Stockholders' Equity

9 Months Ended

Sep. 30, 2020


NOTE 9—STOCKHOLDERS’ EQUITY

Preferred Stock

The following table summarizes our preferred stock outstanding as of September 30, 2020 and December 31, 2019.

Table 9.1: Preferred Stock Outstanding(1)


			Redeemable by Issuer Beginning	Per Annum Dividend Rate	Dividend Frequency	Liquidation Preference per Share		Total Shares Outstanding as of September 30, 2020	Carrying Value (in millions)
Series	Description	Issuance Date							September 30, 2020		December 31, 2019
Series B(2)	6.000% Non-Cumulative	August 20, 2012	September 1, 2017	6.000%	Quarterly	$	1,000	0	$	0	$	853


Series E	Fixed-to-Floating Rate Non-Cumulative	May 14, 2015	June 1, 2020	5.550% through 5/31/2020; 3-mo. LIBOR + 380 bps thereafter	Semi-Annually through 5/31/2020; Quarterly thereafter	1,000		1,000,000	988		988
Series F	6.200% Non-Cumulative	August 24, 2015	December 1, 2020	6.200	Quarterly	1,000		500,000	484		484
Series G	5.200% Non-Cumulative	July 29, 2016	December 1, 2021	5.200	Quarterly	1,000		600,000	583		583
Series H	6.000% Non-Cumulative	November 29, 2016	December 1, 2021	6.000	Quarterly	1,000		500,000	483		483
Series I	5.000% Non-Cumulative	September 11, 2019	December 1, 2024	5.000	Quarterly	1,000		1,500,000	1,462		1,462
Series J	4.800% Non-Cumulative	January 31, 2020	June 1, 2025	4.800	Quarterly	1,000		1,250,000	1,209		0
Series K	4.625% Non-Cumulative	September 17, 2020	December 1, 2025	4.625	Quarterly	1,000		125,000	121		0
Total									$	5,330	$	4,853

__________

(1)Except for Series E, ownership is held in the form of depositary shares, each representing a 1/40th interest in a share of fixed-rate non-cumulative perpetual preferred stock.

(2)On March 2, 2020, we redeemed all outstanding shares of our preferred stock Series B.

Accumulated Other Comprehensive Income

Accumulated other comprehensive income primarily consists of accumulated net unrealized gains associated with securities available for sale, changes in fair value of derivatives in hedging relationships, and foreign currency translation adjustments.

The following table includes the AOCI impacts from the adoption of the CECL standard and the changes in AOCI by component for the three and nine months ended September 30, 2020 and 2019.

Table 9.2: Accumulated Other Comprehensive Income (Loss)


	Three Months Ended September 30, 2020
(Dollars in millions)	Securities Available for Sale		Hedging Relationships(1)		Foreign Currency Translation Adjustments(2)		Other		Total








AOCI as of June 30, 2020	$	2,373	$	1,785	$	(151)	$	(26)	$	3,981
Other comprehensive income (loss) before reclassifications	20		(95)		28		0		(47)
Amounts reclassified from AOCI into earnings	(19)		(80)		0		(2)		(101)
Other comprehensive income (loss), net of tax	1		(175)		28		(2)		(148)
AOCI as of September 30, 2020	$	2,374	$	1,610	$	(123)	$	(28)	$	3,833


	Nine Months Ended September 30, 2020
(Dollars in millions)	Securities Available for Sale		Hedging Relationships(1)		Foreign Currency Translation Adjustments(2)		Other		Total










AOCI as of December 31, 2019	$	935	$	354	$	(107)	$	(26)	$	1,156
Cumulative effects from the adoption of the CECL standard	(8)		0		0		0		(8)
Other comprehensive income (loss) before reclassifications	1,466		1,540		(16)		0		2,990
Amounts reclassified from AOCI into earnings	(19)		(284)		0		(2)		(305)
Other comprehensive income (loss), net of tax	1,447		1,256		(16)		(2)		2,685

AOCI as of September 30, 2020	$	2,374	$	1,610	$	(123)	$	(28)	$	3,833


	Three Months Ended September 30, 2019
(Dollars in millions)	Securities Available for Sale		Hedging Relationships(1)		Foreign Currency Translation Adjustments(2)		Securities Held to Maturity		Other		Total
AOCI as of June 30, 2019	$	125	$	396	$	(132)	$	(178)	$	(41)	$	170
Other comprehensive income (loss) before reclassifications	103		218		(12)		0		0		309
Amounts reclassified from AOCI into earnings	(3)		(29)		0		8		(2)		(26)
Other comprehensive income (loss), net of tax	100		189		(12)		8		(2)		283
AOCI as of September 30, 2019	$	225	$	585	$	(144)	$	(170)	$	(43)	$	453


	Nine Months Ended September 30, 2019
(Dollars in millions)	Securities Available for Sale		Hedging Relationships(1)		Foreign Currency Translation Adjustments(2)		Securities Held to Maturity		Other		Total
AOCI as of December 31, 2018	$	(439)	$	(418)	$	(177)	$	(190)	$	(39)	$	(1,263)
Other comprehensive income (loss) before reclassifications	697		735		33		0		(1)		1,464
Amounts reclassified from AOCI into earnings	(33)		268		0		20		(3)		252
Other comprehensive income (loss), net of tax	664		1,003		33		20		(4)		1,716
AOCI as of September 30, 2019	$	225	$	585	$	(144)	$	(170)	$	(43)	$	453

__________

(1)Includes amounts related to cash flow hedges as well as the excluded component of cross-currency swaps designated as fair value hedges.

(2)Includes other comprehensive loss of $75 million and gain of $59 million for the three and nine months ended September 30, 2020, respectively, and other comprehensive gains of $67 million and $86 million for the three and nine months ended September 30, 2019, respectively, from hedging instruments designated as net investment hedges.

The following table presents amounts reclassified from each component of AOCI to our consolidated statements of income for the three and nine months ended September 30, 2020 and 2019.

Table 9.3: Reclassifications from AOCI


(Dollars in millions)		Three Months Ended September 30,				Nine Months Ended September 30,
AOCI Components	Affected Income Statement Line Item	2020		2019		2020		2019
Securities available for sale:
	Non-interest income	$	25	$	5	$	25	$	44
	Income tax provision (benefit)	6		2		6		11
	Net income	19		3		19		33
Hedging relationships:
Interest rate contracts:	Interest income	179		(44)		347		(166)
Foreign exchange contracts:	Interest income	1		12		10		37
	Interest expense	(1)		(1)		(3)		(1)
	Non-interest income	(73)		71		20		(224)
	Income from continuing operations before income taxes	106		38		374		(354)
	Income tax provision (benefit)	26		9		90		(86)
	Net income	80		29		284		(268)
Securities held to maturity:(1)
	Interest income	0		(10)		0		(26)
	Income tax provision (benefit)	0		(2)		0		(6)
	Net income	0		(8)		0		(20)
Other:
	Non-interest income and non-interest expense	2		3		2		4
	Income tax provision (benefit)	0		1		0		1
	Net income	2		2		2		3
Total reclassifications		$	101	$	26	$	305	$	(252)

__________

(1)On December 31, 2019, we transferred our entire portfolio of held to maturity securities to available for sale.

The table below summarizes other comprehensive income (loss) activity and the related tax impact for the three and nine months ended September 30, 2020 and 2019.

Table 9.4: Other Comprehensive Income (Loss)


	Three Months Ended September 30,
	2020						2019
(Dollars in millions)	Before Tax		Provision (Benefit)		After Tax		Before Tax		Provision (Benefit)		After Tax
Other comprehensive income (loss):
Net unrealized gains on securities available for sale	$	1	$	0	$	1	$	132	$	32	$	100
Net unrealized gains (losses) on hedging relationships	(231)		(56)		(175)		249		60		189
Foreign currency translation adjustments(1)	4		(24)		28		9		21		(12)
Net changes in securities held to maturity	0		0		0		10		2		8
Other	(2)		0		(2)		(2)		0		(2)
Other comprehensive income (loss)	$	(228)	$	(80)	$	(148)	$	398	$	115	$	283


	Nine Months Ended September 30,
	2020						2019
(Dollars in millions)	Before Tax		Provision (Benefit)		After Tax		Before Tax		Provision (Benefit)		After Tax
Other comprehensive income:
Net unrealized gains on securities available for sale	$	1,903	$	456	$	1,447	$	874	$	210	$	664
Net unrealized gains on hedging relationships	1,653		397		1,256		1,322		319		1,003
Foreign currency translation adjustments(1)	3		19		(16)		61		28		33
Net changes in securities held to maturity	0		0		0		26		6		20
Other	(2)		0		(2)		(5)		(1)		(4)
Other comprehensive income	$	3,557	$	872	$	2,685	$	2,278	$	562	$	1,716

__________

(1)Includes the impact of hedging instruments designated as net investment hedges.