424
Interest and fees on loans held for sale 21 22 50 67
Interest and Dividend Income, Securities, Available-for-sale 215 212 659 628
Trading account interest and other 61 51 179 142
Total interest income 2,005 1,834 6,013 5,261
Interest Expense        
Interest Expense, Deposits 293 193 811 484
Interest Expense, Long-term Debt 150 95 425 252
Interest on other borrowings 52 34 188 85
Total interest expense 495 322 1,424 821
Net, interest income 1,510 1,512 4,589 4,440
Provision for Loan, Lease, and Other Losses 132 [1] 61 [2] 412 [3] 121 [4]
Interest Income (Expense), after Provision for Loan Loss 1,378 1,451 4,177 4,319
Noninterest Income        
Service charges on deposit accounts 141 144 417 433
Other charges and fees 90 89 265 264
Card fees 83 75 247 241
Investment Banking Revenue 159 150 431 453
Trading Gain (Loss) 29 42 144 137
Gain (Loss) Related to Litigation Settlement 5 0 210 0
Mortgage Related Income [5] 106 83 294 256
Trust and investment management income 78 80 222 230
Retail investment services 76 74 220 219
Commercial Real Estate Related Income 32 24 106 66
Debt and Equity Securities, Gain (Loss) 4 0 (38) 1
Noninterest Income, Other Operating Income 40 21 135 108
Noninterest Income 843 782 2,653 2,408
Noninterest Expense        
Employee compensation 744 719 2,149 2,141
Other Labor-related Expenses 97 76 344 310
Outside processing and software 241 234 720 667
Charitable contribution to the SunTrust Foundation 0 0 205 0
Net occupancy expense 102 86 305 270
Merger-Related Costs 22 0 75 0
Marketing and Advertising Expense 44 45 131 127
Equipment Expense 36 40 114 124
Federal Deposit Insurance Corporation Premium Expense 17 39 53 118
Operating losses 23 18 60 40
Amortization 21 19 54 51
Other Noninterest Expense 127 108 392 343
Noninterest Expense 1,474 1,384 4,602 4,191
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest 747 849 2,228 2,536
Income Tax Expense (Benefit) 122 95 330 412
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest 625 754 1,898 2,124
Net Income (Loss) Attributable to Noncontrolling Interest 2 2 7 7
Net Income (Loss) Attributable to Parent 623 752 1,891 2,117
Preferred Stock Dividends and Other Adjustments 26 26 77 81
Net Income (Loss) Available to Common Stockholders, Basic $ 597 $ 726 $ 1,814 $ 2,036
Earnings Per Share, Diluted $ 1.34 $ 1.56 $ 4.06 $ 4.34
Earnings Per Share, Basic 1.35 1.58 4.09 4.38
Common Stock, Dividends, Per Share, Declared $ 0.56 $ 0.50 $ 1.56 $ 1.30
Weighted Average Number of Shares Outstanding, Diluted 446,962 464,164 446,673 469,006
Weighted Average Number of Shares Outstanding, Basic 443,960 460,252 443,779 464,804
[1] Provision for credit losses represents net charge-offs by segment combined with an allocation to the segments for the provision attributable to quarterly changes in the ALLL and unfunded commitment reserve balances.
[2]
Provision for credit losses represents net charge-offs by segment combined with an allocation to the segments for the provision attributable to quarterly changes in the ALLL and unfunded commitment reserve balances.
[3] Provision for credit losses represents net charge-offs by segment combined with an allocation to the segments for the provision attributable to quarterly changes in the ALLL and unfunded commitment reserve balances.
[4] Provision for credit losses represents net charge-offs by segment combined with an allocation to the segments for the provision attributable to quarterly changes in the ALLL and unfunded commitment reserve balances.
[5] Beginning with the 2018 Form 10-K, the Company began presenting Mortgage production related income and Mortgage servicing related income as a single line item on the Consolidated Statements of Income titled Mortgage-related income. Prior periods have been conformed to this updated presentation for comparability.
v3.19.3
Consolidated Statements of Comprehensive Income Consolidated Statement of Comprehensive Income - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Statement of Comprehensive Income [Abstract]        
Net Income (Loss) Attributable to Parent $ 623 $ 752 $ 1,891 $ 2,117
Other Comprehensive Income (Loss), Securities, Available-for-sale, Adjustment, after Tax 166 (178) 960 (726)
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax 82 (20) 302 (179)
Other Comprehensive Income (Loss), Brokered Time Deposits, Net of Tax 0 0 (1) 0
Other Comprehensive Income (Loss), Long Term Debt, Adjustment, Net of Tax 0 0 0 3
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Adjustment, Net of Tax 4 3 10 2
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent 252 (195) 1,271 (900)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent $ 875 $ 557 $ 3,162 $ 1,217
v3.19.3
Consolidated Statements of Comprehensive Income Consolidated Statement of Comprehensive Income (Parenthetical) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Statement of Comprehensive Income [Abstract]        
Other Comprehensive Income (Loss), Securities, Available-for-sale, Tax $ 51 $ (55) $ 294 $ (223)
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Tax 25 (6) 93 (55)
Other Comprehensive Income (Loss), Brokered Time Deposits, Tax 0 0 0 0
Other Comprehensive Income (Loss), Long Term Debt, Adjustment, Tax 0 0 0 1
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss) Arising During Period, Tax $ 1 $ 1 $ 4 $ 1
v3.19.3
Consolidated Balance Sheets - USD ($)
shares in Thousands, $ in Millions
Sep. 30, 2019
Dec. 31, 2018
Assets    
Cash and Due from Banks $ 7,844 $ 5,791
Federal Funds Sold and Securities Purchased under Agreements to Resell 1,314 1,679
Interest-bearing Deposits in Banks and Other Financial Institutions 26 25
Cash and cash equivalents 9,184 7,495
Debt Securities, Trading, and Equity Securities, FV-NI [1] 7,104 5,506
Available-for-sale Securities [2] 31,358 31,442
Loans Held for Sale [3] 2,006 1,468
Loans and Leases Receivable, Gross [4] 158,455 151,839
Loans and Leases Receivable, Allowance (1,699) (1,615)
Net loans 156,756 150,224
Property, Plant and Equipment, Net 1,985 2,024
Goodwill 6,331 6,331
Intangible Assets, Net (Excluding Goodwill) 1,648 2,062
Other Assets 10,996 8,991
Total assets 227,368 215,543
Liabilities and Shareholders' Equity    
Noninterest-bearing consumer and commercial deposits 40,360 40,770
Interest-bearing Deposit Liabilities 127,311 121,819
Total deposits 167,671 162,589
Federal Funds Purchased 254 2,141
Securities Sold under Agreements to Repurchase 1,829 1,774
Other Short-term Borrowings 5,061 4,857
Long-term Debt [5] 20,369 15,072
Trading liabilities 1,380 1,604
Other Liabilities 4,315 3,226
Total liabilities 200,879 191,263
Preferred Stock, Value, Outstanding 2,025 2,025
Common Stock, Value, Outstanding 553 553
Additional Paid in Capital 8,989 9,022
Retained earnings 20,664 19,522
Treasury Stock, Value [6] (5,593) (5,422)
Accumulated Other Comprehensive Income (Loss), Net of Tax (149) (1,420)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest 26,489 24,280
Liabilities and Equity $ 227,368 $ 215,543
Common Stock, Shares, Outstanding [7] 444,033 446,888
Common shares authorized 750,000 750,000
Preferred Stock, Shares Outstanding 20 20
Preferred Stock, Shares Authorized 50,000 50,000
Treasury shares of common stock 108,750 105,896
Treasury Stock and Other    
Liabilities and Shareholders' Equity    
Treasury Stock, Value $ (5,693)  
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest [8] (5,593) $ (5,422)
Stockholders' Equity Attributable to Noncontrolling Interest 101 103
Variable Interest Entity, Primary Beneficiary [Member]    
Assets    
Loans and Leases Receivable, Gross 136 153
Liabilities and Shareholders' Equity    
Long-term Debt $ 143 $ 161
Restricted Stock [Member]    
Liabilities and Shareholders' Equity    
Common Stock, Shares, Outstanding 4 7
Trading Assets [Member]    
Liabilities and Shareholders' Equity    
Pledged Assets Separately Reported, Securities Pledged as Collateral, at Fair Value $ 1,284 $ 1,442
Available-for-sale Securities [Member]    
Liabilities and Shareholders' Equity    
Pledged Assets Separately Reported, Securities Pledged as Collateral, at Fair Value 151 222
Fair Value, Recurring [Member]    
Assets    
Debt Securities, Trading, and Equity Securities, FV-NI 7,104 5,506
Available-for-sale Securities $ 31,358 $ 31,442
[1] Includes trading securities pledged as collateral where counterparties have the right to sell or repledge the collateral of $1,284 million and $1,442 million at September 30, 2019 and December 31, 2018, respectively.
[2] Includes securities AFS pledged as collateral where counterparties have the right to sell or repledge the collateral of $151 million and $222 million at September 30, 2019 and December 31, 2018, respectively.
[3] Includes $1.5 billion and $1.2 billion measured at fair value at September 30, 2019 and December 31, 2018, respectively.
[4] Includes LHFI of consolidated VIEs of $136 million and $153 million at September 30, 2019 and December 31, 2018, respectively.
[5] Includes debt of consolidated VIEs of $143 million and $161 million at September 30, 2019 and December 31, 2018, respectively.
[6] Includes noncontrolling interest of $101 million and $103 million at September 30, 2019 and December 31, 2018, respectively.
[7] Includes restricted shares of 4 thousand and 7 thousand at September 30, 2019 and December 31, 2018, respectively.
[8] At September 30, 2019, includes ($5,693) million for treasury stock, less than ($1) million for the compensation element of restricted stock, and $101 million for noncontrolling interest.
v3.19.3
Consolidated Balance Sheets (Parenthetical) - USD ($)
shares in Thousands, $ in Millions
Sep. 30, 2019
Dec. 31, 2018
Loans Receivable, Fair Value Disclosure $ 124 $ 163
Common stock, par value $ 1.00 $ 1.00
Loans and Leases Receivable, Gross [1] $ 158,455 $ 151,839
Long-term Debt [2] $ 20,369 $ 15,072
Common Stock, Shares, Outstanding [3] 444,033 446,888
Variable Interest Entity, Primary Beneficiary [Member]    
Loans and Leases Receivable, Gross $ 136 $ 153
Long-term Debt 143 161
Treasury Stock and Other    
Stockholders' Equity Attributable to Noncontrolling Interest $ 101 $ 103
Restricted Stock [Member]    
Common Stock, Shares, Outstanding 4 7
Available-for-sale Securities [Member]    
Pledged Assets Separately Reported, Securities Pledged as Collateral, at Fair Value $ 151 $ 222
Fair Value, Recurring [Member]    
Debt Securities, Held-to-maturity, Fair Value 0 0
Loans Held-for-sale, Fair Value Disclosure 1,488 1,200
Loans Receivable, Fair Value Disclosure 124 163
Servicing Asset at Fair Value, Amount 1,564  
Other Assets, Fair Value Disclosure 76 95
Long-term Debt, Fair Value 302 289
Brokered Time Deposits [Member] | Fair Value, Recurring [Member]    
Deposits, Fair Value Disclosure $ 552 $ 403
[1] Includes LHFI of consolidated VIEs of $136 million and $153 million at September 30, 2019 and December 31, 2018, respectively.
[2] Includes debt of consolidated VIEs of $143 million and $161 million at September 30, 2019 and December 31, 2018, respectively.
[3] Includes restricted shares of 4 thousand and 7 thousand at September 30, 2019 and December 31, 2018, respectively.
v3.19.3
Consolidated Statements of Shareholders' Equity - USD ($)
shares in Thousands, $ in Millions
Total
Preferred Stock [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock and Other
AOCI Attributable to Parent [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Common Stock, Shares, Outstanding     471,000        
Total shareholders' equity at Dec. 31, 2017 $ 25,154 $ 2,475 $ 550 $ 9,000 $ 17,540 $ (3,591) [1] $ (820)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Net Income [2] (10)       144   (154) [3]
Net Income (Loss) Attributable to Parent 2,117       2,117    
Other Comprehensive Income (Loss), Net of Tax (900)           (900)
Noncontrolling Interest, Period Increase (Decrease) (2)         (2) [1]  
Dividends, Common Stock, Cash (603)       (603)    
Dividends, Preferred Stock, Cash [4] (81)       (81)    
Stock Redeemed or Called During Period, Value (450) (450)          
Treasury Stock, Shares, Acquired     (17,000)        
Treasury Stock, Value, Acquired, Cost Method (1,160)         (1,160) [1]  
Stock Issued During Period, Value, Stock Options Exercised 36         36 [1]  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period     1,000        
Stock Issued During Period, Shares, Other     3,000        
Stock Issued During Period, Value, Other 0   $ 3 (3)      
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures     1,000        
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures 38     4 (6) 40 [1]  
Total shareholders' equity at Sep. 30, 2018 24,139 2,025 $ 553 9,001 19,111 (4,677) [1] (1,874)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Common Stock, Shares, Outstanding     465,000        
Total shareholders' equity at Jun. 30, 2018 24,316 2,025 $ 552 8,980 18,616 (4,178) [1] (1,679)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net Income (Loss) Attributable to Parent 752       752    
Other Comprehensive Income (Loss), Net of Tax (195)           (195)
Noncontrolling Interest, Period Increase (Decrease) (2)         (2) [1]  
Dividends, Common Stock, Cash (229)       (229)    
Dividends, Preferred Stock, Cash [4] (26)       (26)    
Treasury Stock, Shares, Acquired     (7,000)        
Treasury Stock, Value, Acquired, Cost Method (500)         (500) [1]  
Stock Issued During Period, Value, Stock Options Exercised 2     (1)   3 [1]  
Stock Issued During Period, Shares, Other     1,000        
Stock Issued During Period, Value, Other 1   $ 1        
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures 20     22 (2)    
Total shareholders' equity at Sep. 30, 2018 $ 24,139 2,025 $ 553 9,001 19,111 (4,677) [1] (1,874)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Common Stock, Shares, Outstanding     459,000        
Common Stock, Shares, Outstanding 446,888 [5]   447,000        
Total shareholders' equity at Dec. 31, 2018 $ 24,280 2,025 $ 553 9,022 19,522 (5,422) [6] (1,420)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Net Income [7] 31       31    
Net Income (Loss) Attributable to Parent 1,891       1,891    
Other Comprehensive Income (Loss), Net of Tax 1,271           1,271
Noncontrolling Interest, Period Increase (Decrease) (2)         (2) [6]  
Dividends, Common Stock, Cash (693)       (693)    
Dividends, Preferred Stock, Cash [8] (77)       (77)    
Treasury Stock, Shares, Acquired     (5,000)        
Treasury Stock, Value, Acquired, Cost Method (250)         (250) [6]  
Stock Issued During Period, Value, Stock Options Exercised 7     (7)   14 [6]  
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures     2,000        
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures 31     (26) (10) 67 [6]  
Total shareholders' equity at Sep. 30, 2019 26,489 2,025 $ 553 8,989 20,664 (5,593) [6] (149)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Common Stock, Shares, Outstanding     444,000        
Total shareholders' equity at Jun. 30, 2019 25,862 2,025 $ 553 8,965 20,319 (5,599) [6] (401)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net Income (Loss) Attributable to Parent 623       623    
Other Comprehensive Income (Loss), Net of Tax 252           252
Noncontrolling Interest, Period Increase (Decrease) (2)         (2) [6]  
Dividends, Common Stock, Cash (249)       (249)    
Dividends, Preferred Stock, Cash [8] (26)       (26)    
Stock Issued During Period, Value, Stock Options Exercised 2     (3)   5 [6]  
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures 27     27 (3) 3 [6]  
Total shareholders' equity at Sep. 30, 2019 $ 26,489 $ 2,025 $ 553 $ 8,989 $ 20,664 $ (5,593) [6] $ (149)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Common Stock, Shares, Outstanding 444,033 [5]   444,000        
[1] At September 30, 2018, includes ($4,777) million for treasury stock, less than ($1) million for the compensation element of restricted stock, and $101 million for noncontrolling interest
[2] Related to the Company’s adoption of ASU 2014-09, ASU 2016-01, ASU 2017-12, and ASU 2018-02 on January 1, 2018. See Note 1, “Significant Accounting Policies,” to the Company's 2018 Annual Report on Form 10-K for additional information.
[3]
Related to the Company’s early adoption of ASU 2018-02 on January 1, 2018. See Note 1, “Significant Accounting Policies,” to the Company's 2018 Annual Report on Form 10-K for additional information.
[4] For the three months ended September 30, 2018, dividends were $1,022.22 per share for both Series A and B Preferred Stock, $1,406.25 per share for Series F Preferred Stock, $1,262.50 per share for Series G Preferred Stock, and $1,281.25 per share for Series H Preferred Stock.
For the nine months ended September 30, 2018, dividends were $3,044.44 per share for both Series A and B Preferred Stock, $1,468.75 per share for Series E Preferred Stock, $4,218.75 per share for Series F Preferred Stock, $3,787.50 per share for Series G Preferred Stock, and $4,285.07 per share for Series H Preferred Stock.
[5] Includes restricted shares of 4 thousand and 7 thousand at September 30, 2019 and December 31, 2018, respectively.
[6] At September 30, 2019, includes ($5,693) million for treasury stock, less than ($1) million for the compensation element of restricted stock, and $101 million for noncontrolling interest.
[7] Related to the Company’s adoption of ASU 2016-02 on January 1, 2019. See Note 1, “Significant Accounting Policies,” for additional information.
[8] For the three months ended September 30, 2019, dividends were $1,022.22 per share for both Series A and B Preferred Stock, $1,406.25 per share for Series F Preferred Stock, $1,262.50 per share for Series G Preferred Stock, and $1,281.25 per share for Series H Preferred Stock.
For the nine months ended September 30, 2019, dividends were $3,044.44 per share for both Series A and B Preferred Stock, $4,218.75 per share for Series F Preferred Stock, $3,787.50 per share for Series G Preferred Stock, and $3,843.75 per share for Series H Preferred Stock.
v3.19.3
Consolidated Statements of Shareholders' Equity (Parenthetical) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Treasury Stock, Value [1] $ (5,593)   $ (5,593)   $ (5,422)
Common stock dividends, per share $ 0.56 $ 0.50 $ 1.56 $ 1.30  
Treasury Stock and Other          
Treasury Stock, Value $ (5,693) $ (4,777) $ (5,693) $ (4,777)  
Deferred Compensation Equity (1) (1) (1) (1)  
Stockholders' Equity Attributable to Noncontrolling Interest $ 101 $ 101 $ 101 $ 101 $ 103
Series A Preferred Stock [Member]          
Preferred Stock, Dividends, Per Share, Cash Paid $ 1,022.22 $ 1,022.22 $ 3,044.44 $ 3,044.44  
Series B Preferred Stock [Member]          
Preferred Stock, Dividends, Per Share, Cash Paid 1,022.22 1,022.22 3,044.44 3,044.44  
Series E Preferred Stock [Member]          
Preferred Stock, Dividends, Per Share, Cash Paid       1,468.75  
Series F Preferred Stock [Member]          
Preferred Stock, Dividends, Per Share, Cash Paid 1,406.25 1,406.25 4,218.75 4,218.75  
Series G Preferred Stock [Member]          
Preferred Stock, Dividends, Per Share, Cash Paid 1,262.50 1,262.50 3,787.50 3,787.50  
Series H Preferred Stock [Member]          
Preferred Stock, Dividends, Per Share, Cash Paid $ 1,281.25 $ 1,281.25 $ 3,843.75 $ 4,285.07  
[1] Includes noncontrolling interest of $101 million and $103 million at September 30, 2019 and December 31, 2018, respectively.
v3.19.3
Consolidated Statements of Cash Flows - USD ($)
$ in Millions
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Cash Flows from Operating Activities:    
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest $ 1,898 $ 2,124
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:    
Depreciation, Amortization and Accretion, Net 518 535
Payments to Acquire Mortgage Servicing Rights (MSR) (251) (260)
Provisions For Credit Losses And Foreclosed Properties 418 130
Stock Option Compensation And Amortization Of Restricted Stock Compensation 112 118
Debt and Equity Securities, Gain (Loss) 38 (1)
Gain (Loss) on Sale of Loans, Leases, and Other Assets (266) (83)
Net decrease/(increase) in loans held for sale (315) 382
Net decrease/(increase) in Debt Securities, Trading, and Equity Securities, FV-NI (1,598) (818)
Net decrease/(increase) in other assets [1] (382) (1,713)
Net increase/(decrease) in Other Operating Liabilities (166) 478
Net cash provided by (used in) operating activities 6 892
Cash Flows from Investing Activities:    
Proceeds from Maturities, Prepayments and Calls of Debt Securities, Available-for-sale 3,316 2,840
Proceeds from Sale of Available-for-sale Securities 3,690 2,047
Payments to Acquire Available-for-sale Securities (5,824) (5,534)
Proceeds from (payments for) Originations and Purchases of Loans and Leases Held-for-investment [1] 7,957 4,566
Proceeds from Sale of Loans Held-for-investment 866 199
Payments for (Proceeds from) Mortgage Servicing Rights (3) (73)
Payment to Acquire Life Insurance Policy, Investing Activities (1) (201)
Proceeds from Life Insurance Policy 17 8
Proceeds from Insurance Settlement, Investing Activities 210 0
Capital expenditures (261) (170)
Proceeds from Sale of Other Real Estate 88 148
Payments for (Proceeds from) Other Investing Activities 2 1
Net Cash Provided by (Used in) Investing Activities (5,857) (5,301)
Cash Flows from Financing Activities:    
Net (decrease)/increase in total deposits 5,082 (402)
Net increase/(decrease) in funds purchased, securities sold under agreements to repurchase, and other short-term borrowings (1,628) 3,159
Proceeds from Issuance of Long-term Debt 5,992 5,111
Repayment of long-term debt (864) (484)
Payments for Repurchase of Preferred Stock and Preference Stock 0 (450)
Payments for Repurchase of Common Stock (250) (1,160)
Common and preferred dividends paid (747) (664)
Payment, Tax Withholding, Share-based Payment Arrangement (52) (44)
Proceeds from the exercise of stock options 7 36
Net Cash Provided by (Used in) Financing Activities 7,540 5,102
Cash and Cash Equivalents, Period Increase (Decrease) 1,689 693
Cash and cash equivalents 7,495 6,912
Cash and cash equivalents 9,184 7,605
Supplemental Disclosures:    
Transfer of Loans Held-for-sale to Portfolio Loans 17 23
Transfer of Portfolio Loans and Leases to Held-for-sale 812 449
Transfer to Other Real Estate 33 44
Non-cash impact of debt acquired by purchaser in leverage lease sale 163 $ 0
Interest Received from Sales-Type and Direct Financing Leases $ 106  
[1] Pursuant to the Company’s adoption of ASU 2016-02 on January 1, 2019, it began including the interest portion of lessee payments received from sales-type and direct financing leases, which totaled $106 million for the nine months ended September 30, 2019, within operating activities, with the principal portion of lessee payments remaining within investing activities. For periods prior to January 1, 2019, interest payments were not retrospectively reclassified and remain within investing activities. See Note 1, “Significant Accounting Policies,” for additional information.
v3.19.3
Significant Accounting Policies
9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
Significant Accounting Policies [Text Block]
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The unaudited Consolidated Financial Statements included within this report have been prepared in accordance with U.S. GAAP to present interim financial statement information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete, consolidated financial statements. However, in the opinion of management, all adjustments, consisting only of normal recurring adjustments that 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 Consolidated 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. Interim Consolidated Financial Statements should be read in conjunction with the Company’s 2018 Annual Report on Form 10-K.
Changes in Significant Accounting Policies
Pursuant to the Company’s adoption of ASC Topic 842 as of January 1, 2019, the Company updated its accounting policy related to leases. See Note 10, “Leases,” for new disclosures and policy information related to the Company’s leases. There were no other significant changes to the Company’s accounting policies from those disclosed in the Company’s 2018 Annual Report on Form 10-K that could have a material effect on the Company's financial statements.
Subsequent Events
The Company evaluated events that occurred between September 30, 2019 and the date the accompanying financial statements were issued, and there were no material events, other than those already discussed in this Form 10-Q, that would require recognition in the Company’s Consolidated Financial Statements or disclosure in the accompanying Notes.

Accounting Pronouncements
The following table summarizes ASUs issued by the FASB that were adopted during the nine months ended September 30, 2019 or not yet adopted as of September 30, 2019, that could have a material effect on the Company’s financial statements:
Standard
Description
Required Date of Adoption
Effect on the Financial Statements or Other Significant Matters
Standards Adopted in 2019
ASU 2016-02, Leases (Topic 842) and subsequent related ASUs
These ASUs create and amend ASC Topic 842, Leases, which supersedes ASC Topic 840, Leases. ASC Topic 842 requires lessees to recognize right-of-use assets and associated liabilities that arise from leases, with the exception of short-term leases. These ASUs do not make significant changes to lessor accounting; however, there were certain improvements made to align lessor accounting with the lessee accounting model and ASC Topic 606, Revenue from Contracts with Customers. Furthermore, there are several new qualitative and quantitative disclosures required for lessees and lessors, including updated guidance around the presentation of certain cash receipts on the Company’s Consolidated Statements of Cash Flows.

January 1, 2019
The Company adopted these ASUs on January 1, 2019, using a modified retrospective transition approach as of the date of adoption, which resulted in the recognition of $1.2 billion and $1.3 billion in right-of-use assets and associated lease liabilities, respectively, arising from operating leases in which the Company is the lessee, on the Company's Consolidated Balance Sheets. The amount of the right-of-use assets and associated lease liabilities recorded upon adoption was based primarily on the present value of unpaid future minimum lease payments, the amount of which was based on the population of leases in effect at the date of adoption. At September 30, 2019, right-of-use assets and lease liabilities recorded on the Company’s Consolidated Balance Sheets totaled $1.1 billion and $1.2 billion, respectively.
 
Upon adoption, the Company also recognized a cumulative effect adjustment of $31 million to increase the beginning balance of retained earnings (as of January 1, 2019) for deferred gains on sale-leaseback transactions that occurred prior to the date of adoption and for other transition provisions. These ASUs did not have a material impact on the timing of expense or income recognition in the Company’s Consolidated Statements of Income.

Furthermore, effective January 1, 2019, the Company prospectively changed its presentation of certain cash receipts related to sales-type and direct financing leases in which it is the lessor on its Consolidated Statements of Cash Flows. Specifically, the Company began including on its Consolidated Statements of Cash Flows the interest portion of lessee payments received from sales-type and direct financing leases within operating activities, with the principal portion remaining within investing activities. For periods prior to the date of adoption, interest payments were not retrospectively reclassified and remain within investing activities. For the three and nine months ended September 30, 2019, the Company included $36 million and $106 million, respectively, of interest payments received from these sales-type and direct financing leases within operating activities on its Consolidated Statements of Cash Flows.

For additional information and required disclosures related to ASC 842, see Note 10, “Leases.”


Standard
Description
Required Date of Adoption
Effect on the Financial Statements or Other Significant Matters
Standards Not Yet Adopted
ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) and subsequent related ASUs
These ASUs create and amend ASC Topic 326, Financial Instruments - Credit Losses, which replaces the incurred loss impairment methodology with a current expected credit loss methodology for financial instruments measured at amortized cost and other commitments to extend credit. For this purpose, expected credit losses reflect losses over the remaining contractual life of an asset, considering the effect of voluntary prepayments and considering available information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The resulting allowance for credit losses is deducted from the amortized cost basis of the financial assets to reflect the net amount expected to be collected on the financial assets. Additional quantitative and qualitative disclosures are required upon adoption. The change to the allowance for credit losses at the time of the adoption will be made with a cumulative effect adjustment to retained earnings.

Although the current expected credit loss methodology does not apply to AFS debt securities, these ASUs do require entities to record an allowance when recognizing credit losses for AFS securities, rather than recording a direct write-down of the carrying amount.

January 1, 2020
The Company formed a cross-functional team to oversee the implementation of these ASUs. A detailed implementation plan was developed and progress is substantially complete in regards to the identification and staging of data, development and validation of models, refinement of economic forecasting processes, and documentation of accounting policy decisions. Additionally, a new credit loss forecasting process was implemented in the first half of 2019, resulting in modifications to the Company’s associated internal control environment that will be effective upon adoption of these ASUs. In the first half of 2019, the Company performed testing in which methodologies, processes, and internal controls were evaluated and refined. The Company performed a full parallel run of the new methodology in the third quarter of 2019 and will perform another full parallel run in the fourth quarter of 2019. The parallel runs include execution of internal controls, supporting analytics, reserve estimation, process and procedure documentation, and subject matter expert reviews. The Company continues to refine its processes and methodology based on the results of these exercises.

The Company plans to adopt these ASUs on January 1, 2020, and it continues to evaluate the impact that these ASUs will have on its Consolidated Financial Statements and related disclosures. The Company anticipates that an increase to the allowance for credit losses will be recognized upon adoption to provide for the expected credit losses over the estimated life of the financial assets. The actual magnitude of the increase will depend on existing and forecasted economic conditions and trends in the Company’s portfolio at the time of adoption. The Company is also evaluating the anticipated impact that the Merger will have on its estimated impact of adopting these ASUs on its Consolidated Financial Statements.

ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
This ASU amends ASC Topic 350, Intangibles - Goodwill and Other, to simplify the subsequent measurement of goodwill, by eliminating Step 2 from the goodwill impairment test. The amendments require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. This ASU requires an entity to recognize an impairment charge for the amount by which a reporting unit's carrying amount exceeds its fair value, with the loss limited to the total amount of goodwill allocated to that reporting unit. The ASU must be applied on a prospective basis.

January 1, 2020

Based on the Company’s most recent qualitative goodwill impairment assessment performed in the third quarter of 2019, there were no reporting units for which it was more-likely-than-not that the carrying amount of a reporting unit exceeded its respective fair value; therefore, this ASU would not currently have an impact on the Company’s Consolidated Financial Statements or related disclosures. However, if subsequent to adoption, the carrying amount of a reporting unit exceeds its respective fair value, the Company would be required to recognize an impairment charge for the amount that the carrying value exceeds the fair value.
ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

This ASU amends ASC Subtopic 350-40, Intangibles - Goodwill and Other - Internal-Use Software, to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company may apply this ASU either retrospectively, or prospectively to all implementation costs incurred after the date of adoption.

January 1, 2020


The Company’s current accounting policy for capitalizing implementation costs incurred in a hosting arrangement generally aligns with the requirements of this ASU; therefore, the Company's adoption of this ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements or related disclosures.


v3.19.3
Revenue Recognition (Notes)
9 Months Ended
Sep. 30, 2019
Revenue from Contract with Customer [Abstract]  
Revenue from Contract with Customer [Text Block]
NOTE 2REVENUE RECOGNITION
The following tables reflect the Company’s noninterest income disaggregated by financial statement line item, business segment, and by the amount of each revenue stream that is in scope and out of scope of ASC Topic 606, Revenue from Contracts with Customers. Refer to Note 1, “Significant Accounting Policies,” and Note 2, “Revenue Recognition,” to
the Company's 2018 Annual Report on Form 10-K, for the Company's accounting policies for recognizing noninterest income, including the nature and timing of such revenue streams. The Company's contracts with customers generally do not contain terms that require significant judgment to determine the amount of revenue to recognize.
 
Three Months Ended September 30, 2019
(Dollars in millions)
 Consumer 1
 
 Wholesale 1
 
  Out of Scope 1, 2
 
Total
Noninterest income
 
 
 
 
 
 
 
Service charges on deposit accounts

$112

 

$29

 

$—

 

$141

Other charges and fees 3
27

 
4

 
59

 
90

Card fees
57

 
24

 
2

 
83

Investment banking income

 
97

 
62

 
159

Trading income

 

 
29

 
29

Mortgage-related income

 

 
106

 
106

Trust and investment management income
77

 

 
1

 
78

Retail investment services 4
76

 

 

 
76

Insurance settlement

 

 
5

 
5

Commercial real estate-related income

 

 
32

 
32

Net securities gains/(losses)

 

 
4

 
4

Other noninterest income
6

 

 
34

 
40

Total noninterest income

$355

 

$154

 

$334

 

$843


1 
Consumer total noninterest income and Wholesale total noninterest income exclude $124 million and $214 million of out of scope noninterest income, respectively, which are included in the business segment results presented on a management accounting basis in Note 19, "Business Segment Reporting." Out of scope total noninterest income includes these amounts and also includes ($4) million of Corporate Other noninterest income that is not subject to ASC Topic 606.
2 
The Company presents out of scope noninterest income for the purpose of reconciling noninterest income amounts within the scope of ASC Topic 606 to noninterest income amounts presented on the Company's Consolidated Statements of Income.
3 
The Company recognized an immaterial amount of insurance trailing commissions, the majority of which related to performance obligations satisfied in prior periods.
4 
The Company recognized $12 million of mutual fund 12b-1 fees and annuity trailing commissions, the majority of which related to performance obligations satisfied in prior periods.

 
Three Months Ended September 30, 2018
(Dollars in millions)
 Consumer 1
 
 Wholesale 1
 
  Out of Scope 1, 2
 
Total
Noninterest income
 
 
 
 
 
 
 
Service charges on deposit accounts

$111

 

$33

 

$—

 

$144

Other charges and fees 3
28

 
3

 
58

 
89

Card fees
49

 
26

 

 
75

Investment banking income

 
101

 
49

 
150

Trading income

 

 
42

 
42

Mortgage-related income

 

 
83

 
83

Trust and investment management income
79

 

 
1

 
80

Retail investment services 4
73

 

 
1

 
74

Insurance settlement

 

 

 

Commercial real estate-related income

 

 
24

 
24

Net securities gains/(losses)

 

 

 

Other noninterest income
5

 

 
16

 
21

Total noninterest income

$345

 

$163

 

$274

 

$782

1 
Consumer total noninterest income and Wholesale total noninterest income exclude $99 million and $205 million of out of scope noninterest income, respectively, which are included in the business segment results presented on a management accounting basis in Note 19, "Business Segment Reporting." Out of scope total noninterest income includes these amounts and also includes ($30) million of Corporate Other noninterest income that is not subject to ASC Topic 606.
2 
The Company presents out of scope noninterest income for the purpose of reconciling noninterest income amounts within the scope of ASC Topic 606 to noninterest income amounts presented on the Company's Consolidated Statements of Income.
3 
The Company recognized an immaterial amount of insurance trailing commissions, the majority of which related to performance obligations satisfied in prior periods.
4 
The Company recognized $12 million of mutual fund 12b-1 fees and annuity trailing commissions, the majority of which related to performance obligations satisfied in prior periods.


 
Nine Months Ended September 30, 2019
(Dollars in millions)
 Consumer 1
 
 Wholesale 1
 
  Out of Scope 1, 2
 
Total
Noninterest income
 
 
 
 
 
 
 
Service charges on deposit accounts

$324

 

$93

 

$—

 

$417

Other charges and fees 3
82

 
12

 
171

 
265

Card fees
168

 
75

 
4

 
247

Investment banking income

 
261

 
170

 
431

Trading income

 

 
144

 
144

Mortgage-related income

 

 
294

 
294

Trust and investment management income
220

 

 
2

 
222

Retail investment services 4
218

 
1

 
1

 
220

Insurance settlement

 

 
210

 
210

Commercial real estate-related income

 

 
106

 
106

Net securities gains/(losses)

 

 
(38
)
 
(38
)
Other noninterest income
17

 

 
118

 
135

Total noninterest income

$1,029

 

$442

 

$1,182

 

$2,653


1 
Consumer total noninterest income and Wholesale total noninterest income exclude $386 million and $695 million of out of scope noninterest income, respectively, which are included in the business segment results presented on a management accounting basis in Note 19, "Business Segment Reporting." Out of scope total noninterest income includes these amounts and also includes $101 million of Corporate Other noninterest income that is not subject to ASC Topic 606.
2 
The Company presents out of scope noninterest income for the purpose of reconciling noninterest income amounts within the scope of ASC Topic 606 to noninterest income amounts presented on the Company's Consolidated Statements of Income.
3 
The Company recognized an immaterial amount of insurance trailing commissions, the majority of which related to performance obligations satisfied in prior periods.
4 
The Company recognized $31 million of mutual fund 12b-1 fees and annuity trailing commissions, the majority of which related to performance obligations satisfied in prior periods.

 
Nine Months Ended September 30, 2018
(Dollars in millions)
 Consumer 1
 
 Wholesale 1
 
  Out of Scope 1, 2
 
Total
Noninterest income
 
 
 
 
 
 
 
Service charges on deposit accounts

$330

 

$103

 

$—

 

$433

Other charges and fees 3
85

 
8

 
171

 
264

Card fees
160

 
78

 
3

 
241

Investment banking income

 
287

 
166

 
453

Trading income

 

 
137

 
137

Mortgage-related income

 

 
256

 
256

Trust and investment management income
228

 

 
2

 
230

Retail investment services 4
216

 
2

 
1

 
219

Insurance settlement

 

 

 

Commercial real estate-related income

 

 
66

 
66

Net securities gains/(losses)

 

 
1

 
1

Other noninterest income
17

 

 
91

 
108

Total noninterest income

$1,036

 

$478

 

$894

 

$2,408


1 
Consumer total noninterest income and Wholesale total noninterest income exclude $311 million and $618 million of out of scope noninterest income, respectively, which are included in the business segment results presented on a management accounting basis in Note 19, "Business Segment Reporting." Out of scope total noninterest income includes these amounts and also includes ($35) million of Corporate Other noninterest income that is not subject to ASC Topic 606.
2 
The Company presents out of scope noninterest income for the purpose of reconciling noninterest income amounts within the scope of ASC Topic 606 to noninterest income amounts presented on the Company's Consolidated Statements of Income.
3 
The Company recognized an immaterial amount of insurance trailing commissions, the majority of which related to performance obligations satisfied in prior periods.
4 
The Company recognized $38 million of mutual fund 12b-1 fees and annuity trailing commissions, the majority of which related to performance obligations satisfied in prior periods.
v3.19.3
Federal Funds Sold and Securities Financing Activities
9 Months Ended
Sep. 30, 2019
Securities Purchased under Agreements to Resell [Abstract]  
Repurchase Agreements, Resale Agreements, Securities Borrowed, and Securities Loaned Disclosure [Text Block]
NOTE 3 - 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)
September 30, 2019
 
December 31, 2018
Fed funds sold

$5

 

$42

Securities borrowed
491

 
394

Securities purchased under agreements to resell
818

 
1,243

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

$1,314

 

$1,679


Securities purchased under agreements to resell are primarily collateralized by U.S. government or agency securities and are carried at the amounts at which the securities will be subsequently resold, plus accrued interest. Securities borrowed are primarily collateralized by corporate securities. The Company borrows securities and purchases securities under agreements to resell as part of its securities financing activities. On the acquisition date of these securities, the Company and the
related counterparty agree on the amount of collateral required to secure the principal amount loaned under these arrangements. The Company monitors collateral values daily and calls for additional collateral to be provided as warranted under the respective agreements. At September 30, 2019 and December 31, 2018, the total market value of collateral held was $1.3 billion and $1.6 billion, of which $72 million and $108 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:
 
September 30, 2019
 
December 31, 2018
(Dollars in millions)
Overnight and Continuous
 
Up to 30 days
 
Total
 
Overnight and Continuous
 
Up to 30 days
 
30-90 days
 
Total
U.S. Treasury securities

$89

 

$—

 

$89

 

$197

 

$7

 

$—

 

$204

Federal agency securities
95

 
9

 
104

 
112

 
10

 

 
122

MBS - agency residential
1,031

 
143

 
1,174

 
881

 
35

 

 
916

CP
74

 

 
74

 
78

 

 

 
78

Corporate and other debt securities
196

 
192

 
388

 
216

 
158

 
80

 
454

Total securities sold under agreements to repurchase

$1,485

 

$344

 

$1,829

 

$1,484

 

$210

 

$80

 

$1,774



For 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 16, “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 that are subject to MRAs. Generally, MRAs require collateral to exceed the asset or liability recognized on the balance sheet. Transactions subject to these agreements are treated as collateralized financings, and those with a single counterparty are permitted to be presented net on the Company's Consolidated Balance Sheets, provided certain criteria are met that permit balance sheet netting. At September 30, 2019 and December 31, 2018, there were no such transactions subject to legally enforceable MRAs that were eligible for balance sheet netting. The following table includes the amount of collateral pledged or received related to exposures subject to enforceable MRAs. While these agreements are typically over-collateralized, the amount of collateral presented in this table is limited to the amount of the related recognized asset or liability for each counterparty.
(Dollars in millions)
Gross
Amount
 
Amount
Offset
 
Net Amount
Presented in
Consolidated
Balance Sheets
 
Held/Pledged Financial
Instruments
 
Net
Amount
September 30, 2019
 
 
 
 
 
 
 
 
 
Financial assets:
 
 
 
 
 
 
 
 
 
Securities borrowed or purchased under agreements to resell

$1,309

 

$—

 

$1,309

1 

$1,293

 

$16

Financial liabilities:
 
 
 
 
 
 
 
 
 
Securities sold under agreements to repurchase
1,829

 

 
1,829

 
1,829

 

 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
Financial assets:
 
 
 
 
 
 
 
 
 
Securities borrowed or purchased under agreements to resell

$1,637

 

$—

 

$1,637

1 

$1,624

 

$13

Financial liabilities:
 
 
 
 
 
 
 
 
 
Securities sold under agreements to repurchase
1,774

 

 
1,774

 
1,774

 


1 Excludes $5 million and $42 million of Fed Funds sold that are not subject to a master netting agreement at September 30, 2019 and December 31, 2018, respectively.
v3.19.3
Trading Assets and Liabilities and Derivatives Trading Assets and Liabilities and Derivatives
9 Months Ended
Sep. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Trading Assets and Liabilities and Derivatives [Text Block]
NOTE 4 - TRADING ASSETS AND LIABILITIES AND DERIVATIVE INSTRUMENTS

The fair values of the components of trading assets and liabilities and derivative instruments are presented in the following table:
(Dollars in millions)
September 30, 2019
 
December 31, 2018
Trading Assets and Derivative Instruments:
 
 
 
U.S. Treasury securities

$212

 

$262

Federal agency securities
319

 
188

U.S. states and political subdivisions
43

 
54

MBS - agency residential
1,004

 
860

MBS - agency commercial
51

 

ABS
7

 

Corporate and other debt securities
628

 
700

CP
122

 
190

Equity securities
86

 
73

Derivative instruments 1
1,770

 
639

Trading loans 2
2,862

 
2,540

Total trading assets and derivative instruments

$7,104

 

$5,506

Trading Liabilities and Derivative Instruments:
 
 
 
U.S. Treasury securities

$538

 

$801

MBS - agency

 
3

Corporate and other debt securities
539

 
385

Equity securities
20

 
5

Derivative instruments 1
274

 
410

Trading loans
9

 

Total trading liabilities and derivative instruments

$1,380

 

$1,604

1 Amounts include the impact of offsetting cash collateral received from and paid to the same derivative counterparties, and the impact of netting derivative assets and derivative liabilities when a legally enforceable master netting agreement or similar agreement exists.
2 Includes loans related to TRS.

Various trading and derivative instruments are used as part of the Company’s overall balance sheet management strategies and to support client requirements executed through the Bank and/or STRH, a broker/dealer subsidiary of the Company. The Company manages the potential market volatility associated with trading instruments by using appropriate risk management strategies. The size, volume, and nature of the trading products and derivative instruments can vary based on economic conditions as well as client-specific and Company-specific asset or liability positions.
Product offerings to clients include debt securities, loans traded in the secondary market, equity securities, derivative contracts, and other similar financial instruments. Other trading-related activities include acting as a market maker for certain debt and equity security transactions, derivative instrument transactions, and foreign exchange transactions. The Company also uses derivatives to manage its interest rate and market risk from non-trading activities. The Company has policies and procedures to manage market risk associated with client trading and non-trading activities, and assumes a limited degree of market risk by managing the size and nature of its exposure. For
valuation assumptions and additional information related to the Company's trading products and derivative instruments, see Note 16, “Derivative Financial Instruments,” in this Form 10-Q as
well as Note 20, “Fair Value Election and Measurement,” to the Consolidated Financial Statements in the Company's 2018 Annual Report on Form 10-K.

Pledged trading assets are presented in the following table:
(Dollars in millions)