Branch Assets and Liabilities Held for Sale

6 Months Ended

Jun. 30, 2012

Discontinued Operations, Branch Assets and Liabilities Held for Sale and Exit from Taxpayer Financial Services Loan Program [Abstract]

Branch Assets and Liabilities Held for Sale

3.    Branch Assets and Liabilities Held for Sale

On July 31, 2011, we announced that we had reached an agreement with First Niagara Bank, N.A. (“First Niagara”) to sell 195 non-strategic retail branches, including certain loans, deposits and related branch premises, primarily located in upstate New York. The agreement includes the transfer of certain deposits and loans, as well as related branch premises, for a premium of 6.67 percent of the deposits, subject to certain agreed-upon adjustments. On May 18, 2012, we completed the sale of 138 branches to First Niagara and recognized an after-tax gain, net of allocated non-deductible goodwill, of $71 million. Since the premium received of $886 million was calculated based on the total amount of outstanding deposit balances for all branches being sold, a pro-rata portion of the premium related to the deposit balances associated with the branches that were not sold in the amount of $209 million was deferred as unearned revenue and will be recognized in future periods as the remaining branches and related deposit amounts are sold. Included in the sale of the 138 non-strategic retail branches were approximately $10.3 billion in deposits and $1.6 billion in loans. Branch premises were sold for fair value and loans and other transferred assets were sold at their book values.

We subsequently completed the sale of an additional 53 branches during July 2012 and expect to recognize an additional after-tax gain, net of allocated non-deductible goodwill, of approximately $26 million in the third quarter. We currently anticipate we will complete the sale of the remaining 4 non-strategic retail branches during August 2012 which will not have a significant financial impact on our operations.

The following summarizes the assets and liabilities classified as held for sale at June 30, 2012 and December 31, 2011 in our consolidated balance sheet related to the announced agreement to sell certain retail branches.

	June 30, 2012		December 31, 2011
	(in millions)
Loans held for sale (1)	$	531	$	2,495
Other branch assets held for sale:
Properties and equipment, net		14		42
Other assets		9		-
Goodwill allocated to retail branch disposal group		94		398
Total other branch assets held for sale		117		440
Total branch assets held for sale	$	648	$	2,935
Deposits held for sale	$	3,633	$	15,144
Other branch liabilities held for sale		2		11
Total branch liabilities held for sale	$	3,635	$	15,155

⁽¹⁾  Loans held for sale includes $115 million of commercial loans, $279 million of residential mortgages, $94 million of credit card loans and $43 million in other consumer loans at June 30, 2012. Loans held for sale includes $521 million of commercial loans, $1.4 billion of residential mortgages, $416 million of credit card loans and $161 million in other consumer loans at December 31, 2011.