Shareholders' Equity

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

SHAREHOLDERS' EQUITY

SHAREHOLDERS’ EQUITY

Preferred Stock

We have 4.4 million authorized shares of preferred stock without par value and with a liquidation preference of $1,000 per share, or $25 per depositary share. Except for Series I and J, all preferred shares were issued in the form of depositary shares, with each depositary share representing a 1/40th ownership interest in a share of the preferred stock. All preferred shares are registered with the SEC. In addition, Series A and G preferred shares are listed and traded on the National Association of Securities Dealers Automated Quotations (“NASDAQ”) Global Select Market.

Preferred shareholders generally receive asset distributions before common shareholders; however, preferred shareholders have only limited voting rights. Preferred stock dividends reduce earnings applicable to common shareholders and are paid on the 15th day of the months indicated in the following schedule. Dividends are subject to approval by the Board.

The preferred shares are redeemable at our option after the expiration of any applicable redemption restrictions. The redemption amount is computed at the per share liquidation preference plus any declared but unpaid dividends. Redemptions are subject to certain regulatory provisions including satisfying well-capitalized minimum requirements.

The following schedule summarizes key aspects of our preferred stock:

(Dollar amounts in millions)	Carrying value at December 31,				Shares at December 31, 2023			Dividends payable	Earliest redemption date
	2023		2022		Authorized	Outstanding	Rate
Series A	$	67	$	67	140,000	66,139	> of 4.0% or 3M Term SOFR + 0.78%	Qtrly Mar, Jun, Sep, Dec	Dec 15, 2011
Series G	138		138		200,000	138,390	annual floating rate = 3M Term SOFR + 4.50%	Qtrly Mar, Jun, Sep, Dec	Mar 15, 2023
Series I	99		99		300,893	98,555	annual floating rate = 3M Term SOFR + 4.06%	Qtrly Mar, Jun, Sep, Dec	Jun 15, 2023
Series J	136		136		195,152	136,368	annual floating rate = 3M Term SOFR + 4.70%	Qtrly Mar, Jun, Sep, Dec	Sep 15, 2023
Total	$	440	$	440

Common Stock

Our common stock is traded on the NASDAQ Global Select Market. At December 31, 2023, we had 148.2 million shares of $0.001 par common stock outstanding. The balance of common stock and additional paid-in-capital was $1.7 billion at December 31, 2023, and decreased $23 million, or 1%, from the prior year, primarily as a result of common stock repurchases during the first quarter of 2023.

During the first quarter of 2023, we repurchased 0.9 million common shares outstanding for $50 million at an average price of $52.82 per share. As the macroeconomic environment remained uncertain, we suspended our share repurchase program and did not repurchase common shares during the second, third, or fourth quarters of 2023. During 2022, we repurchased 3.6 million common shares outstanding for $200 million at an average price of $56.13 per share.

In February 2024, the Board approved a plan to repurchase up to $35 million of common shares outstanding during the fiscal year 2024. In February 2024, we repurchased 0.9 million common shares outstanding for $35 million at an average price of $39.32.

Accumulated Other Comprehensive Income

The AOCI loss was $2.7 billion at December 31, 2023, and primarily reflects declines in the fair value of fixed-rate available-for-sale securities as a result of changes in interest rates.

During the fourth quarter of 2022, we transferred approximately $10.7 billion fair value ($13.1 billion amortized cost) of mortgage-backed AFS securities to the HTM category to reflect our intent for these securities. The amortized cost basis of these securities does not include $2.4 billion of unrealized losses in AOCI that is amortized over the life of the securities. The amortization of the unrealized losses reported in AOCI will offset the effect of the accretion of the discount in interest income that is created by adjusting the amortized cost basis to the securities’ fair value on the date of the transfer. At December 31, 2023, the unamortized discount on the HTM securities totaled approximately $2.1 billion ($1.5 billion after tax).

The following schedule presents the changes in AOCI:

(In millions)	Net unrealized gains (losses) on investment securities		Net unrealized gains (losses) on derivatives and other		Pension and post-retirement		Total
2023
Balance at December 31, 2022	$	(2,800)	$	(311)	$	(1)	$	(3,112)
Other comprehensive income before reclassifications, net of tax	66		22		—		88
Amounts reclassified from AOCI, net of tax	208		124		—		332
Other comprehensive income	274		146		—		420
Balance at December 31, 2023	$	(2,526)	$	(165)	$	(1)	$	(2,692)
Income tax expense included in other comprehensive income	$	90	$	47	$	—	$	137
2022
Balance at December 31, 2021	$	(78)	$	—	$	(2)	$	(80)
Other comprehensive loss before reclassifications, net of tax	(2,762)		(332)		1		(3,093)
Amounts reclassified from AOCI, net of tax	40		21		—		61
Other comprehensive income (loss)	(2,722)		(311)		1		(3,032)
Balance at December 31, 2022	$	(2,800)	$	(311)	$	(1)	$	(3,112)
Income tax benefit included in other comprehensive loss	$	(888)	$	(101)	$	—	$	(989)

(In millions)	Amounts reclassified from AOCI 1						Affected line item  on statement of income
AOCI components	2023		2022		2021
Net unrealized gains (losses) on investment securities	$	(276)	$	(53)	$	—	Securities gains (losses), net
Less: Income tax expense (benefit)	(68)		(13)		—
	$	(208)	$	(40)	$	—
Net unrealized gains (losses) on derivative instruments	$	(165)	$	(27)	$	61	Interest and fees on loans; Interest on short- and long-term borrowings
Less: Income tax expense (benefit)	(41)		(6)		15
	$	(124)	$	(21)	$	46

1 Positive reclassification amounts indicate increases to earnings on the statement of income.

Deferred Compensation

Deferred compensation consists of invested assets, including our common stock, which are held in rabbi trusts for certain employees and directors. The fair value of our common stock was approximately $19 million and $14 million at December 31, 2023 and 2022, respectively. We consolidate the rabbi trust assets and liabilities and include them in “Other assets” and “Other liabilities” on the consolidated balance sheet, respectively. At December 31, 2023 and 2022, associated trust assets totaled approximately $124 million and $114 million, and trust liabilities totaled approximately $143 million and $128 million, respectively.