SUNTRUST BANKS INC, 10-Q filed on 11/4/2016
Quarterly Report
Document and Entity Information (USD $)
9 Months Ended
Sep. 30, 2016
Oct. 27, 2016
Dec. 31, 2015
Entity Registrant Name
SUNTRUST BANKS INC 
 
 
Entity Central Index Key
0000750556 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Document Type
10-Q 
 
 
Document Period End Date
Sep. 30, 2016 
 
 
Document Fiscal Year Focus
2016 
 
 
Document Fiscal Period Focus
Q3 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
490,797,754 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Common Stock, Par or Stated Value Per Share
$ 1.00 
 
$ 1.00 
Scenario, Forecast [Member]
 
 
 
Common Stock, Par or Stated Value Per Share
 
$ 1.00 
 
Consolidated Statements of Income (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Interest Income
 
 
 
 
Interest and fees on loans
$ 1,245 
$ 1,139 
$ 3,670 
$ 3,345 
Interest and fees on loans held for sale
25 
20 
62 
66 
Interest and Dividend Income, Securities, Available-for-sale
159 
153 
483 
430 
Trading account interest and other
22 
21 
70 
61 
Total interest income
1,451 
1,333 
4,285 
3,902 
Interest Expense
 
 
 
 
Interest on deposits
67 
54 
188 
165 
Interest Expense, Long-term Debt
68 
60 
191 
196 
Interest on other borrowings
29 
23 
Total interest expense
143 
122 
408 
384 
Net, interest income
1,308 
1,211 
3,877 
3,518 
Provision for Loan, Lease, and Other Losses
97 1
32 1
343 1
114 1
Interest Income (Expense), after Provision for Loan Loss
1,211 
1,179 
3,534 
3,404 
Noninterest Income
 
 
 
 
Service charges on deposit accounts
162 
159 
477 
466 
Fees and Commissions, Other
93 
97 
290 
285 
Fees and Commissions, Credit and Debit Cards
83 
83 
243 
247 
Investment Banking Revenue
147 
115 
372 
357 
Trading Gain (Loss)
65 
31 
154 
140 
Fees and Commissions, Fiduciary and Trust Activities
80 
86 
230 
255 
Investment Advisory, Management and Administrative Fees
71 
77 
212 
229 
Fees and Commissions, Mortgage Banking
118 
58 
288 
217 
Servicing Fees, Net
49 
40 
164 
113 
Gain (Loss) on Disposition of Business
52 
Gain (Loss) on Sale of Securities, Net
21 
Noninterest Income, Other Operating Income
21 
58 
83 
173 
Total noninterest income
889 
811 
2,569 
2,503 
Noninterest Expense
 
 
 
 
Employee compensation
687 
641 
1,994 
1,926 
Other Labor-related Expenses
86 
84 
315 
326 
Outside processing and software
225 
200 
626 
593 
Net occupancy expense
93 
86 
256 
255 
Equipment Expense
44 
41 
126 
123 
Marketing and Advertising Expense
38 
42 
120 
104 
Federal Deposit Insurance Corporation Premium Expense
47 
32 
127 
104 
Operating losses
35 
85 
33 
Credit and collection services
17 
47 
52 
Amortization
14 
35 
22 
Other Noninterest Expense
123 
118 
341 
334 
Noninterest Expense
1,409 
1,264 
4,072 
3,872 
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest
691 
726 
2,031 
2,035 
Income Tax Expense (Benefit)
215 
187 
611 
579 
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest
476 
539 
1,420 
1,456 
Net Income (Loss) Attributable to Noncontrolling Interest
Net Income (Loss) Attributable to Parent
474 
537 
1,413 
1,449 
Net Income (Loss) Available to Common Stockholders, Basic
$ 457 
$ 519 
$ 1,363 
$ 1,396 
Earnings Per Share, Diluted
$ 0.91 
$ 1.00 
$ 2.70 
$ 2.67 
Earnings Per Share, Basic
$ 0.92 
$ 1.01 
$ 2.72 
$ 2.70 
Common Stock, Dividends, Per Share, Declared
$ 0.26 
$ 0.24 
$ 0.74 
$ 0.68 
Weighted Average Number of Shares Outstanding, Diluted
501 
519 
506 
523 
Weighted Average Number of Shares Outstanding, Basic
496 
513 
501 
517 
Consolidated Statements of Comprehensive Income Consolidated Statement of Comprehensive Income (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net Income (Loss) Attributable to Parent
$ 474 
$ 537 
$ 1,413 
$ 1,449 
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax
(32)
119 
383 
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax
(86)
84 
137 
94 
Credit Risk Adjustment
(3)
(5)1
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Adjustment, Net of Tax
65 
(64)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent
(118)
206 
580 
34 
Comprehensive Income (Loss), Net of Tax, Attributable to Parent
$ 356 
$ 743 
$ 1,993 
$ 1,483 
Consolidated Statements of Comprehensive Income Consolidated Statement of Comprehensive Income (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
 
Other Comprehensive Income (Loss), Available-for-sale Securities, Tax
$ (32)
$ 70 
$ 228 
$ 6 
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Tax
(51)
50 
81 
57 
Credit Risk Adjustment, Tax
(2)
(3)
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net Unamortized Gain (Loss) Arising During Period, Tax
$ 2 
$ 1 
$ 39 
$ (44)
Consolidated Balance Sheets (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Assets
 
 
Cash and Due from Banks
$ 8,019 
$ 4,299 
Federal Funds Sold and Securities Purchased under Agreements to Resell
1,697 
1,277 
Interest-bearing Deposits in Banks and Other Financial Institutions
24 
23 
Cash and cash equivalents
9,740 
5,599 
Trading assets
7,044 1
6,119 1
Available-for-sale Securities
29,672 
27,825 
Loans Held for Sale
3,772 2
1,838 2
Loans held for investment
141,532 3
136,442 3
Loans and Leases Receivable, Allowance
(1,743)
(1,752)
Net loans
139,789 
134,690 
Premises and equipment
1,510 
1,502 
Goodwill
6,337 
6,337 
Intangible Assets, Net (Excluding Goodwill)
1,131 
1,325 
Other Assets
6,096 
5,582 
Total assets
205,091 
190,817 
Liabilities and Shareholders' Equity
 
 
Noninterest-bearing consumer and commercial deposits
43,835 
42,272 
Interest-bearing Deposit Liabilities
115,007 
107,558 
Total deposits
158,842 
149,830 
Funds purchased
2,226 
1,949 
Securities Sold under Agreements to Repurchase
1,724 
1,654 
Other Short-term Borrowings
949 
1,024 
Long-term Debt
11,866 4
8,462 4
Trading liabilities
1,484 
1,263 
Other Liabilities
3,551 
3,198 
Total liabilities
180,642 
167,380 
Preferred Stock, Value, Outstanding
1,225 
1,225 
Common Stock, Value, Outstanding
550 
550 
Additional Paid in Capital
9,009 
9,094 
Retained earnings
15,681 
14,686 
Treasury stock, at cost, and other
(2,131)5
(1,658)5
Accumulated Other Comprehensive Income (Loss), Net of Tax
115 
(460)
Total shareholders' equity
24,449 
23,437 
Liabilities and Equity
205,091 
190,817 
Common Stock, Shares, Outstanding
495,936 6
508,712 6
Common shares authorized
750,000 
750,000 
Preferred Stock, Shares Outstanding
12 
12 
Preferred Stock, Shares Authorized
50,000 
50,000 
Treasury shares of common stock
53,985 
41,209 
Treasury Stock and Other
 
 
Liabilities and Shareholders' Equity
 
 
Treasury stock, at cost, and other
(2,232)
 
Total shareholders' equity
(2,131)7
(1,658)7
Stockholders' Equity Attributable to Noncontrolling Interest
101 
108 
Variable Interest Entity, Primary Beneficiary [Member]
 
 
Assets
 
 
Loans held for investment
219 
246 
Liabilities and Shareholders' Equity
 
 
Long-term Debt
230 
259 
Restricted Stock [Member]
 
 
Liabilities and Shareholders' Equity
 
 
Common Stock, Shares, Outstanding
21 
1,334 
Trading Securities [Member]
 
 
Liabilities and Shareholders' Equity
 
 
Pledged Assets Separately Reported, Securities Pledged as Collateral, at Fair Value
$ 1,495 
$ 1,377 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
Dec. 31, 2015
Brokered Time Deposits [Member]
Deposits, Fair Value Disclosure
$ 0 
Consolidated Statements of Shareholders' Equity (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Dec. 31, 2015
Dec. 31, 2014
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Total shareholders' equity
$ 24,449 
$ 23,664 
$ 24,449 
$ 23,664 
$ 23,437 
$ 23,005 
Common Stock, Shares, Outstanding
495,936,000 1
 
495,936,000 1
 
508,712,000 1
 
Cumulative effect of credit risk adjustment
 
 
2
 
 
 
Net Income (Loss) Attributable to Parent
474 
537 
1,413 
1,449 
 
 
Other Comprehensive Income (Loss), Net of Tax
 
 
580 
34 
 
 
Noncontrolling Interest, Period Increase (Decrease)
 
 
(7)
(2)
 
 
Dividends, Common Stock, Cash
 
 
(370)
(352)
 
 
Dividends, Preferred Stock, Cash
(17)
(16)
(49)3
(48)3
 
 
Treasury Stock, Value, Acquired, Cost Method
 
 
(566)
(465)
 
 
Payments for Repurchase of Warrants
 
 
(24)
 
 
Stock Issued During Period, Value, Stock Options Exercised
 
 
(15)4
(9)
 
 
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures
 
 
18 4
18 
 
 
Adjustments to Additional Paid in Capital, Share-based Compensation, Restricted Stock Unit or Restricted Stock Award, Requisite Service Period Recognition
 
 
13 
 
 
Stock Issued During Period, Value, Employee Benefit Plan
 
 
 
 
 
Preferred Stock [Member]
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Total shareholders' equity
1,225 
1,225 
1,225 
1,225 
1,225 
1,225 
Common Stock [Member]
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Total shareholders' equity
550 
550 
550 
550 
550 
550 
Common Stock, Shares, Outstanding
496,000,000 
514,000,000 
496,000,000 
514,000,000 
509,000,000 
525,000,000 
Treasury Stock, Shares, Acquired
 
 
(15,000,000)
(11,000,000)
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period
 
 
1,000,000 
 
 
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures
 
 
1,000,000 
 
 
Stock Issued During Period, Shares, Employee Benefit Plan
 
 
 
 
 
Additional Paid-in Capital [Member]
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Total shareholders' equity
9,009 
9,087 
9,009 
9,087 
9,094 
9,089 
Payments for Repurchase of Warrants
 
 
(24)
 
 
 
Stock Issued During Period, Value, Stock Options Exercised
 
 
(28)4
(16)
 
 
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures
 
 
(33)4
14 
 
 
Stock Issued During Period, Value, Employee Benefit Plan
 
 
 
 
 
Retained Earnings [Member]
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Total shareholders' equity
15,681 
14,341 
15,681 
14,341 
14,686 
13,295 
Cumulative effect of credit risk adjustment
 
 
2
 
 
 
Net Income (Loss) Attributable to Parent
 
 
1,413 
1,449 
 
 
Dividends, Common Stock, Cash
 
 
(370)
(352)
 
 
Dividends, Preferred Stock, Cash
 
 
(49)3
(48)3
 
 
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures
 
 
(4)
(3)
 
 
Treasury Stock and Other
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Total shareholders' equity
(2,131)5
(1,451)5
(2,131)5
(1,451)5
(1,658)5
(1,032)5
Noncontrolling Interest, Period Increase (Decrease)
 
 
(7)
(2)
 
 
Treasury Stock, Value, Acquired, Cost Method
 
 
(566)
(465)
 
 
Stock Issued During Period, Value, Stock Options Exercised
 
 
(43)
(25)
 
 
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures
 
 
55 
 
 
Adjustments to Additional Paid in Capital, Share-based Compensation, Restricted Stock Unit or Restricted Stock Award, Requisite Service Period Recognition
 
 
13 
 
 
Stock Issued During Period, Value, Employee Benefit Plan
 
 
 
 
 
AOCI Attributable to Parent [Member]
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Total shareholders' equity
115 
(88)
115 
(88)
(460)
(122)
Cumulative effect of credit risk adjustment
 
 
(5)2 6
 
 
 
Other Comprehensive Income (Loss), Net of Tax
 
 
$ 580 
$ 34 
 
 
Consolidated Statements of Shareholders' Equity (Parenthetical) (USD $)
In Millions, except Per Share data, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Treasury Stock and Other
Sep. 30, 2015
Treasury Stock and Other
Sep. 30, 2016
Additional Paid-in Capital [Member]
Sep. 30, 2015
Additional Paid-in Capital [Member]
Sep. 30, 2016
Series A Preferred Stock [Member]
Additional Paid-in Capital [Member]
Sep. 30, 2015
Series A Preferred Stock [Member]
Additional Paid-in Capital [Member]
Sep. 30, 2016
Series B Preferred Stock [Member]
Additional Paid-in Capital [Member]
Sep. 30, 2015
Series B Preferred Stock [Member]
Additional Paid-in Capital [Member]
Sep. 30, 2016
Series E Preferred Stock [Member]
Additional Paid-in Capital [Member]
Sep. 30, 2015
Series E Preferred Stock [Member]
Additional Paid-in Capital [Member]
Sep. 30, 2016
Series F Preferred Stock [Member]
Additional Paid-in Capital [Member]
Sep. 30, 2015
Series F Preferred Stock [Member]
Additional Paid-in Capital [Member]
Treasury Stock, Value
$ (2,232)
$ (1,550)
 
 
 
 
 
 
 
 
 
 
Deferred Compensation Equity
(7)
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity Attributable to Noncontrolling Interest
$ 101 
$ 106 
 
 
 
 
 
 
 
 
 
 
Preferred Stock, Dividends, Per Share, Cash Paid
 
 
 
 
$ 3,056 
$ 3,044 
$ 3,056 
$ 3,044 
$ 4,406 
$ 4,406 
$ 4,219 
$ 4,813 
Common stock dividends, per share
 
 
$ 0.74 
$ 0.68 
 
 
 
 
 
 
 
 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Cash Flows from Operating Activities:
 
 
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest
$ 1,420 
$ 1,456 
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
 
 
Depreciation, Amortization and Accretion, Net
533 
596 
Gain (Loss) on Sale of Securities, Net
(4)
(21)
Payments to Acquire Mortgage Servicing Rights (MSR)
(198)
(185)
Provisions For Credit Losses And Foreclosed Properties
347 
122 
Stock Option Compensation And Amortization Of Restricted Stock Compensation
85 
65 
Gain (Loss) on Sale of Loans and Leases
(376)
(249)
Net decrease/(increase) in loans held for sale
(1,647)
644 
Increase (Decrease) in Trading Securities
(704)
(183)
Net (increase)/decrease in other assets
(193)
(26)1
Increase (Decrease) in Other Operating Liabilities
155 
(164)1
Net Cash Provided by (Used in) Operating Activities, Continuing Operations
(582)
2,055 
Cash Flows from Investing Activities:
 
 
Proceeds from Maturities, Prepayments and Calls of Available-for-sale Securities
3,763 
4,621 
Proceeds from sales of securities available for sale
197 
2,708 
Purchases of securities available for sale
(5,297)
(7,861)
Proceeds from (payments for) Originations and Purchases of Loans Held-for-investment
(7,007)
(2,097)
Proceeds from sales of loans
1,482 
2,048 
Payments for (Proceeds from) Mortgage Servicing Rights
101 
113 
Capital expenditures
(188)
(74)
Payments related to acquisitions, including contingent consideration
(23)
(30)
Proceeds from Sale of Other Real Estate
171 
179 
Net Cash Provided by (Used in) Investing Activities, Continuing Operations
(7,003)
(619)
Cash Flows from Financing Activities:
 
 
Net (decrease)/increase in total deposits
9,012 
5,804 
Net increase/(decrease) in funds purchased, securities sold under agreements to repurchase, and other short-term borrowings
272 
(5,244)
Proceeds from Issuance of Long-term Debt
4,924 
1,237 
Repayment of long-term debt
(1,448)
(5,670)
Payments for Repurchase of Common Stock
(566)
(465)
Payments for Repurchase of Warrants
(24)
Common and preferred dividends paid
(412)
(393)
Proceeds from the exercise of stock options
15 
14 1
Payments Related to Tax Withholding for Share-based Compensation
(47)
(32)1
Net Cash Provided by (Used in) Financing Activities, Continuing Operations
11,726 
(4,749)
Cash and Cash Equivalents, Period Increase (Decrease)
4,141 
(3,313)
Cash and cash equivalents
5,599 
8,229 
Cash and cash equivalents
9,740 
4,916 
Supplemental Disclosures:
 
 
Transfer of Loans Held-for-sale to Portfolio Loans
23 
726 
Transfer of Portfolio Loans and Leases to Held-for-sale
315 
1,734 
Transfer to Other Real Estate
46 
52 
Non-cash impact of debt acquired by purchaser in leverage lease sale
$ 74 
$ 129 
Significant Accounting Policies
Significant Accounting Policies [Text Block]
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The unaudited Consolidated Financial Statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete, consolidated financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these financial statements, have been made.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes; actual results could vary from those estimates. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.
These interim Consolidated Financial Statements should be read in conjunction with the Company’s 2015 Annual Report on Form 10-K. There have been no significant changes to the Company’s accounting policies as disclosed in the 2015 Annual Report on Form 10-K.
The Company evaluated events that occurred subsequent to September 30, 2016, and there were no material events that would require recognition in the Company's Consolidated Financial Statements or disclosure in the accompanying Notes for the three and nine months ended September 30, 2016, except as follows:
In October of 2016, the Company announced that it signed a definitive agreement to acquire substantially all of the assets of the operating subsidiaries of Pillar Financial, LLC. Pillar is a multi-family agency lending and servicing company with an originate-to-distribute focus that holds licenses with Fannie Mae, Freddie Mac, and the FHA. This acquisition is expected to close in late 2016 or early 2017, subject to certain agency approvals and other closing conditions, and will be part of the Company's Wholesale Banking business segment.

Recently Issued Accounting Pronouncements
The following table summarizes ASUs recently issued by the Financial Accounting Standards Board ("FASB") 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 (or partially adopted) in 2016
 
 
ASU 2015-02, Amendments to the Consolidation Analysis
The ASU rescinds the indefinite deferral of previous amendments to ASC Topic 810, Consolidation, for certain entities and amends components of the consolidation analysis under ASC Topic 810, including evaluating limited partnerships and similar legal entities, evaluating fees paid to a decision maker or service provider as a variable interest, the effects of fee arrangements and/or related parties on the primary beneficiary determination and investment fund specific matters. The ASU may be adopted either retrospectively or on a modified retrospective basis.

January 1, 2016
The Company adopted this ASU on a modified retrospective basis beginning January 1, 2016. The adoption of this standard had no impact to the Consolidated Financial Statements.
ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities
The ASU amends ASC Topic 825, Financial Instruments-Overall, and addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The main provisions require investments in equity securities to be measured at fair value through net income, unless they qualify for a practicability exception, and require fair value changes arising from changes in instrument-specific credit risk for financial liabilities that are measured under the fair value option to be recognized in other comprehensive income. With the exception of disclosure requirements that will be adopted prospectively, the ASU must be adopted on a modified retrospective basis.
January 1, 2018

Early adoption is permitted beginning January 1, 2016 or 2017 for the provision related to changes in instrument-specific credit risk for financial liabilities under the FVO.

The Company early adopted the provision related to changes in instrument-specific credit risk beginning January 1, 2016, which resulted in an immaterial, cumulative effect adjustment from retained earnings to AOCI. The Company is evaluating the impact of the remaining provisions of this ASU on the Consolidated Financial Statements and related disclosures; however, the impact is not expected to be material.
Standard
Description
Required Date of Adoption
Effect on the Financial Statements or Other Significant Matters
ASU 2016-09, Improvements to Employee Share-Based Payment Accounting
The ASU amends ASC Topic 718, Compensation-Stock Compensation, which simplifies several aspects of the accounting for employee share-based payments transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Adoption methods are specific to the component of the ASU, ranging from a retrospective and modified retrospective basis to a prospective basis.
January 1, 2017

Early adoption is permitted.
The Company early adopted the ASU on April 1, 2016 with an effective date of January 1, 2016, which resulted in a reclassification of $4 million from APIC to provision for income taxes, representing excess tax benefits previously recognized in APIC, during the first quarter of 2016. For the second and third quarters of 2016, the Company recognized excess tax benefits of $6 million and $1 million, respectively, in the provision for income taxes. The early adoption favorably impacted both basic and diluted EPS by $0.02 per share for the nine months ended September 30, 2016.
The effect of the retrospective change in presentation in the Consolidated Statements of Cash Flows related to excess tax benefits for the nine months ended September 30, 2015 (comparative prior year period) was a reclassification of $18 million of excess tax benefits from financing activities to operating activities and a reclassification of $32 million of taxes paid related to net share settlement of equity awards from operating activities to financing activities. The net impact on the Consolidated Statements of Cash Flows was immaterial.

The Company had no previously unrecognized excess tax benefits; therefore, there was no impact to the Consolidated Financial Statements as it related to the elimination of the requirement that excess tax benefits be realized before recognition.

The Company elected to retain its existing accounting policy election to estimate award forfeitures.
Standards Not Yet Adopted
 
 
ASU 2014-09, Revenue from Contracts with Customers

ASU 2015-14, Deferral of the Effective Date

ASU 2016-08, Principal versus Agent Considerations

ASU 2016-10, Identifying Performance Obligations and Licensing

ASU 2016-12, Narrow-Scope Improvements and Practical Expedients

These ASUs supersede the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. The core principle of the ASUs is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASUs may be adopted either retrospectively or on a modified retrospective basis to new contracts and existing contracts, with remaining performance obligations as of the effective date.
January 1, 2018

Early adoption is permitted beginning January 1, 2017.
The Company is evaluating the alternative methods of adoption and the anticipated effects on the Consolidated Financial Statements and related disclosures. The Company does not plan to early adopt the standard.

ASU 2016-02, Leases
The ASU creates ASC Topic 842, Leases, and supersedes Topic 840, Leases. Topic 842 requires lessees to recognize right-of-use assets and associated liabilities that arise from leases, with the exception of short-term leases. The ASU does not make significant changes to lessor accounting; however, there were certain improvements made to align lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. There are several new qualitative and quantitative disclosures required. Upon transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach.

January 1, 2019

Early adoption is permitted.
The adoption of this ASU will result in an increase to the Consolidated Balance Sheets for right-of-use assets and associated lease liabilities for operating leases in which the Company is the lessee. The Company is evaluating the other effects of adoption on the Consolidated Financial Statements and related disclosures.
Standard
Description
Required Date of Adoption
Effect on the Financial Statements or Other Significant Matters
ASU 2016-07, Simplifying the Transition to the Equity Method of Accounting
The ASU amends ASC Topic 323, Investments-Equity Method and Joint Ventures, to eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investor obtains significant influence over the investee. In addition, if the investor previously held an AFS equity security, the ASU requires that the investor recognize through earnings the unrealized holding gain or loss in AOCI, as of the date it obtains significant influence. The ASU is to be applied on a prospective basis.

January 1, 2017

Early application is permitted.
This ASU will not impact the Consolidated Financial Statements and related disclosures until there is an applicable increase in investment or change in influence resulting in a transition to the equity method.
ASU 2016-13, Measurement of Credit Losses on Financial Instruments
The ASU amends ASC Topic 326, Financial Instruments-Credit Losses, to replace 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 reflects the portion of the amortized cost basis that the entity does not expect to collect. Additional quantitative and qualitative disclosures are required upon adoption.

The CECL model does not apply to AFS debt securities; however the ASU requires 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

Early adoption is permitted beginning January 1, 2019.
The Company is evaluating the impact the ASU will have on the Company's Consolidated Financial Statements and related disclosures.
Federal Funds Sold and Securities Borrowed or Purchased Under Agreements to Resell
Repurchase Agreements, Resale Agreements, Securities Borrowed, and Securities Loaned Disclosure [Text Block]
NOTE 2 - FEDERAL FUNDS SOLD AND SECURITIES FINANCING ACTIVITIES
Federal Funds Sold and Securities Borrowed or Purchased Under Agreements to Resell
Fed funds sold and securities borrowed or purchased under agreements to resell were as follows:
(Dollars in millions)
September 30, 2016
 
December 31, 2015
Fed funds sold

$31

 

$38

Securities borrowed
267

 
277

Securities purchased under agreements to resell
1,399

 
962

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

$1,697

 

$1,277

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. 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, 2016 and December 31, 2015, the total market value of collateral held was $1.7 billion and $1.2 billion, of which $227 million and $73 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, 2016
 
December 31, 2015
(Dollars in millions)
Overnight and Continuous
 
Up to 30 days
 
30-90 days
 
Total
 
Overnight and Continuous
 
Up to 30 days
 
Total
U.S. Treasury securities

$27

 

$—

 

$—

 

$27

 

$112

 

$—

 

$112

Federal agency securities
112

 
15

 

 
127

 
319

 

 
319

MBS - agency
1,026

 
64

 

 
1,090

 
837

 
23

 
860

CP
19

 

 

 
19

 
49

 

 
49

Corporate and other debt securities
351

 
60

 
50

 
461

 
242

 
72

 
314

Total securities sold under agreements to repurchase

$1,535

 

$139

 

$50

 

$1,724

 

$1,559

 

$95

 

$1,654



For these securities sold under agreements to repurchase, the Company would be obligated to provide additional collateral in the event of a significant decline in fair value of the collateral pledged. This risk is managed by monitoring the liquidity and credit quality of the collateral, as well as the maturity profile of the transactions.

Netting of Securities - Repurchase and Resell Agreements
The Company has various financial assets and financial liabilities that are subject to enforceable master netting agreements or similar agreements. The Company's derivatives that are subject to enforceable master netting agreements or similar agreements are discussed in Note 13, "Derivative Financial Instruments." The following table presents the Company's securities borrowed or purchased under agreements to resell and securities sold under agreements to repurchase that are subject to MRAs. At September 30, 2016 and December 31, 2015, there were no such transactions subject to legally enforceable MRAs that were eligible for balance sheet netting.
Financial instrument collateral received or pledged related to exposures subject to legally enforceable MRAs are not netted on the Consolidated Balance Sheets, but are presented in the following table as a reduction to the net amount reflected on the Consolidated Balance Sheets to derive the held/pledged financial instruments. The collateral amounts held/pledged are limited for presentation purposes to the related recognized asset/liability balance for each counterparty, and accordingly, do not include excess collateral received/pledged.
(Dollars in millions)
Gross
Amount
 
Amount
Offset
 
Net Amount
Presented in
Consolidated
Balance Sheets
 
Held/Pledged Financial
Instruments
 
Net
Amount
September 30, 2016
 
 
 
 
 
 
 
 
 
Financial assets:
 
 
 
 
 
 
 
 
 
Securities borrowed or purchased under agreements to resell

$1,666

 

$—

 

$1,666

1 

$1,652

 

$14

Financial liabilities:
 
 
 
 
 
 
 
 
 
Securities sold under agreements to repurchase
1,724

 

 
1,724

 
1,724

 

 
 
 
 
 
 
 
 
 
 
December 31, 2015
 
 
 
 
 
 
 
 
 
Financial assets:
 
 
 
 
 
 
 
 
 
Securities borrowed or purchased under agreements to resell

$1,239

 

$—

 

$1,239

1 

$1,229

 

$10

Financial liabilities:
 
 
 
 
 
 
 
 
 
Securities sold under agreements to repurchase
1,654

 

 
1,654

 
1,654

 


1 Excludes $31 million and $38 million of Fed funds sold, which are not subject to a master netting agreement at September 30, 2016 and December 31, 2015, respectively.

Trading Assets and Liabilities and Derivatives Trading Assets and Liabilities and Derivatives
Trading Assets and Liabilities and Derivatives [Text Block]
NOTE 3 - 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, 2016
 
December 31, 2015
Trading Assets and Derivative Instruments:
 
 
 
U.S. Treasury securities

$547

 

$538

Federal agency securities
259

 
588

U.S. states and political subdivisions
187

 
30

MBS - agency
883

 
553

CLO securities
1

 
2

Corporate and other debt securities
723

 
468

CP
202

 
67

Equity securities
51

 
66

Derivative instruments 1
1,531

 
1,152

Trading loans 2
2,660

 
2,655

Total trading assets and derivative instruments

$7,044

 

$6,119

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

$918

 

$503

MBS - agency
2

 
37

Corporate and other debt securities
252

 
259

Derivative instruments 1
312

 
464

Total trading liabilities and derivative instruments

$1,484

 

$1,263

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, the Company's broker/dealer subsidiary. The Company manages the potential market volatility associated with trading instruments with 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 13, “Derivative Financial Instruments,” and the “Trading Assets and Derivative Instruments and Securities Available for Sale” section of Note 14, “Fair Value Election and Measurement.”

Pledged trading assets are presented in the following table:
(Dollars in millions)
September 30, 2016
 
December 31, 2015
Pledged trading assets to secure repurchase agreements 1


$1,037

 

$986

Pledged trading assets to secure derivative agreements

465

 
393

Pledged trading assets to secure other arrangements

40

 
40

1 Repurchase agreements secured by collateral totaled $999 million and $950 million at September 30, 2016 and December 31, 2015, respectively.
Securities Available for Sale
Securities Available for Sale
NOTE 4SECURITIES AVAILABLE FOR SALE
Securities Portfolio Composition
 
September 30, 2016
(Dollars in millions)
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
U.S. Treasury securities

$4,850

 

$135

 

$2

 

$4,983

Federal agency securities
324

 
10

 

 
334

U.S. states and political subdivisions
250

 
11

 

 
261

MBS - agency
22,606

 
714

 
4

 
23,316

MBS - non-agency residential
75

 
1

 

 
76

ABS
9

 
2

 

 
11

Corporate and other debt securities
35

 
1

 

 
36

Other equity securities 1
655

 
1

 
1

 
655

Total securities AFS

$28,804

 

$875

 

$7

 

$29,672

 
 
 
 
 
 
 
 
 
December 31, 2015
(Dollars in millions)
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
U.S. Treasury securities

$3,460

 

$3

 

$14

 

$3,449

Federal agency securities
402

 
10

 
1

 
411

U.S. states and political subdivisions
156

 
8

 

 
164

MBS - agency
22,877

 
397

 
150

 
23,124

MBS - non-agency residential
92

 
2

 

 
94

ABS
11

 
2

 
1

 
12

Corporate and other debt securities
37

 
1

 

 
38

Other equity securities 1
533

 
1

 
1

 
533

Total securities AFS

$27,568

 

$424

 

$167

 

$27,825

1 At September 30, 2016, the fair value of other equity securities was comprised of the following: $143 million of FHLB of Atlanta stock, $402 million of Federal Reserve Bank of Atlanta stock, $104 million of mutual fund investments, and $6 million of other.
At December 31, 2015, the fair value of other equity securities was comprised of the following: $32 million of FHLB of Atlanta stock, $402 million of Federal Reserve Bank of Atlanta stock, $93 million of mutual fund investments, and $6 million of other.

The following table presents interest and dividends on securities AFS:
 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions)
2016
 
2015
 
2016
 
2015
Taxable interest

$154

 

$143

 

$470

 

$397

Tax-exempt interest
2

 
2

 
4

 
5

Dividends
3

 
8

 
9

 
28

Total interest and dividends on securities AFS

$159

 

$153

 

$483

 

$430



Securities AFS pledged to secure public deposits, repurchase agreements, trusts, and other funds had a fair value of $3.5 billion and $3.2 billion at September 30, 2016 and December 31, 2015, respectively.

The following table presents the amortized cost, fair value, and weighted average yield of investments in debt securities AFS at September 30, 2016, by remaining contractual maturity, with the exception of MBS and ABS, which are based on estimated average life. Receipt of cash flows may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.
 
Distribution of Remaining Maturities
(Dollars in millions)
Due in 1 Year or Less
 
Due After 1 Year through 5 Years
 
Due After 5 Years through 10 Years
 
Due After 10 Years
 
Total
Amortized Cost:
 
 
 
 
 
 
 
 
 
U.S. Treasury securities

$—

 

$1,847

 

$3,003

 

$—

 

$4,850

Federal agency securities
118

 
92

 
7

 
107

 
324

U.S. states and political subdivisions
20

 
21

 
125

 
84

 
250

MBS - agency
2,024

 
13,277

 
7,104

 
201

 
22,606

MBS - non-agency residential

 
75

 

 

 
75

ABS
7

 
1

 
1

 

 
9

Corporate and other debt securities

 
35

 

 

 
35

Total debt securities AFS

$2,169

 

$15,348

 

$10,240

 

$392

 

$28,149

Fair Value:
 
 
 
 
 
 
 
 
 
U.S. Treasury securities

$—

 

$1,874

 

$3,109

 

$—

 

$4,983

Federal agency securities
118

 
98

 
8

 
110

 
334

U.S. states and political subdivisions
20

 
23

 
133

 
85

 
261

MBS - agency
2,129

 
13,719

 
7,259

 
209

 
23,316

MBS - non-agency residential

 
76

 

 

 
76

ABS
7

 
3

 
1

 

 
11

Corporate and other debt securities

 
36

 

 

 
36

Total debt securities AFS

$2,274

 

$15,829

 

$10,510

 

$404

 

$29,017

 Weighted average yield 1
2.75
%
 
2.38
%
 
2.42
%
 
3.17
%
 
2.44
%
1 Weighted average yields are based on amortized cost.

Securities AFS in an Unrealized Loss Position
The Company held certain investment securities AFS where amortized cost exceeded fair value, resulting in unrealized loss positions. Market changes in interest rates and credit spreads may result in temporary unrealized losses as the market prices of securities fluctuate. At September 30, 2016, 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 reviewed its portfolio for OTTI in accordance with the accounting policies described in Note 1, "Significant Accounting Policies," of the Company's 2015 Annual Report on Form 10-K.

Securities AFS in an unrealized loss position at period end are presented in the following tables:
 
September 30, 2016
 
Less than twelve months
 
Twelve months or longer
 
Total
(Dollars in millions)
Fair
Value
 
Unrealized
Losses
2
 
Fair
Value
 
Unrealized
Losses
2
 
Fair
Value
 
Unrealized
Losses
2
Temporarily impaired securities AFS:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities

$350

 

$2

 

$—

 

$—

 

$350

 

$2

Federal agency securities
15

 

 
3

 

 
18

 

U.S. states and political subdivisions
52

 

 

 

 
52

 

MBS - agency
611

 
1

 
513

 
3

 
1,124

 
4

ABS

 

 
6

 

 
6

 

Other equity securities

 

 
4

 
1

 
4

 
1

Total temporarily impaired securities AFS
1,028

 
3


526


4


1,554


7

OTTI securities AFS 1:
 
 
 
 
 
 
 
 
 
 
 
MBS - non-agency residential
17

 

 

 

 
17

 

ABS
1

 

 

 

 
1

 

Total OTTI securities AFS
18

 

 

 

 
18

 

Total impaired securities AFS

$1,046

 

$3

 

$526

 

$4

 

$1,572

 

$7


 
December 31, 2015
 
Less than twelve months
 
Twelve months or longer
 
Total
(Dollars in millions)
Fair
Value
 
Unrealized
 Losses 2
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
 Losses 2
Temporarily impaired securities AFS:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities

$2,169

 

$14

 

$—

 

$—

 

$2,169

 

$14

Federal agency securities
75

 

 
34

 
1

 
109

 
1

MBS - agency
11,434

 
114

 
958

 
36

 
12,392

 
150

ABS

 

 
7

 
1

 
7

 
1

Other equity securities
3

 
1

 

 

 
3

 
1

Total temporarily impaired securities AFS
13,681

 
129

 
999

 
38

 
14,680

 
167

OTTI securities AFS 1:
 
 
 
 
 
 
 
 
 
 
 
ABS
1

 

 

 

 
1

 

Total OTTI securities AFS
1

 

 

 

 
1

 

Total impaired securities AFS

$13,682

 

$129

 

$999

 

$38

 

$14,681

 

$167

1 OTTI securities AFS are impaired securities for which OTTI credit losses have been previously recognized in earnings.
2 Unrealized losses less than $0.5 million are presented as zero within the table.

At September 30, 2016, temporarily impaired securities AFS that have been in an unrealized loss position for twelve months or longer included agency MBS, federal agency securities, one ABS collateralized by 2004 vintage home equity loans, and one equity security. The temporarily impaired ABS continues to receive timely principal and interest payments, and is evaluated quarterly for credit impairment. Unrealized losses on securities AFS that relate to factors other than credit are recorded in AOCI, net of tax.

Realized Gains and Losses and Other-Than-Temporarily Impaired Securities AFS
Net securities gains/(losses) are comprised of gross realized gains, gross realized losses, and OTTI credit losses recognized in earnings. For the three months ended September 30, 2016, no gross realized gains were recognized. For the nine months ended September 30, 2016, gross realized gains were $4 million. For both the three and nine months ended September 30, 2016, gross realized losses were immaterial and there were no OTTI credit losses recognized in earnings. For the three and nine months ended September 30, 2015, gross realized gains were $11 million and $25 million, respectively. Gross realized losses of $3 million were recognized for both the three and nine months ended September 30, 2015, and OTTI losses recognized in earnings were immaterial for both periods.
Securities AFS in an unrealized loss position are evaluated quarterly for other-than-temporary credit impairment, which is determined using cash flow analyses that take into account security specific collateral and transaction structure. Future expected credit losses are determined using various assumptions, the most significant of which include default rates, prepayment rates, and loss severities. If, based on this analysis, a security is in an unrealized loss position and the Company does not expect to recover the entire amortized cost basis of the security, the expected cash flows are then discounted at the security’s initial effective interest rate to arrive at a present value amount. Credit losses on the OTTI security are recognized in earnings and reflect the difference between the present value of cash flows expected to be collected and the amortized cost basis of the security. See Note 1, "Significant Accounting Policies," in the Company's 2015 Annual Report on Form 10-K for additional information regarding the Company's policy on securities AFS and related impairments.
The Company continues to reduce existing exposure on OTTI securities primarily through paydowns. In certain instances, the amount of credit losses recognized in earnings on a debt security exceeds the total unrealized losses on the security, which may result in unrealized gains relating to factors other than credit recorded in AOCI, net of tax.
During the three and nine months ended September 30, 2016, there were no credit impairment losses recognized on securities AFS held at the end of the period. During the three and nine months ended September 30, 2015, credit impairment recognized on securities AFS still held at the end of the period was immaterial, all of which related to one private MBS with a fair value of approximately $22 million at September 30, 2015. The accumulated balance of OTTI credit losses recognized in earnings on securities AFS held at period end was $24 million at September 30, 2016 and $25 million at September 30, 2015. Subsequent credit losses may be recorded on securities without a corresponding further decline in fair value when there has been a decline in expected cash flows.

Loans
Loans
NOTE 5 - LOANS
Composition of Loan Portfolio
(Dollars in millions)
September 30, 2016
 
December 31, 2015
Commercial loans:
 
 
 
C&I

$68,298

 

$67,062

CRE
5,056

 
6,236

Commercial construction
3,875

 
1,954

Total commercial loans
77,229

 
75,252

Residential loans:
 
 
 
Residential mortgages - guaranteed
521

 
629

Residential mortgages - nonguaranteed 1
26,306

 
24,744

Residential home equity products
12,178

 
13,171

Residential construction
393

 
384

Total residential loans
39,398

 
38,928

Consumer loans:
 
 
 
Guaranteed student
5,844

 
4,922

Other direct
7,358

 
6,127

Indirect
10,434

 
10,127

Credit cards
1,269

 
1,086

Total consumer loans
24,905

 
22,262

LHFI

$141,532

 

$136,442

LHFS 2

$3,772

 

$1,838

1 Includes $234 million and $257 million of LHFI measured at fair value at September 30, 2016 and December 31, 2015, respectively.
2 Includes $3.0 billion and $1.5 billion of LHFS measured at fair value at September 30, 2016 and December 31, 2015, respectively.
During the three months ended September 30, 2016 and 2015, the Company transferred $153 million and $38 million in LHFI to LHFS, and $13 million and $75 million in LHFS to LHFI, respectively. In addition to sales of mortgage LHFS in the normal course of business, the Company sold $1.2 billion and $178 million in loans and leases for net gains of $8 million and $9 million during the three months ended September 30, 2016 and 2015, respectively.
During the nine months ended September 30, 2016 and 2015, the Company transferred $315 million and $1.7 billion in LHFI to LHFS, and $23 million and $726 million in LHFS to LHFI, respectively. In addition to sales of mortgage LHFS in the normal course of business, the Company sold $1.5 billion and $2.0 billion in loans and leases for net gains of $6 million and $22 million during the nine months ended September 30, 2016 and 2015, respectively.
At both September 30, 2016 and December 31, 2015, the Company had $23.6 billion of net eligible loan collateral pledged to the Federal Reserve discount window to support $17.1 billion and $17.2 billion of available, unused borrowing capacity, respectively.
At September 30, 2016 and December 31, 2015, the Company had $36.1 billion and $33.7 billion of net eligible loan collateral pledged to the FHLB of Atlanta to support $31.1 billion and $28.5 billion of available borrowing capacity, respectively. The available FHLB borrowing capacity at September 30, 2016 was used to support $3.0 billion of long-term debt and $4.4 billion of letters of credit issued on the Company's behalf. At December 31, 2015, the available FHLB borrowing capacity was used to support $408 million of long-term debt and $6.7 billion of letters of credit issued on the Company's behalf.

Credit Quality Evaluation
The Company evaluates the credit quality of its loan portfolio by employing a dual internal risk rating system, which assigns both PD and LGD ratings to derive expected losses. Assignment of PD and LGD ratings are predicated upon numerous factors, including consumer credit risk scores, rating agency information, borrower/guarantor financial capacity, LTV ratios, collateral type, debt service coverage ratios, collection experience, other internal metrics/analyses, and/or qualitative assessments.
For the commercial portfolio, the Company believes that the most appropriate credit quality indicator is an individual loan’s risk assessment expressed according to the broad regulatory agency classifications of Pass or Criticized. The Company conforms to the following regulatory classifications for Criticized assets: Other Assets Especially Mentioned (or Special Mention), Adversely Classified, Doubtful, and Loss. However, for the purposes of disclosure, management believes the most meaningful distinction within the Criticized categories is between Criticized Accruing (which includes Special Mention and a portion of Adversely Classified) and Criticized Nonaccruing (which includes a portion of Adversely Classified and Doubtful and Loss). This distinction identifies those relatively higher risk loans for which there is a basis to believe that the Company will not collect all amounts due under those loan agreements. The Company's risk rating system is more granular, with multiple risk ratings in both the Pass and Criticized categories. Pass ratings reflect relatively low PDs, whereas, Criticized assets have higher PDs. The granularity in Pass ratings assists in establishing pricing, loan structures, approval requirements, reserves, and ongoing credit management requirements. Commercial risk ratings are refreshed at least annually, or more frequently as appropriate, based upon considerations such as market conditions, borrower characteristics, and portfolio trends. Additionally, management routinely reviews portfolio risk ratings, trends, and concentrations to support risk identification and mitigation activities. The increase in Criticized accruing and nonaccruing C&I loans at September 30, 2016 compared to December 31, 2015, as presented in the following risk rating table, was driven primarily by downgrades of loans in the energy industry vertical.
For consumer and residential loans, the Company monitors credit risk based on indicators such as delinquencies and FICO scores. The Company believes that consumer credit risk, as assessed by the industry-wide FICO scoring method, is a relevant credit quality indicator. Borrower-specific FICO scores are obtained at origination as part of the Company’s formal underwriting process, and refreshed FICO scores are obtained by the Company at least quarterly.
For government-guaranteed loans, the Company monitors the credit quality based primarily on delinquency status, as it is a more relevant indicator of credit quality due to the government guarantee. At September 30, 2016 and December 31, 2015, 28% and 31%, respectively, of the guaranteed residential loan portfolio was current with respect to payments. At September 30, 2016 and December 31, 2015, 77% and 78%, respectively, of the guaranteed student loan portfolio was current with respect to payments. The Company's loss exposure on guaranteed residential and student loans is mitigated by the government guarantee.


LHFI by credit quality indicator are presented in the following tables:
 
Commercial Loans
 
C&I
 
CRE
 
Commercial Construction
(Dollars in millions)
September 30, 2016
 
December 31, 2015
 
September 30, 2016
 
December 31, 2015
 
September 30, 2016
 
December 31, 2015
Risk rating:
 
 
 
 
 
 
 
 
 
 
 
Pass

$65,800

 

$65,379

 

$4,688

 

$6,067

 

$3,749

 

$1,931

Criticized accruing
1,997

 
1,375

 
358

 
158

 
124

 
23

Criticized nonaccruing
501

 
308

 
10

 
11

 
2

 

Total

$68,298

 

$67,062

 

$5,056

 

$6,236

 

$3,875

 

$1,954


 
Residential Loans 1
 
Residential Mortgages -
Nonguaranteed
 
Residential Home Equity Products
 
Residential Construction
(Dollars in millions)
September 30, 2016
 
December 31, 2015
 
September 30, 2016
 
December 31, 2015
 
September 30, 2016
 
December 31, 2015
Current FICO score range:
 
 
 
 
 
 
 
 
 
 
 
700 and above

$22,342

 

$20,422

 

$10,016

 

$10,772

 

$331

 

$313

620 - 699
3,037

 
3,262

 
1,590

 
1,741

 
51

 
58

Below 620 2
927

 
1,060

 
572

 
658

 
11

 
13

Total

$26,306

 

$24,744

 

$12,178

 

$13,171

 

$393

 

$384


 
Consumer Loans 3
 
Other Direct
 
Indirect
 
Credit Cards
(Dollars in millions)
September 30, 2016
 
December 31, 2015
 
September 30, 2016
 
December 31, 2015
 
September 30, 2016
 
December 31, 2015
Current FICO score range:
 
 
 
 
 
 
 
 
 
 
 
700 and above

$6,649

 

$5,501

 

$7,377

 

$7,015

 

$878

 

$759

620 - 699
659

 
576

 
2,483

 
2,481

 
317

 
265

Below 620 2
50

 
50

 
574

 
631

 
74

 
62

Total

$7,358

 

$6,127

 

$10,434

 

$10,127

 

$1,269

 

$1,086