Acquisitions and Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2012

Components of Income (Loss) from Discontinued Operations, Net of Taxes, of 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 September 30,				Nine months ended September 30,
in millions	2012		2011		2012		2011
Net interest income	$	28	$	35	$	89	$	106
Provision for loan and lease losses		(2)		37		4		99
Net interest income (expense) after provision for loan and lease losses		30		(2)		85		7
Noninterest income		(21)		(16)		(41)		(37)
Noninterest expense	$	9		10		27		30
Income (loss) before income taxes		—		(28)		17		(60)
Income taxes		—		(10)		6		(22)
Income (loss) from discontinued operations, net of taxes (a)		—	$	(18)	$	11	$	(38)

(a) Includes after-tax charges of $13 million and $12 million for the three-month periods ended September 30, 2012 and 2011, respectively, and $39 million and $37 million for the nine-month periods ended September 30, 2012 and 2011, 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	September 30, 2012		December 31, 2011		September 30, 2011
Trust loans at fair value	$	2,513	$	2,726	$	2,829
Portfolio loans at fair value		71		76		75
Loans, net of unearned income of ($2), ($2) and $1		2,744		3,010		3,080
Less: Allowance for loan and lease losses		65		104		115
Net loans		5,263		5,708		5,869
Trust accrued income and other assets at fair value		29		34		31
Accrued income and other assets		68		87		101
Total assets	$	5,360	$	5,829	$	6,001
Trust accrued expense and other liabilities at fair value	$	25	$	28	$	28
Trust securities at fair value		2,310		2,522		2,623
Total liabilities	$	2,335	$	2,550	$	2,651

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 September 30, 2012:

September 30, 2012 dollars in millions	Fair Value of Level 3         Assets and Liabilities		Valuation Technique	Significant Unobservable Input	Range (Weighted-Average)
Trust loans and	$	2,584	Discounted cash flow	Prepayment speed		4.00 - 26.00% (10.22%)
portfolio loans				Expected credit losses		2.00 - 80.00% (52.34%)
accounted for at fair				Discount rate		2.60 - 7.30% (4.90%)
value				Expected defaults		8.00 - 21.50% (12.60%)
Trust securities		2,310	Discounted cash flow	Discount rate		1.80 - 6.50% (4.30%)

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 September 30, 2012. 

September 30, 2012 in millions	Contractual Amount		Fair Value
ASSETS
Portfolio loans	$	68	$	71
Trust loans		2,617		2,513
Trust other assets		29		29
LIABILITIES
Trust securities	$	2,665	$	2,310
Trust other liabilities		25		25

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 for the nine-month period ended September 30, 2012.

in millions	Portfolio Student Loans		Trust Student Loans		Trust Other Assets		Trust Securities		Trust Other Liabilities
Balance at December 31, 2011	$	76	$	2,726	$	34	$	2,522	$	28
Gains (losses) recognized in earnings (a)		—		59		—		103		—
Purchases		—		—		—		—		—
Sales		—		—		—		—		—
Issuances		—		—		—		—		—
Settlements		(5)		(272)		(5)		(315)		(3)
Balance at September 30, 2012	$	71	$	2,513	$	29	$	2,310	$	25

(a) Gains (losses) on the Trust Student Loans and Trust Securities were driven primarily by fair value adjustments.

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

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

	Three months ended September 30,				Nine months ended September 30,
in millions	2012		2011		2012		2011
Noninterest income		—		—		—	$	1
Noninterest expense		—		—	$	9		1
Income (loss) before income taxes		—		—		(9)		—
Income taxes		—	$	(1)		(3)		(1)
Income (loss) from discontinued operations, net of taxes		—	$	1	$	(6)	$	1

Components of Assets and Liabilities of Austin Capital Management

The discontinued assets of Austin included on the balance sheet are as follows; there were no discontinued liabilities at September 30, 2012, December 31, 2011, and September 30, 2011:

in millions	September 30, 2012		December 31, 2011		September 30, 2011
Cash and due from banks	$	21	$	31	$	31
Net loans		—		—		1
Total assets	$	21	$	31	$	32

Combined Results of Discontinued Operations

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

	Three months ended September 30,				Nine months ended September 30,
in millions	2012		2011		2012		2011
Net interest income	$	28	$	35	$	89	$	106
Provision for loan and lease losses		(2)		37		4		99
Net interest income (expense) after provision for loan and lease losses		30		(2)		85		7
Noninterest income		(21)		(16)		(41)		(36)
Noninterest expense	$	9		10		36		31
Income (loss) before income taxes		—		(28)		8		(60)
Income taxes		—		(11)		3		(23)
Income (loss) from discontinued operations, net of taxes (a)		—	$	(17)	$	5	$	(37)

(a) Includes after-tax charges of $13 million and $12 million for the three-month periods ended September 30, 2012 and 2011, respectively, and $39 million and $37 million for the nine-month periods ended September 30, 2012 and 2011, 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	September 30, 2012		December 31, 2011		September 30, 2011
Cash and due from banks	$	21	$	31	$	31
Trust loans at fair value		2,513		2,726		2,829
Portfolio loans at fair value		71		76		75
Loans, net of unearned income of ($2), ($2) and $1		2,744		3,010		3,081
Less: Allowance for loan and lease losses		65		104		115
Net loans		5,263		5,708		5,870
Trust accrued income and other assets at fair value		29		34		31
Accrued income and other assets		68		87		101
Total assets	$	5,381	$	5,860	$	6,033
Trust accrued expense and other liabilities at fair value	$	25	$	28	$	28
Trust securities at fair value		2,310		2,522		2,623
Total liabilities	$	2,335	$	2,550	$	2,651

Trust [Member]

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.

September 30, 2012 in millions	Level 1		Level 2		Level 3		Total
ASSETS MEASURED ON A RECURRING BASIS
Portfolio loans		—		—	$	71	$	71
Trust loans		—		—		2,513		2,513
Trust other assets		—		—		29		29
Total assets on a recurring basis at fair value		—		—	$	2,613	$	2,613
LIABILITIES MEASURED ON A RECURRING BASIS
Trust securities		—		—	$	2,310	$	2,310
Trust other liabilities		—		—		25		25
Total liabilities on a recurring basis at fair value		—		—	$	2,335	$	2,335