FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2014

Difference between aggregate fair value and aggregate unpaid principal balance for residential mortgage loans held-for-sale

The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for residential mortgage loans held for sale measured at fair value:

September 30, 2014

December 31, 2013

(in millions)

Aggregate Fair Value

Aggregate Unpaid Principal

Aggregate Fair Value Less Aggregate Unpaid Principal

Aggregate Fair Value

Aggregate Unpaid Principal

Aggregate Fair Value Less Aggregate Unpaid Principal

Residential mortgage loans held for sale, at fair value

$189

$183

$176

$173

Difference between aggregate fair value and aggregate unpaid principal balance for commercial mortgage loans held-for-sale

The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for commercial and commercial real estate loans held for sale measured at fair value:



	September 30, 2014
(in millions)	Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal
Commercial and commercial real estate loans held for sale, at fair value		$16		$16		$—

Assets and liabilities measured on recurring basis

The following table presents assets and liabilities measured at fair value, including gross derivative assets and liabilities on a recurring basis at September 30, 2014:



(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$18,616		$—		$18,616		$—
State and political subdivisions	10		—		10		—
Equity securities	25		8		17		—
U.S. Treasury	15		15		—		—
Total securities available for sale	18,666		23		18,643		—
Residential loans held for sale	189		—		189		—
Commercial and commercial real estate loans held for sale	16		—		16		—
Total loans held for sale	205		—		205		—
Derivative assets:
Interest rate swaps	563		—		563		—
Foreign exchange contracts	137		—		137		—
Other contracts	6		—		6		—
Total derivative assets	706		—		706		—
Venture capital investments	6		—		—		6
Total assets		$19,583		$23		$19,554		$6
Derivative liabilities:
Interest rate swaps		$655		$—		$655		$—
Foreign exchange contracts	132		—		132		—
Other contracts	10		—		10		—
Total derivative liabilities	797		—		797		—
Total liabilities		$797		$—		$797		$—

The following table presents assets and liabilities measured at fair value including gross derivative assets and liabilities on a recurring basis at December 31, 2013:



(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$15,945		$—		$15,945		$—
State and political subdivisions	10		—		10		—
Equity securities	25		8		17		—
U.S. Treasury	15		15		—		—
Total securities available for sale	15,995		23		15,972		—
Residential loans held for sale	176		—		176		—
Derivative assets:
Interest rate swaps	677		—		677		—
Foreign exchange contracts	94		—		94		—
Other contracts	7		—		7		—
Total derivative assets	778		—		778		—
Venture capital investments	5		—		—		5
Total assets		$16,954		$23		$16,926		$5
Derivative liabilities:
Interest rate swaps		$970		$—		$970		$—
Foreign exchange contracts	87		—		87		—
Other contracts	10		—		10		—
Total derivative liabilities	1,067		—		1,067		—
Total liabilities		$1,067		$—		$1,067		$—

The changes in Level 3 assets measured at fair value on a recurring basis are summarized as follows:



	Nine Months Ended September 30,
(in millions)	2014		2013
Balance as of January 1,		$5		$6
Purchases, issuances, sales and settlements:
Sales	—		(4		)
Settlements	—		3
Other net gains	1		—
Balance as of period end		$6		$5
Net unrealized gain (loss) included in net income for the period relating to assets held at period end		$—		$—

Gains (losses) on assets and liabilities measured on a nonrecurring basis included in earnings

The following table presents gains (losses) on assets and liabilities measured at fair value on a nonrecurring basis and recorded in earnings:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2014			2013			2014			2013
Impaired collateral-dependent loans⁽¹⁾		($5	)		($56	)		($99	)		($114	)
MSRs⁽²⁾	5			3			8			42
Foreclosed assets⁽³⁾	1			1			2			3
Goodwill impairment⁽⁴⁾	—			—			—			(4,435		)

Fair value of assets and liabilities measured on a nonrecurring basis

The following tables present assets and liabilities measured at fair value on a nonrecurring basis:



	September 30, 2014
(in millions)	Total		Level 1		Level 2		Level 3
Impaired collateral-dependent loans⁽¹⁾		$103		$—		$103		$—
MSRs⁽²⁾	174		—		—		174
Foreclosed assets⁽³⁾	40		—		40		—
Goodwill⁽⁴⁾	6,876		—		—		6,876



	December 31, 2013
(in millions)	Total		Level 1		Level 2		Level 3
Impaired collateral-dependent loans⁽¹⁾		$74		$—		$74		$—
MSRs⁽²⁾	185		—		—		185
Foreclosed assets⁽³⁾	49		—		49		—
Goodwill⁽⁴⁾	6,876		—		—		6,876

⁽¹⁾During the three and nine months ended September 30, 2014, the Company recorded impairment charges of $5 million and $99 million, respectively. The impairment charges included current charges from $144 million of collateral-dependent loans which have been written down to $103 million as of September 30, 2014 and other collateral-dependent loans that have been sold or refinanced and are no longer on the Company's balance sheet as of September 30,2014. During the three and nine months ended September 30, 2013, the Company recorded impairment charges of $56 million and $114 million, respectively. The impairment charges include current charges from $209 million of collateral-dependent loans which have been written down to $113 million as of September 30, 2013 and other collateral-dependent loans that have been sold or refinanced and are no longer on the Company's balance sheet as of September 30, 2013.

⁽²⁾In the first nine months of 2014, MSRs totaling $208 million were evaluated for impairment and written down to $174 million, resulting in an impairment recapture of $8 million and a total cumulative valuation allowance of $15 million. In the first nine months of 2013, MSRs totaling $215 million were evaluated for impairment and written down to $185 million, resulting in an impairment (charge) of $42 million and a total cumulative valuation allowance of $28 million.

⁽³⁾In the first nine months of 2014, foreclosed real estate accounted for at the lower of cost or fair value less costs to sell was written down to fair value of $40 million, resulting in impairment charges of $2 million. In the year ended 2013, foreclosed real estate accounted for at the lower of cost or fair value less costs to sell was written down to fair value of $49 million, resulting in an impairment charge of $4 million.

⁽⁴⁾In the year ended 2013, Goodwill totaling $11.3 billion was written down to its implied fair value of $6.9 billion, resulting in an impairment charge of $4.4 billion.

Assets and liabilities measured at fair value

The following table is a summary of fair value for financial instruments not recorded at fair value in the unaudited interim Consolidated Financial Statements. The carrying amounts in the following table are recorded in the Consolidated Balance Sheets under the indicated captions:



	September 30, 2014
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Loans and leases		$90,749		$91,227		$—		$—		$103		$103		$90,646		$91,124
Other loans held for sale	3		3		—		—		—		—		3		3
Securities held to maturity	5,289		5,278		—		—		5,289		5,278		—		—
Other investment securities	893		893		—		—		893		893		—		—
Financial Liabilities:
Deposits	93,463		93,791		—		—		93,463		93,791		—		—
Federal funds purchased and securities sold under agreements to repurchase	5,184		7,310		—		—		5,184		7,310		—		—
Other short-term borrowed funds	6,715		6,710		—		—		6,715		6,710		—		—
Long-term borrowed funds	2,062		2,060		—		—		2,062		2,060		—		—



	December 31, 2013
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Loans and leases		$85,859		$85,724		$—		$—		$74		$74		$85,785		$85,650
Other loans held for sale	1,078		1,078		—		—		—		—		1,078		1,078
Securities held to maturity	4,315		4,257		—		—		4,315		4,257		—		—
Other investment securities	935		935		—		—		935		935		—		—
Financial Liabilities:
Deposits	86,903		86,907		—		—		86,903		86,907		—		—
Deposits held for sale	5,277		5,277		—		—		5,277		5,277		—		—
Federal funds purchased and securities sold under agreements to repurchase	4,791		4,791		—		—		4,791		4,791		—		—
Other short-term borrowed funds	2,251		2,249		—		—		2,251		2,249		—		—
Long-term borrowed funds	1,405		1,404		—		—		1,405		1,404		—		—

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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