| Fair Value Measurements |
FAIR VALUE MEASUREMENTS The Corporation utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. In cases where quoted market values in an active market are not available, the Corporation uses present value techniques and other valuation methods to estimate the fair values of its financial instruments. These valuation methods require considerable judgment and the resulting estimates of fair value can be significantly affected by the assumptions made and methods used. Trading securities, investment securities available-for-sale, derivatives and deferred compensation plan liabilities are recorded at fair value on a recurring basis. Additionally, from time to time, the Corporation may be required to record other assets and liabilities at fair value on a nonrecurring basis, such as impaired loans, other real estate (primarily foreclosed property), nonmarketable equity securities and certain other assets and liabilities. These nonrecurring fair value adjustments typically involve write-downs of individual assets or application of lower of cost or fair value accounting. Refer to Note 1 for further information about the fair value hierarchy, descriptions of the valuation methodologies and key inputs used to measure financial assets and liabilities recorded at fair value, as well as a description of the methods and significant assumptions used to estimate fair value disclosures for financial instruments not recorded at fair value in their entirety on a recurring basis. ASSETS AND LIABLILITIES RECORDED AT FAIR VALUE ON A RECURRING BASIS The following tables present the recorded amount of assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and 2013. | | | | | | | | | | | | | | | | | | (in millions) | Total | | Level 1 | | Level 2 | | Level 3 | | December 31, 2014 | | | | | | | | | | | | | | | | | | Trading securities: | | | | | | | | | Deferred compensation plan assets | $ | 94 |
| | $ | 94 |
| | $ | — |
| | $ | — |
| | Investment securities available-for-sale: | | | | | | | | | U.S. Treasury and other U.S. government agency securities | 526 |
| | 526 |
| | — |
| | — |
| | Residential mortgage-backed securities (a) | 7,274 |
| | — |
| | 7,274 |
| | — |
| | State and municipal securities | 23 |
| | — |
| | — |
| | 23 |
| (b) | Corporate debt securities | 51 |
| | — |
| | 50 |
| | 1 |
| (b) | Equity and other non-debt securities | 242 |
| | 130 |
| | — |
| | 112 |
| (b) | Total investment securities available-for-sale | 8,116 |
| | 656 |
| | 7,324 |
| | 136 |
| | Derivative assets: | | | | | | | | | Interest rate contracts | 328 |
| | — |
| | 328 |
| | — |
| | Energy derivative contracts | 527 |
| | — |
| | 527 |
| | — |
| | Foreign exchange contracts | 39 |
| | — |
| | 39 |
| | — |
| | Warrants | 4 |
| | — |
| | — |
| | 4 |
| | Total derivative assets | 898 |
| | — |
| | 894 |
| | 4 |
| | Total assets at fair value | $ | 9,108 |
| | $ | 750 |
| | $ | 8,218 |
| | $ | 140 |
| | Derivative liabilities: | | | | | | | | | Interest rate contracts | $ | 102 |
| | $ | — |
| | $ | 102 |
| | $ | — |
| | Energy derivative contracts | 525 |
| | — |
| | 525 |
| | — |
| | Foreign exchange contracts | 34 |
| | — |
| | 34 |
| | — |
| | Other | 1 |
| | — |
| | — |
| | 1 |
| | Total derivative liabilities | 662 |
| | — |
| | 661 |
| | 1 |
| | Deferred compensation plan liabilities | 94 |
| | 94 |
| | — |
| | — |
| | Total liabilities at fair value | $ | 756 |
| | $ | 94 |
| | $ | 661 |
| | $ | 1 |
| |
| | (a) | Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises. |
| | (b) | Auction-rate securities. |
| | | | | | | | | | | | | | | | | | (in millions) | Total | | Level 1 | | Level 2 | | Level 3 | | December 31, 2013 | | | | | | | | | Trading securities: | | | | | | | | | Deferred compensation plan assets | $ | 96 |
| | $ | 96 |
| | $ | — |
| | $ | — |
| | Equity and other non-debt securities | 7 |
| | 7 |
| | — |
| | — |
| | Residential mortgage-backed securities (a) | 2 |
| | — |
| | 2 |
| | — |
| | State and municipal securities | 3 |
| | — |
| | 3 |
| | — |
| | Total trading securities | 108 |
| | 103 |
| | 5 |
| | — |
| | Investment securities available-for-sale: | | | | | | | | | U.S. Treasury and other U.S. government agency securities | 45 |
| | 45 |
| | — |
| | — |
| | Residential mortgage-backed securities (a) | 8,926 |
| | — |
| | 8,926 |
| | — |
| | State and municipal securities | 22 |
| | — |
| | — |
| | 22 |
| (b) | Corporate debt securities | 56 |
| | — |
| | 55 |
| | 1 |
| (b) | Equity and other non-debt securities | 258 |
| | 122 |
| | — |
| | 136 |
| (b) | Total investment securities available-for-sale | 9,307 |
| | 167 |
| | 8,981 |
| | 159 |
| | Derivative assets: | | | | | | | | | Interest rate contracts | 380 |
| | — |
| | 380 |
| | — |
| | Energy derivative contracts | 105 |
| | — |
| | 105 |
| | — |
| | Foreign exchange contracts | 15 |
| | — |
| | 15 |
| | — |
| | Warrants | 3 |
| | — |
| | — |
| | 3 |
| | Total derivative assets | 503 |
| | — |
| | 500 |
| | 3 |
| | Total assets at fair value | $ | 9,918 |
| | $ | 270 |
| | $ | 9,486 |
| | $ | 162 |
| | Derivative liabilities: | | | | | | | | | Interest rate contracts | $ | 133 |
| | $ | — |
| | $ | 133 |
| | $ | — |
| | Energy derivative contracts | 102 |
| | — |
| | 102 |
| | — |
| | Foreign exchange contracts | 14 |
| | — |
| | 14 |
| | — |
| | Other | 2 |
| | — |
| | — |
| | 2 |
| | Total derivative liabilities | 251 |
| | — |
| | 249 |
| | 2 |
| | Deferred compensation plan liabilities | 96 |
| | 96 |
| | — |
| | — |
| | Total liabilities at fair value | $ | 347 |
| | $ | 96 |
| | $ | 249 |
| | $ | 2 |
| |
| | (a) | Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises. |
| | (b) | Auction-rate securities. |
There were no transfers of assets or liabilities recorded at fair value on a recurring basis into or out of Level 1, Level 2 and Level 3 fair value measurements during the years ended December 31, 2014 and 2013. The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2014 and 2013. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net Realized/Unrealized Gains (Losses) (Pretax) | | | | | | | | | | | | | | | | | Balance at Beginning of Period | | Recorded in Earnings | Recorded in Other Comprehensive Income (Loss) | | | | | | Balance at End of Period | | | | | | | | | | | | (in millions) | | Realized | Unrealized | | Sales | | Settlements |
| | Year Ended December 31, 2014 | | | | | | | | | | | | | | | Investment securities available-for-sale: | | | | | | | | | | | | | | | State and municipal securities (a) | $ | 22 |
| | $ | — |
| | $ | — |
| | $ | 1 |
| (b) | | $ | — |
| | $ | — |
| | $ | 23 |
| Corporate debt securities (a) | 1 |
| | — |
| | — |
| | — |
| | | — |
| | — |
| | 1 |
| Equity and other non-debt securities (a) | 136 |
| | 2 |
| (c) | — |
| | 7 |
| (b) | | (33 | ) | | — |
| | 112 |
| Total investment securities
available-for-sale | 159 |
| | 2 |
| (c) | — |
| | 8 |
| (b) | | (33 | ) | | — |
| | 136 |
| Derivative assets: | | | | | | | | | | | | | | | Warrants | 3 |
| | 7 |
| (d) | 1 |
| (d) | — |
| | | (7 | ) | | — |
| | 4 |
| Derivative liabilities: | | | | | | | | | | | | | | | Other | 2 |
| | (1 | ) | (c) | — |
| | — |
| | | — |
| | (2 | ) | | 1 |
| Year Ended December 31, 2013 | | | | | | | | | | | | | | | Investment securities available-for-sale: | | | | | | | | | | | | | | | State and municipal securities (a) | $ | 23 |
| | $ | — |
| | $ | — |
| | $ | 2 |
| (b) | | $ | (3 | ) | | $ | — |
| | $ | 22 |
| Corporate debt securities (a) | 1 |
| | — |
| | — |
| | — |
| | | — |
| | — |
| | 1 |
| Equity and other non-debt securities (a) | 156 |
| | 1 |
| (c) | — |
| | (1 | ) | (b) | | (20 | ) | | — |
| | 136 |
| Total investment securities
available-for-sale | 180 |
| | 1 |
| (c) | — |
| | 1 |
| (b) | | (23 | ) | | — |
| | 159 |
| Derivative assets: | | | | | | | | | | | | | | | Warrants | 3 |
| | 9 |
| (d) | 1 |
| (d) | — |
| | | (4 | ) | | (6 | ) | | 3 |
| Derivative liabilities: | | | | | | | | | | | | | | | Other | 1 |
| | — |
| | (2 | ) | (c) | — |
| | | — |
| | (1 | ) | | 2 |
|
| | (a) | Auction-rate securities. |
| | (b) | Recorded in "net unrealized gains (losses) on investment securities available-for-sale" in other comprehensive income. |
| | (c) | Realized and unrealized gains and losses due to changes in fair value recorded in "net securities gains (losses)" on the consolidated statements of income. |
| | (d) | Realized and unrealized gains and losses due to changes in fair value recorded in "other noninterest income" on the consolidated statements of income. |
ASSETS AND LIABILITIES RECORDED AT FAIR VALUE ON A NONRECURRING BASIS The Corporation may be required, from time to time, to record certain assets and liabilities at fair value on a nonrecurring basis. These include assets that are recorded at the lower of cost or fair value, and were recognized at fair value since it was less than cost at the end of the period. All assets recorded at fair value on a nonrecurring basis were classified as Level 3 at December 31, 2014 and 2013 and are presented in the following table. No liabilities were recorded at fair value on a nonrecurring basis at December 31, 2014 and 2013. | | | | | | (in millions) | | Level 3 | December 31, 2014 | | | Loans: | | | Commercial | | $ | 38 |
| Commercial mortgage | | 26 |
| Total loans | | 64 |
| Nonmarketable equity securities (a) | | 2 |
| Other real estate | | 2 |
| Total assets at fair value | | $ | 68 |
| December 31, 2013 | | | Loans: | | | Commercial | | $ | 43 |
| Real estate construction | | 20 |
| Commercial mortgage | | 61 |
| International | | 4 |
| Total loans | | 128 |
| Nonmarketable equity securities (a) | | 2 |
| Other real estate | | 5 |
| Total assets at fair value | | $ | 135 |
|
| | (a) | Commitments to fund additional investments in nonmarketable equity securities recorded at fair value on a nonrecurring basis were insignificant at December 31, 2014 and 2013. |
Level 3 assets recorded at fair value on a nonrecurring basis at December 31, 2014 and 2013 included loans for which a specific allowance was established based on the fair value of collateral and other real estate for which fair value of the properties was less than the cost basis. For both asset classes, the unobservable inputs were the additional adjustments applied by management to the appraised values to reflect such factors as non-current appraisals and revisions to estimated time to sell. These adjustments are determined based on qualitative judgments made by management on a case-by-case basis and are not quantifiable inputs, although they are used in the determination of fair value. The following table presents quantitative information related to the significant unobservable inputs utilized in the Corporation's Level 3 recurring fair value measurement as of December 31, 2014 and December 31, 2013. The Corporation's Level 3 recurring fair value measurements include auction-rate securities where fair value is determined using an income approach based on a discounted cash flow model. The inputs in the table below reflect management's expectation of continued illiquidity in the secondary auction-rate securities market due to a lack of market activity for the issuers remaining in the portfolio, a lack of market incentives for issuer redemptions, and the expectation for a continuing low interest rate environment. | | | | | | | | | | | | Discounted Cash Flow Model | | | | Unobservable Input | | Fair Value (in millions) | | Discount Rate | | Workout Period (in years) | December 31, 2014 | | | | | | State and municipal securities (a) | $ | 23 |
| | 3% - 9% | | 1 - 3 | Equity and other non-debt securities (a) | 112 |
| | 4% - 8% | | 1 - 2 | December 31, 2013 | | | | | | State and municipal securities (a) | $ | 22 |
| | 5% - 10% | | 3 - 4 | Equity and other non-debt securities (a) | 136 |
| | 5% - 8% | | 2 - 3 |
| | (a) | Auction-rate securities. |
ESTIMATED FAIR VALUES OF FINANCIAL INSTRUMENTS NOT RECORDED AT FAIR VALUE ON A RECURRING BASIS The Corporation typically holds the majority of its financial instruments until maturity and thus does not expect to realize many of the estimated fair value amounts disclosed. The disclosures also do not include estimated fair value amounts for items that are not defined as financial instruments, but which have significant value. These include such items as core deposit intangibles, the future earnings potential of significant customer relationships and the value of trust operations and other fee generating businesses. The Corporation believes the imprecision of an estimate could be significant. The carrying amount and estimated fair value of financial instruments not recorded at fair value in their entirety on a recurring basis on the Corporation’s consolidated balance sheets are as follows: | | | | | | | | | | | | | | | | | | | | | | Carrying Amount | | Estimated Fair Value | (in millions) | | Total | | Level 1 | | Level 2 | | Level 3 | December 31, 2014 | | | | | | | | | | Assets | | | | | | | | | | Cash and due from banks | $ | 1,026 |
| | $ | 1,026 |
| | $ | 1,026 |
| | $ | — |
| | $ | — |
| Interest-bearing deposits with banks | 5,045 |
| | 5,045 |
| | 5,045 |
| | — |
| | — |
| Investment securities held-to-maturity | 1,935 |
| | 1,933 |
| | — |
| | 1,933 |
| | — |
| Loans held-for-sale | 5 |
| | 5 |
| | — |
| | 5 |
| | — |
| Total loans, net of allowance for loan losses (a) | 47,999 |
| | 47,932 |
| | — |
| | — |
| | 47,932 |
| Customers’ liability on acceptances outstanding | 10 |
| | 10 |
| | 10 |
| | — |
| | — |
| Nonmarketable equity securities (b) | 11 |
| | 18 |
| | — |
| | — |
| | 18 |
| Restricted equity investments | 92 |
| | 92 |
| | 92 |
| | — |
| | — |
| Liabilities | | | | | | | | | | Demand deposits (noninterest-bearing) | 27,224 |
| | 27,224 |
| | — |
| | 27,224 |
| | — |
| Interest-bearing deposits | 25,841 |
| | 25,841 |
| | — |
| | 25,841 |
| | — |
| Customer certificates of deposit | 4,421 |
| | 4,411 |
| | — |
| | 4,411 |
| | — |
| Total deposits | 57,486 |
| | 57,476 |
| | — |
| | 57,476 |
| | — |
| Short-term borrowings | 116 |
| | 116 |
| | 116 |
| | — |
| | — |
| Acceptances outstanding | 10 |
| | 10 |
| | 10 |
| | — |
| | — |
| Medium- and long-term debt | 2,679 |
| | 2,681 |
| | — |
| | 2,681 |
| | — |
| Credit-related financial instruments | (85 | ) | | (85 | ) | | — |
| | — |
| | (85 | ) | December 31, 2013 | | | | | | | | | | Assets | | | | | | | | | | Cash and due from banks | $ | 1,140 |
| | $ | 1,140 |
| | $ | 1,140 |
| | $ | — |
| | $ | — |
| Interest-bearing deposits with banks | 5,311 |
| | 5,311 |
| | 5,311 |
| | — |
| | — |
| Loans held-for-sale | 4 |
| | 4 |
| | — |
| | 4 |
| | — |
| Total loans, net of allowance for loan losses (a) | 44,872 |
| | 44,801 |
| | — |
| | — |
| | 44,801 |
| Customers’ liability on acceptances outstanding | 11 |
| | 11 |
| | 11 |
| | — |
| | — |
| Nonmarketable equity securities (b) | 12 |
| | 19 |
| | — |
| | — |
| | 19 |
| Restricted equity investments | 133 |
| | 133 |
| | 133 |
| | — |
| | — |
| Liabilities | | | | | | | | | | Demand deposits (noninterest-bearing) | 23,875 |
| | 23,875 |
| | — |
| | 23,875 |
| | — |
| Interest-bearing deposits | 24,354 |
| | 24,354 |
| | — |
| | 24,354 |
| | — |
| Customer certificates of deposit | 5,063 |
| | 5,055 |
| | — |
| | 5,055 |
| | — |
| Total deposits | 53,292 |
| | 53,284 |
| | — |
| | 53,284 |
| | — |
| Short-term borrowings | 253 |
| | 253 |
| | 253 |
| | — |
| | — |
| Acceptances outstanding | 11 |
| | 11 |
| | 11 |
| | — |
| | — |
| Medium- and long-term debt | 3,543 |
| | 3,540 |
| | — |
| | 3,540 |
| | — |
| Credit-related financial instruments | (88 | ) | | (88 | ) | | — |
| | — |
| | (88 | ) |
| | (a) | Included $64 million and $128 million of impaired loans recorded at fair value on a nonrecurring basis at December 31, 2014 and 2013, respectively. |
| | (b) | Included $2 million of nonmarketable equity securities recorded at fair value on a nonrecurring basis at both December 31, 2014 and 2013. |
|