XML 66 R38.htm IDEA: XBRL DOCUMENT

Acquisitions and Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2013

Components of Income (Loss) from Discontinued Operations, Net of Taxes for Education Lending Business

The components of “income (loss) from discontinued operations, net of taxes” for the education lending business are as follows:


	Three months ended June 30,				Six months ended June 30,
in millions	2013		2012		2013		2012

Net interest income	$	26	$	30	$	54	$	61
Provision for loan and lease losses		(2)		2		4		6

Net interest income (expense) after provision for loan and lease losses		28		28		50		55
Noninterest income		(18)		(2)		(34)		(20)
Noninterest expense		7		9		14		18

Income (loss) before income taxes		3		17		2		17
Income taxes		2		6		1		6

Income (loss) from discontinued operations, net of taxes ^(a)	$	1	$	11	$	1	$	11

(a)

Includes after-tax charges of $11 million and $12 million for the three-month periods ended June 30, 2013 and 2012, and $21 and $26 million for the six-month periods ended June 30, 2013 and 2012, respectively, determined by applying a matched funds transfer pricing methodology to the liabilities assumed necessary to support the discontinued operations.

Components of Assets and Liabilities of Education Lending Business

The discontinued assets and liabilities of our education lending business included on the balance sheet are as follows:


in millions	June 30, 2013		December 31, 2012		June 30, 2012

Trust loans at fair value	$	2,317	$	2,369	$	2,580
Portfolio loans at fair value		151		157		73
Loans, net of unearned income of ($5), ($5) and ($2)		2,524		2,675		2,830
Less: Allowance for loan and lease losses		41		55		79

Net loans		4,951		5,146		5,404
Trust accrued income and other assets at fair value		24		26		31
Accrued income and other assets		52		60		76

Total assets	$	5,027	$	5,232	$	5,511


Trust accrued expense and other liabilities at fair value	$	21	$	22	$	28
Trust securities at fair value		2,118		2,159		2,373

Total liabilities	$	2,139	$	2,181	$	2,401

Quantitative Information about Level 3 Fair Value Measurements

The following table shows the significant unobservable inputs used to measure the fair value of the education loan securitization trust loans and securities and the portfolio loans accounted for at fair value as of June 30, 2013:

June 30, 2013
dollars in millions

Fair Value of Level 3
Assets and Liabilities

Valuation
Technique

Significant
Unobservable Input

Range
(Weighted-Average)

Trust loans and

2,468

Discounted cash flow

Prepayment speed

4.00 - 13.50% (6.16%)

portfolio loans

Loss severity

2.00 - 80.00% (52.29%)

accounted for at fair

Discount rate

1.90 - 4.20% (3.12%)

value

Default rate

8.13 - 22.00% (13.84%)

Trust securities

2,118

Discounted cash flow

Discount rate

1.10 - 3.70% (2.43%)

December 31, 2012
dollars in millions

Fair Value of Level 3

Assets and Liabilities

Valuation
Technique

Significant
Unobservable Input

Range

(Weighted-Average)

Trust loans and

2,526

Discounted cash flow

Prepayment speed

4.00 - 26.00% (10.02%)

portfolio loans

Loss severity

2.00 - 80.00% (52.30%)

accounted for at fair

Discount rate

2.40 - 6.60% (4.79%)

value

Default rate

8.13 - 21.50% (13.44%)

Trust securities

2,159

Discounted cash flow

Discount rate

1.50 - 6.10% (4.14%)

June 30, 2012
dollars in millions

Fair Value of Level 3

Assets and Liabilities

Valuation
Technique

Significant
Unobservable Input

Range

(Weighted-Average)

Trust loans and

2,653

Discounted cash flow

Prepayment speed

4.00 - 26.00% (10.22%)

portfolio loans

Loss severity

2.00 - 80.00% (52.34%)

accounted for at fair

Discount rate

3.00 - 8.10% (5.30%)

value

Default rate

8.00 - 20.64% (12.40%)

Trust securities

2,373

Discounted cash flow

Discount rate

2.10 - 6.90% (4.80%)

Consolidated Trusts' Assets and Liabilities at Fair Value and Contractual Values

The following table shows the consolidated trusts’ assets and liabilities at fair value and the portfolio loans at fair value and their related contractual values as of June 30, 2013.


June 30, 2013 in millions	Contractual Amount		Fair Value

ASSETS
Portfolio loans	$	145	$	151
Trust loans		2,269		2,317
Trust other assets		24		24

LIABILITIES
Trust securities	$	2,288	$	2,118
Trust other liabilities		21		21

Consolidated Assets and Liabilities at Fair Value on Recurring Basis

The following table presents the assets and liabilities of the trusts that were consolidated and are measured at fair value, as well as the portfolio loans that are measured at fair value on a recurring basis.


June 30, 2013 in millions	Level 1		Level 2		Level 3		Total

ASSETS MEASURED ON A RECURRING BASIS
Portfolio loans		—		—	$	151	$	151
Trust loans		—		—		2,317		2,317
Trust other assets		—		—		24		24

Total assets on a recurring basis at fair value		—		—	$	2,492	$	2,492


LIABILITIES MEASURED ON A RECURRING BASIS
Trust securities		—		—	$	2,118	$	2,118
Trust other liabilities		—		—		21		21

Total liabilities on a recurring basis at fair value		—		—	$	2,139	$	2,139

Change in Fair Values of Level 3 Consolidated Education Loan Securitization Trusts and Portfolio Loans

The following table shows the change in the fair values of the Level 3 consolidated education loan securitization trusts and portfolio loans for the six-month period ended June 30, 2013.


in millions	Portfolio Student Loans		Trust Student Loans		Trust Other Assets		Trust Securities		Trust Other Liabilities

Balance at December 31, 2012	$	157	$	2,369	$	26	$	2,159	$	22
Gains (losses) recognized in earnings ^(a)		—		111		—		144		—
Purchases		—		—		—		—		—
Sales		—		—		—		—		—
Issuances		—		—		—		—		—
Settlements		(6)		(163)		(2)		(185)		(1)

Balance at June 30, 2013	$	151	$	2,317	$	24	$	2,118	$	21


Balance at March 31, 2013	$	154	$	2,333	$	25	$	2,126	$	25
Gains (losses) recognized in earnings ^(a)		—		68		—		85		—
Purchases		—		—		—		—		—
Sales		—		—		—		—		—
Issuances		—		—		—		—		—
Settlements		(3)		(84)		(1)		(93)		(4)

Balance at June 30, 2013	$	151	$	2,317	$	24	$	2,118	$	21

(a)	Gains (losses) were driven primarily by fair value adjustments.

Components of Income (Loss) from Discontinued Operations, Net of Taxes

The components of “income (loss) from discontinued operations, net of taxes” for Victory are as follows:


	Three months ended June 30,				Six months ended June 30,
in millions	2013		2012		2013		2012

Noninterest income	$	28	$	28	$	57	$	58
Noninterest expense		22		21		43		45

Income (loss) before income taxes		6		7		14		13
Income taxes		2		3		5		5

Income (loss) from discontinued operations, net of taxes	$	4	$	4	$	9	$	8

The components of “income (loss) from discontinued operations, net of taxes” for Austin are as follows:


	Three months ended June 30,				Six months ended June 30,
in millions	2013		2012		2013		2012

Noninterest expense		—	$	1		—	$	9

Income (loss) before income taxes		—		(1)		—		(9)
Income taxes		—		—	$	2		(3)

Income (loss) from discontinued operations, net of taxes		—	$	(1)	$	(2)	$	(6)

Components of Assets and Liabilities from Discontinued Operations

The discontinued assets and liabilities of Victory that are classified as held for sale and measured at the lower of carrying value or fair value less cost to sell, included on the balance sheet and the related assets under management are as follows:


in millions	June 30, 2013		December 31, 2012		June 30, 2012

Cash and due from banks	$	1	$	1	$	1
Accrued income and other assets		35		27		11

Total assets	$	36	$	28	$	12


Accrued expense and other liabilities	$	30	$	38	$	27

Total liabilities	$	30	$	38	$	27

The discontinued assets and liabilities of Austin included on the balance sheet are as follows:


in millions	June 30, 2013		December 31, 2012		June 30, 2012

Cash and due from banks	$	21	$	22	$	22

Total assets	$	21	$	22	$	22


Accrued expense and other liabilities		—	$	1		—

Total liabilities		—	$	1		—

Combined Results of Discontinued Operations

Combined discontinued operations. The combined results of the discontinued operations are as follows:


	Three months ended June 30,				Six months ended June 30,
in millions	2013		2012		2013		2012

Net interest income	$	26	$	30	$	54	$	61
Provision for loan and lease losses		(2)		2		4		6

Net interest income (expense) after provision for loan and lease losses		28		28		50		55
Noninterest income		10		26		23		38
Noninterest expense		29		31		57		72

Income (loss) before income taxes		9		23		16		21
Income taxes		4		9		8		8

Income (loss) from discontinued operations, net of taxes ^(a)	$	5	$	14	$	8	$	13

(a)

Includes after-tax charges of $11 million and $12 million for the three-month periods ended June 30, 2013 and 2012, respectively, and $21 million and $26 million for the six-month periods ended June 30, 2013 and 2012, respectively, determined by applying a matched funds transfer pricing methodology to the liabilities assumed necessary to support the discontinued operations.

Combined Assets and Liabilities of Discontinued Operations

The combined assets and liabilities of the discontinued operations are as follows:


in millions	June 30, 2013		December 31, 2012		June 30, 2012

Cash and due from banks	$	22	$	23	$	23
Trust loans at fair value		2,317		2,369		2,580
Portfolio loans at fair value		151		157		73
Loans, net of unearned income of ($5), ($5), and ($2)		2,524		2,675		2,830
Less: Allowance for loan and lease losses		41		55		79

Net loans		4,951		5,146		5,404
Trust accrued income and other assets at fair value		24		26		31
Accrued income and other assets		87		87		87

Total assets	$	5,084	$	5,282	$	5,545


Trust accrued expense and other liabilities at fair value	$	21	$	22	$	28
Accrued expense and other liabilities		30		39		27
Trust securities at fair value		2,118		2,159		2,373

Total liabilities	$	2,169	$	2,220	$	2,428