Large accelerated filer þ

Accelerated filer ¨

Smaller reporting company¨

Emerging growth company ¨

ABS — Asset-backed securities.

ACH — Automated clearing house.

AFS — Available for sale.

AIP — Annual Incentive Plan.

ALCO — Asset/Liability Committee.

ALM — Asset/Liability Management.

ALLL — Allowance for loan and lease losses.

AOCI — Accumulated other comprehensive income.

APIC — Additional paid-in capital.

ASC — Accounting Standards Codification.

ASU — Accounting Standards Update.

ATE — Additional termination event.

ATM — Automated teller machine.

Bank — SunTrust Bank.

Basel III — the Third Basel Accord, a comprehensive set of reform measures developed by the BCBS.

BCBS — Basel Committee on Banking Supervision.

BHC — Bank holding company.

Board — The Company’s Board of Directors.

bps — Basis points.

BRC — Board Risk Committee.

CCAR — Comprehensive Capital Analysis and Review.

CCB — Capital conservation buffer.

CD — Certificate of deposit.

CDR — Conditional default rate.

CDS — Credit default swaps.

CECL — Current expected credit loss.

CEO — Chief Executive Officer.

CET1 — Common Equity Tier 1 Capital.

CFO — Chief Financial Officer.

CIB — Corporate and investment banking.

C&I — Commercial and industrial.

Class A shares — Visa Inc. Class A common stock.

Class B shares — Visa Inc. Class B common stock.

CLO — Collateralized loan obligation.

CME — Chicago Mercantile Exchange.

Company — SunTrust Banks, Inc.

CP — Commercial paper.

CPR — Conditional prepayment rate.

CRE — Commercial real estate.

~~CRO~~ ~~— Chief Risk Officer.~~

CSA — Credit support annex.

~~CVA~~ ~~— Credit valuation adjustment.~~

DDA — Demand deposit account.

DOJ — Department of Justice.

DTA — Deferred tax asset.

DVA — Debit valuation adjustment.

EBPC — Enterprise Business Practices Committee.

EPS — Earnings per share.

ER — Enterprise Risk.

ERISA — Employee Retirement Income Security Act of 1974.

Exchange Act — Securities Exchange Act of 1934.

Fannie Mae — Federal National Mortgage Association.

Freddie Mac — Federal Home Loan Mortgage Corporation.

FDIC — Federal Deposit Insurance Corporation.

Federal Reserve — Federal Reserve System.

Fed funds — Federal funds.

FHA — Federal Housing Administration.

FHLB — Federal Home Loan Bank.

FICO — Fair Isaac Corporation.

Fitch — Fitch Ratings Ltd.

FRB — Federal Reserve Board.

FTE — Fully taxable-equivalent.

FVO — Fair value option.

GenSpring — GenSpring Family Offices, LLC.

Ginnie Mae — Government National Mortgage Association.

GSE — Government-sponsored enterprise.

HAMP — Home Affordable Modification Program.

HUD — U.S. Department of Housing and Urban Development.

IPO — Initial public offering.

IRLC — Interest rate lock commitment.

ISDA — International Swaps and Derivatives Association.

LCR — Liquidity coverage ratio.

LGD — Loss given default.

LHFI — Loans held for investment.

LHFS — Loans held for sale.

LIBOR — London InterBank Offered Rate.

LOCOM — Lower of cost or market.

LTI — Long-term incentive.

LTV— Loan to value.

MasterCard — MasterCard International.

MBS — Mortgage-backed securities.

MD&A — Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Moody’s — Moody’s Investors Service.

MRA — Master Repurchase Agreement.

MRM — Market Risk Management.

MRMG — Model Risk Management Group.

MSR — Mortgage servicing right.

MVE — Market value of equity.

NCF — National Commerce Financial Corporation.

NOW — Negotiable order of withdrawal account.

NPA — Nonperforming asset.

NPL — Nonperforming loan.

NPR — Notice of proposed rulemaking.

NSFR — Net stable funding ratio.

OCC — Office of the Comptroller of the Currency.

OCI — Other comprehensive income.

OREO — Other real estate owned.

OTC — Over-the-counter.

OTTI — Other-than-temporary impairment.

PAC — Premium Assignment Corporation.

Parent Company — SunTrust Banks, Inc. (the parent Company of SunTrust Bank and other subsidiaries).

PD — Probability of default.

Pillar — substantially all of the assets of the operating subsidiaries of Pillar Financial, LLC.

PPNR — Pre-provision net revenue.

PWM — Private Wealth Management.

REIT — Real estate investment trust.

ROA — Return on average total assets.

ROE — Return on average common shareholders’ equity.

ROTCE — Return on average tangible common shareholders' equity.

RSU — Restricted stock unit.

RWA — Risk-weighted assets.

S&P — Standard and Poor’s.

SBA — Small Business Administration.

SEC — U.S. Securities and Exchange Commission.

STAS — SunTrust Advisory Services, Inc.

STCC — SunTrust Community Capital, LLC.

STIS — SunTrust Investment Services, Inc.

STM — SunTrust Mortgage, Inc.

STRH — SunTrust Robinson Humphrey, Inc.

SunTrust — SunTrust Banks, Inc.

The unaudited Consolidated Financial Statements have been prepared in accordance with U.S. GAAP ~~for~~to present interim financial statement information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete, consolidated financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments ~~which~~that are necessary for a fair presentation of the results of operations in these financial statements, have been made.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes; actual results could vary from ~~those~~these estimates. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

These interim Consolidated Financial Statements should be read in conjunction with the Company’s ~~2015~~2016 Annual Report on Form 10-K. ~~There~~Other than the recently issued accounting pronouncements discussed in this section, there have been no significant changes to the

Company’s accounting policies, as disclosed in the ~~2015~~2016 Annual Report on Form ~~10-K.~~10-K, that could have a material effect on the Company's financial statements.

The Company evaluated events that occurred ~~subsequent to~~between September 30, ~~2016,~~2017 and the date the accompanying financial statements were issued, and there were no material events, other than those already discussed in this Form 10-Q, that would require recognition in the Company's Consolidated Financial Statements or disclosure in the accompanying ~~Notes for the three and nine months ended September 30, 2016, except as follows:~~

~~In October of 2016, the Company announced that it signed a definitive agreement to acquire substantially all of the assets of the operating subsidiaries of~~ ~~Pillar~~ ~~Financial, LLC.~~ ~~Pillar~~ is a multi-family agency lending and servicing company with an originate-to-distribute focus that holds licenses with Fannie Mae, Freddie Mac, and the FHA. This acquisition is expected to close in late 2016 or early 2017, subject to certain agency approvals and other closing conditions, and will be part of the Company's Wholesale Banking business segment.Notes.

For these securities sold under agreements to repurchase, the Company would be obligated to provide additional collateral in the event of a significant decline in fair value of the collateral pledged. This risk is managed by monitoring the liquidity and credit quality of the collateral, as well as the maturity profile of the transactions.

Netting of Securities - Repurchase and Resell Agreements

The Company has various financial assets and financial liabilities that are subject to enforceable master netting agreements or similar agreements. The Company's derivatives that are subject to enforceable master netting agreements or similar agreements are discussed in Note 13, "Derivative Financial Instruments." The following table presents the

Company's securities borrowed or purchased under agreements to resell and securities sold under agreements to repurchase that

are subject to MRAs. Generally, MRAs require collateral to exceed the asset or liability recognized on the balance sheet. Transactions subject to these agreements are treated as collateralized financings, and those with a single counterparty are permitted to be presented net on the Company's Consolidated Balance Sheets, provided certain criteria are met that permit balance sheet netting. At September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, there were no such transactions subject to legally enforceable MRAs that were eligible for balance sheet netting.

~~Financial instrument~~The following table includes the amount of collateral ~~received~~pledged or ~~pledged~~received related to exposures subject to ~~legally~~ enforceable ~~MRAs~~MRAs. While these agreements are ~~not netted on~~typically over-collateralized, the ~~Consolidated Balance Sheets, but are~~amount of collateral presented in ~~the following~~this table ~~as a reduction~~is limited to the ~~net~~ amount ~~reflected on the Consolidated Balance Sheets to derive the held/pledged financial instruments. The collateral amounts held/pledged are limited for presentation purposes to~~of the related recognized ~~asset/~~asset or liability ~~balance~~ for each ~~counterparty, and accordingly, do not include excess collateral received/pledged.~~counterparty.

Various trading and derivative instruments are used as part of the Company’s overall balance sheet management strategies and to support client requirements executed through the Bank and/or STRH, ~~the Company's~~a broker/dealer ~~subsidiary.~~subsidiary of the Company. The Company manages the potential market volatility associated with trading instruments ~~with~~by using appropriate risk management strategies. The size, volume, and nature of the trading products and derivative instruments can vary based on economic conditions as well as client-specific and Company-specific asset or liability positions.

Product offerings to clients include debt securities, loans traded in the secondary market, equity securities, derivative contracts, and other similar financial instruments. Other ~~trading-related~~trading-

related activities include acting as a

market maker for certain debt and equity security transactions, derivative instrument transactions, and foreign exchange transactions. The Company also uses derivatives to manage its interest rate and market risk from non-trading activities. The Company has policies and procedures to manage market risk associated with client trading and non-trading activities, and assumes a limited degree of market risk by managing the size and nature of its exposure. For valuation assumptions and additional information related to the Company's trading products and derivative instruments, see Note 13, “Derivative Financial Instruments,” and the “Trading Assets and Derivative Instruments and Securities Available for Sale” section of Note 14, “Fair Value Election and Measurement.”

The Company held certain investment securities AFS where amortized cost exceeded fair value, resulting in unrealized loss positions. Market changes in interest rates and credit spreads may result in temporary unrealized losses as the market prices of securities fluctuate. At September 30, ~~2016,~~2017, the Company did not intend to sell these securities nor was it more-likely-than-not

that the Company would be required to sell these securities before their anticipated recovery or maturity. The Company reviewed its portfolio for OTTI in accordance with the accounting policies described in Note 1, "Significant Accounting Policies," ofto the Company's ~~2015~~2016 Annual Report on Form 10-K.

At September 30, ~~2016,~~2017, temporarily impaired securities AFS that have been in an unrealized loss position for twelve months or longer included agency MBS, U.S. Treasury securities, municipal securities, non-agency commercial MBS, federal

agency securities, one ABS collateralized by 2004 vintage home equity loans, and one equity security. The Company continues to receive contractual distributions on the temporarily impaired ABS ~~continues~~and dividends on the equity security. Both of these

securities are evaluated quarterly for ~~credit impairment.~~OTTI. Unrealized losses on the remaining temporarily impaired securities were due to market interest rates being higher than the securities' stated coupon rates. Unrealized losses on securities AFS that relate to factors other than credit are recorded in AOCI, net of tax.

Realized Gains and Losses and Other-Than-Temporarily Impaired Securities AFS

Net securities gains/(losses) are comprised of gross realized gains, gross realized losses, and OTTI credit losses recognized in earnings. For both the three and nine months ended September 30, 2017, gross realized gains and gross realized losses were immaterial and there were no OTTI credit losses recognized in earnings. For the three months ended September 30, 2016, no gross realized gains were ~~recognized. For~~recognized and for the nine months ended September 30, 2016, gross realized gains were $4 million. For both the three and nine months ended September 30, 2016, gross realized losses were immaterial and there were no OTTI credit losses recognized in earnings. For the three and nine months ended September 30, 2015, gross realized gains were $11 million and $25 million, respectively. Gross realized losses of $3 million were recognized for both the three and nine months ended September 30, 2015, and OTTI losses recognized in earnings were immaterial for both periods.

Securities AFS in an unrealized loss position are evaluated quarterly for other-than-temporary credit impairment, which is determined using cash flow analyses that take into account security specific collateral and transaction structure. Future expected credit losses are determined using various assumptions, the most significant of which include default rates, prepayment

rates, and loss severities. If, based on this analysis, a security is in an unrealized loss position and the Company does not expect

to recover the entire amortized cost basis of the security, the expected cash flows are then discounted at the security’s initial effective interest rate to arrive at a present value amount. Credit losses on the OTTI security are recognized in earnings and reflect the difference between the present value of cash flows expected to be collected and the amortized cost basis of the security. See Note 1, "Significant Accounting Policies," into the Company's ~~2015~~2016 Annual Report on Form 10-K for additional information regarding the Company's policy on securities AFS and related impairments.

The Company ~~continues~~seeks to reduce existing exposure on OTTI securities primarily through paydowns. In certain instances, the amount of credit losses recognized in earnings on a debt security exceeds the total unrealized losses on the security, which may result in unrealized gains relating to factors other than credit recorded in AOCI, net of tax.

During the three and nine months ended September 30, 2017 and 2016, there were no credit impairment losses recognized on securities AFS held at the end of ~~the~~each period. During the three and nine months ended September 30, 2015, credit impairment recognized on securities AFS still held at the end of the period was immaterial, all of which related to one private MBS with a fair value of approximately $22 million at September 30, 2015. The accumulated balance of OTTI credit losses recognized in earnings on securities AFS held at period end was $22 million at September 30, 2017 and $24 million at September 30, ~~2016 and $25 million at September 30, 2015.~~2016. Subsequent credit losses may be recorded on securities without a corresponding further decline in fair value when there has been a decline in expected cash flows.

Composition of Loan Portfolio


(Dollars in millions)	September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016
Commercial loans:
C&I		$68,298		$67,062
C&I ¹						$67,758		$69,213
CRE	5,056		6,236		5,238		4,996
Commercial construction	3,875		1,954		3,964		4,015
Total commercial loans	77,229		75,252		76,960		78,224
Residential loans:
Residential mortgages - guaranteed	521		629		497		537
Residential mortgages - nonguaranteed ¹	26,306		24,744
Residential mortgages - nonguaranteed ²					27,041		26,137
Residential home equity products	12,178		13,171		10,865		11,912
Residential construction	393		384		327		404
Total residential loans	39,398		38,928		38,730		38,990
Consumer loans:
Guaranteed student	5,844		4,922		6,559		6,167
Other direct	7,358		6,127		8,597		7,771
Indirect	10,434		10,127		11,952		10,736
Credit cards	1,269		1,086		1,466		1,410
Total consumer loans	24,905		22,262		28,574		26,084
LHFI		$141,532		$136,442		$144,264		$143,298
LHFS ²		$3,772		$1,838
LHFS ³						$2,835		$4,169

¹Includes ~~$234~~$3.5 billion and $3.7 billion of lease financing and $764 million and ~~$257~~$729 million of installment loans at September 30, 2017 and December 31, 2016, respectively.

² Includes $206 million and $222 million of LHFI measured at fair value at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

²³Includes ~~$3.0~~$2.3 billion and ~~$1.5~~$3.5 billion of LHFS measured at fair value at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

During the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, the Company transferred $91 million and $153 million ~~and $38 million in~~of LHFI to LHFS, and $6 million and $13 million ~~and $75 million in~~of LHFS to LHFI, respectively. In addition to sales of residential and commercial mortgage LHFS in the normal course of business, the Company sold $285 million and $1.2 billion ~~and $178 million in~~of loans and leases for a net ~~gains~~loss of $1 million and a net gain of $8 ~~million and $9~~ million during the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

During the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, the Company transferred $218 million and $315 million ~~and $1.7 billion in~~of LHFI to LHFS, and transferred $16 million and $23 million ~~and $726 million in~~of LHFS to LHFI, respectively. In addition to sales of residential and commercial mortgage LHFS in the normal course of business, the Company sold $513 million and $1.5 billion ~~and $2.0 billion in~~of loans and leases for an immaterial net ~~gains~~gain and a net gain of $6 ~~million and $22~~ million during the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

~~At both~~During the three months ended September 30, 2017 and 2016, the Company purchased $333 million and $506 million, respectively, of guaranteed student loans in the normal course of business. During the nine months ended September 30, 2017, the Company purchased $1.4 billion of guaranteed student loans and $99 million of consumer indirect loans, and during the nine months ended September 30, 2016, the Company purchased $1.6 billion of guaranteed student loans.

underwriting process, and refreshed FICO scores are obtained by the Company at least quarterly.

For government-guaranteed loans, the Company monitors the credit quality based primarily on delinquency status, as it is a more relevant indicator of credit quality due to the government guarantee. At September 30, ~~2016~~2017 and December 31, ~~2015, 28%~~2016, 32% and ~~31%~~29%, respectively, of the guaranteed residential loan

~~Notes to Consolidated Financial Statements (Unaudited), continued~~

portfolio was current with respect to payments. At September 30, ~~2016~~2017 and December 31, ~~2015, 77%~~2016, 76% and ~~78%~~75%, respectively, of the guaranteed student loan portfolio was current with respect

to payments. The Company's loss exposure on guaranteed residential and student loans is mitigated by the government guarantee.

LHFI by credit quality indicator are presented in the following tables:


	Commercial Loans												Commercial Loans
	C&I				CRE				Commercial Construction				C&I				CRE				Commercial Construction
(Dollars in millions)	September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Risk rating:
Pass		$65,800		$65,379		$4,688		$6,067		$3,749		$1,931		$65,768		$66,961		$4,933		$4,574		$3,882		$3,914
Criticized accruing	1,997		1,375		358		158		124		23		1,698		1,862		300		415		81		84
Criticized nonaccruing	501		308		10		11		2		—		292		390		5		7		1		17
Total		$68,298		$67,062		$5,056		$6,236		$3,875		$1,954		$67,758		$69,213		$5,238		$4,996		$3,964		$4,015

A loan is considered impaired when it is probable that the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the agreement. Commercial nonaccrual loans greater than $3 million and certain commercial, residential, and consumer loans whose terms have been modified in a TDR are individually evaluated

for impairment. Smaller-balance homogeneous loans that are collectively evaluated for impairment and loans measured at fair value are not included in the following tables. Additionally, the following tables exclude guaranteed ~~consumer~~ student loans and guaranteed residential mortgages for which there was nominal risk of principal loss.

The Company's recorded investment of nonaccruing loans secured by residential real estate properties for which formal foreclosure proceedings are in process at September 30, ~~2016~~2017 and December 31, ~~2015~~2016 was ~~$105~~$72 million and ~~$112~~$85 million, respectively. The Company's recorded investment of accruing loans secured by residential real estate properties for which formal foreclosure proceedings are in process at September 30, ~~2016~~2017 and December 31, ~~2015~~2016 was ~~$140~~$94 million and ~~$152~~$122 million, of which ~~$131~~$90 million and ~~$141~~$114 million were insured by the FHA or guaranteed by the VA, respectively.

At September 30, ~~2016,~~2017, OREO included ~~$46~~$50 million of foreclosed residential real estate properties and $9$4 million of foreclosed commercial real estate properties, with the ~~remainder~~remaining $3 million related to land.

At December 31, ~~2015,~~2016, OREO included ~~$39~~$50 million of foreclosed residential real estate properties and ~~$11~~$7 million of foreclosed commercial real estate properties, with the ~~remainder~~remaining $3 million related to land.

A TDR is a loan for which the Company has granted an economic concession to ~~the~~a borrower in response to certain instances of financial difficulty experienced by the borrower, ~~that~~which the Company would not have considered otherwise. When a loan is modified under the terms of a TDR, the Company typically offers the borrower an extension of the loan maturity date and/or a reduction in the original contractual interest rate. In certain

situations, the Company may offer to restructure a loan in a

manner that ultimately results in the forgiveness of a contractually specified principal balance.

At September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the Company had ~~$19~~$1 million and $4$29 million, respectively, of commitments to lend additional funds to debtors whose terms have been modified in a TDR.

TDRs that ~~have~~ defaulted during the three and nine months ended September 30, 2017 and 2016, ~~and 2015 that~~which were first modified within the previous 12 months, were immaterial. ThThe e majority of loans that were modified under the terms of a TDR and subsequently became 90 days or more delinquent have remained on nonaccrual status since the time of delinquency.

Concentrations of Credit Risk

The Company does not have a significant concentration of risk to any individual client except for the U.S. government and its agencies. However, a geographic concentration arises because the Company operates primarily within Florida, Georgia, Virginia, Maryland, and North ~~Carolina, and Virginia.~~Carolina. The Company engages in limited international banking activities. The Company’s total

cross-border outstanding loans were ~~$2.1~~$1.5 billion and ~~$1.6~~$2.2 billion at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

With respect to collateral concentration, at September 30, ~~2016,~~2017, the Company owned ~~$39.4~~$38.7 billion in loans secured by residential real estate, representing ~~28%~~27% of total LHFI. Additionally, the Company had ~~$10.4~~$10.1 billion in commitments to extend credit on home equity lines and ~~$7.5~~$4.1 billion in residential mortgage loan commitments outstanding at September 30, ~~2016.~~2017. At December 31, ~~2015,~~2016, the Company owned ~~$38.9~~$39.0 billion in loans secured by residential real estate, representing ~~29%~~27% of total LHFI, and had ~~$10.5~~$10.3 billion in commitments to extend credit on home equity lines and ~~$3.2~~$4.2 billion in residential mortgage loan commitments outstanding. At both September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, 1% ~~and 2%~~ of residential loans owned were guaranteed by a federal agency or a GSE, respectively.

As discussed in Note 1, “Significant Accounting Policies,” to the Company's ~~2015~~2016 Annual Report on Form 10-K, the ALLL is composed of both specific allowances for certain nonaccrual loans and TDRs and general allowances ~~grouped into loan pools based on~~ for groups of loans with

similar risk characteristics. No allowance is required for

loans measured at fair value. Additionally, the Company records an immaterial allowance for loan products that are guaranteed by government agencies, as there is nominal risk of principal loss.

As discussed in Note 16, "Business Segment Reporting," the Company realigned its business segment structure from three segments to two segments in the second quarter of 2017. As a result, the Company reassessed the composition of its goodwill reporting units and combined the Consumer Banking and Private Wealth Management reporting unit and Mortgage Banking reporting unit into a single Consumer goodwill reporting unit. The Mortgage Banking reporting unit did not have any associated goodwill prior to this change. The composition of the Wholesale Banking reporting unit was not impacted by the business segment structure realignment.

The Company conducts a goodwill impairment test at the reporting unit level at least annually, or more frequently as events occur or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. See Note 1, "Significant Accounting Policies," into the Company's ~~2015~~2016 Annual Report on Form 10-K for additional

information regarding the Company's goodwill accounting policy.

The Company performed a qualitative goodwill ~~assessment~~assessments in the first, second, and third quarters of ~~2016,~~2017, considering changes in key assumptions, ~~and monitoring~~ other events, or

~~changes in~~and circumstances occurring since the most recent annual goodwill impairment ~~analyses~~test performed as of October 1, ~~2015.~~2016. The Company concluded, based on the totality of factors observed, that it is not more-likely-than-not that the fair values of its ~~reporting units~~reportable segments are less than their respective carrying values. Accordingly, goodwill was not required to be quantitatively tested for impairment during the nine months ended September 30, ~~2016.~~2017.

Changes in the carrying amount of goodwill by reportable segment for the nine months ended September 30, 2017 are presented in the following table. There were no material changes in the carrying amount of goodwill by reportable segment for the nine months ended September 30, ~~2016 and 2015.~~2016.

arising from its own conduct and the specifically defined Litigation. While the district court approved a class action settlement of the Litigation in 2012, the U.S. Court of Appeals for the Second Circuit reversed the district court's approval of the settlement on June 30, 2016. The ~~parties await further action~~U.S. Supreme Court denied plaintiffs' petition for certiorari on ~~the appeal and/or a return of~~March 27, 2017, and the case returned to the district ~~court.~~court for further action.

Agreements associated with Visa's IPO have provisions that Visa will fund a litigation escrow account, established for the purpose of funding judgments in, or settlements of, the Litigation. If the escrow account is insufficient to cover the Litigation losses, then Visa will issue additional Class A shares (“loss shares”). The proceeds from the sale of the loss shares would then be deposited in the escrow account. The issuance of the loss shares will cause a dilution of Visa's Class B shares as a result of an adjustment to lower the conversion factor of the Class B shares to Class A shares. Visa U.S.A.'s members are responsible for any portion of the settlement or loss on the Litigation after the escrow account is depleted and the value of the Class B shares is fully diluted.

In May 2009, the Company sold its 3.2 million Class B shares to the Visa Counterparty and entered into a derivative with the Visa Counterparty. Under the derivative, the Visa

Counterparty is compensated by the Company for any decline in the conversion factor as a result of the outcome of the

Litigation. Conversely, the Company is compensated by the Visa Counterparty for any increase in the conversion factor. The amount of payments made or received under the derivative is a function of the 3.2 million shares sold to the Visa Counterparty, the change in conversion rate, and Visa’s share price. The Visa Counterparty, as a result of its ownership of the Class B shares, is impacted by dilutive adjustments to the conversion factor of the Class B shares caused by the Litigation losses. Additionally, the Company will make ~~a quarterly payment~~periodic payments based on the notional of the derivative and a fixed rate until the date on which the Litigation is settled. The fair value of the derivative is estimated based on unobservable inputs consisting of management's estimate of the probability of certain litigation scenarios and the timing of the resolution of the Litigation due in large part to the aforementioned decision by the U.S. Court of Appeals for the Second Circuit. The fair value of the derivative liability was $15 million ~~and $6 million~~ at both September 30, ~~2016~~2017 and December 31, ~~2015, respectively.~~2016. The ~~increase in~~ fair value of the derivative ~~liability was driven by changes in management's estimate of both~~is estimated based on the ~~probability of certain litigation scenarios as well as the timing of~~Company's expectations regarding the resolution of the Litigation. ~~However, the~~The ultimate impact to the Company could be significantly different based on the Litigation outcome.

The Company enters into various derivative financial instruments, both in a dealer capacity to facilitate client transactions and as an end user as a risk management tool. The ~~ALCO monitors all derivative activities. When derivatives have been entered into with clients, the~~ Company generally manages the risk associated with these derivatives within the ~~framework of its~~established MRM and credit risk management frameworks. Derivatives may be used by the Company to hedge various economic or client-related exposures. In such instances, derivative positions are typically monitored using a VAR methodology, ~~that monitors total daily exposure and seeks to manage the exposure on an overall basis.~~with exposures reviewed daily. Derivatives are also used as a risk management tool to hedge the Company’s balance sheet exposure to changes in identified cash flow and fair value risks, either economically or in accordance with hedge accounting provisions. The Company’s Corporate Treasury function is responsible for employing the various hedge strategies to manage these objectives. ~~Additionally, as a normal part of its operations, the~~The Company enters into IRLCs on residential and commercial mortgage loans that are accounted for as freestanding ~~derivatives and has~~derivatives. Additionally, certain contracts containing embedded derivatives ~~that~~ are measured, in their entirety, at fair value. All derivatives, including both freestanding ~~derivatives and~~as well as any embedded derivatives that the Company bifurcates from the host contracts, are measured at fair value in the Consolidated Balance Sheets in trading assets and derivative instruments and trading liabilities and derivative instruments. The associated gains and losses are either recognized in AOCI, net of tax, or within the Consolidated Statements of Income, depending upon the use and designation of the derivatives.

Credit and Market Risk Associated with Derivative Instruments

Derivatives expose the Company to ~~counterparty credit~~ risk ifthat the counterparty to the derivative contract does not perform as expected. The

Company manages its exposure to counterparty credit risk associated with derivatives by entering into transactions with counterparties with defined exposure limits based on their credit

quality and in accordance with established policies and procedures. All counterparties are reviewed regularly as part of the Company’s credit risk management practices and appropriate action is taken to adjust the exposure limits to certain counterparties as necessary. The Company’s derivative transactions ~~may also be~~are generally governed by ISDA agreements or other legally enforceable industry standard master netting agreements. In certain cases and depending on the nature of the underlying derivative transactions, bilateral collateral agreements are also utilized. Furthermore, the Company and its subsidiaries are subject to OTC derivative clearing requirements, which require certain derivatives to be cleared through central ~~clearinghouses.~~clearing houses, such as LCH.Clearnet Limited ("LCH") and the CME. These ~~clearinghouses~~clearing houses require the Company to post initial and variation margin to mitigate the risk of non-payment, the latter of which is received or paid daily based on the net asset or liability position of the contracts. Effective January 3, 2017, the CME amended its rulebook to legally characterize variation margin cash payments for cleared OTC derivatives as settlement rather than as collateral. As a result, in the first quarter of 2017, the Company began reducing the corresponding derivative asset and liability balances for CME-cleared OTC derivatives to reflect the settlement of those positions via the exchange of variation margin. Variation margin payments for LCH-cleared OTC derivatives continue to be subject to collateral accounting and characterized by the Company as collateral.

When the Company has more than one outstanding derivative transaction with a single counterparty, and there exists a legal right of offset with that counterparty, the Company considers its exposure to the counterparty to be the net fair value of its derivative positions with that counterparty. If the net fair value is positive, then the corresponding asset value also reflects cash collateral held. At September 30, ~~2016,~~2017, the economic exposure of these net derivative asset positions ~~were $1.1 billion,~~was $636 million, reflecting ~~$1.9 billion~~$974 million of net derivative gains, adjusted for cash and other collateral of ~~$811~~$338 million that the Company held in relation to these positions. At December 31, ~~2015, reported~~2016, the economic exposure of net derivative ~~assets were $896~~asset positions was $774 million, reflecting ~~$1.4~~$1.1 billion of net derivative gains, adjusted for cash and other collateral held of ~~$463~~$339 million.

Derivatives also expose the Company to market risk arising from the adverse effects that changes in market factors, such as interest rates, currency rates, equity prices, commodity prices,

The impacts of derivative instruments on the Consolidated Statements of Income and the Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2017 and 2016 are presented in the following tables. The impacts are segregated between derivatives that are designated in hedge accounting relationships and those that are ~~used for economic~~

used for economic hedging or trading purposes, with further identification of the underlying risks in the derivatives and the hedged items, where appropriate. The tables do not disclose the financial impact of the activities that these derivative instruments are intended to hedge.

The Company has various financial assets and financial liabilities that are subject to enforceable master netting agreements or similar agreements. The Company's securities borrowed or purchased under agreements to resell, and securities sold under agreements to repurchase, that are subject to enforceable master netting agreements or similar agreements, are discussed in Note 2, "Federal Funds Sold and Securities Financing Activities." The Company enters into ISDA or other legally enforceable industry standard master netting agreements with derivative counterparties. Under the terms of the master netting agreements, all transactions between the Company and the counterparty constitute a single business relationship such that in the event of default, the nondefaulting party is entitled to set off claims and apply property held by that party in respect of any transaction against obligations owed. Any payments, deliveries, or other transfers may be applied against each other and netted.

The following tables present total gross derivative instrument assets and liabilities at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, which are adjusted to reflect the effects of legally enforceable master netting agreements and cash collateral received or paid when calculating the net amount reported in the Consolidated Balance Sheets. Also included in the tables are financial instrument collateral related to legally enforceable master netting agreements that represents securities collateral received or pledged and customer cash collateral held at third party custodians. These amounts are not offset on the Consolidated Balance Sheets but are shown as a reduction to total derivative instrument assets and liabilities to derive net derivative assets and liabilities. These amounts are limited to the derivative asset/liability balance, and accordingly, do not include excess collateral received/pledged.

Credit Derivative Instruments

As part of the Company's trading businesses, the Company enters into contracts that are, in form or substance, written guarantees; specifically, CDS, risk participations, and TRS. The Company accounts for these contracts as derivatives, and accordingly, records these contracts at fair value, with changes in fair value recognized in trading income in the Consolidated Statements of Income.

The Company periodically writes CDS, which are agreements under which the Company receives premium payments from its counterparty for protection against an event of default of a reference asset. In the event of default under the CDS, the Company would either settle its obligation net in cash or make a cash payment to its counterparty and take delivery of the defaulted reference asset, from which the Company may recover all, a portion, or none of the credit loss, depending on the performance of the reference asset. Events of default, as defined in the CDS agreements, are generally triggered upon the failure to pay and similar events related to the issuer(s) of the reference asset. When the Company has written CDS, all written CDS contracts reference single name corporate credits or corporate credit indices. The Company generally enters into offsetting purchased CDS for the underlying reference asset, under which the Company pays a premium to its counterparty for protection against an event of default on the reference asset. The counterparties to these purchased CDS are generally of high creditworthiness and typically have ISDA master netting agreements in place that subject the CDS to master netting provisions, thereby mitigating the risk of non-payment to the Company. As such, at September 30, 2016, the Company did not have any material risk of making a non-recoverable payment on any written CDS. During 2016 and 2015, the only instances of default on written CDS were driven by credit indices with constituent credit default. In all cases where the Company made resulting cash payments to settle, the Company collected like amounts from the counterparties to the offsetting purchased CDS.

At September 30, ~~2016, written CDS had remaining terms of four years. There were no written CDS at~~2017 and December 31, ~~2015. The fair value of written CDS was $3 million at September 30, 2016. The maximum guarantees outstanding at September 30,~~ 2016, ~~as measured by~~ the gross notional amount ~~of written CDS, was $170 million, which represents risk reduction trades offsetting purchased CDS positions. At September 30, 2016 and December 31, 2015, the gross notional amounts~~ of purchased CDS contracts designated as trading instruments ~~were $305~~was $10 million and ~~$150~~$135 million, respectively. The fair ~~values~~value of purchased CDS ~~were $5 million and $1 million~~was immaterial at September 30, ~~2016~~2017 and $3 million at December 31, ~~2015, respectively.~~2016.

The Company has also entered into TRS contracts on loans. The Company’s TRS business consists of matched trades, such that when the Company pays depreciation on one TRS, it receives the same amount on the matched TRS. To mitigate its credit risk, the Company typically receives initial cash collateral from the counterparty upon entering into the TRS and is entitled to additional collateral if the fair value of the underlying reference assets deteriorates. There were ~~$2.2~~$2.5 billion and $2.1 billion of outstanding TRS notional balances at ~~both~~ September 30, ~~2016~~2017 and December 31, ~~2015.~~2016, respectively. The fair values of these TRS assets and liabilities at September 30, ~~2016~~2017 were ~~$25~~$17 million and ~~$21~~$13 million,

respectively, and related collateral held at September 30, ~~2016~~2017 was ~~$474~~$552 million. The fair values of the TRS assets and liabilities at December 31, ~~2015~~2016 were ~~$57~~$34 million and ~~$52~~$31 million, respectively, and related collateral held at December 31, ~~2015~~2016 was ~~$492~~$450 million. For additional information on the Company's TRS contracts, see Note 8, "Certain Transfers of Financial Assets and Variable Interest Entities," as well as Note 14, "Fair Value Election and Measurement."

The Company writes risk participations, which are credit derivatives, whereby the Company has guaranteed payment to a dealer counterparty in the event the counterparty experiences a loss on a derivative, such as an interest rate swap, due to a failure to pay by the counterparty’s customer (the “obligor”) on that derivative. The Company manages its payment risk on its risk participations by monitoring the creditworthiness of the obligors, which are all corporations or partnerships, through the normal credit review process that the Company would have performed had it entered into a derivative directly with the obligors. To date, no material losses have been incurred related to the Company’s written risk participations. At September 30, ~~2016, the remaining terms on these risk participations generally ranged from zero to 31 years, with a weighted average term on the maximum estimated exposure of 9.0 years. At December 31, 2015,~~2017, the remaining terms on these risk participations generally ranged from less than one year to ~~eight~~nine years, with a weighted average term on the maximum estimated exposure of 5.6 years. At December 31, 2016, the remaining terms on these risk participations generally ranged from less than one year to thirty-one years, with a weighted average term on the maximum estimated exposure of 8.5 years. The Company’s maximum estimated exposure to written risk participations, as measured by projecting a maximum value of the guaranteed derivative instruments based on interest rate curve simulations and assuming 100% default by all obligors on the maximum values, was approximately ~~$78~~$60 million and ~~$55~~$95 million at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. The fair values of the written risk participations were immaterial at both September 30, ~~2016~~2017 and December 31, ~~2015. The Company may enter into purchased risk participations to mitigate this written credit risk exposure to a derivative counterparty.~~2016.

Cash Flow Hedging Instruments

The Company utilizes a comprehensive risk management strategy to monitor sensitivity of earnings to movements in interest rates. Specific types of funding and principal amounts hedged are determined based on prevailing market conditions and the shape of the yield curve. In conjunction with this strategy, the Company may employ various interest rate derivatives as risk management tools to hedge interest rate risk from recognized assets and liabilities or from forecasted transactions. The terms and notional amounts of derivatives are determined based on management’s assessment of future interest rates, as well as other factors.

Interest rate swaps have been designated as hedging the exposure to the benchmark interest rate risk associated with floating rate loans. At September 30, 2017, the maturities for hedges of floating rate loans ranged from less than one year to five years, with the weighted average being 3.8 years. At December 31, 2016, the maturities for hedges of floating rate loans ranged from less than one year to six years, with the weighted average being ~~4.0 years. At December 31, 2015, the maturities for hedges of floating rate loans ranged from less than one year to seven years, with the weighted average being 3.3~~4.1 years. These hedges have been highly effective in offsetting the designated risks, yielding an immaterial amount of ineffectiveness for the three and nine

The Company utilizes interest rate derivatives as economic hedges related to:

Residential MSRs. The Company hedges these instruments with a combination of interest rate derivatives, including forward and option contracts, futures, and forward rate agreements.

Residential mortgage IRLCs and ~~mortgage~~ LHFS. The Company hedges these instruments using forward and option contracts, futures, and forward rate agreements.

The Company is exposed to volatility and changes in foreign exchange rates associated with certain commercial loans. To hedge against this foreign exchange rate risk, the Company enters into foreign exchange rate contracts that provide for the future

receipt and delivery of foreign currency at previously agreed-upon terms.

The Company enters into CDS to hedge credit risk associated with certain loans held within its Wholesale ~~Banking~~ segment. The Company accounts for these contracts as derivatives, and accordingly, recognizes these contracts at fair value, with changes in fair value recognized in other noninterest income in the Consolidated Statements of Income.

Trading activity primarily includes interest rate swaps, equity derivatives, CDS, futures, options, foreign ~~currency~~exchange rate contracts, and ~~commodities.~~commodity derivatives. These derivatives are entered into in a dealer capacity to facilitate client transactions, or are utilized as a risk management tool by the Company as an end user (predominantly in certain macro-hedging strategies). ~~The macro-hedging strategies are focused on managing the Company’s overall interest rate risk exposure that is not otherwise hedged by derivatives or in connection with specific hedges.~~

The Company measures certain assets and liabilities at fair value, which are classified as level 1, 2, or 3 within the fair value hierarchy, as shown below, on the basis of whether the measurement employs observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s own assumptions, taking into account information about market participant assumptions that is readily available.

Level 1: Quoted prices for identical instruments in active markets

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets

Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable

Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The Company’s recurring fair value measurements are based on either a requirement to measure such assets and liabilities at fair value or on the Company’s election to measure certain financial assets and liabilities at fair value. Assets and liabilities that are required to be measured at fair value on a recurring basis include trading securities, securities AFS, and derivative financial instruments. Assets and liabilities that the Company has elected to measure at fair value on a recurring basis include its residential MSRs, trading loans, and certain LHFS, LHFI, ~~trading loans,~~ brokered time deposits, and ~~issuances of~~ fixed rate ~~debt.~~debt issuances.

The Company elects to measure certain assets and liabilities at fair value to better align its financial performance with the economic value of actively traded or hedged assets or liabilities. The use of fair value also enables the Company to mitigate non-economic earnings volatility caused from financial assets and liabilities being measured using different bases of accounting, as well as to more accurately portray the active and dynamic management of the Company’s balance sheet.

The Company uses various valuation techniques and assumptions in estimating fair value. The assumptions used to estimate the value of an instrument have varying degrees of impact to the overall fair value of an asset or liability. This process involves gathering multiple sources of information, including broker quotes, values provided by pricing services, trading activity in other identical or similar securities, market indices, and pricing matrices. When observable market prices for the asset or liability are not available, the Company employs various

modeling techniques, such as discounted cash flow analyses, to estimate fair value. Models used to produce material financial reporting information are validated prior to use and following any material change in methodology. Their performance is monitored at least quarterly, and any material deterioration in model performance is escalated. This review is performed by different internal groups depending on the type of fair value asset or liability.

The Company has formal processes and controls in place to support the appropriateness of its fair value estimates. For fair values obtained from a third party, or those that include certain trader estimates of fair value, there is an independent price validation function that provides oversight for these estimates. For level 2 instruments and certain level 3 instruments, the validation generally involves evaluating pricing received from two or more third party pricing sources that are widely used by market participants. The Company evaluates this pricing information from both a qualitative and quantitative perspective and determines whether any pricing differences exceed acceptable thresholds. If thresholds are exceeded, the Company assesses differences in valuation approaches used, which may include contacting a pricing service to gain further insight into the valuation of a particular security or class of securities to resolve the pricing variance, which could include an adjustment to the price used for financial reporting purposes.

The Company classifies instruments within level 2 in the fair value hierarchy when it determines that external pricing sources estimated fair value using prices for similar instruments trading in active markets. A wide range of quoted values from pricing sources may imply a reduced level of market activity and indicate that significant adjustments to price indications have been made. In such cases, the Company evaluates whether the asset or liability should be classified as level 3.

Determining whether to classify an instrument as level 3 involves judgment and is based on a variety of subjective factors, including whether a market is inactive. A market is considered inactive if significant decreases in the volume and level of activity for the asset or liability have been observed. In making this determination the Company evaluates the number of recent transactions in either the primary or secondary market, whether or not price quotations are current, the nature of market participants, the variability of price quotations, the breadth of bid/ask spreads, declines in, or the absence of, new issuances, and the availability of public information. When a market is determined to be inactive, significant adjustments may be made to price indications when estimating fair value. In making these adjustments the Company seeks to employ assumptions a market participant would use to value the asset or liability, including consideration of illiquidity in the referenced market.

The following tables present the change in fair value during the three and nine months ended September 30, ~~2016~~2017 and ~~2015~~2016 of financial instruments for which the FVO has been elected, as well as for residential MSRs. The tables do not reflect the change in fair value attributable to related economic hedges that the Company uses to mitigate market-related risks associated with the financial instruments. Generally, changes in the fair value of ~~economic~~

economic hedges are recognized in trading income, mortgage production related income, mortgage servicing related income, commercial real estate related income, or other noninterest income as appropriate, and are designed to partially offset the change in fair value of the financial instruments referenced in the tables below. The Company’s economic hedging activities are deployed at both the instrument and portfolio level.

Trading Assets and Derivative Instruments and Securities Available for Sale

Unless otherwise indicated, trading assets are priced by the trading desk and securities AFS are valued by an independent third party pricing service.

U.S. Treasury Securities

The Company estimates the fair value of its U.S. Treasury securities based on quoted prices observed in active markets; as such, these investments are classified as level 1.

Federal ~~agency securities~~Agency Securities

The Company includes in this classification securities issued by federal agencies and GSEs. Agency securities consist of debt obligations issued by HUD, FHLB, and other agencies or collateralized by loans that are guaranteed by the SBA and are, therefore, backed by the full faith and credit of the U.S. government. For SBA instruments, the Company ~~estimated~~estimates fair value based on pricing from observable trading activity for similar securities or from a third party pricing service. Accordingly, the Company classified these instruments as level 2.

U.S. ~~states~~States and ~~political subdivisions~~Political Subdivisions

The Company’s investments in U.S. states and political subdivisions (collectively “municipals”) include obligations of county and municipal authorities and agency bonds, which are general obligations of the municipality or are supported by a specified revenue source. Holdings ~~were~~are geographically dispersed, with no significant concentrations in any one state or municipality. Additionally, all AFS municipal obligations classified as level 2 are highly rated or are otherwise collateralized by securities backed by the full faith and credit of the federal government.

~~Level~~At December 31, 2016, level 3 AFS municipal securities ~~at September 30, 2016 and December 31, 2015 includes~~included an immaterial amount of bonds ~~that are~~ redeemable with the issuer at par and cannot be traded in the market. As such, no significant observable market data for these instruments iswas available; therefore, these securities ~~are~~were priced at par.

These level 3 AFS municipal securities matured during the second quarter of 2017.

MBS – ~~agency~~Agency

Agency MBS includes pass-through securities and collateralized mortgage obligations issued by GSEs and U.S. government agencies, such as Fannie Mae, Freddie Mac, and Ginnie Mae. Each security contains a guarantee by the issuing GSE or agency. For agency MBS, the Company ~~estimated~~estimates fair value based on pricing from observable trading activity for similar securities or from a third party pricing service; accordingly, the Company has classified these instruments as level 2.

MBS – ~~non-agency residential~~Non-agency

Non-agency residential MBS includes purchased interests in third party securitizations, as well as retained interests in

Company-sponsored securitizations of 2006 and 2007 vintage residential mortgages (including both prime jumbo fixed rate collateral and floating rate collateral). At the time of purchase or origination, these securities had high investment grade ratings; however, through the credit crisis, they experienced deterioration in credit quality leading to downgrades to non-investment grade levels. The Company obtains pricing for these securities from an independent pricing service. The Company evaluates third

party pricing to determine the reasonableness of the information relative to changes in market data, such as any recent trades, information received from market participants and analysts, and/or changes in the underlying collateral performance. The Company continued to classify non-agency residential MBS as level 3, as the Company believes that available third party pricing relies on significant unobservable assumptions, as evidenced by a persistently wide bid-ask price range and variability in pricing from the pricing services, particularly for the vintage and exposures held by the Company.

Non-agency commercial MBS at September 30, 2017 and December 31, 2016 consists of purchased interests in third party securitizations. These interests have high investment grade ratings, and the Company obtains pricing for these securities from an independent pricing service. The Company has classified these non-agency commercial MBS as level 2, as the Company believes that the independent pricing service relies on observable data in active markets.

CLO Securities

CLO preference share exposure is estimated at fair value based on pricing from observable trading activity for similar securities. Accordingly, the Company has classified these instruments as level 2.

Asset-Backed Securities

ABS classified as securities AFS includes purchased interests in third party securitizations collateralized by home equity loans and are valued based on third party pricing with significant unobservable assumptions; as such, they are classified as level 3.

Corporate and ~~other debt securities~~Other Debt Securities

Corporate debt securities are comprised predominantly of senior and subordinate debt obligations of domestic corporations and are classified as level 2. Other debt securities classified as trading in level 3 at December 31, 2015 included bonds that were not actively traded in the market and for which valuation judgments were highly subjective due to limited observable market data. At December 31, 2015, the fair value of these level 3 bonds were estimated using market comparable bond index yields. These bonds were sold during the first quarter of 2016.

~~Other debt securities classified as~~ AFS in level 3 at September 30, ~~2016~~2017 and December 31, ~~2015~~2016 include bonds that are redeemable with the issuer at par and cannot be traded in the market. As such, observable market data for these instruments is not available.

Commercial Paper

The Company acquires CP that is generally short-term in nature (maturity of less than 30 days) and highly rated. The Company estimates the fair value of this CP based on observable pricing from executed trades of similar instruments; as such, CP is classified as level 2.

Equity ~~securities~~Securities

~~Equity~~The Company estimates the fair value of its equity securities classified as trading assets based on quoted prices observed in active markets; accordingly, these investments are classified as level 1.

Other equity securities classified as securities AFS include primarily FHLB of Atlanta stock and Federal Reserve Bank of Atlanta stock, which are redeemable with the issuer at cost and cannot be traded in the ~~market. As~~market; as such, ~~observable market data for~~ these instruments ~~is not available and they~~ are classified as level 3. The Company accounts for the stock based on industry guidance that requires these investments be carried at cost and evaluated for impairment based on the ultimate recovery of cost.

Loans Held for Sale and Loans Held for Investment

Residential LHFS

The Company values certain newly-originated residential mortgage LHFS ~~predominantly~~ at fair value based upon defined product criteria. The Company chooses to fair value these residential mortgage LHFS to eliminate the complexities and inherent difficulties of achieving hedge accounting and to better align reported results with the underlying economic changes in value of the loans and related hedge instruments. Any origination fees are recognized within mortgage production related income in the Consolidated Statements of Income when earned at the time of closing. The servicing value is included in the fair value of the loan and is initially recognized at the time the Company enters into IRLCs with borrowers. The Company employs derivative instruments to economically hedge changes in interest rates and the related impact on servicing value in the fair value of the loan. The mark-to-market adjustments related to LHFS and the associated economic hedges are captured in mortgage production related income.

management strategies. The Company evaluated, on an instrument by instrument basis, whether a new issuance would be measured at fair value.

On January 1, 2016, the Company partially adopted ASU 2016-01, which requires changes in credit spreads for financial liabilities measured at fair value pursuant to a fair value option to be recognized in OCI. The impact to OCI is determined from the change in credit spreads above LIBOR swap spreads. For ~~both~~ the three and nine months ended September 30, 2017 and 2016, the impact on AOCI due to changes in credit spreads was immaterial. For additional information on the Company's partial adoption of ASU 2016-01, see Note 1, "Significant Accounting Policies."

The Company has classified CDs measured at fair value as level 2 instruments due to the Company's ability to reasonably measure all significant inputs based on observable market variables. The Company employs a discounted cash flow approach based on observable market interest rates for the term of the CD and an estimate of the Bank's credit risk. For ~~the~~any embedded derivative features, the Company uses the same valuation methodologies as if the derivative were a standalone derivative, as discussed herein under "Derivative instruments."

Long-term ~~debt~~Debt

The Company has elected to measure at fair value certain fixed rate issuances of public debt that are valued by obtaining price indications from a third party pricing service and utilizing broker

quotes to corroborate the reasonableness of those marks. Additionally, information from market data of recent observable trades and indications from buy side investors, if available, are taken into consideration as additional support for the value. Due to the availability of this information, the Company determined that the appropriate classification for these debt issuances is level 2. The ~~election~~Company utilizes derivative instruments to ~~fair value~~convert interest rates on its fixed rate debt to floating rates. The Company elected to measure certain fixed rate debt issuances ~~was made~~at fair value to align the accounting for the debt with the accounting for offsetting derivative positions, without having to apply complex hedge accounting.

The Company utilizes derivative financial instruments to convert interest rates on its debt from fixed to floating rates. Prior to January 1, 2016, changes in the Company’s credit spreads for public debt measured at fair value impacted earnings. For the three and nine months ended September 30, 2015, the estimated earnings impact from changes in credit spreads above U.S.

The following tables present a reconciliation of the beginning and ending balances for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (other than servicing rights which are disclosed in Note 7, “Goodwill and Other Intangible Assets”). Transfers into and out of the fair value hierarchy levels are assumed to occur at the end

of the period in which the transfer occurred. None of the transfers into or out of level 3 have been the result of using alternative valuation approaches to estimate fair values. There were no transfers between level 1 and 2 during the three and nine months ended September 30, ~~2016~~2017 and ~~2015.~~2016.

The following tables present losses recognized on assets still held at period end, and measured at fair value on a non-recurring basis, for the three and nine months ended September 30, ~~2016~~2017 and the year ended December 31, ~~2015.~~2016. Adjustments to fair value generally result from the application of LOCOM or through

write-downs of individual assets. The tables do not reflect changes in fair value attributable to economic hedges the Company may have used to mitigate interest rate risk associated with LHFS.

Loans Held for Sale

At ~~December 31, 2015,~~September 30, 2017, LHFS classified as level 2 consisted of commercial loans that were valued using ~~significant unobservable assumptions from comparably rated loans.~~market prices and measured at LOCOM. During the three and nine months ended September 30, 2017, the Company transferred $31 million of C&I NPLs to LHFS as the Company elected to actively market these loans for sale. As ~~such,~~a result of transferring the C&I NPLs to LHFS, the Company recognized a $5 million charge-off to reflect the loans' estimated market value. There were no gains/(losses) recognized in earnings during the three and nine months ended September 30, 2017 as the charge-offs related to these loans are ~~classified as level 3. The decline in LHFS compared to December 31, 2015 was due to the sale of $185 million of these loans in the second quarter of 2016 and the sale~~a component of the ~~remaining $17 million in the third quarter of 2016.~~ALLL.

Loans Held for Investment

At September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, LHFI consisted primarily of consumer and residential real estate loans discharged in Chapter 7 bankruptcy that had not been reaffirmed by the borrower, as well as nonperforming CRE loans for which specific reserves had been recognized. Cash proceeds from the sale of the underlying collateral is the expected source of repayment for a majority of these loans. Accordingly, the fair value of these loans is derived from the estimated fair value of the underlying collateral, incorporating market data if available. There were no gains/(losses) recognized during the three and nine months ended September 30, ~~2016~~2017 or during the year ended December 31, ~~2015,~~2016, as the charge-offs related to these loans are a component of the ALLL. Due to the lack of market data for similar assets, all of these loans are classified as level 3.

OREO

OREO is measured at the lower of cost or fair value less costs to sell. OREO classified as level ~~2 consists primarily of residential homes and commercial properties for which binding purchase agreements exist. OREO classified as level~~ 3 consists primarily of residential homes, commercial properties, and vacant lots and land for which initial valuations are based on property-specific appraisals, broker pricing opinions, or other limited, highly

~~limited, highly~~ subjective market information. Updated value estimates are received regularly for level 3 OREO.

Other Assets

Other assets consists of cost and equity method investments, other repossessed assets, assets under operating leases where the Company is the lessor, branch properties, ~~and~~ land held for ~~sale.~~sale, and software.

Investments in cost and equity method investments are ~~valued~~evaluated for potential impairment based on the expected remaining cash flows to be received from these assets discounted at a market rate that is commensurate with the expected risk, considering relevant Company-specific valuation multiples, where applicable. Based on the valuation methodology and associated unobservable inputs, these investments are classified as level 3. ~~During~~The Company recognized $1 million of impairment charges on equity investments during both the three and nine months ended September 30, 2017. During the year ended December 31, 2016, the Company recognized impairment charges of $8 million on its equity investments. ~~There were no impairment charges recognized on equity investments during the three months ended September 30, 2016 or during the year ended December 31, 2015.~~

Other repossessed assets comprises repossessed personal property that is measured at fair value less cost to sell. These assets are classified as level 3 as their fair value is determined based on a variety of subjective, unobservable factors. There were no losses recognized in earnings by the Company on other repossessed assets during the three and nine months ended September 30, ~~2016~~2017 or during the year ended December 31, ~~2015,~~2016, as the impairment charges on repossessed personal property were a component of the ALLL.

The Company monitors the fair value of assets under operating leases where the Company is the lessor and recognizes impairment on the leased asset to the extent the carrying value is not recoverable and is greater than its fair value. Fair value is determined using collateral specific pricing digests, external appraisals, broker opinions, recent sales data from industry

equipment dealers, and the discounted cash flows derived from the underlying lease agreement. As market data for similar assets and lease arrangements is available and used in the valuation, these assets are considered level 2. ~~During both~~The Company recognized an immaterial amount of impairment charges during the three and nine months ended September 30, ~~2016, the Company recognized impairment charges of $12 million and $16 million, respectively,~~2017 attributable to changes in the fair value of various personal property under operating leases. During the year ended December 31, ~~2015,~~2016, the Company recognized impairment charges of $6$12 million attributable to changes in the fair value of various personal property under operating leases.

~~The Company recognized impairment charges of $1 million and $8 million on branch~~Branch properties ~~during the three and nine~~

~~months ended September 30, 2016, respectively. These branches~~ are classified as level 3, as their fair ~~values were~~value is based on market comparables and broker opinions. During the nine months ended September 30, 2017, the Company recognized impairment charges of $11 million on branch properties. No related impairment charges were recognized during the three months ended September 30, 2017. During the year ended December 31, 2016, the Company recognized impairment charges of $12 million on branch properties.

Land held for sale is recorded at the lesser of carrying value or fair value less cost to sell, and is considered level 3 as its fair

value is determined based on market comparables and broker opinions. ~~The Company recognized impairment charges of $5 million on land held for sale during~~During the nine months ended September 30, ~~2016. There were no~~2017, the Company recognized impairment charges ~~recognized~~of $2 million on land held for ~~sale~~sale. No related impairment charges were recognized during the three months ended September 30, ~~2016, and an immaterial amount of impairment charges were recognized on land held for sale during~~2017. During the year ended December 31, ~~2015.~~2016, the Company recognized impairment charges of $4 million on land held for sale.

Software consisted primarily of external software licenses and internally developed software. External software licenses are classified as level 2, as their fair value is based on available vendor pricing from comparable software licenses. Internally developed software is classified as level 3 and is measured based on capitalized software development costs. The Company recognized impairment charges of $20 million during both the three and nine months ended September 30, 2017. During the year ended December 31, 2016, the Company recognized no impairment charges on software.


(a)	Cash and cash equivalents are valued at their carrying amounts, which are reasonable estimates of fair value due to the relatively short period to maturity of the instruments.


(b)	Trading assets and derivative instruments, securities AFS, and trading liabilities and derivative instruments that are classified as level 1 are valued based on quoted ~~market prices.~~prices observed in active markets. For those instruments classified as level 2 or 3, refer to the respective valuation discussions within this footnote.

(c)

LHFS are generally valued based on observable current market prices or, if quoted market prices are not available, quoted market prices of similar instruments. Refer to the LHFS section within this footnote for further discussion. When valuation assumptions are not readily observable in the market, instruments are valued based on the best available data to approximate fair value. This data may be internally developed and considers risk premiums that a market participant would require under then-current market conditions.

Litigation and Regulatory Matters

In the ordinary course of business, the Company and its subsidiaries are parties to numerous civil claims and lawsuits and subject to regulatory examinations, investigations, and requests for information. Some of these matters involve claims for substantial amounts. The Company’s experience has shown that the damages alleged by plaintiffs or claimants are often overstated, based on unsubstantiated legal theories, unsupported by facts, and/or bear no relation to the ultimate award that a court might grant. Additionally, the outcome of litigation and regulatory matters and the timing of ultimate resolution are inherently difficult to predict. These factors make it difficult for the Company to provide a meaningful estimate of the range of reasonably possible outcomes of claims in the aggregate or by individual claim. However, on a case-by-case basis, reserves are established for those legal claims in which it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. The Company's financial statements at September 30, ~~2016~~2017 reflect the Company's current best estimate of probable losses associated with these matters, including costs to comply with various settlement agreements, where applicable.

The actual costs of resolving these claims may be substantially higher or lower than the amounts reserved.

For a limited number of legal matters in which the Company is involved, the Company is able to estimate a range of reasonably possible losses in excess of related reserves, if any. Management currently estimates these losses to range from $0 to approximately ~~$190~~$160 million. This estimated range of reasonably possible losses represents the estimated possible losses over the life of such legal matters, which may span a currently indeterminable number of years, and is based on information available at September 30, ~~2016.~~2017. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from this estimate. Those matters for which an estimate is not possible are not included within this estimated range; therefore, this estimated range does not represent the Company’s maximum loss exposure. Based on current knowledge, it is the opinion of management that liabilities arising from legal claims in excess of the amounts currently reserved, if any, will not have a material impact on the Company’s financial condition, results of operations, or cash

~~Notes to Consolidated Financial Statements (Unaudited), continued~~

flows. However, in light of the significant uncertainties involved in these matters and the large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to the Company’s financial condition, results of operations, or cash flows for any given reporting period.

The following is a description of certain litigation and regulatory matters:

Card Association Antitrust Litigation

The Company is a defendant, along with Visa and MasterCard, as well as several other banks, in several antitrust lawsuits challenging their practices. For a discussion regarding the Company’s involvement in this litigation matter, see Note 12, “Guarantees.”

~~Lehman Brothers Holdings, Inc. Litigation~~

Beginning in October 2008, STRH, along with other underwriters and individuals, were named as defendants in several individual and putative class action complaints filed in the U.S. District Court for the Southern District of New York and state and federal courts in Arkansas, California, Texas, and Washington. Plaintiffs alleged violations of Sections 11 and 12 of the Securities Act of 1933 and/or state law for allegedly false and misleading disclosures in connection with various debt and preferred stock offerings of Lehman Brothers Holdings, Inc. ("Lehman Brothers") and sought unspecified damages. All cases were transferred for coordination to the multi-district litigation captioned ~~In re Lehman Brothers Equity/Debt Securities Litigation~~ pending in the U.S. District Court for the Southern District of New York. Defendants filed a motion to dismiss all claims asserted in the class action. On July 27, 2011, the District Court granted in part and denied in part the motion to dismiss the claims against STRH and the other underwriter defendants in the class action. A settlement with the class plaintiffs was approved by the Court and the class settlement approval process was completed. A number of individual lawsuits and smaller putative class actions remained following the class settlement. STRH settled two such individual actions. The other individual lawsuits were dismissed. In two of such dismissed individual actions, the plaintiffs were unable to appeal the dismissals of their claims until their claims against a third party were resolved. In one of these individual actions, the plaintiffs filed a notice of appeal to the Second Circuit Court of Appeals, but that appeal was denied on July 8, 2016. The plaintiff has filed a petition to appeal the decision to the U.S. Supreme Court. In the other individual action, no appeal has been filed.

Bickerstaff v. SunTrust Bank

This case was filed in the Fulton County State Court on July 12, 2010, and an amended complaint was filed on August 9, 2010. Plaintiff asserts that all overdraft fees charged to his account which related to debit card and ATM transactions are actually interest charges and therefore subject to the usury laws of Georgia. Plaintiff has brought claims for violations of civil and criminal usury laws, conversion, and money had and received, and purports to bring the action on behalf of all Georgia citizens who incurred such overdraft fees within the four years before the complaint was filed where the overdraft fee resulted in an

interest rate being charged in excess of the usury rate. The Bank filed a motion to compel arbitration and on March 16, 2012, the Court entered an order holding that the Bank's arbitration provision is enforceable but that the named plaintiff in the case had opted out of that provision pursuant to its terms. The Court explicitly stated that it was not ruling at that time on the question of whether the named plaintiff could have opted out for the putative class members. The Bank filed an appeal of this decision, but this appeal was dismissed based on a finding that the appeal was prematurely granted. On April 8, 2013, the plaintiff filed a motion for class certification and that motion was denied on February 19, 2014. Plaintiff appealed the denial of class certification and on September 8, 2015, the Georgia Supreme Court agreed to hear the appeal. On January 4, 2016, the Georgia Supreme Court heard oral argument on the appeal. On July 8, 2016, the Georgia Supreme Court reversed the Court of Appeals of Georgia and remanded the case for further proceedings. On October 6, 2017, the trial court granted plaintiff's motion for class certification. The Bank has until November 6, 2017 to appeal the trial court's decision.

~~Putative~~ ERISA Class Actions

Company Stock Class Action

Beginning in July 2008, the Company and certain officers, directors, and employees of the Company were named in a ~~putative~~ class action alleging that they breached their fiduciary duties under ERISA by offering the Company's common stock as an investment option in the SunTrust Banks, Inc. 401(k) Plan (the “Plan”). The plaintiffs ~~purport~~sought to represent all current and former Plan participants who held the Company stock in their Plan accounts from May 15, 2007 to March 30, 2011 and seek to recover alleged losses these participants supposedly incurred as a result of their investment in Company stock.

This case was originally filed in the U.S. District Court for the Southern District of Florida but was transferred to the U.S. District Court for the Northern District of Georgia, Atlanta Division (the “District Court”), in November 2008. On October 26, 2009, an amended complaint was filed. On December 9, 2009, defendants filed a motion to dismiss the amended complaint. On October 25, 2010, the District Court granted in part and denied in part defendants' motion to dismiss the amended complaint.

On April 14, 2011, the U.S. Court of Appeals for the Eleventh Circuit (“the Circuit Court”) granted defendants and plaintiffs permission to pursue interlocutory review in separate appeals. The Circuit Court subsequently stayed these appeals pending decision of a separate appeal involving The Home Depot

Notes to Consolidated Financial Statements (Unaudited), continued

in which substantially similar issues are presented. On May 8, 2012, the Circuit Court decided that appeal in favor of The Home Depot. On March 5, 2013, the Circuit Court issued an order remanding the case to the District Court for further proceedings in light of its decision in The Home Depot case. On September 26, 2013, the District Court granted the defendants' motion to dismiss plaintiffs' claims. Plaintiffs filed an appeal of this decision in the Circuit Court. Subsequent to the filing of this appeal, the U.S. Supreme Court decided Fifth Third Bancorp v. Dudenhoeffer, which held that employee stock ownership plan fiduciaries receive no presumption of prudence with respect to employer stock plans. The Circuit Court remanded the case back to the District Court for further proceedings in light of Dudenhoeffer. On June 18, 2015, the Court entered an order

~~Notes to Consolidated Financial Statements (Unaudited), continued~~

granting in part and denying in part the Company’s motion to dismiss. ~~The discovery process has begun.~~

On August 17, 2016, the District Court entered an order that among other things granted certain of the plaintiffs' motion for class certification. According to the Order, the class is defined as "All persons, other than Defendants and members of their immediate families, who were participants in or beneficiaries of the SunTrust Banks, Inc. 401(k) Savings Plan (the "Plan") at any time between May 15, 2007 and March 30, 2011, inclusive (the "Class Period") and whose accounts included investments in SunTrust common stock ("SunTrust Stock") during that time period and who sustained a loss to their account as a result of the investment in SunTrust Stock."

On August 1, 2016, certain non-fiduciary defendants filed a motion for summary judgment as it relates to them, which was granted by the District Court on October 5, 2016. Discovery is ongoing.

Mutual Funds Class Actions

On March 11, 2011, the Company and certain officers, directors, and employees of the Company were named in a putative class action alleging that they breached their fiduciary duties under ERISA by offering certain STI Classic Mutual Funds as investment options in the Plan. The plaintiffs purport to represent all current and former Plan participants who held the STI Classic Mutual Funds in their Plan accounts from April 2002 through December 2010 and seek to recover alleged losses these Plan participants supposedly incurred as a result of their investment in the STI Classic Mutual Funds. This action is pending in the U.S. District Court for the Northern District of Georgia, Atlanta Division (the “District Court”). On June 6, 2011, plaintiffs filed an amended complaint, and, on June 20, 2011, defendants filed a motion to dismiss the amended complaint. On March 12, 2012, the Court granted in part and denied in part the motion to dismiss. The Company filed a subsequent motion to dismiss the remainder of the case on the ground that the Court lacked subject matter jurisdiction over the remaining claims. On October 30, 2012, the Court dismissed all claims in this action. Immediately thereafter, plaintiffs' counsel initiated a substantially similar lawsuit against the Company naming two new plaintiffs and also filed an appeal of the dismissal with the U.S. Court of Appeals for the Eleventh Circuit. The Company filed a motion to dismiss in the new action and this motion was granted. On February 26, 2014, the U.S. Court of Appeals for the Eleventh Circuit upheld the District Court's dismissal. On March 18, 2014, the plaintiffs' counsel filed a motion for reconsideration with the Eleventh Circuit. On

August 26, 2014, plaintiffs in the original action filed a Motion for Consolidation of Appeals requesting that the Court consider this appeal jointly with the appeal in the second action. This motion was granted on October 9, 2014 and plaintiffs filed their consolidated appeal on December 16, 2014.

On June 27, 2014, the Company and certain current and former officers, directors, and employees of the Company were named in another putative class action alleging breach of fiduciary duties associated with the inclusion of STI Classic Mutual Funds as investment options in the Plan. This case, Brown, et al. v. SunTrust Banks, Inc., et al., was filed in the U.S. District Court for the District of Columbia. On September 3, 2014, the U.S. District Court for the District of Columbia issued an order transferring the case to the U.S. District Court for the Northern District of Georgia. On November 12, 2014, the Court

granted plaintiffs’ motion to stay this case until the U.S. Supreme Court issued a decision in Tibble v. Edison International. On May 18, 2015, the U.S. Supreme Court decided Tibble and held that plan fiduciaries have a duty, separate and apart from investment selection, to monitor and remove imprudent investments.

After Tibble, the cases pending on appeal were remanded to the District Court. On March 25, 2016, a consolidated amended complaint was filed, consolidating all of these pending actions into one case. The Company filed an answer to the consolidated amended complaint on June 6, 2016 and discovery is ongoing.

Intellectual Ventures II v. SunTrust Banks, Inc. and SunTrust Bank

This action was filed in the U.S. District Court for the Northern District of Georgia on July 24, 2013. Plaintiff alleges that SunTrust violates ~~one or more of several~~five patents held by plaintiff in connection with SunTrust’s provision of online banking services and other systems and services. Plaintiff seeks damages for alleged patent infringement of an unspecified amount, as well as attorney’s fees and expenses. The matter was stayed on October 7, 2014 pending inter partes review of a number of the claims asserted against SunTrust. On August 1, 2017, plaintiff dismissed its claims regarding four of the five patents.

Consent Order with the Federal Reserve

On April 13, 2011, SunTrust, SunTrust Bank, and STM entered into a Consent Order with the FRB in which SunTrust, SunTrust Bank, and STM agreed to strengthen oversight of, and improve risk management, internal audit, and compliance programs concerning the residential mortgage loan servicing, loss mitigation, and foreclosure activities of STM.

On July 25, 2014, the FRB imposed a $160 million civil money penalty as a result of the FRB’s review of the Company’s residential mortgage loan servicing and foreclosure processing practices that preceded the Consent Order. The Company ~~expects to satisfy the entirety of~~believes that it has fully satisfied this ~~assessed~~ penalty by ~~providing~~having provided consumer relief and certain cash payments as contemplated by the settlement with the U.S. and the ~~States Attorneys'~~states' Attorneys General regarding certain mortgage servicing claims, discussed below at “United States Mortgage Servicing Settlement.” SunTrust continues its engagement with the FRB to demonstrate compliance with its commitments under the Consent Order.

Notes to Consolidated Financial Statements (Unaudited), continued

United States Mortgage Servicing Settlement

In the second quarter of 2014, STM and the U.S., through the DOJ, HUD, and Attorneys General for several states, reached a final settlement agreement related to the National Mortgage Servicing Settlement. The settlement agreement became effective on September 30, 2014 when the court entered the Consent Judgment. Pursuant to the settlements, STM made $50 million in cash payments and committed to provide $500 million of consumer relief by the fourth quarter of 2017 and to implement certain mortgage servicing standards. ~~While subject to confirmation by~~STM implemented all of the prescribed servicing standards within the required timeframes. In an August 10, 2017 report, the independent Office of Mortgage Settlement Oversight ~~(“OMSO”~~("OMSO"), appointed to review and certify compliance with the provisions of the settlement, confirmed that the Company ~~believes it has~~ fulfilled its consumer relief commitments. ~~STM also implemented all of the prescribed servicing standards within the required timeframes. Compliance~~STM's compliance with the servicing standards continues to be monitored, tested, and reported

~~Notes to Consolidated Financial Statements (Unaudited), continued~~

quarterly by an internal review group and semi-annually by the OMSO. ~~As a result, the~~The Company does not expect ~~to incur additional~~ costs ~~in satisfying its consumer relief obligations or implementation of the servicing standards~~ associated with remaining servicing standard obligations to have a material impact on the ~~settlement.~~

~~DOJ Investigation of GSE Loan Origination Practices~~

In January 2014, STM received notice from the DOJ of an investigation regarding the origination and underwriting of single family residential mortgage loans sold by STM to Fannie Mae and Freddie Mac. The DOJ and STM have not yet engaged in any material dialogue about how this matter may proceed and no allegations have been raised against STM. STM continues to cooperate with the investigation.Company's financial results.

Residential Funding Company, LLC v. SunTrust Mortgage, Inc.

STM has been named as a defendant in a complaint filed December 17, 2013 in the Southern District of New York by Residential Funding Company, LLC ("RFC"), a Chapter 11 debtor-affiliate of GMAC Mortgage, LLC, alleging breaches of representations and warranties made in connection with loan sales and seeking indemnification against losses allegedly suffered by RFC as a result of such alleged breaches. The case was transferred to the United States Bankruptcy Court for the Southern District of New York. On August 1, 2017, the parties reached an agreement to resolve the matter and it is now closed. The ~~litigation remains active in~~settlement did not have a material impact on the ~~Bankruptcy Court and discovery has commenced.~~

~~SunTrust Mortgage Reinsurance Class Actions~~

STM and Twin Rivers Insurance Company ("Twin Rivers") have been named as defendants in two putative class actions alleging that the companies entered into illegal “captive reinsurance” arrangements with private mortgage insurers. More specifically, plaintiffs allege that SunTrust’s selection of private mortgage insurers who agree to reinsure with Twin Rivers certain loans referred to them by SunTrustCompany's financial results in illegal “kickbacks” in the form of the insurance premiums paid to Twin Rivers. Plaintiffs contend that this arrangement violates the Real Estate Settlement Procedures Act (“RESPA”) and results in unjust enrichment to the detriment of borrowers. The first of these cases, ~~Thurmond, Christopher, et al. v. SunTrust Banks, Inc. et al., was filed in February 2011 in the U.S. District Court~~ for the ~~Eastern District of Pennsylvania. This case was stayed by the Court pending the outcome of~~ ~~Edwards v. First American Financial Corporation, a captive reinsurance case that was pending before the U.S. Supreme Court at the time. The second of these cases,~~ ~~Acosta, Lemuel & Maria Ventrella et al. v. SunTrust Bank, SunTrust Mortgage, Inc., et al.,~~ ~~was filed in the U.S. District Court for the Central District of California in December 2011. This case was stayed pending a decision in the~~ ~~Edwards~~ ~~case also. In June 2012,~~

~~the U.S. Supreme Court withdrew its grant of~~ ~~certiorari~~ in ~~Edwards~~three and ~~as a result, the stays in these cases were lifted. SunTrust has filed a motion to dismiss the~~ ~~Thurmond~~ ~~case which was granted in part and denied in part, allowing limited discovery surrounding the argument that the statute of limitations for certain claims should be equitably tolled.~~ ~~Thurmond~~ ~~has been stayed pending a ruling in a similar case currently before the Third Circuit. The~~ ~~Acosta~~ ~~plaintiffs have voluntarily dismissed their case.~~nine months ended September 30, 2017.

United States Attorney’s Office for the Southern District of New York Foreclosure Expense Investigation

In April 2013, STM ~~has been~~began cooperating with the United States Attorney's Office for the Southern District of New York (the "Southern District") in a broad-based industry investigation regarding claims for foreclosure-related expenses charged by law firms in connection with the foreclosure of loans guaranteed or insured by Fannie Mae, Freddie Mac, or FHA. The investigation relates to a private litigant qui tam lawsuit filed under seal and remains in early stages. The Southern District has not yet advised STM how it will proceed in this matter. The

Southern District and STM engaged in dialogue regarding potential resolution of this matter as part of the National Mortgage Servicing Settlement, but were unable to reach agreement.

LR Trust v. SunTrust Banks, Inc., et al.

In November 2016, the Company and certain officers and directors were named as defendants in a shareholder derivative action alleging that defendants failed to take action related to activities at issue in the National Mortgage Servicing, HAMP, and FHA Originations settlements, and certain other legal matters or to ensure that the alleged activities in each were remedied and otherwise appropriately addressed. Plaintiff sought an award in favor of the Company for the amount of damages sustained by the Company, disgorgement of alleged benefits obtained by defendants, and enhancements to corporate governance and internal controls. On September 18, 2017, the court dismissed this matter and on October 16, 2017, Plaintiff filed an appeal.

~~Felix v. SunTrust Mortgage, Inc.~~SEC Investment Adviser 12b-1 Fees

This putative class action was filed against STM on April 4, 2016. Plaintiff alleges that STM breaches its contract with borrowers when it collects interest on FHA loans at repayment because STM fails to use an approved FHA notice form. Plaintiff also alleges that STM violatesThe SEC Division of Enforcement investigated whether STIS committed fraud under the ~~Georgia usury statute~~Investment Advisers Act of 1940 ("IAA"), by ~~collecting such interest. Plaintiff attempts to bring the breach of contract claim~~purchasing mutual fund shares on behalf of ~~all borrowers~~clients that imposed an SEC Rule 12b-1 marketing fee on the investment if share classes existed which did not impose such a fee, and informed the ~~usury claim on behalf~~Company that it made a preliminary determination to recommend that the SEC bring an enforcement action against STIS. Specifically, the proposed action would allege violations of ~~Georgia borrowers. Plaintiff~~Sections 206(1), 206(2), 206(4), and ~~STM reached~~207 of the IAA and Rule 206(4)-7 of the Code of Federal Regulations.

On September 14, 2017, pursuant to a settlement agreed to by the parties, the SEC issued an administrative order against STIS, instituting administrative and cease and desist proceedings pursuant to Section 15(b) of the ~~action with the class,~~Exchange Act and ~~the U.S. District Court for the Northern District of Georgia granted preliminary approval~~Sections 203(e) and 203(k) of the ~~settlement on September 9, 2016.~~IAA, making findings and imposing remedial sanctions and a cease and desist order (the "OIP"). The ~~settlement terms had an insignificant impact on~~OIP imposed a civil monetary penalty of $1.1 million upon STIS and required STIS to refund to current and former clients $1.3 million of avoidable 12b-1 fees they paid, including interest. Refunds to the ~~Company's financial position. A hearing on final approval has been scheduled for February 6, 2017.~~

~~Northern District of Georgia Investigation~~affected clients are substantially complete.

On ~~April 28, 2016,~~September 14, 2017, the ~~Bank received~~SEC Division of Corporation Finance notified the Company that its request for a ~~subpoena from~~waiver of ineligible issuer status under Rule 405 of the ~~United States Attorney’s Office for~~Securities Act of 1933 had been granted and that its status as a well-known seasoned issuer would continue notwithstanding issuance of the Northern District of Georgia in connection with an investigation pertaining to a suspected embezzlement by an employee of a SunTrust business client. The subpoena requests information regarding the Bank’s Anti-Money Laundering and Bank Secrecy Act compliance processes to detect such crimes by employees of business clients. The Company is cooperating with the investigation.OIP.

Notes to Consolidated Financial Statements (Unaudited), continued

NOTE 16 - BUSINESS SEGMENT REPORTING

The Company measures business activity across ~~three~~two segments: Consumer ~~Banking~~ and ~~Private Wealth Management,~~ Wholesale ~~Banking, and Mortgage Banking,~~, with functional activities included in Corporate Other. ~~Business~~In the second quarter of 2017, the Company realigned its business segment structure from three segments ~~are determined~~to two segments based on, ~~the products and services provided or the type of client served, and they reflect~~among other things, the manner in which financial information is evaluated by ~~management.~~ management and in conjunction with Company-wide organizational changes that were announced during the first quarter of 2017. Specifically, the Company retained the previous composition of the Wholesale Banking segment and changed the basis of presentation of the Consumer Banking and Private Wealth Management segment and Mortgage Banking segment such that those segments were combined into a single Consumer segment.

The following is a description of the segments and their primary ~~businesses.~~businesses at September 30, 2017.

The Consumer ~~Banking and Private Wealth Management~~ segment is made up of ~~three~~four primary businesses:

Consumer Banking provides services to individual consumers and branch-managed small business clients through an extensive network of traditional and in-store branches, ATMs, the internet (www.suntrust.com), mobile banking, and by telephone (1-800-SUNTRUST). Financial products and services offered to consumers and small business clients include deposits and payments, loans, ~~brokerage,~~ and various fee-based services. ~~Discount/online and full-service brokerage products are offered to individual clients through STIS.~~ Consumer Banking also serves as an entry point for clients and provides services for other ~~lines of business.~~businesses.

Consumer Lending offers an array of lending products to individual consumers and small business clients via the Company's Consumer Banking and ~~Private Wealth Management~~PWM businesses, through the internet (www.suntrust.com and www.lightstream.com), as well as through various national offices and partnerships. Products offered include home equity lines, personal credit lines and loans, direct auto, indirect auto, student lending, credit cards, and other lending products.

PWM provides a full array of wealth management products and professional services to ~~both~~ individual consumers and institutional clients, including loans, deposits, brokerage, professional investment ~~management,~~advisory, and trust services to clients seeking active management of their financial resources. Institutional clients are served by the Institutional Investment Solutions business. Discount/online and full-service brokerage products are offered to individual clients through STIS. Investment advisory products and services are offered to clients by STAS, an SEC registered investment advisor. PWM also includes GenSpring, which provides family office solutions to ultra-high net worth individuals and their families. Utilizing teams of multi-disciplinary specialists with expertise in investments, tax, accounting, estate planning, and other wealth management disciplines, GenSpring helps families manage and sustain wealth across multiple generations.

Mortgage Banking offers residential mortgage products nationally through its retail and correspondent channels, the internet (www.suntrust.com), and by telephone (1-800-SUNTRUST). These products are either sold in the

secondary market, primarily with servicing rights retained, or held in the Company’s loan portfolio. Mortgage Banking also services loans for other investors, in addition to loans held in the Company’s loan portfolio.

The Wholesale ~~Banking~~ segment is made up of ~~four~~three primary ~~businesses:~~businesses and the Treasury & Payment Solutions product group:

CIB delivers comprehensive capital markets solutions, including advisory, capital raising, and financial risk management, with the goal of serving the needs of both public and private companies in the Wholesale ~~Banking~~ segment and PWM business. Investment Banking and Corporate Banking teams within CIB serve clients across the nation, offering a full suite of traditional banking and investment banking products and services to companies

with annual revenues typically greater than $150 million. Investment Banking serves select industry segments including consumer and retail, energy, financial services, healthcare, industrials, and technology, media and communications. Corporate Banking serves clients across diversified industry sectors based on size, complexity, and frequency of capital markets issuance. Also managed within CIB is the Equipment Finance Group, which provides lease financing solutions (through SunTrust Equipment Finance & Leasing).

Commercial & Business Banking offers an array of traditional banking products, including lending, cash management and investment banking solutions via STRH to commercial clients (generally clients with revenues between $1 million and $150 million), not-for-profit organizations, and governmental entities, as well as auto dealer financing (floor plan inventory financing). Also managed within Commercial & Business Banking is ~~the Premium Assignment Corporation,~~PAC, which provides corporate insurance premium financing solutions.


◦	In September 2017, the Company announced that it reached a definitive agreement to sell its PAC subsidiary. PAC had $1.3 billion in assets at September 30, 2017. The sale is expected to close in the fourth quarter of 2017, subject to various customary closing conditions.

Commercial Real Estate provides a full range of financial solutions for commercial real estate developers, owners, and ~~investors,~~operators, including construction, mini-perm, and permanent real estate financing, as well as tailored financing and equity investment solutions via STRH. ~~The institutional~~With the acquisition of the assets of Pillar in December of 2016, commercial real estate ~~team~~also provides multi-family agency lending and servicing, as well as loan administration, advisory, and commercial mortgage brokerage services. The Institutional Property Group business targets relationships with ~~institutional~~REITs, pension fund advisors, private funds, homebuilders, and insurance companies and the ~~regional team~~Regional business focuses on private real estate owners and developers through a regional delivery structure. Commercial Real Estate also offers tailored financing and equity investment solutions for community development

Notes to Consolidated Financial Statements (Unaudited), continued

and affordable housing projects through STCC, with particular expertise in Low Income Housing Tax Credits and New Market Tax Credits.

Treasury & Payment Solutions provides ~~all SunTrust business~~Wholesale clients with services required to manage their payments and receipts, combined with the ability to manage and optimize their deposits across all aspects of their business. Treasury & Payment Solutions operates all electronic and paper payment types, including card, wire transfer, ACH, check, and cash. It also provides clients the means to manage their accounts electronically online, both domestically and internationally.

~~Mortgage Banking offers residential mortgage products nationally through its retail and correspondent channels, the internet (www.suntrust.com~~), and by telephone (1-800-SUNTRUST). These products are either sold in the secondary market, primarily with servicing rights retained, or held in the Company’s loan portfolio. Mortgage Banking also services loans for other investors, in addition to loans held in the Company’s loan portfolio.

Corporate Other includes management of the Company’s investment securities portfolio, long-term debt, end user derivative instruments, short-term liquidity and funding activities, balance sheet risk management, and most real estate

~~Notes to Consolidated Financial Statements (Unaudited), continued~~

assets. Additionally, Corporate Other includes the Company's functional activities such as marketing, SunTrust online, human resources, finance, ~~Enterprise Risk,~~ER, legal and compliance, communications, procurement, enterprise information services, corporate real estate, and executive management.

Because business segment results are presented based on management accounting practices, the transition to the consolidated results ~~which are~~ prepared under U.S. GAAP creates certain differences, which are reflected in Reconciling Items. Business segment reporting conventions are described ~~below.~~below:

Net interest income-FTE – is reconciled from net interest income and is ~~presented~~grossed-up on an FTE basis to make income from tax-exempt assets comparable to other taxable products. Segment results reflect matched maturity funds transfer pricing, which ascribes credits or charges based on the economic value or cost created by assets and liabilities of each segment. Differences between these credits and charges are captured as reconciling items. The change in this variance is generally attributable to corporate balance sheet management strategies.

Provision/(benefit) for credit losses – represents net charge-offs by segment combined with an allocation to the segments for the provision/(benefit) attributable to each segment's quarterly change in the ALLL and unfunded commitments reserve balances.

Noninterest income – includes federal and state tax credits that are grossed-up on a pre-tax equivalent basis, related primarily to certain community development investments.

Provision for income taxes-FTE – is calculated using a blended income tax rate for each ~~segment. This calculation~~segment and includes ~~the impact~~reversals of ~~various adjustments, such as~~ the ~~reversal of the FTE gross up on tax-exempt assets,~~ tax adjustments and credits ~~that are unique to each segment.~~

described above. The difference between the calculated provision for income taxes at the segment level and the consolidated provision for income taxes is reported as reconciling items.

The segment’s financial performance is comprised of direct financial results and allocations for various corporate functions that provide management an enhanced view of the segment’s financial performance. Internal allocations include the following:

Operational costs – expenses are charged to segments based on a methodical activity-based costing process, which also allocates residual expenses to the segments. Generally, recoveries of these costs are reported in Corporate Other.

Support and overhead costs – expenses not directly attributable to a specific segment are allocated based on various drivers (number of equivalent employees, number of PCs/laptops, net revenue, etc.). Recoveries for these allocations are reported in Corporate Other.

~~Sales and referral credits~~ ~~– segments may compensate another segment for referring or selling certain products. The majority of the revenue resides in the segment where the product is ultimately managed.~~

The application and development of management reporting methodologies is an active process and undergoes periodic enhancements. The implementation of these enhancements to the internal management reporting methodology may materially affect the results disclosed for each segment, with no impact on consolidated results. If significant changes to management reporting methodologies take place, the impact of these changes is quantified and prior period information is ~~reclassified,~~revised, when practicable.

In the second quarter of 2017, in conjunction with the aforementioned business segment structure realignment, the Company made certain adjustments to its internal funds transfer pricing methodology. Prior period information was revised to conform to the new business segment structure and the updated internal funds transfer pricing methodology.

This report contains forward-looking statements. Statements regarding: (i) future levels of net interest margin, ~~regulatory assessments, share repurchases,~~deposit costs, premium amortization, expenses, efficiency, delinquencies, charge-offs, hurricane related losses, the net charge-off ratio, the provision for loan losses, ~~mortgage production volumes and income, the ratio of ALLL to period end loans, service charges on deposit accounts and the impact of an enhanced posting order process, net occupancy expense,~~ net charge-offs, our capital ratios, and share repurchases; (ii) tangible efficiency ratio goals; (iii) the ~~net charge-off ratio; (ii) future rates~~timing of ~~NPL formation and energy-related NPLs and charge-offs; (iii) future provision for loan losses exceeding net charge-offs;~~closing of our sale of PAC; (iv) ~~future actions taken regarding~~ the ~~LCR and related effects,~~asset sensitivity of our balance sheet and our ~~ability~~exposure to ~~comply with~~interest rate risk in future ~~regulatory requirements within regulatory timelines;~~periods; (v) ~~our expectations regarding the return to accruing status for certain TDRs; (vi)~~future changes in the size and composition of the securities AFS portfolio; (vi) future issuances of preferred stock; (vii) ~~efficiency goals,~~future impacts of ASUs not yet adopted; (viii) the ~~timing of the closing and estimated financial effects of the Pillar acquisition, and~~provision for income taxes; (ix) future ~~profitable growth~~optimization of ~~the Wholesale Banking segment~~our capital structure and balance sheet; and (x) future credit ratings and outlook, are forward-looking statements. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words ~~“believes,~~“believe,” ~~“expects,~~“expect,” ~~“anticipates,~~“anticipate,” ~~“estimates,~~“estimate,” ~~“intends,~~“intend,” ~~“plans,~~“target,” ~~“targets,~~“forecast,” ~~“initiatives,~~“future,” “strategy,” “goal,” “initiative,” “plan,” “opportunity,” “potentially,” “probably,” ~~“projects,~~“project,” ~~“outlook”~~“outlook,” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Such statements are based upon the current beliefs and expectations of management and on information currently available to management. They speak as of the date hereof, and we do not assume any obligation to update the statements made herein or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.

Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, Item 1A., "Risk Factors" ofin our ~~2015~~2016 Annual Report on Form 10-K and also include risks discussed in this report and in other periodic reports that we file with the SEC. Additional factors include: current and future legislation and regulation could require us to change our business practices, reduce revenue, impose additional costs, or otherwise adversely affect business operations or competitiveness; we are subject to ~~increased~~stringent capital adequacy and liquidity requirements and our failure to meet these would adversely affect our financial condition; the ~~fiscal~~monetary and ~~monetary~~fiscal policies of the federal government and its agencies could have a material adverse effect on our earnings; our financial results have been, and may continue to be, materially affected by general economic conditions, and a deterioration of economic conditions or of the financial markets may materially adversely affect our lending and other businesses and our financial results and condition; changes in market interest rates or capital markets could adversely affect our revenue and

expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; interest rates on our outstanding financial instruments might be subject to change based on regulatory developments, which could adversely affect our revenue, expenses, and the value of those financial instruments; our

earnings may be affected by volatility in mortgage production and servicing revenues, and by changes in carrying values of our ~~MSRs~~servicing assets and mortgages held for sale due to changes in interest rates; disruptions in our ability to access global capital markets may adversely affect our capital resources and liquidity; we are subject to credit risk; we may have more credit risk and higher credit losses to the extent that our loans are concentrated by loan type, industry segment, borrower type, or location of the borrower or collateral; we rely on the mortgage secondary market and GSEs for some of our liquidity; loss of customer deposits could increase our funding costs; any reduction in our credit rating could increase the cost of our funding from the capital markets; we are subject to litigation, and our expenses related to this litigation may adversely affect our results; we may incur fines, penalties and other negative consequences from regulatory violations, possibly even inadvertent or unintentional violations; we are subject to certain risks related to originating and selling mortgages, and may be required to repurchase mortgage loans or indemnify mortgage loan purchasers as a result of breaches of representations and warranties, or borrower fraud, and this could harm our liquidity, results of operations, and financial condition; we face ~~certain~~ risks as a servicer of loans; we are subject to risks related to delays in the foreclosure process; ~~clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding;~~ consumers and small businesses may decide not to use banks to complete their financial transactions, which could affect net income; we have businesses other than banking which subject us to a variety of risks; negative public opinion could damage our reputation and adversely impact business and revenues; we may face more intense scrutiny of our sales, training, and incentive compensation practices; we rely on other companies to provide key components of our business infrastructure; competition in the financial services industry is intense and we could lose business or suffer margin declines as a result; we continually encounter technological change and must effectively develop and implement new technology; maintaining or increasing market share depends on market acceptance and regulatory approval of new products and services; our ability to receive dividends from our subsidiaries or other investments could affect our liquidity and ability to pay dividends; any reduction in our credit rating could increase the cost of our funding from the capital markets; we have in the past and may in the future pursue acquisitions, which could affect costs and from which we may not be able to realize anticipated benefits; we depend on the expertise of key personnel, and if these individuals leave or change their roles without effective replacements, operations may suffer; we may not be able to hire or retain additional qualified personnel and recruiting and compensation costs may increase as a result of turnover, both of which may increase costs and reduce profitability and may adversely impact our ability to implement our business strategies; our framework for managing risks may not be effective in mitigating risk and loss to us; our controls and procedures may not prevent or detect all errors or acts of fraud; we are at risk of increased losses from fraud; our operational systems and infrastructure may fail or may be the subject of a breach or cyber-attack that could adversely affect our business; a disruption, breach, or failure in ~~or breach of our~~the operational ~~or security~~ systems orand infrastructure ~~or those~~ of our third party vendors and other service providers, including as a result of cyber-attacks, could ~~disrupt our businesses, result~~adversely

~~in the disclosure or misuse of confidential or proprietary information, damage~~affect our ~~reputation, increase our costs and cause losses;~~business; the soundness of other financial institutions could adversely affect us; we depend on the accuracy and completeness of information about clients and counterparties; our accounting policies and processes are critical to how we report our financial condition and results of operation, and they require management to make estimates about matters that are uncertain; depressed market values for our stock and adverse economic conditions sustained over a period of time may require us to write down some portion of our goodwill; our financial instruments measured at fair value expose us to certain market risks; our stock price can be volatile; we might not pay dividends on our stock; our ability to receive dividends from our subsidiaries or other investments could affect our liquidity and ability to pay dividends; and certain banking laws and certain provisions of our articles of incorporation may have an anti-takeover effect.

INTRODUCTION

We are a leading provider of financial services with our headquarters located in Atlanta, Georgia. Our principal banking subsidiary, SunTrust Bank, offers a full line of financial services for consumers, businesses, corporations, and institutions, both through its branches (located primarily in Florida, Georgia, ~~Maryland,~~Virginia, North Carolina, Tennessee, Maryland, South Carolina, ~~Tennessee, Virginia,~~ and the District of Columbia) and through other national delivery channels. In addition to deposit, credit, and trust and investment services offered by the Bank, our other subsidiaries provide capital markets, mortgage banking, securities brokerage, online consumer lending, and asset and wealth management services. We operate ~~three~~two business segments: Consumer ~~Banking~~ and ~~Private Wealth Management,~~ Wholesale, ~~Banking, and Mortgage Banking,~~ with our functional activities included in Corporate Other. See Note 16, "Business Segment Reporting," to the Consolidated Financial Statements in this Form 10-Q for a description of our business ~~segments. In addition~~segments and related business segment structure realignment from three segments to ~~deposit, credit, mortgage banking, and trust and investment services offered by~~two segments in the ~~Bank, our other subsidiaries provide asset and wealth management, securities brokerage, and capital markets services.~~second quarter of 2017.

This MD&A is intended to assist readers in their analysis of the accompanying Consolidated Financial Statements and supplemental financial information. It should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial Statements in Item 1 of this Form 10-Q, as well as other information contained in this document and in our ~~2015~~2016 Annual Report on Form 10-K. When we refer to “SunTrust,” “the Company,” “we,” “our,” and “us” in this narrative, we mean SunTrust Banks, Inc. and ~~the~~its consolidated subsidiaries.

In the MD&A, consistent with SEC guidance in Industry Guide 3 that contemplates the calculation of tax exempt income on a tax equivalent basis, we present net interest income, net interest margin, total revenue, and efficiency ratios on an FTE basis. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments using a federal tax rate of 35% and state income taxes, where applicable, to increase tax-exempt interest income to a taxable-equivalent basis. We believe this measure to be the preferred industry measurement of net interest income and that it enhances comparability of net interest income arising from taxable and tax-exempt sources. Additionally, we present other non-U.S. GAAP metrics to assist investors in understanding

management’s view of particular financial measures, as well as to align presentation of these financial measures with peers in the industry who may also provide a similar presentation.

Reconcilements for all non-U.S. GAAP measures are provided in Table 1.20.

EXECUTIVE OVERVIEW

Financial Performance

We delivered solid revenue growth, ~~across all~~improved efficiency, and higher capital returns in the third quarter of 2017, resulting in strong EPS growth. Our performance was driven by consistent execution against our ~~business segments, which helped~~core strategies and provides further evidence that our differentiated value proposition continues to ~~offset~~resonate with clients. Total revenue for the third quarter of 2017 increased 2% sequentially and 4% compared to the third quarter of 2016, driven largely by higher net interest income and strong investment banking performance.

Net interest income was $1.5 billion for the third quarter of 2017, an increase of 2% sequentially and 9% compared to the third quarter of 2016, due to net interest margin expansion and growth in ~~expenses during~~average earning assets. Noninterest income increased 2% sequentially and decreased 5% compared to the third quarter of 2016. ~~EPS~~ ~~declined compared~~The sequential increase was due primarily to our continued success in meeting more of our clients' capital markets needs across the ~~prior quarter and~~entire Wholesale segment, evidenced by the third quarter of 2015; however, the prior quarter and third quarter of 2015 included $0.05 and $0.11 per share, respectively, in discrete items that benefited earnings. Excluding these discrete benefits, ~~EPS~~ grew compared to both prior periods. Total revenue for the current quarter increased modestly compared to the prior quarter and increased 8% year-over-year driven by increases in both net interest income and noninterest income. Net interest income for the third quarter increased 8% year-over-year due to an$24 million increase in capital markets-related income as mergers and acquisitions advisory and equity offerings both ~~average earning assets and net interest margin, while the 10%~~had strong quarters. The year-over-year ~~increase~~decrease in noninterest income was driven by lower mortgage-related income, offset partially by higher ~~mortgage~~investment banking and capital markets-related income, partially offset by a decline in other noninterest income due to gains from the sale of loans and leases in the prior year quarter. The sequential quarter improvement in total revenue was driven by a 1% increase in net interest income, as well as growth in mortgage and capital markets-related income, which offset the effect of net asset-related gains recognized in the prior quarter.commercial real estate related income.

Our net interest margin ~~declined three~~increased one basis point sequentially and 19 basis points sequentially, due largely to lower residential mortgage loan and security yields. The full effect of our second quarter of 2016 subordinated debt issuance, together with slightly higher deposit costs, also contributed to the sequential decline. Relativecompared to the third quarter of ~~2015, net interest margin increased two basis points to 2.96%, reflecting~~2016, driven primarily by higher earning asset yields arising from higher benchmark interest rates, ~~in addition to a~~continued favorable mix shift ~~within~~in the ~~loan~~LHFI portfolio, and lower MBS premium amortization, offset partially by ~~higher~~ funding costs. ~~Assuming a static rate environment,~~Looking forward to the fourth quarter of 2017, we expect net interest margin to decline by ~~approximately two~~one to three basis ~~points in~~points. Beyond that, we anticipate future net interest margin expansion if the ~~fourth quarter~~short end of ~~2016. We continue~~the yield curve continues to ~~carefully manage the duration of our balance sheet given the prolonged low interest rate environment, while also being cognizant of controlling interest rate risk.~~rise. See additional discussion related to revenue, noninterest income, and net interest income and margin in the "Noninterest Income" and "Net Interest Income/Margin" sections of this MD&A. Also in this MD&A, see Table ~~13,~~12, "Net Interest Income Asset Sensitivity," for an analysis of potential changes in net interest income due to instantaneous moves in benchmark interest rates.

Noninterest expense ~~increased 5% sequentially,~~remained stable compared to the prior quarter and ~~11%~~declined $18 million, or 1%, compared to the third quarter of ~~2015. The sequential quarter increase was driven primarily by~~2016. Sequentially, higher ~~regulatory and compliance-related~~severance costs, ~~increased costs associated with improved business performance,~~software writedowns, and higher ~~net occupancy costs.~~personnel costs were offset by the favorable resolution of several legal matters during the current quarter. The ~~year-over-year increase~~decrease compared to the prior year quarter was driven by the ~~same factors impacting the prior quarter in addition to lower incentive-based compensation costs~~aforementioned legal accrual reversals and ~~discrete mortgage-related benefits in the third quarter of 2015. Regulatory assessments expense increased as a result of the FDIC’s surcharge on large depository institutions, which became effective~~reduced outside processing and software expenses during the current quarter. ~~This incremental surcharge is anticipated~~Though our expense base has and will vary from quarter to bequarter, we remain focused on reducing less productive expenses to provide funding for investments in ~~effect for 10 quarters. We will continue to work diligently to improve our~~talent, technology, and improved product offerings. See additional

~~execution and the effectiveness of our operations to improve our overall efficiency. See additional~~ discussion related to noninterest expense in the "Noninterest Expense" section of this MD&A. ~~Also see Table 1, "Selected Financial Data and Reconcilement of Non-U.S. GAAP Measures," in this MD&A for additional information regarding, and a reconciliation of, adjusted noninterest expense.~~

During the third quarter of ~~2016,~~2017, our efficiency ~~ratio increased to 63.1%~~and tangible efficiency ratios were 60.1% and 59.2%, respectively, both of which improved meaningfully compared to ~~61.4% in~~ the prior ~~year quarter. Our tangible efficiency ratio also increased during the current~~ quarter ~~to 62.5%~~ratios of 61.2% and 60.6%, and compared to ~~61.0% in~~ the third quarter of ~~2015, as expense growth outpaced~~2016 ratios of 63.1% and 62.5%, respectively. Our current quarter efficiency ratios benefited from the favorable resolution of several legal matters, which was offset partially by higher severance costs and software-related writedowns. Notwithstanding the impact of this net benefit, our core efficiency continued to improve. This progress, combined with our positive revenue ~~growth. For the nine months ended September 30, 2016,~~momentum and ongoing efficiency initiatives that we have been executing for several years, has driven positive operating leverage and enables us to remain on track to achieve our ~~efficiency ratio and~~ tangible efficiency ratio ~~both improved more than 100 basis points to 62.2%~~goals of between 61% and ~~61.6%, compared to 63.2%~~62% for 2017, and ~~62.8% for the same period in 2015, respectively, driven~~below 60% by ~~positive operating leverage. We remain focused on improving our efficiency each year with the objective of achieving our long-term efficiency ratio goal of below 60%.~~2019. See Table 1,20, "Selected Financial Data and Reconcilement of Non-U.S. GAAP Measures," in this MD&A for additional information regarding, and a reconciliation of, our tangible efficiency ratio.

Overall asset quality ~~trends~~ remained ~~relatively stable~~very strong during the third quarter of ~~2016, reflecting solid economic conditions in our markets and businesses, as well as continued underwriting discipline. Our loan portfolio continued to perform well,~~2017, evidenced by ~~stable delinquency and NPL levels and a modest~~our 0.21% annualized net charge-off ratio ~~of 0.35% for~~and 0.48% NPL ratio. These low levels reflect the ~~third quarter of 2016, compared to 0.39% for~~relative strength across our entire LHFI portfolio, notwithstanding anticipated losses incurred from the ~~prior quarter, and 0.21% for the third quarter of 2015. Energy-related net charge-offs improved sequentially to $33 million during the current quarter, compared to $70 million~~recent hurricanes, which resulted in a slight increase in the ~~prior quarter, which drove the four basis point reduction in our net charge-off ratio compared to the second quarter of 2016. The~~ ALLL to period-end LHFI ratio ~~declined two basis points from~~compared to the prior ~~quarter~~quarter. Our solid position reflects the proactive actions we have taken over the past several years to de-risk, diversify, and improve the quality of our loan portfolio. As it relates to hurricane impacts, we expect a modest increase in delinquencies and charge-offs over the next several quarters, driven primarily by ~~continued improvements~~the residential and consumer loan portfolios. We believe that losses from the recent hurricanes are very manageable in the ~~asset quality~~context of the ~~residential loan~~overall Company, given the strength and diversity of our LHFI portfolio. Overall, we expect to operate within a net charge-off ratio of between 25 and 35 basis points over the near term. We ~~expect our ALLL~~also continue to ~~period-end LHFI ratio to remain relatively stable in the medium-term, which should result in~~forecast a provision for loan losses that ~~modestly exceeds~~generally approximates net charge-offs. See additional discussion of ~~our energy-related loan exposure, as well as~~ our credit and asset quality, in the “Loans,” “Allowance for Credit Losses,” and “Nonperforming Assets” sections of this MD&A.

Average ~~loans~~total LHFI increased ~~1% sequentially,~~2% compared to the third quarter of 2016, driven by growth across ~~our~~all consumer loan portfolios as well as by growth in commercial construction loans and nonguaranteed residential mortgages. These increases were offset partially by declines in residential home equity products and CRE loans. Our consumer lending ~~strategies~~initiatives continue to produce ~~profitable~~solid loan growth through each of our major channels, while furthering the positive mix shift within the LHFI portfolio and improving our overall lending pipelines remain healthy. We sold approximately $1 billion of indirect automobile loans in September 2016 as part of our overall balance sheet optimization strategy. Separately, we reclassified $1.1 billion of CRE loans to the commercial construction loan portfolio this quarter in accordance with a revised interpretation of regulatory classification requirements. Compared to the third quarter of 2015, average loans grew 7%, driven by 5% growth in C&I loans, 20% growth in consumer loans, and 8% growth in nonguaranteed residential mortgages, partially offset by a 10% decline in residential home equity products. We remain focused on generating targeted loan growth at accretive risk-adjusted returns while continuing to meet the financing needs of our clients.return profile. See

additional loan discussion in the “Loans,” “Nonperforming Assets,” and "Net Interest Income/Margin" sections of this MD&A.

Average ~~quarterly~~ consumer and commercial deposits increased ~~1% sequentially and 7% year-over-year,~~3% compared to the third quarter of 2016, driven by ~~strong and~~ broad-based growth ~~in lower cost~~across most of our product categories, particularly NOW accounts and time deposits. Our success in growing deposits reflects our overall strategic efforts to meet more clients’ deposit and payment needs and thereby improve profitability; this growth has been enabled by investments in our technology platforms and client-facing bankers. Rates paid on our deposits increased ~~one~~14 basis ~~point sequentially, driven by a slight mix shift between~~points compared to the third quarter of 2016 resulting from the increase in benchmark interest rates. The strong deposit growth we have produced over the past several years, in addition to our ~~Wholesale Banking~~access to low-cost funding, enables us to prudently manage

our funding base and ~~Consumer Banking clients.~~more effectively manage our deposit costs. We ~~continue to maintain a disciplined approach to pricing with a focus~~remain focused on maximizing the value proposition ~~other than~~for our clients, outside of rates paid, ~~for~~by meeting more of our ~~clients.~~clients' needs through strategic investments in talent and technology. See additional discussion regarding average deposits in the "Net Interest Income/Margin" section of this MD&A.

Capital ~~and Liquidity~~

Our regulatory capital ~~position was relatively stable during the third quarter of~~ratios increased compared to December 31, 2016, with a CET1 ratio of ~~9.78%~~9.62% at September 30, ~~2016.~~2017, driven primarily by growth in retained earnings. Additionally, our CET1 ratio, on a fully phased-in basis, was estimated to be ~~9.66%~~9.48% at September 30, ~~2016,~~2017, which is well above the current regulatory requirement. Our book value and tangible book value per common share both increased ~~7% and 9%, respectively,~~ compared to December 31, ~~2015,~~2016, due primarily to ~~growth in retained~~ earnings ~~and a 3% decline in common shares outstanding.~~growth. See additional details related to our capital in Note 13, "Capital," to the Consolidated Financial Statements in our ~~2015~~2016 Annual Report on Form 10-K. Also see Table 1,20, "Selected Financial Data and Reconcilement of Non-U.S. GAAP Measures," in this MD&A for additional information regarding, and reconciliations of, tangible book value per common share and our fully phased-in CET1 ratio.

~~During the second quarter of 2016,~~In June 2017, we announced ~~that~~capital plans in response to the Federal ~~Reserve had no objections~~Reserve's review of and non-objection to our 2017 capital plan submitted in conjunction with the ~~2016~~2017 CCAR. Accordingly, during the third quarter of ~~2016,~~2017, we increased ~~the~~our quarterly common stock dividend by 54% to ~~$0.26 per share, which reflects an increase of 8%~~$0.40 per common ~~share from the prior quarter.~~share. We also repurchased ~~$240~~$330 million of our outstanding common stock during the third quarter of ~~2016~~2017 in conjunction with the ~~2016~~2017 capital plan. ~~During October 2016,~~At September 30, 2017, we ~~repurchased an additional $240~~had $990 million of ~~our outstanding~~remaining common stock ~~as part of the 2016 capital~~repurchase capacity available under this plan, ~~and~~which we expect to ~~repurchase approximately $480 million of additional outstanding common stock~~conduct in relatively even quarterly increments through the end of the second quarter of ~~2017.~~2018. See additional details related to our capital actions and share repurchases in the “Capital Resources” section of this MD&A and in Part II, Item 2 of this Form 10-Q.

~~In October 2016, we announced that we signed a definitive agreement to acquire substantially all of the assets of the operating subsidiaries of~~ ~~Pillar~~ ~~Financial, LLC.~~ ~~Pillar~~ is a multi-family agency lending and servicing company with an originate-to-distribute focus that holds licenses with Fannie Mae, Freddie Mac, and the FHA. We expect that this acquisition will expand our capabilities within the commercial real estate business, while also being accretive to our return profile. The acquisition of ~~Pillar~~ ~~is expected to close in late 2016 or early 2017.~~

~~Wholesale Banking~~

Third Quarter of ~~2016~~2017

Net interest income was ~~$1.3~~$1.5 billion during the third quarter of ~~2016,~~2017, an increase of ~~$95~~$125 million, or 8%9%, compared to the third quarter of ~~2015.~~ 2016. This year-over-year increase was a result of a higher net interest margin and growth in average earning assets.

Net interest margin for the third quarter of ~~2016 increased two~~2017 was 3.15%, a 19 basis ~~points to 2.96%,~~point increase compared to the same period of last ~~year, due to a six basis point increase in average earning asset yields.~~year. The ~~earning assets yield~~ increase was driven primarily by higher earning asset yields arising from higher benchmark interest rates as well as continued balance sheet optimization. Specifically, average earning asset yields increased 31 basis points, driven by a 31 basis point increase in average LHFI yields, ~~and was partially offset by lower yields~~with increases in yield noted across all loan categories. Yields on securities AFS increased 28 basis points due primarily to changes in portfolio mix, lower premium amortization, and ~~an increase in~~higher interest rates. These increases were offset partially by higher rates paid on average interest-bearing liabilities.

~~Average earning assets~~Rates paid on average interest-bearing liabilities increased ~~$12.2 billion, or 7%, during the third quarter of 2016,~~17 basis points compared to the third quarter of ~~2015,~~2016, driven by increases in rates paid on NOW, money market accounts, and time deposits as well as short-term borrowings and long-term debt. Compared to the third quarter of 2016, the average rate paid on interest-bearing deposits increased 14 basis points.

Looking forward to the fourth quarter of 2017, we expect net interest margin to decline by one to three basis points. Beyond that, we anticipate future net interest margin expansion if the short end of the yield curve continues to rise. See Table 12, "Net Interest Income Asset Sensitivity," in this MD&A for an analysis of potential changes in net interest income due to instantaneous moves in benchmark interest rates.

Average earning assets increased $4.3 billion, or 2%, compared to the third quarter of 2016, driven primarily by a ~~$9.4~~$2.4 billion, or 7%2%, increase in average LHFI and a ~~$1.9~~$2.5 billion, or 7%9%, increase in average securities AFS. The increase in average LHFI was ~~attributable to~~driven by growth across all consumer loan ~~categories,~~portfolios as well as ~~C&I~~growth in commercial construction loans and nonguaranteed residential ~~mortgages, and commercial construction loans.~~mortgages. These increases were offset partially ~~offset~~ by ~~a decline~~declines in residential home equity products and CRE loans as paydowns exceeded new originations and draws. See the "Loans" section in this MD&A for additional discussion regarding loan activity.

~~Yields on average earning assets~~Average interest-bearing liabilities increased ~~six basis points to 3.20% for the third quarter of 2016,~~$4.3 billion, or 3%, compared to the third quarter of ~~2015, driven~~2016, due primarily ~~by an eight basis point increase~~to growth in LHFI yields, partially offset by a six basis point decline in yields on securities AFS. The increase in LHFI yields was due largely to a favorable mix shift within the LHFI portfolio along with higher benchmark interest rates, which increased late in the fourth quarter of 2015. Specifically, yields increased onconsumer and commercial ~~loans, particularly the C&I portfolio,~~deposits as well as ~~on residential home equity products, guaranteed mortgages,~~increases in funds purchased and ~~most~~other short-term borrowings. Average interest-bearing consumer ~~loan categories. The six basis point decrease in securities AFS yields was~~and commercial deposits increased $4.0 billion, or 4%, compared to the same period last year, due primarily to ~~the addition of lower-yielding U.S. Treasury securities to support LCR requirements that will~~growth in NOW and time deposits, offset partially by a decrease in money market accounts. Average other short-term borrowings increased $531 million, or 42%, driven by an increase ~~effective January 1, 2017.~~in short-term FHLB advances. See the ~~"Securities Available for Sale"~~"Borrowings" section in this MD&A for additional information regarding ~~the composition and associated yields on our investment securities.~~other short-term borrowings.

We utilize interest rate swaps to manage interest rate risk. These instruments are primarily receive-fixed, pay-variable swaps that synthetically convert a portion of our commercial loan portfolio from floating rates, based on LIBOR, to fixed rates. At September 30, ~~2016,~~2017, the outstanding notional balance of active

swaps that qualified as cash flow hedges on variable rate commercial loans was ~~$18.7~~$13.7 billion, compared to active swaps of ~~$16.9~~$16.7 billion at December 31, ~~2015.~~2016.

In addition to the income recognized from active swaps, we ~~continue to~~ recognize interest income ~~over the original hedge period resulting~~ from terminated ~~or de-designated~~ swaps that were previously designated as cash flow hedges on variable rate commercial loans. Interest income from our commercial loan swaps ~~was~~decreased to $13 million during the third quarter of 2017, compared to $59 million during the third quarter of 2016 ~~compared~~due primarily to ~~$70 million during the third quarter of 2015.~~an increase in LIBOR. As we manage our interest rate risk we may continue to purchase additional and/or terminate existing interest rate swaps.

Remaining swaps on commercial loans have maturities through 2022 and have an average maturity of ~~4.0~~3.8 years at September 30, ~~2016.~~2017. The weighted average rate on the ~~receive-~~

~~fixed~~receive-fixed rate leg of the commercial loan swap portfolio was ~~1.30%~~1.35%, and the weighted average rate on the pay-variable leg was ~~0.53%~~1.23%, at September 30, ~~2016.~~

Average interest-bearing liabilities increased $10.5 billion, or 9%, during the third quarter of 2016, compared to the third quarter of 2015, due primarily to growth in lower cost deposits, driven by increases in NOW and money market account balances, and an increase in long-term debt. Average consumer and commercial deposits increased $8.6 billion, or 8%, compared to the same period last year. Average long-term debt increased $2.6 billion, or 27%, driven by an increase in long-term FHLB advances and the issuance of $750 million of subordinated debt in the second quarter of 2016. See the "Borrowings" section in this MD&A for additional information regarding other short-term borrowings and long-term debt.

Rates paid on average interest-bearing liabilities increased three basis points during the current quarter, compared to the third quarter of 2015, driven by increased rates in NOW and money market accounts as well as the aforementioned increase in long-term debt. Compared to the third quarter of 2015, the average rate paid on interest-bearing deposits increased three basis points.

Looking forward, assuming a static rate environment, we expect net interest margin to decline by approximately two to three basis points in the fourth quarter of 2016, due largely to the continued low interest rate environment.We are continuing to carefully manage the duration of our overall balance sheet given the prolonged low interest rate environment, while also being cognizant of controlling interest rate risk. See Table 13, "~~Net Interest Income Asset Sensitivity," in this MD&A for an analysis of potential changes in net interest income due to instantaneous moves in benchmark interest rates.~~2017.

First Nine Months of ~~2016~~2017

Net interest income was ~~$4.0~~$4.3 billion during the first nine months of ~~2016,~~2017, an increase of ~~$357~~$324 million, or ~~10%~~8%, compared to the first nine months of ~~2015.~~2016. Net interest margin for the first nine months of ~~2016~~2017 increased 1114 basis points, to ~~2.99%~~3.13%, compared to the same period of 2016. The increase was driven by the same factors as discussed above for the third quarter of 2017. Specifically, average earning asset yields increased 23 basis points, driven by a 23 basis point increase in average LHFI yields, with notable increases in yield on average commercial loans, residential home equity products, guaranteed student loans, and consumer direct loans. In addition, yields on securities AFS increased 16 basis points due primarily to lower premium amortization. These increases were offset partially by higher rates paid on average interest-bearing liabilities.

Rates paid on average interest-bearing liabilities increased 12 basis points compared to the first nine months of 2016, driven primarily by the same factors that impacted the quarter-over-quarter increase. Compared to the first nine months of 2016, the average rate paid on interest-bearing deposits increased 10 basis points.

Average earning assets increased $6.6 billion, or 4%, compared to the first nine months of 2015, due to a 12 basis point increase in the average earning asset yields driven by higher loan and securities AFS yields. Compared to the first nine months of 2015, rates paid on interest-bearing liabilities remained stable.

~~Average earning assets increased $9.3 billion, or 6%, during the first nine months of~~ 2016, ~~compared to 2015,~~ driven primarily by a ~~$7.6~~$3.6 billion, or 6%3%, increase in average LHFI and a ~~$1.7~~$3.0 billion, or 6%11%, increase in average securities AFS. The increase in average LHFI was ~~due largely to~~driven by growth across all consumer loan portfolios as well as growth in commercial construction, C&I, and nonguaranteed residential ~~mortgages, consumer direct, and commercial construction loans.~~mortgages. These increases were offset partially ~~offset~~ by ~~a decline~~declines in residential home equity products and CRE loans as paydowns exceeded new originations and draws. See the "Loans" section in this MD&A for additional discussion regarding loan activity.

Yields on average earning assets increased 12 basis points, to 3.22%, for the first nine months of 2016, compared to 2015, driven primarily by a 13 basis point increase in LHFI yields primarily attributable to increases in yield on average commercial loans, particularly in our C&I portfolio, as well as

client relationships. Average long-term debt ~~driven~~increased $617 million, or 6%, compared to the first nine months of 2016, due primarily to the issuances of $1.0 billion of 3-year fixed rate senior notes, $300 million of 3-year floating rate senior notes and our second quarter issuance of $1.0 billion of 5-year fixed rate senior notes under our Global Bank Note program, partially offset by ~~a decrease~~decreases in ~~average~~ long-term FHLB advances. See the "Borrowings" section in this MD&A for additional information regarding ~~other short-term borrowings and~~ long-term debt.

Foregone Interest

Foregone interest income from NPLs had an immaterial effect on net interest margin during the three and nine months ended September 30, 2017. Forgone interest income from NPLs reduced net interest margin by two basis points for both the three and nine months ended September 30, 2016. ~~Foregone interest income from NPLs had a limited effect on the net interest margin during the three and nine months ended September 30, 2015.~~ See additional discussion of our expectations of future credit quality in the “Loans,” “Allowance for Credit Losses,” and “Nonperforming Assets” sections of this MD&A. In addition, Table 21 of this MD&A contains more detailed information concerning average balances, yields earned, and rates paid.

Noninterest income ~~increased $78~~decreased $43 million, or ~~10%~~5%, compared to the third quarter of ~~2015,~~2016 and ~~increased $66~~decreased $49 million, or 3%2%, compared to the nine months ended September 30, ~~2015.~~2016. The ~~increase~~decrease compared to the third quarter of ~~2015~~2016 was driven by ~~higher mortgage and capital markets-related~~reduced mortgage-related income, partially offset by ~~a decline in other noninterest income due to gains from the sale of loans and leases in the prior year quarter.~~higher investment banking income. The ~~increase~~decrease compared to the nine months ended September 30, ~~2015~~2016 was driven by ~~higher mortgage~~lower mortgage-related income and ~~capital markets-related~~other noninterest income ~~the second quarter gain~~as well as reduced service charges on ~~sale of premises, and higher client transaction-related fees, partially~~deposit accounts, offset by ~~a decline in wealth management-related income~~higher capital markets and a reduction in gains from sales of securities, loans, and leases. The growth in noninterest income for both periods reflects our ongoing strategic investments in talent and capabilities across our businesses.commercial real estate related income.

Client transaction-related-fees, which include service charges on deposit accounts, other charges and fees, and card fees, ~~remained relatively flat~~decreased $6 million, or 2%, compared to the third quarter of ~~2015~~2016 and ~~increased $12~~decreased $11 million, or 1%, ~~compared to the nine~~

~~months ended September 30, 2015. The increase~~ compared to the nine months ended September 30, ~~2015 was due primarily to increased client activity. Consistent with our previous guidance,~~2016. These decreases were driven by our enhanced posting order process ~~will be fully implemented in~~that was instituted during the fourth quarter of ~~this year, which we expect will result in a reduction in service charges on deposit accounts of approximately $10 million per quarter going forward.~~2016.

Investment banking income increased ~~$32~~$19 million, or ~~28%~~13%, compared to the third quarter of ~~2015,~~2016 and increased ~~$15~~$108 million, or 29%, compared to the nine months ended September 30, 2016. These increases were due to strong deal flow activity across most product categories, particularly equity offerings, mergers and acquisitions advisory, and syndicated finance.

Trading income decreased $14 million, or 22%, compared to the third quarter of 2016 and decreased $6 million, or 4%, compared to the nine months ended September 30, ~~2015. The increase for both periods was~~2016. These decreases were driven by ~~strong deal flow~~lower client trading activity ~~across most product categories as we continue to expand~~ and ~~deepen client relationships. The growth was due, in large part, to strength in equity capital markets and mergers and acquisitions advisory services. The increase~~higher counterparty credit valuation reserves.

Mortgage production related income decreased $57 million, or 48%, compared to the third quarter of ~~2015 was also driven by strong results in syndicated finance.~~

~~Trading income increased $34 million compared to the third quarter of 2015,~~2016 and ~~increased $14~~decreased $118 million, or ~~10%, compared~~

Noninterest expense ~~increased $145~~decreased $18 million, or ~~11%~~1%, compared to the third quarter of ~~2015,~~2016 and increased ~~$200~~$171 million, or 5%4%, compared to the nine months ended September 30, ~~2015.~~2016. The increase for both periods was driven by higher regulatory and compliance-related costs, higher costs associated with increased revenue and business activity, and lower incentive-based compensation costs and discrete mortgage-related benefits in the third quarter of 2015.

~~Personnel expenses increased $48 million, or 7%,~~decrease compared to the third quarter of ~~2015,~~2016 was driven by the favorable resolution of several legal matters during the current quarter as well as reduced outside processing and ~~increased $57 million, or 3%,~~software expense, offset partially by higher employee compensation and higher other noninterest expense. The increase compared to the nine months ended September 30, ~~2015. The increase for both periods~~2016 was ~~due primarily to~~driven largely by higher employee compensation (as a result of improved business performance and the acquisition of Pillar), together with increases in net occupancy expense, other noninterest expense, and regulatory assessments, offset partially by the aforementioned favorable resolution of several legal matters and lower ~~incentive-based compensation in the third quarter of 2015, as well as higher salaries and incentive-based compensation in the current quarter related to improved revenue and business performance.~~

~~Outside~~outside processing and software ~~expense~~expense.

Personnel expenses increased ~~$25~~$33 million, or ~~13%~~4%, compared to the third quarter of ~~2015,~~2016 and increased ~~$33~~$145 million, or 6%, compared to the nine months ended September 30, ~~2015. The increase for both periods was driven by increased business activity levels,~~2016. These increases were due primarily to higher ~~utilization of third party services, and increased investments in technology to enable ongoing efficiency initiatives.~~

Net occupancy expense increased $7 million, or 8%, compared to the third quarter of 2015, and remained relatively stable compared to the nine months ended September 30, 2015. The increase compared to the third quarter of 2015 was due to lower gains from prior sale-leaseback transactions during the current quarter,employee compensation costs associated with improved revenue growth as well as the ~~recognition of previously deferred sale-leaseback gains~~incremental compensation costs associated with the Pillar acquisition in the second quarter of 2016 as a result of a reduction in our usage of leased office space. Relative to the third quarter of 2016 level, we expect net occupancy expense to be relatively stable over the next one to two years, as further reductions in amortized gains will be generally offset by a more efficient branch network.December 2016.

~~Marketing~~Outside processing and ~~customer development~~software expense decreased $4$22 million, or 10%, compared to the third quarter of ~~2015,~~2016 and ~~increased $16~~decreased $14 million, or ~~15%~~2%, compared to the nine months ended September 30, ~~2015. The decrease compared to the third~~

~~quarter of 2015 was~~2016. These decreases were due primarily to lower ~~advertising costs in the current quarter. The increase compared to the nine months ended September 30, 2015 was primarily due to~~transaction volume, efficiencies generated with third party providers, and insourcing of certain activities, partially offset by higher ~~advertising costs during the first half of 2016 associated with our campaign to further advance the Company's purpose.~~software related investments.

~~Regulatory assessments~~Net occupancy expense increased ~~$15~~$24 million, or ~~47%, compared to the third quarter of 2015, and increased $23 million, or 22%~~9%, compared to the nine months ended September 30, ~~2015. The increase for both periods was driven primarily by the FDIC surcharge on large banks, which became effective during the current quarter, and higher FDIC assessment fees due~~2016 in response to ~~asset growth and a higher assessment rate.~~reduced amortized gains from prior sale leaseback transactions.

~~Operating losses~~Regulatory assessments expense increased $32 million compared to the third quarter of 2015, and increased $52 million compared to the nine months ended September 30, 2015. The increase for both periods was due primarily to favorable developments in previous mortgage-related matters, resulting in accrual reductions recognized in 2015.

~~Credit and collection services increased $9 million compared to the third quarter of 2015, and decreased $5~~$16 million, or ~~10%~~13%, compared to the nine months ended September 30, ~~2015. The~~2016.

This increase ~~compared to~~was driven by the FDIC surcharge on large banks that became effective in the third quarter of ~~2015 was driven primarily by higher credit-related expenses recognized in the current quarter related~~2016, and a larger assessment base attributable to increased business activity. The decrease compared to the nine months ended September 30, 2015 was driven primarily by mortgage transaction related reserve releases due to the expiration of representationbalance sheet growth.

Marketing and ~~warranty obligations, offset partially by the current quarter increase in credit-related expenses.~~

~~Amortization~~customer development expense increased $5$7 million, or ~~56%~~18%, compared to the third quarter of ~~2015,~~2016 and increased ~~$13~~$9 million, or ~~59%~~8%, compared to the nine months ended September 30, ~~2015. The increase for both periods was~~2016. These increases were driven by increased ~~investments~~sponsorship costs together with variability in ~~certain low-income~~advertising and client development costs.

Amortization expense increased $8 million, or 57%, compared to the third quarter of 2016 and increased $14 million, or 40%, compared to the nine months ended September 30, 2016. These increases were driven by an increase in our community development ~~projects,~~investments, which ~~also resulted in a similar increase in~~are amortized over the life of the related tax ~~credits.~~credits that these investments generate. See the "Community Development Investments" section of Note 8, "Certain Transfers of Financial Assets and Variable Interest Entities," to the Consolidated Financial Statements in this Form 10-Q for additional information regarding ~~our community development~~these investments.

Operating losses decreased $69 million compared to the third quarter of 2016, resulting in a $34 million operating gain for the current quarter. Compared to the nine months ended September 30, 2016, operating losses decreased $68 million, or 80%. These decreases were driven by the favorable resolution of several legal matters, which aggregated to $58 million, during the current quarter.

Other noninterest expense increased $28 million, or 20%, compared to the third quarter of 2016 and increased $48 million, or 12%, compared to the nine months ended September 30, 2016. These increases were due primarily to higher severance costs and software-related writedowns recognized in the current quarter associated with ongoing efficiency initiatives.

Our disclosures about the credit quality of our loan portfolio and the related credit reserves (i) describe the nature of credit risk inherent in the loan portfolio, (ii) provide information on how we analyze and assess credit risk in arriving at an adequate and appropriate ALLL, and (iii) explain changes in the ALLL as well as reasons for those changes.

Our loan portfolio consists of three loan segments: commercial, residential, and consumer. Loans are assigned to these segments based on the type of borrower, purpose, collateral, and/or our underlying credit management processes. Additionally, we further disaggregate each loan segment into loan types based on common characteristics within each loan segment.

Commercial Loans

C&I loans include loans to fund business operations or activities, loans secured by owner-occupied properties, corporate credit cards, and other wholesale lending activities. Commercial loans secured by owner-occupied properties are classified as C&I loans because the primary source of loan repayment for these properties is business income and not real estate operations. CRE and commercial construction loans include investor loans where repayment is largely dependent upon the operation, refinance, or sale of the underlying real estate.

Residential Loans

Residential mortgages, both government-guaranteed and nonguaranteed, consist of loans secured by 1-4 family homes, mostly prime, first-lien loans. Residential home equity products consist of equity lines of credit and closed-end equity loans that may be in either a first lien or junior lien position. Residential construction loans include owner-occupied residential ~~lot~~construction-to-perm loans and ~~construction-to-perm~~residential lot loans.

Consumer Loans

Consumer loans include government-guaranteed student loans, indirect loans (consisting of loans secured by automobiles, boats, and recreational vehicles), other direct loans (consisting primarily of unsecured loans, direct auto loans, loans secured by negotiable collateral, and private student loans), and consumer credit cards.

The composition of our loan portfolio is ~~shown~~presented in Table 5.4:


Loan Portfolio by Types of Loans	Loan Portfolio by Types of Loans		Table 5		Loan Portfolio by Types of Loans		Table 4
(Dollars in millions)	September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016
Commercial loans:
C&I		$68,298		$67,062
C&I ¹						$67,758		$69,213
CRE	5,056		6,236		5,238		4,996
Commercial construction	3,875		1,954		3,964		4,015
Total commercial loans	77,229		75,252		76,960		78,224
Residential loans:
Residential mortgages - guaranteed	521		629		497		537
Residential mortgages - nonguaranteed ¹	26,306		24,744
Residential mortgages - nonguaranteed ²					27,041		26,137
Residential home equity products	12,178		13,171		10,865		11,912
Residential construction	393		384		327		404
Total residential loans	39,398		38,928		38,730		38,990
Consumer loans:
Guaranteed student	5,844		4,922		6,559		6,167
Other direct	7,358		6,127		8,597		7,771
Indirect	10,434		10,127		11,952		10,736
Credit cards	1,269		1,086		1,466		1,410
Total consumer loans	24,905		22,262		28,574		26,084
LHFI		$141,532		$136,442		$144,264		$143,298
LHFS ²		$3,772		$1,838
LHFS ³						$2,835		$4,169

¹Includes ~~$234~~$3.5 billion and $3.7 billion of lease financing and $764 million and ~~$257~~$729 million of installment loans at September 30, 2017 and December 31, 2016, respectively.

²Includes $206 million and $222 million of LHFI measured at fair value at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

²³ Includes ~~$3.0~~$2.3 billion and ~~$1.5~~$3.5 billion of LHFS measured at fair value at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

LHFI totaled ~~$141.5~~$144.3 billion at September 30, ~~2016,~~2017, an increase of ~~$5.1 billion,~~$966 million, or 4%1%, from December 31, ~~2015,~~2016, driven ~~largely~~ by growth in consumer loans, nonguaranteed residential mortgages, and CRE loans, offset partially by decreases in C&I loans and residential home equity products.

Average LHFI during the third quarter of 2017 totaled $144.7 billion, up $266 million compared to the prior quarter, driven by growth in consumer loans, commercial construction loans, and nonguaranteed residential mortgages. These increases were offset partially ~~offset~~ by ~~decreases~~declines in residential home equity products and CRE loans.

Average loans during the third quarter of 2016 totaled $142.3 billion, up $1.0 billion, or 1%, compared to the prior quarter driven primarily by loan growth in consumer loans and nonguaranteed residential mortgages, partially offset by declines in C&I loans and residential home equity products. See the "Net Interest Income/Margin" section of this MD&A for more information regarding average loan balances.

Commercial loans ~~increased $2.0~~decreased $1.3 billion, or 3%2%, during the first nine months of ~~2016, driven largely by~~2017 compared to December 31, 2016. This decrease was due to a ~~$1.2~~$1.5 billion, or 2%, ~~increase~~decline in C&I loans ~~resulting from growth~~driven by elevated paydowns and lower revolver utilization. The decrease in C&I loans was offset partially by a ~~number of industry verticals and client segments. Commercial construction~~$242 million, or 5%, increase in CRE loans ~~also increased by $1.9 billion, or 98%, compared to December 31, 2015,~~ due to ~~a reclassification of $1.1 billion of CRE loans to the commercial construction~~organic loan portfolio this quarter in accordance with a revised interpretation of regulatory classification requirements. CRE loans decreased $1.2 billion, or 19%, compared to December 31, 2015, due primarily to the aforementioned reclassification.production and draws on existing commitments.

Residential loans ~~increased $470~~decreased $260 million, or 1%, compared to December 31, ~~2015,~~2016, driven ~~by a $1.6 billion, or 6%, increase in nonguaranteed residential mortgages as new originations exceeded paydowns. The increase in nonguaranteed residential mortgages was offset~~ largely by a ~~$993 million,~~$1.0 billion, or 8%9%, decrease

in residential home equity products as payoffs and paydowns exceeded new originations and draws during the first nine months of ~~2016.~~2017. The decrease in residential home equity products was offset largely by a $904 million, or 3%, increase in nonguaranteed residential mortgages.

At September 30, ~~2016,~~2017, 40% of our residential home equity products were in a first lien position and 60% were in a junior

lien position. For residential home equity products in a junior lien position, we own or service ~~30%~~31% of the loans that are senior to the home equity product. Approximately ~~10%~~11% of the home equity line portfolio is due to convert to amortizing term loans by the end of ~~2016~~2017 and an additional ~~28%~~14% enter the conversion phase over the following three years.

We perform credit management activities to limit our loss exposure on home equity accounts. These activities may result in the suspension of available credit and curtailment of available draws of most home equity junior lien accounts when the first lien position is delinquent, including when the junior lien is still current. We monitor the delinquency status of first mortgages serviced by other parties and actively monitor refreshed credit bureau scores of borrowers with junior liens, as these scores are highly sensitive to first lien mortgage delinquency. The ~~loss severity on home equity junior lien accounts was approximately 71% and 75% at September 30, 2016 and December 31, 2015, respectively. The~~ average borrower FICO score related to loans in our home equity portfolio was approximately ~~760~~770 and 765, and the average outstanding loan size was approximately $45,000 and $46,000 at ~~both~~ September 30, ~~2016~~2017 and December 31, ~~2015.~~2016, respectively. The loss severity on home equity junior lien accounts that incurred charge-offs was approximately 72% and 74% at September 30, 2017 and December 31, 2016, respectively.

Consumer loans increased ~~$2.6~~$2.5 billion, or ~~12%~~10%, during the first nine months of ~~2016,~~2017, driven by growth across all consumer loan ~~classes~~categories as our consumer lending ~~strategies~~initiatives continue to ~~produce profitable growth through each of~~be well received by our ~~major channels.~~

Loans Held for Sale

LHFS ~~increased $1.9~~decreased $1.3 billion, or 32%, during the first nine months of ~~2016, driven primarily by increased~~2017, as loan sales exceeded conventional mortgage ~~production.~~production into LHFS.

Asset Quality

Our asset quality ~~excluding energy-related exposure,~~metrics remained very strong during the third quarter and first nine months of ~~2016,~~2017, driven by economic growth, ~~and~~ improved residential housing ~~markets. Our strong position reflects~~markets, and significant progress in working through problem energy-related exposures, which is evidenced by our modest net charge-off and NPL ratios. These levels reflect the relative strength of our LHFI portfolio in response to proactive ~~actions~~steps we have taken over the past several years to de-risk, diversify, and improve the quality of our loan portfolio. Our current quarter financial results were impacted by recent hurricanes, which caused the slight increase in the ALLL to period-end LHFI ratio compared to the prior quarter as well as the sequential quarter increase in the provision for credit losses. See the “Allowance for Credit Losses” section of this MD&A for additional information regarding our ALLL and provision for credit losses.

NPAs ~~increased $284~~decreased $127 million, or ~~39%~~14%, compared to December 31, ~~2015,~~2016, driven primarily by ~~increases in~~the continued resolution of problem energy-related ~~C&I NPLs and residential home equity NPLs, the latter of which was associated with changes to our home equity line risk mitigation program that were implemented during the first quarter of 2016.~~exposures. At September 30, ~~2016, substantially all~~2017, the ratio of the home equity NPLs modified in 2016 were current with respect to payments and the majority are expected to return to accruing status after the borrowers have demonstrated six months of consistent payment history. At September 30, 2016, NPLs to ~~total~~period-end LHFI was ~~0.67%~~0.48%, ~~an increase~~a decrease of 1811 basis points compared to December 31, ~~2015, due to the aforementioned increase in home equity and energy-related NPLs (for additional discussion, see the following "Energy-related Loan Exposure" section).~~2016.

Net charge-offs were $78 million during the third quarter of 2017, compared to $70 million during the prior quarter and $126 million during the third quarter of ~~2016,~~2016. The net charge-off ratio

was 0.21% for the third quarter of 2017, compared to ~~$137 million during~~0.20% for the prior quarter and $71 million during the third quarter of 2015. The current quarter included $33 million in energy-related net charge-offs, compared to $70 million in the prior quarter. This improvement in energy-related charge-offs drove a four basis point reduction in our net charge-off ratio to 0.35% for the third quarter of ~~2016,~~2016. The decrease in net charge-offs compared to ~~0.39% for~~ the prior year quarter was driven primarily by overall asset quality improvements and ~~0.21% for~~lower net charge-offs associated with energy-related exposures, offset partially by higher net charge-offs associated with consumer loans. For the ~~third quarter~~first nine months of ~~2015. Net~~2017 and 2016, net charge-offs were ~~$347~~$261 million and ~~$258~~$347 million, and the net charge-off ratio was ~~0.33%~~0.24% and ~~0.26%~~0.33%, ~~for the first nine months of 2016 and 2015,~~ respectively.

Early stage delinquencies ~~decreased six basis points from December 31, 2015, to 0.64%~~were 0.71%, 0.66%, and 0.72% of total loans at September 30, ~~2016.~~2017, June 30, 2017, and December 31, 2016, respectively. Early stage delinquencies, excluding government-guaranteed loans, were ~~0.25%~~0.29%, 0.22%, and ~~0.30%~~0.27% at September 30, ~~2016~~2017, June 30, 2017, and December 31, ~~2015,~~2016, respectively. The increases in early stage delinquencies described above resulted primarily from impacts associated with the recent hurricanes.

~~Going forward, assuming no significant changes~~As it relates to hurricane impacts, we expect a modest increase in delinquencies and charge-offs over the next several quarters, driven primarily by the residential and consumer loan portfolios. We believe that losses from the recent hurricanes are very manageable in the ~~macroeconomic environment,~~context of the overall Company, given the strength and diversity of our LHFI portfolio. Overall, we expect ~~NPLs~~ to ~~modestly decline in the near-term and expect our overall~~operate within a net charge-off ratio ~~to be~~of between 3025 and 35 basis points ~~for~~over the ~~full year 2016.~~near term. We also ~~expect our ALLL~~continue to ~~period-end LHFI ratio to remain relatively stable in the medium-term, which should result in~~forecast a provision for loan losses that ~~modestly exceeds~~generally approximates net charge-offs.

~~Energy-related Loan Exposure~~

We believe that our LHFI portfolio is well diversified by product, client, and geography. However, the LHFI portfolio may be exposed to concentrations of credit risk which exist in relation to individual borrowers or groups of borrowers, types of collateral, certain industries, certain loan products, or regions of the country.

The energy industry vertical is a component of our CIB business. At both September 30, 2016 and December 31, 2015, outstanding loans in the energy portfolio totaled $3.1 billion, and represented 2% of the total loan portfolio. Total exposure, which includes funded and unfunded commitments, was $8.8 billion and $9.3 billion at September 30, 2016 and December 31, 2015, respectively, and represented 4% of our total funded and unfunded commitments at each period end. Loans in the energy portfolio that were in a second lien position at September 30, 2016, were immaterial.

Outstanding loan exposure to the two most adversely impacted sectors, namely oil field services and exploration & production, represented 14% and 21%, respectively, of our energy loan portfolio at September 30, 2016, compared to 15% and 23%, respectively, at December 31, 2015. The remaining energy loan portfolio relates to borrowers in the midstream (i.e., pipeline & transportation) and downstream (i.e., refining & distribution) energy sectors, which have not been as meaningfully impacted by lower commodity prices.

During the third quarter of 2016, net charge-offs on energy loans totaled $33 million and energy-related NPLs declined from $354 million at June 30, 2016 to $337 million at September 30, 2016. At September 30, 2016, 11% of our total energy loans were nonperforming and 30% were criticized (which includes nonperforming loans and criticized accruing loans), both unchanged from the prior quarter, but up from 6% and 19%, respectively, at December 31, 2015. At September 30, 2016, 89% of our nonperforming energy loans were current with respect to payments; however, they are classified as nonperforming due to uncertainty regarding the full collectability of principal, as discussed in the "Critical Accounting Policies" MD&A section and Note 1, "Significant Accounting Policies," to the Consolidated Financial Statements in our 2015 Annual Report on Form 10-K.

We have taken a thorough approach to managing our energy exposure and accounting for increased probable loss content in our reserve estimation process. This includes increasing the resources and intensity around mitigating our risk and helping our clients navigate through this downturn. Reserves associated with the energy portfolio represented 5.5% and 4.6% of total outstanding energy loans at September 30, 2016 and December 31, 2015, respectively. Assuming no significant changes in the macroeconomic environment, we expect $40 million to $60 million of energy-related charge-offs over the next two to three quarters. We continue to view our energy-related risk as manageable in the context of our overall Company. See Note 5, “Loans,” to the Consolidated Financial Statements in this Form 10-Q for more information on our LHFI portfolio.

The allowance for credit losses consists of the ALLL and the reserve for unfunded commitments. A rollforward of our allowance for credit losses and summarized credit loss experience is shown in Table 7.6. See Note 1, "Significant Accounting Policies," and the "Critical Accounting Policies"

MD&A section of our ~~2015~~2016 Annual Report on Form 10-K, as well as Note 6, "Allowance for Credit Losses," to the Consolidated Financial Statements in this Form 10-Q for further information regarding our ALLL accounting policy, determination, and allocation.

Provision for Credit Losses

The total provision for credit losses includes the provision/(benefit) for loan losses and the provision/(benefit) for unfunded commitments. The provision for loan losses is the result of a detailed analysis performed to estimate an appropriate and adequate ALLL. For the third quarter of ~~2016,~~2017, the total provision for loan losses increased ~~$72~~$24 million compared to the third quarter of ~~2015.~~2016, entirely due to losses incurred from the recent hurricanes, which were largely offset by lower net charge-offs associated with energy-related exposures. For the first nine months of ~~2016,~~2017, the total provision for loan losses ~~increased $231~~decreased $14 million compared to the same period in ~~2015. These increases in the overall provision for loan losses were~~2016, driven primarily by lower net charge-offs associated with energy-related exposures, offset partially by the aforementioned losses from recent hurricanes as well as higher ~~energy-related~~net charge-offs associated with the consumer loan ~~growth, and moderating asset quality improvements, partially offset by lower charge-offs on residential loans.~~portfolio.

Our quarterly review processes to determine the level of reserves and provision are informed by trends in our LHFI portfolio (including historical loss experience, expected loss calculations, delinquencies, performing status, size and composition of the loan portfolio, and concentrations within the portfolio) combined with a view on economic conditions. In addition to internal credit quality metrics, the ALLL estimate is impacted by other indicators of credit risk associated with the portfolio, such as geopolitical and economic risks, and the increasing availability of credit and resultant higher levels of leverage for consumers and commercial borrowers.

Allowance for Loan and Lease Losses


ALLL by Loan Segment	ALLL by Loan Segment			Table 8			ALLL by Loan Segment			Table 7
(Dollars in millions)	September 30, 2016			December 31, 2015			September 30, 2017			December 31, 2016
ALLL:
Commercial loans		$1,157			$1,047			$1,123			$1,124
Residential loans	382			534			351			369
Consumer loans	204			171			298			216
Total		$1,743			$1,752			$1,772			$1,709
Segment ALLL as a % of total ALLL:
Commercial loans	66		%	60		%	63		%	66		%
Residential loans	22			30			20			21
Consumer loans	12			10			17			13
Total	100		%	100		%	100		%	100		%
Segment LHFI as a % of total LHFI:
Commercial loans	54		%	55		%	53		%	55		%
Residential loans	28			29			27			27
Consumer loans	18			16			20			18
Total	100		%	100		%	100		%	100		%

The ALLL ~~decreased $9~~increased $63 million, or 1%4%, from December 31, ~~2015,~~2016, to ~~$1.7~~$1.8 billion at September 30, ~~2016.~~2017. The ~~slight decrease reflects continued improvements in the asset quality of the~~increase was due primarily to losses incurred from recent hurricanes and higher reserves associated with consumer loans, offset partially by lower reserves associated with residential ~~loan portfolio, largely offset by loan growth.~~loans. The ALLL to period-end LHFI ratio (excluding loans measured at fair value) ~~decreased six~~increased four basis points from December 31, ~~2015,~~2016, to 1.23% at September 30, ~~2016.~~2017. The ratio of the ALLL to ~~total~~ NPLs ~~decreased~~(excluding NPLs measured at fair value) increased to ~~1.84x~~2.55x at September 30, ~~2016,~~2017, compared to ~~2.62x~~2.03x at December 31, ~~2015,~~2016, reflecting ~~our first quarter~~a decrease in NPLs due primarily to the continued resolution of ~~2016 migration~~problem energy-related exposures and lower inflows of ~~energy loans to nonperforming status, higher~~new residential NPLs ~~associated with changes to our home equity line risk mitigation program, and a slight decrease~~as well as an increase in the ALLL.

NPAs increased $284 million, or 39%, during the first nine months of 2016, largely due to downgrades of certain energy-related loans as well as home equity lines. At September 30, 2016, our ratio of NPLs to period-end LHFI was 0.67%, up 18 basis points from December 31, 2015, driven by a deterioration of certain loans in our energy industry vertical and due to an increase in residential home equity NPLs, driven by changes in our home equity line risk mitigation program.

Problem loans or loans with potential weaknesses, such as nonaccrual loans, loans over 90 days past due and still accruing, and TDR loans, are disclosed in the NPA table above. Loans with known potential credit problems that may not otherwise be disclosed in this table include accruing criticized commercial loans, which are disclosed along with additional credit quality information in Note 5, “Loans,” to the Consolidated Financial Statements in this Form 10-Q. At September 30, ~~2016~~2017 and

in the residential portfolio resulting in lower inflows of new residential NPLs. Consumer NPLs increased $6 million, or 86%, from December 31, 2016, driven by an increase in residential home equity NPLs driven by changes to our home equity line risk mitigation program implemented during the first quarter of 2016. At September 30, 2016, substantially all of the home equity NPLs modified in 2016 were current with respect to payments and the majority are expected to return to accruing status after the borrowers have demonstrated six months of consistent payment history.consumer indirect NPLs.

Interest income on consumer and residential nonaccrual loans, if ~~recognized,~~received, is recognized on a cash basis. Interest income on commercial nonaccrual loans is not generally recognized until after the principal amount has been reduced to zero. We recognized $4$11 million and $5$4 million of interest income related to nonaccrual loans (which includes out-of-period interest for certain commercial nonaccrual loans) during the third quarter of 2017 and 2016, and ~~2015, respectively,~~$24 million and $13 ~~million and $18~~ million during the first nine months of ~~2016~~2017 and ~~2015,~~2016, respectively. If all such loans had been accruing interest according to their original contractual terms, estimated interest income of ~~$13~~$11 million and $6$13 million would have been recognized during the third quarter of 2017 and 2016, and ~~2015, respectively,~~$33 million and $35 ~~million and $22~~ million during the first nine months of ~~2016~~2017 and ~~2015,~~2016, respectively.

Other Nonperforming Assets

OREO ~~increased $1~~decreased $3 million, or 2%5%, during the first nine months of ~~2016.~~2017 to $57 million at September 30, 2017. Sales of OREO resulted in proceeds of $46 million ~~and $98 million~~ during both the first nine months of 2017 and 2016, ~~and 2015, respectively, contributing to~~resulting in net gains of $8 million ~~and $19 million, respectively,~~for both periods, inclusive of valuation reserves.

Most of our OREO properties are located in Florida, ~~North Carolina,~~Georgia, Maryland, and ~~Maryland.~~Virginia. Residential and commercial real estate properties comprised ~~80%~~88% and ~~16%~~7%, respectively, of the $57 million in total OREO at September 30, ~~2016,~~2017, with the remainder related to land. Upon foreclosure, the values of these properties were ~~reevaluated~~re-evaluated and, if necessary, written down to their then-current estimated fair value less estimated costs to sell. Any further decreases in property values could result in additional losses as they are ~~periodically~~regularly revalued. See the "Non-recurring Fair Value Measurements" section within Note 14, "Fair Value Election and Measurement," to the Consolidated Financial Statements in this Form 10-Q for additional information.

Gains and losses on the sale of OREO are recorded in other noninterest expense in the Consolidated Statements of Income. Sales of OREO and the related gains or losses are highly dependent on our disposition ~~strategy and buyer opportunities.~~strategy. We are actively managing and disposing of these foreclosed assets to minimize future ~~losses.~~losses and to maintain compliance with regulatory requirements.

Accruing loans past due 90 days or more included LHFI and LHFS, and totaled ~~$1.1~~$1.3 billion ~~and $981 million~~ at both September 30, ~~2016~~2017 and December 31, ~~2015, respectively.~~2016. Of these, 97% ~~and 96%~~ were government-guaranteed at both September 30, ~~2016~~2017 and December 31, ~~2015, respectively.~~2016. Accruing LHFI past due 90 days or more increased ~~$163~~$55 million, or ~~17%~~4%, during the first

nine months of ~~2016,~~2017, driven ~~primarily~~ by ana $91 million increase in ~~government-guaranteed~~guaranteed student loans, offset partially by a $41 million decrease in ~~government-guaranteed~~guaranteed residential mortgages.

Restructured Loans

To maximize the collection of loan balances, we evaluate troubled loans on a case-by-case basis to determine if a loan modification is appropriate. We pursue loan modifications when there is a reasonable chance that an appropriate modification would allow our client to continue servicing the debt. For loans secured by residential real estate, if the client demonstrates a loss of income such that the client cannot reasonably support a modified loan, we may pursue short sales and/or deed-in-lieu arrangements. For loans secured by income producing commercial properties, we perform an in-depth and ongoing programmatic review of a number of factors, including cash flows, loan structures, collateral values, and guarantees to identify loans within our income producing commercial loan portfolio that are most likely to experience distress.

Based on our review of the aforementioned factors and our assessment of overall risk, we evaluate the benefits of proactively initiating discussions with our clients to improve a loan’s risk profile. In some cases, we may renegotiate terms of their loans so that they have a higher likelihood of continuing to perform. To date, we have restructured loans in a variety of ways to help our clients service their debt and to mitigate the potential for additional losses. The restructuring methods being offered to our residential clients are reductions in interest rates, extensions of terms, or forgiveness of principal. ~~Specifically, for~~For home equity lines nearing the end of the draw period and for commercial loans, the primary restructuring method is an extension of terms.

Loans with modifications deemed to be economic concessions resulting from borrower financial difficulties are reported as TDRs. Accruing loans may retain accruing status at the time of restructure and the status is determined by, among other things, the nature of the restructure, the borrower's repayment history, and the borrower's repayment capacity.

Nonaccruing loans that are modified and demonstrate a sustainable history of repayment performance in accordance with their modified terms, typically six months, are usually reclassified to accruing TDR status. Generally, once a residential loan becomes a TDR, we expect that the loan will continue to be reported as a TDR for its remaining life, even after returning to accruing status (unless the modified rates and terms at the time of modification were available in the market at the time of the modification, or if the loan is subsequently remodified at market rates). Some restructurings may not ultimately result in the complete collection of principal and interest (as modified by the terms of the restructuring), culminating in default, which could result in additional incremental losses. These potential incremental losses are factored into our ALLL estimate. The level of re-defaults will likely be affected by future economic conditions. See Note 5, “Loans,” to the Consolidated Financial Statements in this Form 10-Q for additional information.

At September 30, ~~2016,~~2017, our total TDR portfolio was $2.8 billion and was comprised of ~~$2.6~~$2.5 billion, or ~~91%~~90%, of residential loans (predominantly first and second lien residential mortgages and home equity lines of credit), ~~$126~~$182 million, or 5%6%, of ~~commercial~~consumer loans, and ~~$123~~$98 million, or 4%, of ~~consumer~~commercial loans. Total TDRs ~~increased $49~~decreased $36 million from December 31, 2016, driven by a $34 million, or 2%1%, reduction in accruing TDRs during the first nine months of 2017 due primarily to paydowns and payoffs in the residential portfolio. Nonaccruing TDRs decreased $2 million, or 1%, from December 31, 2015. Nonaccruing TDRs increased $130 million, or 74%, and accruing TDRs decreased $81 million, or 3%, from December 31, 2015. The increase in nonaccruing TDRs was driven largely by the changes to our home equity line risk mitigation program implemented during the first quarter of 2016.

Generally, interest income on restructured loans that have met sustained performance criteria and returned to accruing

status is recognized according to the terms of the restructuring. Such ~~recognized~~ interest income recognized was $27 million and $28 million ~~and $29 million during~~for the third quarter of 2017 and 2016, and ~~2015, respectively,~~$81 million and $84 ~~million and $86~~ million for the first nine months of ~~2016~~2017 and ~~2015,~~2016, respectively. If all such loans had been accruing interest according to their original contractual terms, estimated interest income of $32 million and $34 million ~~and $36 million during~~for the third quarter of 2017 and 2016, and ~~2015, respectively,~~$98 million and $105 ~~million and $110~~ million for the first nine months of ~~2016~~2017 and ~~2015,~~2016, respectively, would have been recognized.

The following is a discussion of the more significant financial assets and financial liabilities that are measured at fair value on the Consolidated Balance Sheets at September 30, ~~2016~~2017 and December 31, ~~2015.~~2016. For a complete discussion of our financial instruments measured at fair value and the methodologies used to estimate the fair values of our financial instruments, see Note 14, “Fair Value Election and Measurement,” to the Consolidated Financial Statements in this Form 10-Q.

Trading Assets and Liabilities and Derivative Instruments

Trading assets and derivative instruments increased ~~$925~~$251 million, or ~~15%~~4%, compared to December 31, ~~2015.~~2016. This increase was due primarily ~~due~~ to increases in ~~net derivative instruments, agency MBS, corporate and other debt securities, U.S. states and political subdivisions securities,~~trading loans and CP, offset ~~partially~~largely by ~~a decrease~~decreases in federal agency securities, ~~resulting from~~U.S. Treasury securities, and municipal securities. These changes were driven by normal ~~changes~~activity in the trading portfolio product mix as we ~~manage our~~

manage our business and continue to meet our clients' ~~needs, as well as, increased MSR hedging activity related to the fluctuations in long-term interest rates.~~needs. Trading liabilities and derivative instruments ~~increased $221~~decreased $67 million, or ~~17%~~5%, compared to December 31, ~~2015,~~2016, due primarily to ~~an increase~~decreases in U.S. Treasury securities and net derivative instruments, offset partially by ~~decreases~~an increase in ~~net derivative instruments~~corporate and ~~agency MBS.~~other debt securities. For composition and valuation assumptions related to our trading products, as well as additional information on our derivative instruments, see Note 3, “Trading Assets and Liabilities and Derivative Instruments,” Note 13, “Derivative Financial Instruments,” and the “Trading Assets and Derivative Instruments and Securities Available for Sale” section of Note 14, “Fair Value Election and Measurement,” to the Consolidated Financial Statements in this Form 10-Q. Also, for a discussion of market risk associated with our trading activities, refer to the “Market Risk Management—Market Risk from Trading Activities” section of this MD&A.

The securities AFS portfolio is managed as part of our overall liquidity management and ALM process to optimize income and portfolio value over an entire interest rate cycle while mitigating the associated risks. Changes in the size and composition of the portfolio reflect our efforts to maintain a high quality, liquid portfolio, while managing our interest rate risk profile. The amortized cost of the portfolio increased ~~$1.2 billion~~$618 million during the nine months ended September 30, ~~2016,~~2017, due primarily ~~driven~~to increased holdings of agency MBS, non-agency commercial MBS, and municipal securities, offset largely by ~~an increase~~a decline in U.S. Treasury securities ~~to support LCR requirements that will increase effective January 1, 2017, as well as an increase~~and a reduction in other equity securities due to ~~increased~~decreased holdings of FHLB of Atlanta ~~capital stock. We expect to add approximately $1 billion of high-quality, liquid securities in the fourth quarter to finalize our progress towards the increased 2017 LCR requirements.~~stock and mutual fund investments. The fair value of the securities AFS portfolio increased ~~$1.8 billion~~$772 million compared to December 31, ~~2015,~~2016, due primarily ~~due~~ to the aforementioned ~~addition of U.S. Treasury securities~~changes in the portfolio mix and a ~~$611~~$154 million increase in net unrealized ~~gains, most notably on agency MBS, due to a decline in market interest rates.~~gains. At September 30, ~~2016,~~2017, the overall securities AFS portfolio was in a ~~$868~~$97 million net unrealized gain ~~position.~~position, compared to a net unrealized loss position of $57 million at December 31, 2016.

~~For the nine months ended September 30, 2016 and 2015, we recorded $4 million and $21 million, respectively, in net~~Net realized gains related to the sale of securities ~~AFS.~~AFS were immaterial for the nine months ended September 30, 2017 and $4 million for the nine months ended September 30, 2016. There were no OTTI losses recognized in earnings for the nine months ended September 30, ~~2016,~~2017 and ~~OTTI losses recognized in earnings for the nine months ended September 30, 2015 were immaterial.~~2016. For

additional information on our accounting policies, composition, and valuation

assumptions related to the securities AFS portfolio, see Note 1, "Significant Accounting Policies," into our ~~2015~~2016 Annual Report on Form 10-K, as well as Note 4, "Securities Available for Sale," and the “Trading Assets and Derivative Instruments and Securities Available for Sale” section of Note 14, “Fair Value Election and Measurement,” to the Consolidated Financial Statements in this Form 10-Q.

For the ~~third quarter of 2016,~~three months ended September 30, 2017, the average yield on the securities AFS portfolio was ~~2.22%~~2.50%, compared to ~~2.28%~~2.22% for the ~~third quarter of 2015.~~three months ended September 30, 2016. For the nine months ended September 30, ~~2016,~~2017, the average yield on the securities AFS portfolio was ~~2.30%~~2.46%, compared to ~~2.18%~~2.30% for the nine months ended September 30, ~~2015.~~2016. The ~~year-over-year decrease~~increases in average yield ~~for the third quarter of 2016 was~~were due primarily ~~due~~ to ~~the addition of lower-yielding U.S. Treasury securities during the current quarter. The year-over-year increase~~shifts in ~~average yield for the nine months ended September 30, 2016 was primarily due to~~portfolio mix, lower MBS premium amortization, and higher benchmark interest rates in the current ~~year.~~periods. See additional discussion related to average yields on securities AFS in the "Net Interest Income/Margin" section of this MD&A.

The securities AFS portfolio had an effective duration of ~~3.8~~4.4 years at September 30, ~~2016~~2017 compared to ~~4.5~~4.6 years at December 31, ~~2015.~~2016. Effective duration is a measure of price sensitivity of a bond portfolio to an immediate change in market interest rates, taking into consideration embedded options. An effective duration of ~~3.8~~4.4 years suggests an expected price change

of approximately ~~3.8%~~4.4% for a 100 basis point instantaneous and parallel change in market interest rates.

The credit quality and liquidity profile of the securities AFS portfolio remained strong at September 30, ~~2016~~2017 and, consequently, we believe that we have the flexibility to respond to changes in the economic environment and take actions as opportunities arise to manage our interest rate risk profile and balance liquidity risk against investment returns. Over the longer term, the size and composition of the securities AFS portfolio will reflect balance sheet trends, our overall liquidity objectives, and interest rate risk management objectives. Accordingly, the size and composition of the securities AFS portfolio could change over time.

Federal Home Loan Bank and Federal Reserve Bank Stock

We previously acquired capital stock in the FHLB of Atlanta as a precondition for becoming a member of that institution. As a member, we are able to take advantage of competitively priced advances as a wholesale funding source and to access grants and low-cost loans for affordable housing and community development projects, among other benefits. At September 30, ~~2016,~~2017, we held a total of ~~$143~~$68 million of capital stock in the FHLB of Atlanta, ~~an increase~~a decrease of ~~$111~~$64 million compared to December 31, ~~2015. This increase was~~2016 due to our purchase of FHLB of Atlanta capital stock during the first half of 2016 related to an increase in FHLB borrowings during the same period, partially offset by a redemption of FHLB capital stock related to a decline in long-term FHLB ~~borrowings during~~advances over the ~~third quarter~~same period. See additional information regarding changes in our long-term debt in the "Borrowings" section of ~~2016. Dividends recognized in relation to FHLB capital stock were immaterial for both~~this MD&A. For the three and nine months ended September 30, 2017 and 2016, ~~compared~~we recognized an immaterial amount of dividends related to ~~$2 million and $10 million for the three and nine months ended September 30, 2015, respectively.~~FHLB capital stock.

Similarly, to remain a member of the Federal Reserve System, we are required to hold a certain amount of capital stock, determined as either a percentage of the Bank’s capital or as a percentage of total deposit liabilities. At September 30, ~~2016,~~2017, we held ~~$402~~$403 million of Federal Reserve Bank of Atlanta stock, ~~unchanged from~~an increase of $1 million compared to December 31, ~~2015.~~2016. For the three and nine months ended September 30, ~~2016,~~2017, we recognized dividends related to Federal Reserve Bank of Atlanta stock of $2 million and $5$7 million, respectively, compared to $6$2 million and ~~$18~~$5 million for the three and nine months ended September 30, ~~2015,~~2016, respectively. The decline in dividends recognized was due to legislation passed by the U.S. Congress in December 2015, which changed the dividend rate on our statutory investment in Federal Reserve Bank of Atlanta stock from 6% to the lower of 6% or the 10-year Treasury note rate (which, at September 30, 2016, was 1.60%).

BORROWINGS

Short-Term Borrowings

Our ~~total period-end~~ short-term borrowings at September 30, ~~2016~~2017 increased ~~$272~~$685 million, or 6%14%, from December 31, ~~2015,~~2016, driven by a ~~$277 million~~$1.0 billion increase in funds purchased, offset partially by decreases of $211 million and ~~a $70~~$106 million ~~increase~~ in securities sold under agreements to repurchase ~~partially offset by a $75 million~~and other short-term borrowings, respectively. The decrease in other short-term ~~borrowings. The decrease in other short-term~~

borrowings was due primarily ~~due~~ to a ~~$106~~$127 million ~~decline~~decrease in master notes outstanding.

Long-Term Debt

During the nine months ended September 30, ~~2016,~~2017, our long-term debt ~~increased~~decreased by ~~$3.4 billion,~~$468 million, or ~~40%~~4%. This ~~increase~~decrease was ~~primarily due to the addition of $2.6~~driven by $1.5 billion of ~~long-term~~ FHLB ~~advances and the issuance of $750~~advance terminations, $850 million of ~~10-year fixed rate~~senior note maturities, and $188 million of subordinated ~~notes~~note maturities in ~~the second quarter of 2016. Additionally, during~~ the first quarter of ~~2016, we issued~~2017, as well

as $451 million of senior note maturities in the third quarter of 2017. Largely offsetting these reductions were our issuances of $1.0 billion of 3-year fixed rate senior notes, $300 million of 3-year floating rate senior notes, and $1.0 billion of 5-year fixed rate senior notes under our Global Bank Note program, as well as an increase in direct finance leases of $220 million during the nine months ended September 30, 2017. These issuances allowed us to supplement our funding sources at favorable borrowing rates and ~~used the proceeds to~~ pay ~~off $1.0 billion of higher cost, fixed rate senior notes that were due in 2016. There have been no other material changes in our long-term debt as described in our 2015 Annual Report on Form 10-K.~~down maturing borrowings.

CAPITAL RESOURCES

Regulatory Capital

Our primary federal regulator, the Federal Reserve, measures capital adequacy within a framework that sets capital requirements relative to the risk profiles of individual banks. The framework assigns risk weights to assets and off-balance sheet risk exposures according to predefined classifications, creating a base from which to compare capital levels. We measure capital adequacy using the standardized approach to the ~~Federal Reserve's~~FRB's Basel III Final Rule. ~~Basel III retained~~

In January 2017, the general framework from the prior capital adequacy calculations under Basel I, but certain predefined classifications have changed and risk weightings have been revised. Additionally, Basel III introduced a new capital measure, CET1, and revised what comprises Tier 1 and Total capital. Further, Basel III revised the requirements related to minimum capital adequacy levels.

~~In the third quarter, the Federal Reserve~~FRB released a ~~notice of proposed rulemaking related to~~final rule that revises capital plan and stress test rules, whereby certain BHCs, such as us, will no longer be subject to the qualitative component of the annual CCAR. The final rule also modifies certain regulatory reports to collect additional information on nonbank assets and ~~also indicated that an additional notice of proposed rulemaking is forthcoming in 2017 that would address other elements of Basel III~~to reduce reporting burdens for large and ~~stress test rules. We are in the process of evaluating this information, but do not expect the~~noncomplex firms. This final ~~rules to significantly~~rule has no impact on our minimum capital requirements.

The OCC, the FRB, and the FDIC recently issued two NPRs in an effort to simplify certain aspects of the capital rules. In August 2017, a Transitions NPR was issued, which would extend certain transition provisions currently in the capital rules for banks with less than $250 billion in total consolidated assets. In September 2017, a Simplifications NPR was issued, which would apply a simpler treatment for certain exposures and capital calculations for banks with less than $250 billion in total consolidated assets. The Simplifications NPR also includes certain clarifications and technical amendments to the capital rules.

CET1 is limited to common equity and related surplus (net of treasury stock), retained earnings, AOCI, and common equity minority interest, subject to limitations. Certain regulatory adjustments and exclusions are made to CET1, including removal of goodwill, other intangible assets, certain DTAs, ~~the impact on capital arising from mark-to-market adjustments related to our credit spreads, which is now included in AOCI,~~ and certain defined benefit pension fund net assets. Further, banks employing the standardized approach to Basel III were granted a one-time permanent election to exclude AOCI from the calculation of regulatory capital. We elected to exclude AOCI from the calculation of our CET1.

Tier 1 capital includes CET1, qualified preferred equity instruments, qualifying minority interest not included in CET1, subject to limitations, and certain other regulatory deductions. Tier 1 capital included a portion of trust preferred securities in 2015; however, those instruments were completely phased-out of Tier 1 capital effective January 1, 2016 and are now classified as Tier 2 capital. As a result, the $627 million in principal amount of Parent Company trust preferred securities outstanding that

amounts of 1.25% and 0.625% is, respectively, are required to be maintained above the minimum capital ratios. The CCB will continue to increase each year through January 1, 2019, when the CCB amount will be fully phased-in at 2.5% above the minimum capital ratios. The CCB places restrictions on the amount of retained earnings that may be used for capital distributions or discretionary bonus payments as risk-based capital ratios approach their respective “adequately capitalized” minimum capital ratios plus the CCB. To be considered “well-capitalized,” Tier 1 and Total capital ratios of 6% and 10%, respectively, are required.

We are also subject to a Tier 1 leverage ratio requirement, which measures Tier 1 capital against average total assets less certain deductions, as calculated in accordance with regulatory guidelines. The minimum leverage ratio threshold is 4% and is not subject to the CCB.

Risk weighting under Basel III was modified primarily to enhance risk sensitivity of RWA. Additional risk weight categories were added and certain calculation methodologies were introduced to more precisely calculate exposure risk. Exposures that received a significant risk weight and/or calculation methodology change compared to Basel I included certain nonperforming and past-due loans, MSRs, certain unfunded commitments, derivatives, securitizations, and certain commercial and CRE loans.

A transition period applies to certain capital elements and risk weighted assets, where phase-in percentages are applicable in the calculations of capital and RWA. One of the more significant transitions required by the Basel III Final Rule relates to the risk weighting applied to MSRs, which will impact the CET1 ratio during the transition period when compared to the CET1 ratio that is calculated on a fully phased-in basis. Specifically, the fully phased-in risk weight of MSRs is 250%, while the risk weight to be applied during the transition period is 100%. The transition period is applicable from January 1, 2015 through December 31, 2017. Table 1211 presents the Company's transitional Basel III regulatory capital ~~metrics at September 30, 2016 and December 31, 2015.~~metrics.


Regulatory Capital Metrics ¹	Regulatory Capital Metrics ¹			Table 12			Regulatory Capital Metrics ¹			Table 11
(Dollars in millions)	September 30, 2016			December 31, 2015			September 30, 2017			December 31, 2016
Regulatory capital:
CET1		$16,862			$16,421			$17,025			$16,953
Tier 1 capital	18,101			17,804			19,009			18,186
Total capital	21,671			20,668			22,459			21,685
Assets:
RWA		$172,461			$164,851			$176,931			$176,825
Average total assets for leverage ratio	195,105			183,763			200,090			197,272
Risk-based ratios:
CET1	9.78		%	9.96		%	9.62		%	9.59		%
CET1 - fully phased-in ²	9.66			9.80			9.48			9.43
Tier 1 capital	10.50			10.80			10.74			10.28
Total capital	12.57			12.54			12.69			12.26
Leverage	9.28			9.69			9.50			9.22
Total shareholders’ equity to assets	11.92			12.28			11.78			11.53

¹ ~~Basel III Final Rules became effective for us~~We calculated these measures based on ~~January 1, 2015. Our calculation of these measures~~the methodology specified by our primary regulator, which may differ from ~~those of~~the calculations used by other financial services companies that ~~calculate~~present similar metrics.

²The CET1 ratio on a fully phased-in basis at September 30, ~~2016~~2017 is estimated. See Table 1,20, "Selected Financial Data and Reconcilement of Non-U.S. GAAP Measures," in this MD&A for a reconciliation of our transitional CET1 ratio to our fully phased-in, estimated CET1 ratio.

All of our capital ratios ~~except for the Total capital ratio, declined modestly~~increased compared to December 31, ~~2015, as~~2016, driven primarily by growth in retained earnings, ~~was~~ offset partially by ~~the impact of growth~~an increase in treasury stock and a slight increase in RWA due to increased on- and off-balance sheet exposures. ~~Further, as mentioned above, the phase-out of the trust preferred securities from Tier 1 capital to Tier 2 capital resulted in an additional decline in~~In addition, the Tier 1 capital and ~~Leverage ratios. The~~ Total capital ~~ratio increased slightly compared to December 31, 2015, due primarily to~~ratios were both favorably impacted by our ~~$750 million subordinated debt~~Series G preferred stock issuance in May 2017, detailed in the ~~second quarter of 2016.~~"Capital Actions" section below. At

September 30, ~~2016,~~2017, our capital ratios were well above current regulatory requirements.

Our estimate of the fully phased-in CET1 ratio of ~~9.66%~~9.48% at September 30, ~~2016~~2017 considers a 250% risk-weighting for MSRs, which is the primary driver for the difference in the transitional CET1 ratio ~~at September 30, 2016~~ compared to the estimated fully phased-in ratio ~~in the same period.~~at September 30, 2017. Our estimated fully phased-in ratio is in excess of the 4.5% minimum CET1 ratio, and is also in excess of the 7.0% limit that includes the minimum level of 4.5% plus the 2.5% fully phased-in CCB. See Table 1,20, "Selected Financial Data and Reconcilement of Non-U.S. GAAP Measures," in this MD&A for a reconciliation of our fully phased-in CET1 ratio. Also see Note 13, "Capital," to the Consolidated Financial Statements in our 2016 Annual Report on Form 10-K for additional information regarding our regulatory capital adequacy requirements and metrics.

Capital Actions

We declared and paid common dividends of $443 million, or $0.92 per common share, during the nine months ended September 30, 2017, compared to $370 million, or $0.74 per common share, during the nine months ended September 30, ~~2016, compared to $352 million, or $0.68 per common share, during the nine months ended September 30, 2015. We also recognized~~2016. Additionally, we declared dividends on our preferred stock of ~~$49~~$65 million and ~~$48~~$49 million during the nine months ended September 30, 2017 and 2016, ~~and 2015,~~ respectively.

Various regulations administered by federal and state bank regulatory authorities restrict the Bank's ability to distribute its retained earnings. At September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the Bank's capacity to pay cash dividends to the Parent Company under these regulations totaled approximately ~~$2.3~~$2.1 billion and ~~$2.7~~$2.5 billion, respectively.

During the first quarter of ~~2016,~~2017, we repurchased ~~$151~~$414 million of our outstanding common stock, which included $240 million under our 2016 capital plan and ~~$24~~an incremental $174 million pursuant to the 1% of ~~our outstanding common stock warrants as part of our 2015~~Tier 1 capital ~~plan.~~de minimis exception allowed under the applicable 2016 Capital Plan Rule. During the second quarter of ~~2016,~~2017, we repurchased an additional ~~$175~~$240 million of our outstanding common stock at market value, which completed our authorized ~~$875~~$960 million of common equity repurchases as approved by the Board in conjunction with the ~~2015~~2016 capital plan.

In June ~~2016,~~2017, we announced capital plans in response to the Federal Reserve's review of and non-objection to our 2017 capital plan submitted in conjunction with the ~~2016~~2017 CCAR. Our ~~2016~~2017 capital plan includes increases in our share repurchase program and quarterly common stock dividend, while maintaining ~~the current~~our level of preferred stock dividends. Specifically, the ~~2016~~2017 capital plan ~~authorizes~~authorized the repurchase of up to ~~$960 million~~$1.32 billion of our outstanding common stock to be completed between the third quarter of ~~2016~~2017 and the second quarter of ~~2017, which we expect to conduct relatively evenly on a quarterly basis,~~2018, as well as ~~an 8%~~a 54% increase in our quarterly common stock dividend from ~~$0.24~~$0.26 per share to ~~$0.26~~$0.40 per share, beginning in the third quarter of ~~2016.~~2017. During the third quarter of ~~2016,~~2017, we repurchased ~~$240~~$330 million of our outstanding common stock at market value as a part of this ~~2016 capital plan. During October of 2016, we repurchased an additional $240 million of our outstanding common stock at market value as part of this~~2017 capital plan.

See Item 5 and Note 13, "Capital," to the Consolidated Financial Statements in our ~~2015~~2016 Annual Report on Form 10-K, as well as Part II, Item 2 in this Form 10-Q for additional information regarding our ~~2015~~2016 capital plan and related share repurchase activity.

In May 2017, we issued depositary shares representing ownership interest in 7,500 shares of Perpetual Preferred Stock, Series G, with no par value and $100,000 liquidation preference per share (the "Series G Preferred Stock"). As a result of this issuance, we received net proceeds of approximately $743 million after the underwriting discount, but before expenses. The Series G Preferred Stock has no stated maturity and will not be subject to any sinking fund or other obligation to redeem, repurchase, or retire the shares. Dividends for the shares are noncumulative and, if declared, will be payable semi-annually beginning on December 15, 2017 through June 15, 2022 at a rate per annum of 5.05%, and payable quarterly beginning on September 15, 2022 at a rate per annum equal to the three-month LIBOR plus 3.10%. By its terms, we may redeem the Series G Preferred Stock on any dividend payment date occurring on or after June 15, 2022 or at any time within 90 days following a regulatory capital event, at a redemption price of $1,000 per depositary share plus any declared and unpaid dividends. Except in certain limited circumstances, the Series G Preferred Stock does not have any voting rights. Over time, we plan to further optimize our capital structure by issuing additional preferred stock and reducing our CET1 ratio.

CRITICAL ACCOUNTING POLICIES

There have been no significant changes to our Critical Accounting Policies as described in our ~~2015~~2016 Annual Report on Form 10-K.

ENTERPRISE RISK MANAGEMENT

Except as noted below, there have been no other significant changes in our Enterprise Risk Management practices as described in our ~~2015~~2016 Annual Report on Form 10-K.

~~To ensure increased role clarity and enhanced independent oversight~~In the first quarter of ~~risk-taking activity, the reporting relationship of all teammates with risk oversight responsibility were realigned under the~~ ~~CRO. To more accurately reflect its scope and mandate, Corporate Risk Management ("CRM") was renamed Enterprise Risk ("~~2017, we established an additional executive committee to further support ER oversight, referred to as the Enterprise Business Practices Committee ("EBPC"). The EBPC is chaired by the Chief Human Resources Officer and is responsible for ensuring alignment of our business practices with our core purpose, principles, and values. The EBPC also serves as the forum for enterprise reputational risk exposures.

Additionally, in the second quarter of ~~2016.~~2017, we made a number of organizational changes within ER to align with our updated business segment structure and to augment synergies across risk disciplines.

Credit Risk Management

There have been no significant changes in our Credit Risk Management practices as described in our ~~2015~~2016 Annual Report on Form 10-K.

Operational Risk Management

There have been no significant changes in our Operational Risk Management practices as described in our ~~2015~~2016 Annual Report on Form 10-K.

Market Risk Management

Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices, commodity

prices, and other relevant market rates or prices. Interest rate risk, defined as the exposure of net interest income and MVE to changes in interest rates, is our primary market risk and mainly arises from changes in the structure and composition of our balance sheet. Variable rate loans, prior to any hedging related actions, were approximately ~~60%~~58% of total loans at September 30, ~~2016,~~2017, and after giving consideration to hedging related actions, were approximately ~~45%~~49% of total loans. Approximately 7%4% of our variable rate loans at September 30, ~~2016~~2017 had coupon rates that were equal to a contractually specified interest rate floor. In addition to interest rate risk, we are also exposed to market risk in our trading instruments measured at fair value. Our ALCO meets regularly and is responsible for reviewing our ~~open market positions~~ALM and ~~establishing~~liquidity risk position in conformance with the established policies and limits designed to measure, monitor, and ~~limit exposure to~~control market risk.

Market Risk from Non-Trading Activities

The primary goal of interest rate risk management is to control exposure to interest rate risk within policy limits approved by the Board. These limits ~~and guidelines~~ reflect our appetite for interest rate risk over both short-term and long-term horizons. No limit breaches occurred during the nine months ended September 30, ~~2016.~~2017.

The major sources of our non-trading interest rate risk are timing differences in the maturity and repricing characteristics of assets and liabilities, changes in the absolute level and shape of the yield curve, as well as the embedded optionality in our products and ~~the potential exercise of freestanding or embedded options.~~related customer behavior. We measure these risks and their impact by identifying and quantifying exposures through the use of sophisticated simulation and valuation models, which, as described in additional detail below, are employed by management to understand net interest income sensitivity and MVE sensitivity. These measures show that our interest rate risk profile is moderately asset sensitive at September 30, ~~2016.~~2017.

MVE and net interest income sensitivity are complementary interest rate risk metrics and should be viewed together. Net interest income sensitivity captures asset and liability repricing differences for one year, inclusive of forecast balance sheet changes, and is considered a shorter term ~~measure, while~~measure. MVE sensitivity captures ~~differences within~~ the ~~period end balance sheets through~~change in the ~~financial instruments' respective maturities~~discounted net present value of all on- and off-balance sheet items and is considered a longer term measure.

~~A positive~~Positive net interest income sensitivity in a rising rate environment indicates that over the forecast horizon of one year, asset based interest income will increase more quickly than liability based interest expense due to balance sheet composition. A negative MVE sensitivity in a rising rate environment indicates that the value of financial assets will decrease more than the value of financial liabilities.

One of the primary methods that we use to quantify and manage interest rate risk is simulation analysis, which we use to model net interest income from assets, liabilities, and derivative positions under various interest rate scenarios and balance sheet structures. This analysis measures the sensitivity of net interest income over a two-year time horizon, which differs from the interest rate sensitivities in Table ~~13,~~12, which reflect a one-year time horizon. Key assumptions in the simulation analysis (and in the valuation analysis discussed below) relate to the behavior of interest rates and spreads, the changes in product balances,

and the behavior of loan and deposit clients in different rate environments. This analysis incorporates several assumptions, the most significant of which relate to the repricing and behavioral fluctuations of deposits with indeterminate or non-contractual maturities.

As the future path of interest rates is not known, we use simulation analysis to project net interest income under various scenarios including implied forward, deliberately extreme, and other scenarios that are unlikely. The analyses may include rapid and gradual ramping of interest rates, rate shocks, basis risk analysis, and yield curve twists. Specific strategies are also analyzed to determine their impact on net interest income levels and sensitivities.

The sensitivity analysis presented in Table 1312 is measured as a percentage change in net interest income due to instantaneous moves in benchmark interest rates. Estimated changes below are dependent upon material assumptions such as those previously discussed.


Net Interest Income Asset Sensitivity	Net Interest Income Asset Sensitivity	Table 13	Net Interest Income Asset Sensitivity	Table 12

	Estimated % Change in Net Interest Income Over 12 Months ¹		Estimated % Change in Net Interest Income Over 12 Months ¹
	September 30, 2016	December 31, 2015	September 30, 2017	December 31, 2016
Rate Change
+200 bps	3.6%	5.7%	3.2%	3.3%
+100 bps	2.1%	3.0%	1.8%	1.9%
-25 bps	(0.7)%	(1.2)%	(0.6)%	(0.6)%
-100 bps			(6.7)%	NM ²

¹Estimated % change of net interest income is reflected on a non-FTE basis.

²"NM"- Not meaningful. A downward rate change of 100 basis points would imply a negative interest rate environment during the period and was not considered to be meaningful.

Net interest income asset sensitivity at September 30, ~~2016~~2017 decreased slightly compared to December 31, ~~2015. This decrease resulted from an increase in the notional balance of received-fixed swaps,~~2016, driven primarily by growth in fixed rate ~~assets,~~consumer loans and ~~an increase~~a decrease in floating rate ~~liabilities during the first nine months of 2016.~~commercial loans. See additional discussion related to net interest income in the "Net Interest Income/Margin" section of this MD&A.

We also perform valuation analyses, which we use for discerning levels of risk present in the balance sheet and derivative positions that might not be taken into account in the net interest income simulation horizon. Whereas a net interest income simulation highlights exposures over a relatively short time horizon, our valuation analysis incorporates all cash flows over the estimated remaining life of all balance sheet and derivative positions.

The valuation of the balance sheet, at a point in time, is defined as the discounted present value of asset and derivative cash flows minus the discounted present value of liability cash flows, the net of which is referred to as MVE. The sensitivity of MVE to changes in the level of interest rates is a measure of the

longer-term repricing risk and ~~options risk~~ embedded optionality in the balance sheet. Similar to the net interest income simulation, MVE uses instantaneous changes in rates. However, MVE values only the current balance sheet and does not incorporate originations of new/replacement business or balance sheet growth that are used in the net interest income simulation model. As with the net interest income simulation model, assumptions about the timing and variability of balance sheet cash flows are

critical in the MVE analysis. Significant MVE assumptions include those that drive prepayment speeds, expected changes in balances, and pricing of the indeterminate deposit portfolios.

At September 30, ~~2016,~~2017, the MVE profile in Table 1413 indicates a decline in net balance sheet value due to instantaneous upward changes in rates. This MVE sensitivity is reported for both upward and downward rate shocks.


Market Value of Equity Sensitivity	Market Value of Equity Sensitivity	Table 14	Market Value of Equity Sensitivity	Table 13

	Estimated % Change in MVE		Estimated % Change in MVE
	September 30, 2016	December 31, 2015	September 30, 2017	December 31, 2016
Rate Change
+200 bps	(7.3)%	(8.2)%	(7.7)%	(9.1)%
+100 bps	(2.9)%	(3.7)%	(3.4)%	(4.2)%
-25 bps	0.3%	0.7%	0.5%	0.8%

The decrease in MVE sensitivity at September 30, ~~2016~~2017 compared to December 31, ~~2015~~2016 was due to lower balance sheet duration, driven primarily ~~from (i) lower long-term interest rates, which drive faster prepayment speeds on mortgage loans and securities, and (ii) the implementation~~by a decline in our outstanding, active notional balance of ~~the annual update on client deposit behaviors on indeterminate maturity deposits.~~receive-fixed, pay-variable commercial loan swaps. The 10-year swap rate at September 30, ~~2016 declined 72~~2017 decreased five basis points to ~~1.46%~~2.29%, compared to ~~2.18%~~2.34% at December 31, ~~2015. Updated deposit assumptions reflect increasing balances and slower decays, which lengthens deposit lives, thereby shortening overall balance sheet duration.~~2016. While an instantaneous and severe shift in interest rates was used in this analysis to provide an estimate of exposure under these rate scenarios, we believe that a gradual shift in interest rates would have a much more modest impact.

Since MVE measures the discounted present value of cash flows over the estimated lives of instruments, the change in MVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (i.e., the current year). Furthermore, MVE does not take into account factors such as future balance sheet growth, changes in product mix, changes in yield curve relationships, and changing product spreads that could mitigate the impact of changes in interest rates. The net interest income simulation and valuation analyses do not include actions that management may undertake to manage this risk in response to anticipated changes in interest rates.

Market Risk from Trading Activities

We manage market risk associated with trading activities using a comprehensive risk management approach, which includes VAR metrics, stress testing, and sensitivity analyses. Risk metrics are measured and monitored on a daily basis at both the trading desk and at the aggregate portfolio level to ensure exposures are in line with our risk appetite. Our risk measurement for covered positions subject to the Market Risk Rule takes into account trading exposures

behavior is indicative of future market performance, VAR is only one of several tools used to manage market risk. Other tools used to actively manage market risk include scenario analysis, stress testing, profit and loss attribution, and stop loss limits.

In addition to VAR, as required by the Market Risk Rule issued by the U.S. banking regulators, we calculate Stressed VAR, which is used as a component of the total market risk capital charge. We calculate the Stressed VAR risk measure using a ten-day holding period at a one-tail, 99% confidence level and employ a historical simulation approach based on a continuous twelve-month historical ~~window.~~window selected to reflect a period of significant financial stress for our trading portfolio. The historical period used in the selection of the stress window encompasses all recent financial crises including the 2008-2009 global financial ~~crisis, which captures the most significant period of financial stress applicable to our specific portfolio.~~crisis. Our Stressed VAR calculation uses the same methodology and models as regular VAR, which is a requirement under the Market Risk Rule.

Table 1514 presents VAR and Stressed VAR for the three and nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, as well as VAR by Risk Factor at September 30, ~~2016~~2017 and ~~2015.~~2016.

Value at Risk Profile Table 15

Three Months Ended September 30 Nine Months Ended September 30
(Dollars in millions) 2016 2015 2016 2015
VAR (1-day holding period):
Period end
$2

$2

$2

$2
High 3
3
3
3
Low 1
2
1
2
Average 2
2
3
2

Stressed VAR (10-day holding period):
Period end
$72

$39

$72

$39
High 87
81
87
104
Low 11
29
8
24
Average 39
47
31
57

VAR by Risk Factor at period end (1-day holding period):
Equity risk
$1

$1
Interest rate risk 2
2
Credit spread risk 5
2
VAR total at period end (1-day diversified) 2
2



Value at Risk Profile					Table 14

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2017		2016		2017		2016
VAR (1-day holding period):
Period end		$2		$2		$2		$2
High	3		3		3		3
Low	1		1		1		1
Average	2		2		2		3

Stressed VAR (10-day holding period):
Period end		$69		$72		$69		$72
High	100		87		100		87
Low	44		11		22		8
Average	65		39		53		31

VAR by Risk Factor at period end (1-day holding period):
Equity risk						$1		$1
Interest rate risk					1		2
Credit spread risk					3		5
VAR total at period end (1-day diversified)					2		2

The trading portfolio, measured in terms of VAR, is predominantly comprised of four sub-portfolios of covered positions: (i) credit trading, (ii) fixed income securities, (iii) interest rate derivatives, and (iv) equity derivatives. The trading portfolio also contains other sub-portfolios, including foreign

exchange rate and ~~commodities;~~commodity derivatives; however, these trading risk exposures are not material. Our covered positions originate primarily from underwriting, market making and associated risk mitigating hedging activity, and other services for our clients. AsThe trading portfolio's VAR profile, as illustrated in Table ~~15, there~~14, is influenced by a variety of factors, including the size and composition of the portfolio, market volatility, the correlation between different positions, and the specific risk measure being reported. Average daily VAR was ~~a modest increase~~unchanged for the three months ended September 30, 2017 compared to the same period in 2016, and average daily VAR was lower for the nine months ended September 30, ~~2016~~2017 compared to the ~~same period of 2015, while the~~prior year. These results were driven primarily by favorable market conditions and strong client demand, which resulted in higher average daily VAR for the three months ended September 30, 2016 remained at the same level year-over-year. The period end VAR at September 30, 2016 was $2 million, unchanged compared to September 30, 2015. Continued risk mitigating activitiesbalance sheet usage within our ~~equity derivatives business since~~credit trading portfolio, as well as lower levels of market volatility during the ~~second half~~first nine months of ~~2015 contributed to a lower average~~2017, which largely offset the impact of higher balance sheet usage on the VAR calculation. Stressed VAR, which is not influenced by current levels of market volatility, increased for the three and nine months ended September 30, ~~2016~~2017 compared to the same periods ~~of 2015. The period end Stressed VAR at September 30,~~in 2016, ~~was higher compared to September 30, 2015 primarily due to an~~driven by both the aforementioned increase in balance sheet usage ~~within the credit trading business during the third quarter of 2016 in response to increased client demand~~ and ~~more favorable market conditions. Additionally, period end Stressed VaR at September 30, 2016 reflected the temporary impact of maturing positions in the~~higher stressed exposures associated with our equity derivatives portfolio. Nonetheless, our Stressed VAR remains within historical ranges. The trading portfolio of covered positions did not contain any correlation trading positions or on- or off-balance sheet securitization positions ~~in 2015 or~~during the nine months ended September 30, 2017 or 2016.

In accordance with the Market Risk Rule, we evaluate the accuracy of our VAR model through daily backtesting by comparing aggregate daily trading gains and losses (excluding fees, commissions, reserves, net interest income, and intraday trading) from covered positions with the corresponding daily VAR-based measures ~~derived from~~generated by the model. As illustrated in the following graph for the twelve months ended September 30, ~~2016,~~2017, there were no firmwide VAR backtesting exceptions during this period. There was a near VAR backtest exception in November 2016, due largely to the post-election sell-off in U.S. bond markets, which temporarily impacted our fixed income and credit trading portfolios. The total number of VAR backtesting exceptions over the preceding 12twelve months is used to determine the multiplication factor for the VAR-based capital requirement under the Market Risk Rule. The capital multiplication factor increases from a minimum of three to a maximum of four, depending on the number of exceptions. There was no change in the capital multiplication factor over the preceding 12twelve months.

We have valuation policies, procedures, and methodologies for all covered positions. Additionally, trading positions are reported in accordance with U.S. GAAP and are subject to independent price verification. See Note 13, "Derivative Financial Instruments" and Note 14, "Fair Value Election and Measurement" to the Consolidated Financial Statements in this Form 10-Q, as well as the "Critical Accounting Policies" MD&A section inof our ~~2015~~2016 Annual Report on Form 10-K for discussion of valuation policies, procedures, and methodologies.

Model risk management: Our approach ~~for validating~~regarding the validation and ~~evaluating~~evaluation of the accuracy of our internal ~~and~~models, external models, and associated processes, includes developmental and implementation testing as well as ongoing monitoring and maintenance performed by the various model developers, in conjunction with model owners. ~~The~~Our MRMG is responsible for the independent model validation ~~for~~of all trading risk models. The validation typically includes evaluation of all model documentation as well as model monitoring and maintenance plans. In addition, the MRMG performs its own independent testing. We regularly review the performance of all trading risk models through our model monitoring and maintenance process to preemptively address emerging developments in financial markets, assess evolving modeling approaches, and to identify potential model enhancement.

Stress testing: We use a comprehensive range of stress testing techniques to help monitor risks across trading desks and to augment standard daily VAR and other risk limits reporting. The stress testing framework is designed to quantify the impact of extreme, but plausible, stress scenarios that could lead to large unexpected losses. Our stress tests include historical repeats and

simulations using hypothetical risk factor shocks. All trading positions within each applicable market risk category (interest rate risk, equity risk, foreign exchange rate risk, credit spread risk, and commodity price risk) are included in our comprehensive stress testing framework. We review stress testing scenarios on an ongoing basis and make updates as necessary to ensure that both current and emerging risks are captured appropriately.

Trading portfolio capital adequacy: We assess capital adequacy on a regular basis, which is based on estimates of our risk profile and capital positions under baseline and stressed scenarios. Scenarios consider significant risks, including credit risk, market risk, and operational risk. Our assessment of capital adequacy arising from market risk includes a review of risk arising from material portfolios of covered positions. See the “Capital Resources” section in this MD&A for additional discussion of capital adequacy.

and severely adverse liquidity events; these events may be idiosyncratic or systemic, or a combination thereof.

We mitigate these risks utilizing a variety of tested liquidity management techniques in keeping with regulatory guidance and industry best practices. For example, we mitigate structural liquidity risk by structuring our balance sheet prudently so that we fund less liquid assets, such as loans, with stable funding sources, such as consumer and commercial deposits, long-term debt, and capital. We mitigate market liquidity risk by maintaining diverse borrowing resources to fund projected cash needs and structuring our liabilities to avoid maturity concentrations. We test ~~contingent~~contingency liquidity risk from a range of potential adverse circumstances in our contingency funding scenarios. These scenarios inform the amount of contingency liquidity sources we maintain as a liquidity buffer to ensure we can meet our obligations in a timely manner under adverse ~~contingent~~contingency liquidity events.

Governance. We maintain a comprehensive liquidity risk governance structure in keeping with regulatory guidance and industry best practices. Our Board, through the BRC, oversees liquidity risk management and establishes our liquidity risk appetite via a set of cascading risk limits. The BRC reviews and approves risk policies to establish these limits and regularly reviews reports prepared by senior management to monitor compliance with these policies. The Board charges the CEO with determining corporate strategies in accordance with its risk appetite and the CEO is a member of our ALCO, which is the executive level committee with oversight of liquidity risk management. The ALCO regularly monitors our liquidity and compliance with liquidity risk limits, and also reviews and approves liquidity management strategies and tactics.

Management and Reporting Framework. Corporate Treasury, under the oversight of the ALCO, is responsible for managing consolidated liquidity risks we encounter in the course of our business. In so doing, Corporate Treasury develops and implements short-term and long-term liquidity management strategies, funding plans, and liquidity stress tests, and also monitors early warning indicators; all of which assist in identifying, measuring, monitoring, reporting, and managing our liquidity risks. Corporate Treasury primarily monitors and manages liquidity risk at the Parent Company and Bank levels as the non-bank subsidiaries are relatively small and ultimately rely upon the Parent Company as a source of liquidity in adverse environments. However, Corporate Treasury also monitors

liquidity developments of, and maintains a regular dialogue with, our other legal entities.

MRM conducts independent oversight and governance of liquidity risk management activities. For example, MRM works with Corporate Treasury to ensure our liquidity risk management practices conform to applicable laws and regulations and evaluates key assumptions incorporated in our contingency funding scenarios.

Further, the internal audit function performs the risk assurance role for liquidity risk management. Internal audit conducts an independent assessment of the adequacy of internal controls, including procedural documentation, approval processes, reconciliations, and other mechanisms employed by liquidity risk management and MRM to ensure that liquidity risk

is consistent with applicable policies, procedures, laws, and regulations.

LCR requirements under Regulation WW became effective for us on January 1, 2016. The LCR requires large U.S. banking organizations to hold unencumbered high-quality liquid assets sufficient to withstand projected cash outflows under a prescribed liquidity stress scenario. ~~Regulation WW will be phased in as specified by the regulatory requirements and requires that we maintain an LCR above 90% during 2016 and 100% beginning January 1, 2017.~~ We ~~expect to meet or exceed~~have met LCR requirements within the regulatory ~~timelines. At~~timelines and at September 30, ~~2016,~~2017, our LCR was above ~~90%.~~the 100% regulatory requirement.

On December 19, 2016, the FRB published a final rule implementing public disclosure requirements for BHCs subject to the LCR that will require them to publicly disclose quantitative and qualitative information regarding their respective LCR calculations on a quarterly basis. We will be required to begin disclosing elements under this final rule after October 1, 2018.

On May 3, 2016, ~~Federal banking regulators moved forward with~~the FRB, OCC, and the FDIC issued a joint proposed rule ~~that~~to implement the NSFR. The proposal would ~~implement~~require large U.S. banking organizations to maintain a stable funding profile over a one-year horizon. The FRB proposed a modified NSFRrequirement ~~the net stable funding ratio ("NSFR"),~~ for ~~large~~BHCs with greater than $50 billion but less than $250 billion in total consolidated assets, and ~~internationally active banking organizations, and would modify certain definitions~~less than $10 billion in ~~the LCR Final Rule which was finalized in September 2014.~~total on balance sheet foreign exposure. The proposed NSFR requirement seeks to (i) reduce vulnerability to liquidity risk in financial institution funding structures and (ii) promote improved standardization in the measurement, management and disclosure of liquidity risk. It would apply to the same large and internationally active banking organizations that are subject to the LCR rule, but with a broader focus. It seeks to require stable funding relative to each bank’s entire balance sheet using a one-year time horizon rather than the LCR's short-term, 30-day stress test requirement. The proposed rule contains an implementation date of January 1, ~~2018.~~2018; however, a final rule has not yet been issued.

Uses of Funds. Our primary uses of funds include the extension of loans and credit, the purchase of investment securities, working capital, and debt and capital service. The Bank ~~and the Parent Company borrow~~borrows from the money markets using instruments such as Fed funds, Eurodollars, and securities sold under agreements to repurchase. At September 30, ~~2016,~~2017, the Bank retained a material cash position in its Federal Reserve account. The Parent Company also retains a material cash position in its ~~Federal Reserve~~ account with the Bank in accordance with our policies and risk limits, discussed in greater detail below.

Sources of Funds. Our primary source of funds is a large, stable deposit base. Core deposits, predominantly made up of consumer and commercial deposits originated primarily from our retail branch network and Wholesale ~~Banking~~ client base, are our largest and most cost-effective source of funding. Total deposits

the issuance of up to $5.0 billion of such securities under the SEC shelf registration, of which ~~$4.0~~$2.2 billion and $3.0 billion of issuance capacity remained available at September 30, ~~2016. In February~~2017 and December 31, 2016, respectively. The reduction in our SEC shelf registration issuance capacity during the first nine months of 2017 was driven by the Parent ~~Company issued $1.0 billion~~Company's May 2017 issuance of ~~5-year fixed rate senior notes.~~$750 million of Perpetual Preferred Stock, Series G. See the "Capital Resources" section of this MD&A for additional information regarding our stock issuances.

The Bank maintains a ~~global bank note~~Global Bank Note program under which it may issue senior or subordinated debt with various terms. In ~~May 2016,~~January 2017, the Bank issued ~~$750~~$1.0 billion of 3-year fixed rate senior notes and $300 million of ~~10-year fixed~~3-year floating rate ~~subordinated~~senior notes under this program. In July 2017, we issued $1.0 billion of 5-year senior notes that pay a fixed annual coupon rate of 2.45% under our Global Bank Note program. At September 30, ~~2016,~~2017, the Bank retained ~~$35.8~~$34.9 billion of remaining capacity to issue notes under the ~~global bank note~~Global Bank Note program.

Our issuance capacity under these Bank and Parent Company programs refers to authorization granted by our Board, which is a formal program capacity and not a commitment to purchase by any investor. Debt and equity securities issued under these programs are designed to appeal primarily to domestic and international institutional investors. Institutional investor demand for these securities depends upon numerous factors, including, but not limited to, our credit ratings, investor perception of financial market conditions, and the health of the banking sector. Therefore, our ability to access these markets in the future could be impaired for either idiosyncratic or systemic reasons.

We assess liquidity needs that may occur in both the normal course of business and during times of unusual, adverse events, considering both on and off-balance sheet arrangements and commitments that may impact liquidity in certain business environments. We have contingency funding scenarios and plans that assess liquidity needs that may arise from certain stress events such as severe economic recessions, financial market disruptions, and credit rating downgrades. In particular, a ratings downgrade could adversely impact the cost and availability of

some of our liquid funding sources. Factors that affect our credit ratings include, but are not limited to, the credit risk profile of our assets, the adequacy of our ALLL, the level and stability of

our earnings, the liquidity profile of both the Bank and the Parent Company, the economic environment, and the adequacy of our capital base.

As illustrated in Table ~~16, Moody’s,~~ 15, S&P~~, and~~ ~~Fitch~~ ~~all assigned a “Stable” outlook on~~ revised our credit ~~ratings based on our improved earnings profile, good asset quality performance, solid liquidity profile,~~rating outlook from “Stable” to “Positive” in the third quarter of 2017, while both Moody’s and ~~sound capital position.~~Fitch maintained “Stable” outlooks. Future credit rating downgrades are possible, although not currently anticipated given these “Positive” and “Stable” credit rating outlooks.



Credit Ratings and Outlook			Table 1615
	September 30, ~~2016~~2017
	Moody’s	S&P		Fitch
SunTrust Banks, Inc.:
Senior debt	Baa1	BBB+		A-
Preferred stock	Baa3	BB+		BB

SunTrust Bank:
Long-term deposits	A1	A-		A
Short-term deposits	P-1	A-2		F1
Senior debt	Baal	A-		A-
Outlook	Stable	~~Stable~~Positive		Stable

Our investment portfolio is a use of funds and we manage the portfolio primarily as a store of liquidity, maintaining the majority of our securities in liquid and high-grade asset classes, such as agency MBS, agency debt, and U.S. Treasury securities; nearly all of these securities qualify as high-quality liquid assets under the U.S. LCR Final Rule. At September 30, ~~2016,~~2017, our securities AFS portfolio contained ~~$25.0~~$27.4 billion of unencumbered high-quality, liquid securities at market value.

As mentioned above, we ~~maintain~~evaluate contingency funding scenarios to anticipate and manage the likely impact of impaired capital markets access and other adverse liquidity circumstances. Our contingency plans also provide for continuous monitoring of net borrowed funds dependence and available sources of contingency liquidity. These ~~sources of~~ contingency liquidity sources include available cash reserves, the ability to sell, pledge, or borrow against unencumbered securities in our investment portfolio, the capacity to borrow from the FHLB system or the Federal Reserve discount window, and the ability to sell or securitize certain loan portfolios.

Parent Company Liquidity. Our primary measure of Parent Company liquidity is the length of time the Parent Company can meet its existing and forecasted obligations using its cash resources. We measure and manage this metric using forecasts from both normal and adverse conditions. Under adverse conditions, we measure how long the Parent Company can meet its capital and debt service obligations after experiencing material attrition of short-term unsecured funding and without the support of dividends from the Bank or access to the capital markets. In accordance with these risk limits established by ALCO and the Board, we manage the Parent Company’s liquidity by structuring its net maturity schedule to minimize the amount of debt maturing within a short period of time. A majority of the Parent Company’s liabilities are long-term in nature, coming from the proceeds of issuances of our capital securities and long-term senior and subordinated notes. See the "Borrowings" section of this MD&A, as well as Note 11, “Borrowings and Contractual Commitments,” to the Consolidated Financial Statements in our ~~2015~~2016 Annual Report on Form 10-K for further information regarding our debt.

We manage the Parent Company to maintain most of its liquid assets in cash and securities that it can quickly convert into cash. Unlike the Bank, it is not typical for the Parent Company to maintain a material investment portfolio of publicly traded securities. We manage the Parent Company cash balance to provide sufficient liquidity to fund all forecasted obligations (primarily debt and capital service) for an extended period of months in accordance with our risk limits.

The primary uses of Parent Company liquidity include debt service, dividends on capital instruments, the periodic purchase

of investment securities, loans to our subsidiaries, and common share repurchases. See further details of the authorized common share repurchases in the "Capital Resources" section of this MD&A and in Part II, Item 2, "Unregistered Sales of Equity Securities and Use of Proceeds" in this Form 10-Q. We fund corporate dividends with Parent Company cash, the primary sources of which are dividends from our banking subsidiary and proceeds from the issuance of debt and capital securities. We are subject to both state and federal banking regulations that limit our ability to pay common stock dividends in certain circumstances.

Other Liquidity Considerations. As presented in Table ~~18,~~17, we had an aggregate potential obligation of ~~$89.7~~$87.0 billion to our clients in unused lines of credit at September 30, ~~2016.~~2017. Commitments to extend credit are arrangements to lend to clients who have complied with predetermined contractual obligations. We also had ~~$2.8~~$2.9 billion in letters of credit outstanding at September 30, ~~2016,~~2017, most of which are standby letters of credit, which require that we provide funding if certain future events occur. Approximately ~~$464~~$263 million of these letters supported variable rate demand obligations at September 30, ~~2016.~~2017. Unused commercial lines of credit have decreased since December 31, ~~2015,~~2016, driven by revolver utilization. ~~Unused credit card lines increased~~Residential mortgage commitments also decreased since December 31, ~~2015~~2016, due primarily to ~~our strategic focus on growing this business and our launch~~the decrease in IRLC volume outpacing the decrease in closed loan volume during the first nine months of ~~new, streamlined~~2017. Additionally, unused CRE lines of credit ~~card product offerings in 2015. Additionally, our mortgage commitments increased~~decreased since December 31, ~~2015 due to higher purchase and refinance production volume~~2016, driven primarily by ~~the low interest rate environment.~~increased utilization of existing CRE lines of credit.

Other Market Risk

Except as discussed below, there have been no other significant changes to other market risk as described in our ~~2015~~2016 Annual Report on Form 10-K.

We measure our residential MSRs ~~are measured~~ at fair value on a recurring basis and hedge the risk associated with changes in fair value. Residential MSRs totaled ~~$1.1 billion and $1.3~~$1.6 billion at both September 30, ~~2016~~2017 and December 31, ~~2015, respectively,~~2016, and are managed ~~within established risk limits~~ and monitored as part of ana comprehensive risk governance process, which includes established ~~governance process.~~risk limits.

We originated residential MSRs with fair values at the time of origination of $90 million and $252 million during the three and nine months ended September 30, 2017, and $88 million and $198 million during the three and nine months ended September 30, 2016, ~~respectively, and $68 million and $185 million during the three and nine months ended September 30, 2015,~~ respectively. Additionally, we purchased residential MSRs with a fair ~~values~~value of approximately $27 million and $104 million during the three and nine months ended September 30, ~~2016, respectively, and $109 million during the nine months ended September 30, 2015.~~2016. No residential MSRs were purchased during the three and nine months ended September 30, ~~2015.~~2017.

We recognized mark-to-market decreases in the fair value of the residential MSR portfolio of ~~$56~~$70 million and ~~$488~~$195 million during the three and nine months ended September 30, ~~2016,~~2017, respectively. During the three and nine months ended September 30, ~~2015,~~2016, we recognized mark-to-market decreases of ~~$198~~$56 million and ~~$235~~$488 million, ~~in the fair value of the MSR portfolio,~~ respectively. Changes in fair value include the decay resulting from the realization of monthly net servicing cash flows. We recognized net losses related to residential MSRs, inclusive of ~~decay~~fair value changes and related hedges, of $54 million and $153 million for the three and nine months ended September 30, 2017, and $44 million and $107 million for the three and nine months ended September 30, 2016, ~~and net losses of $47 million and $137 million for the three and nine months ended September 30, 2015,~~ respectively. Compared to the prior year ~~quarter,~~periods, the ~~decrease~~increase in net losses related to residential MSRs was primarily driven by ~~stronger net hedge performance. Compared to the nine months ended September 30, 2015, the~~higher decay combined with a decrease in net ~~losses related to MSRs was primarily driven by lower decay along with improved net~~ hedge ~~performance.~~performance in the current periods. All other servicing rights, which include commercial mortgage and consumer indirect loan servicing

rights, are not measured at fair value on a recurring basis, and therefore, are not subject to the same market risks associated with residential MSRs.

OFF-BALANCE SHEET ARRANGEMENTS

In the ordinary course of business we engage in certain activities that are not reflected in our Consolidated Balance Sheets, generally referred to as "off-balance sheet arrangements." These activities involve transactions with unconsolidated VIEs as well as other arrangements, such as commitments and guarantees, to meet the financing needs of our customers and to support ongoing operations. Additional information regarding these types of activities is included in the ~~"Borrowings" and “Liquidity~~"Liquidity Risk ~~Management” sections~~Management" section of this MD&A, Note 8, ~~“Certain~~"Certain Transfers of Financial Assets and Variable Interest Entities,”" and Note 12, ~~“Guarantees,”~~"Guarantees," to the Consolidated Financial Statements in this Form 10-Q, as well as in our ~~2015~~2016 Annual Report on Form 10-K.

Contractual Obligations

In the normal course of business, we enter into certain contractual obligations, including obligations to make future payments on ~~debt~~our borrowings, partnership investments, and lease arrangements, as well as ~~contractual~~ commitments ~~for~~to lend to clients and to fund capital expenditures and service contracts.

Except for changes in unfunded lending commitments (presented in Table 1817 within the "Liquidity Risk Management"

section of this MD&A), borrowings (presented in the "Borrowings" section of this MD&A), and pension and other postretirement benefit plans (disclosed in Note 11, "Employee Benefit Plans," to the Consolidated Financial Statements in this Form 10-Q), there have been no material changes in our contractual obligations from those disclosed in our ~~2015~~2016 Annual Report on Form 10-K.

See Note 16, "Business Segment Reporting," to the Consolidated Financial Statements in this Form 10-Q for a description of our business segments, basis of presentation, internal management reporting methodologies, and business segment structure

realignment from three segments to two segments in the second quarter of 2017. Table 1918 presents net income for our reportable business segments:



Georgia		58-1575035
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



		Page
GLOSSARY OF DEFINED TERMS		i

PART I - FINANCIAL INFORMATION		1

Item 1.	Financial Statements (Unaudited)	2
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Shareholders’ Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements (Unaudited)	7
	Note 1 - Significant Accounting Policies	7
	Note 2 - Federal Funds Sold and Securities Financing Activities	9
	Note 3 - Trading Assets and Liabilities and Derivative Instruments	11
	Note 4 - Securities Available for Sale	12
	Note 5 - Loans	16
	Note 6 - Allowance for Credit Losses	24
	Note 7 - Goodwill and Other Intangible Assets	25
	Note 8 - Certain Transfers of Financial Assets and Variable Interest Entities	28
	Note 9 - Net Income Per Common Share	31
	Note 10 - Income Taxes	32
	Note 11 - Employee Benefit Plans	32
	Note 12 - Guarantees	33
	Note 13 - Derivative Financial Instruments	35
	Note 14 - Fair Value Election and Measurement	44
	Note 15 - Contingencies	59
	Note 16 - Business Segment Reporting	62
	Note 17 - Accumulated Other Comprehensive (Loss)/Income	66

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operation	6768
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	~~102~~103
Item 4.	Controls and Procedures	~~102~~103

PART II - OTHER INFORMATION		~~103~~104

Item 1.	Legal Proceedings	~~103~~104
Item 1A.	Risk Factors	~~103~~104
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~103~~106
Item 3.	Defaults Upon Senior Securities	~~104~~107
Item 4.	Mine Safety Disclosures	~~104~~107
Item 5.	Other Information	~~104~~107
Item 6.	Exhibits	~~104~~107

SIGNATURE		~~105~~108


	Three Months Ended September 30				Nine Months Ended September 30				Three Months Ended September 30					Nine Months Ended September 30
(Dollars in millions and shares in thousands, except per share data) (Unaudited)	2016		2015		2016		2015		2017			2016		2017		2016
Interest Income
Interest and fees on loans		$1,245		$1,139		$3,670		$3,345		$1,382			$1,245		$4,009		$3,670
Interest and fees on loans held for sale	25		20		62		66		24			25		70		62
Interest and dividends on securities available for sale	159		153		483		430		195			159		573		483
Trading account interest and other	22		21		70		61		34			22		95		70
Total interest income	1,451		1,333		4,285		3,902		1,635			1,451		4,747		4,285
Interest Expense
Interest on deposits	67		54		188		165		111			67		286		188
Interest on long-term debt	68		60		191		196		76			68		216		191
Interest on other borrowings	8		8		29		23		18			8		46		29
Total interest expense	143		122		408		384		205			143		548		408
Net interest income	1,308		1,211		3,877		3,518		1,430			1,308		4,199		3,877
Provision for credit losses	97		32		343		114		120			97		330		343
Net interest income after provision for credit losses	1,211		1,179		3,534		3,404		1,310			1,211		3,869		3,534
Noninterest Income
Service charges on deposit accounts	162		159		477		466		154			162		453		477
Other charges and fees	93		97		290		285		92			93		291		290
Card fees	83		83		243		247		86			83		255		243
Investment banking income	147		115		372		357		166			147		480		372
Trading income	65		31		154		140		51			65		148		154
Trust and investment management income									79			80		229		230
Retail investment services									69			71		208		212
Mortgage production related income	118		58		288		217		61			118		170		288
Mortgage servicing related income	49		40		164		113		46			49		148		164
Trust and investment management income	80		86		230		255
Retail investment services	71		77		212		229
Gain on sale of premises	—		—		52		—
Commercial real estate related income ¹									17			8		61		36
Net securities gains	—		7		4		21		—			—		1		4
Other noninterest income	21		58		83		173
Other noninterest income ¹									25			13		76		99
Total noninterest income	889		811		2,569		2,503		846			889		2,520		2,569
Noninterest Expense
Employee compensation	687		641		1,994		1,926		725			687		2,152		1,994
Employee benefits	86		84		315		326		81			86		302		315
Outside processing and software	225		200		626		593		203			225		612		626
Net occupancy expense	93		86		256		255		94			93		280		256
Regulatory assessments									47			47		143		127
Marketing and customer development									45			38		129		120
Equipment expense	44		41		126		123		40			44		123		126
Marketing and customer development	38		42		120		104
Regulatory assessments	47		32		127		104
Operating losses	35		3		85		33
Credit and collection services	17		8		47		52
Amortization	14		9		35		22		22			14		49		35
Operating (gains)/losses									(34		)	35		17		85
Other noninterest expense	123		118		341		334		168			140		436		388
Total noninterest expense	1,409		1,264		4,072		3,872		1,391			1,409		4,243		4,072
Income before provision for income taxes	691		726		2,031		2,035		765			691		2,146		2,031
Provision for income taxes	215		187		611		579		225			215		606		611
Net income including income attributable to noncontrolling interest	476		539		1,420		1,456		540			476		1,540		1,420
Net income attributable to noncontrolling interest	2		2		7		7		2			2		7		7
Net income		$474		$537		$1,413		$1,449		$538			$474		$1,533		$1,413
Net income available to common shareholders		$457		$519		$1,363		$1,396		$512			$457		$1,468		$1,363

Net income per average common share:
Diluted		$0.91		$1.00		$2.70		$2.67		$1.06			$0.91		$3.00		$2.70
Basic	0.92		1.01		2.72		2.70		1.07			0.92		3.04		2.72
Dividends declared per common share	0.26		0.24		0.74		0.68		0.40			0.26		0.92		0.74
Average common shares - diluted	500,885		518,677		505,619		522,634		483,640			500,885		489,176		505,619
Average common shares - basic	496,304		513,010		501,036		516,970		478,258			496,304		483,711		501,036



	Three Months Ended September 30					Nine Months Ended September 30
(Dollars in millions) (Unaudited)	2016			2015		2016			2015
Net income		$474			$537		$1,413			$1,449
Components of other comprehensive (loss)/income:
Change in net unrealized (losses)/gains on securities available for sale, net of tax of ($19), $70, $228, and $6, respectively	(32		)	119		383			4
Change in net unrealized (losses)/gains on derivative instruments, net of tax of ($51), $50, $81, and $57, respectively	(86		)	84		137			94
Change in credit risk adjustment on long-term debt, net of tax of ($2), $0, ($3), and $0, respectively ¹	(3		)	—		(5		)	—
Change related to employee benefit plans, net of tax of $2, $1, $39, and ($44), respectively	3			3		65			(64		)
Total other comprehensive (loss)/income, net of tax	(118		)	206		580			34
Total comprehensive income		$356			$743		$1,993			$1,483



	Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions) (Unaudited)	2017			2016			2017			2016
Net income		$538			$474			$1,533			$1,413
Components of other comprehensive income/(loss):
Change in net unrealized gains/(losses) on securities available for sale, net of tax of $24, ($19), $57, and $228, respectively	40			(32		)	97			383
Change in net unrealized (losses)/gains on derivative instruments, net of tax of ($1), ($51), ($7), and $81, respectively	(2		)	(86		)	(13		)	137
Change in credit risk adjustment on long-term debt, net of tax of $1, ($2), $1, and ($3), respectively ¹	1			(3		)	1			(5		)
Change related to employee benefit plans, net of tax of $2, $2, $3, and $39, respectively	3			3			1			65
Total other comprehensive income/(loss), net of tax	42			(118		)	86			580
Total comprehensive income		$580			$356			$1,619			$1,993


	September 30,			December 31,			September 30,			December 31,
(Dollars in millions and shares in thousands, except per share data)	2016			2015			2017			2016
Assets	(Unaudited)						(Unaudited)
Cash and due from banks		$8,019			$4,299			$7,071			$5,091
Federal funds sold and securities borrowed or purchased under agreements to resell	1,697			1,277			1,182			1,307
Interest-bearing deposits in other banks	24			23			25			25
Cash and cash equivalents	9,740			5,599			8,278			6,423
Trading assets and derivative instruments ¹	7,044			6,119			6,318			6,067
Securities available for sale	29,672			27,825
Loans held for sale ($3,026 and $1,494 at fair value at September 30, 2016 and December 31, 2015, respectively)	3,772			1,838
Loans ² ($234 and $257 at fair value at September 30, 2016 and December 31, 2015, respectively)	141,532			136,442
Securities available for sale ²							31,444			30,672
Loans held for sale ($2,252 and $3,540 at fair value at September 30, 2017 and December 31, 2016, respectively)							2,835			4,169
Loans ³ ($206 and $222 at fair value at September 30, 2017 and December 31, 2016, respectively)							144,264			143,298
Allowance for loan and lease losses	(1,743		)	(1,752		)	(1,772		)	(1,709		)
Net loans	139,789			134,690			142,492			141,589
Premises and equipment, net	1,510			1,502			1,616			1,556
Goodwill	6,337			6,337			6,338			6,337
Other intangible assets (MSRs at fair value: $1,119 and $1,307 at September 30, 2016 and December 31, 2015, respectively)	1,131			1,325
Other intangible assets (Residential MSRs at fair value: $1,628 and $1,572 at September 30, 2017 and December 31, 2016, respectively)							1,706			1,657
Other assets	6,096			5,582			7,225			6,405
Total assets		$205,091			$190,817			$208,252			$204,875

Liabilities
Noninterest-bearing deposits		$43,835			$42,272			$43,984			$43,431
Interest-bearing deposits (CDs at fair value: $54 and $0 at September 30, 2016 and December 31, 2015, respectively)	115,007			107,558
Interest-bearing deposits (CDs at fair value: $207 and $78 at September 30, 2017 and December 31, 2016, respectively)							118,753			116,967
Total deposits	158,842			149,830			162,737			160,398
Funds purchased	2,226			1,949			3,118			2,116
Securities sold under agreements to repurchase	1,724			1,654			1,422			1,633
Other short-term borrowings	949			1,024			909			1,015
Long-term debt ³ ($963 and $973 at fair value at September 30, 2016 and December 31, 2015, respectively)	11,866			8,462
Long-term debt ⁴ ($758 and $963 at fair value at September 30, 2017 and December 31, 2016, respectively)							11,280			11,748
Trading liabilities and derivative instruments	1,484			1,263			1,284			1,351
Other liabilities	3,551			3,198			2,980			2,996
Total liabilities	180,642			167,380			183,730			181,257
Shareholders’ Equity
Preferred stock, no par value	1,225			1,225			1,975			1,225
Common stock, $1.00 par value	550			550			550			550
Additional paid-in capital	9,009			9,094			8,985			9,010
Retained earnings	15,681			14,686			17,021			16,000
Treasury stock, at cost, and other ⁴	(2,131		)	(1,658		)
Accumulated other comprehensive income/(loss), net of tax	115			(460		)
Treasury stock, at cost, and other ⁵							(3,274		)	(2,346		)
Accumulated other comprehensive loss, net of tax							(735		)	(821		)
Total shareholders’ equity	24,449			23,437			24,522			23,618
Total liabilities and shareholders’ equity		$205,091			$190,817			$208,252			$204,875

Common shares outstanding ⁵	495,936			508,712
Common shares outstanding ⁶							476,001			491,188
Common shares authorized	750,000			750,000			750,000			750,000
Preferred shares outstanding	12			12			20			12
Preferred shares authorized	50,000			50,000			50,000			50,000
Treasury shares of common stock	53,985			41,209			74,053			58,738

¹ Includes trading securities pledged as collateral where counterparties have the right to sell or repledge the collateral		$1,495			$1,377			$1,043			$1,437
² Includes loans of consolidated VIEs	219			246
³ Includes debt of consolidated VIEs	230			259
⁴ Includes noncontrolling interest	101			108
⁵ Includes restricted shares	21			1,334
² Includes securities AFS pledged as collateral where counterparties have the right to sell or repledge the collateral							280			—
³ Includes loans of consolidated VIEs							186			211
⁴ Includes debt of consolidated VIEs							195			222
⁵ Includes noncontrolling interest							101			103
⁶ Includes restricted shares							9			11


(Dollars and shares in millions, except per share data) (Unaudited)	Preferred Stock		Common Shares Outstanding		Common Stock		Additional Paid-in Capital			Retained Earnings			Treasury Stock and Other¹			Accumulated Other Comprehensive (Loss)/Income			Total			Preferred Stock		Common Shares Outstanding		Common Stock		Additional Paid-in Capital			Retained Earnings			Treasury Stock and Other¹			Accumulated Other Comprehensive (Loss)/Income			Total
Balance, January 1, 2015		$1,225	525			$550		$9,089			$13,295			($1,032	)		($122	)		$23,005
Net income	—		—		—		—			1,449			—			—			1,449
Other comprehensive income	—		—		—		—			—			—			34			34
Change in noncontrolling interest	—		—		—		—			—			(2		)	—			(2		)
Common stock dividends, $0.68 per share	—		—		—		—			(352		)	—			—			(352		)
Preferred stock dividends ²	—		—		—		—			(48		)	—			—			(48		)
Repurchase of common stock	—		(11	)	—		—			—			(465		)	—			(465		)
Exercise of stock options and stock compensation expense	—		—		—		(16		)	—			25			—			9
Restricted stock activity	—		—		—		14			(3		)	7			—			18
Amortization of restricted stock compensation	—		—		—		—			—			13			—			13
Issuance of stock for employee benefit plans and other	—		—		—		—			—			3			—			3
Balance, September 30, 2015		$1,225	514			$550		$9,087			$14,341			($1,451	)		($88	)		$23,664

Balance, January 1, 2016		$1,225	509			$550		$9,094			$14,686			($1,658	)		($460	)		$23,437			$1,225	509			$550		$9,094			$14,686			($1,658	)		($460	)		$23,437
Cumulative effect of credit risk adjustment ³	—		—		—		—			5			—			(5		)	—
Cumulative effect of credit risk adjustment ²																						—		—		—		—			5			—			(5		)	—
Net income	—		—		—		—			1,413			—			—			1,413			—		—		—		—			1,413			—			—			1,413
Other comprehensive income	—		—		—		—			—			—			580			580			—		—		—		—			—			—			580			580
Change in noncontrolling interest	—		—		—		—			—			(7		)	—			(7		)	—		—		—		—			—			(7		)	—			(7		)
Common stock dividends, $0.74 per share	—		—		—		—			(370		)	—			—			(370		)	—		—		—		—			(370		)	—			—			(370		)
Preferred stock dividends ²	—		—		—		—			(49		)	—			—			(49		)
Preferred stock dividends ³																						—		—		—		—			(49		)	—			—			(49		)
Repurchase of common stock	—		(15	)	—		—			—			(566		)	—			(566		)	—		(15	)	—		—			—			(566		)	—			(566		)
Repurchase of common stock warrants	—		—		—		(24		)	—			—			—			(24		)	—		—		—		(24		)	—			—			—			(24		)
Exercise of stock options and stock compensation expense ⁴	—		1		—		(28		)	—			43			—			15			—		1		—		(28		)	—			43			—			15
Restricted stock activity ⁴	—		1		—		(33		)	(4		)	55			—			18			—		1		—		(33		)	(4		)	55			—			18
Amortization of restricted stock compensation	—		—		—		—			—			2			—			2			—		—		—		—			—			2			—			2
Balance, September 30, 2016		$1,225	496			$550		$9,009			$15,681			($2,131	)		$115			$24,449			$1,225	496			$550		$9,009			$15,681			($2,131	)		$115			$24,449

Balance, January 1, 2017																							$1,225	491			$550		$9,010			$16,000			($2,346	)		($821	)		$23,618
Net income																						—		—		—		—			1,533			—			—			1,533
Other comprehensive income																						—		—		—		—			—			—			86			86
Change in noncontrolling interest																						—		—		—		—			—			(2		)	—			(2		)
Common stock dividends, $0.92 per share																						—		—		—		—			(443		)	—			—			(443		)
Preferred stock dividends ³																						—		—		—		—			(65		)	—			—			(65		)
Issuance of preferred stock, Series G																						750		—		—		(7		)	—			—			—			743
Repurchase of common stock																						—		(17	)	—		—			—			(984		)	—			(984		)
Exercise of stock options and stock compensation expense																						—		1		—		(14		)	—			27			—			13
Restricted stock activity																						—		1		—		(4		)	(4		)	31			—			23
Balance, September 30, 2017																							$1,975	476			$550		$8,985			$17,021			($3,274	)		($735	)		$24,522

SunTrust Banks, Inc. Consolidated Statements of Cash Flows

	Nine Months Ended September 30
(Dollars in millions) (Unaudited)	2016			2015
Cash Flows from Operating Activities
Net income including income attributable to noncontrolling interest		$1,420			$1,456
Adjustments to reconcile net income to net cash (used in)/provided by operating activities:
Depreciation, amortization, and accretion	533			596
Origination of mortgage servicing rights	(198		)	(185		)
Provisions for credit losses and foreclosed property	347			122
Stock-based compensation	85			65
Net securities gains	(4		)	(21		)
Net gain on sale of loans held for sale, loans, and other assets	(376		)	(249		)
Net (increase)/decrease in loans held for sale	(1,647		)	644
Net increase in trading assets	(704		)	(183		)
Net increase in other assets ¹	(193		)	(26		)
Net increase/(decrease) in other liabilities ¹	155			(164		)
Net cash (used in)/provided by operating activities	(582		)	2,055

Cash Flows from Investing Activities
Proceeds from maturities, calls, and paydowns of securities available for sale	3,763			4,621
Proceeds from sales of securities available for sale	197			2,708
Purchases of securities available for sale	(5,297		)	(7,861		)
Net increase in loans, including purchases of loans	(7,007		)	(2,097		)
Proceeds from sales of loans	1,482			2,048
Purchases of mortgage servicing rights	(101		)	(113		)
Capital expenditures	(188		)	(74		)
Payments related to acquisitions, including contingent consideration	(23		)	(30		)
Proceeds from the sale of other real estate owned and other assets	171			179
Net cash used in investing activities	(7,003		)	(619		)

Cash Flows from Financing Activities
Net increase in total deposits	9,012			5,804
Net increase/(decrease) in funds purchased, securities sold under agreements to repurchase, and other short-term borrowings	272			(5,244		)
Proceeds from issuance of long-term debt and other	4,924			1,237
Repayments of long-term debt	(1,448		)	(5,670		)
Repurchase of common stock	(566		)	(465		)
Repurchase of common stock warrants	(24		)	—
Common and preferred dividends paid	(412		)	(393		)
Taxes paid related to net share settlement of equity awards ¹	(47		)	(32		)
Proceeds from exercise of stock options ¹	15			14
Net cash provided by/(used in) financing activities	11,726			(4,749		)

Net increase/(decrease) in cash and cash equivalents	4,141			(3,313		)
Cash and cash equivalents at beginning of period	5,599			8,229
Cash and cash equivalents at end of period		$9,740			$4,916

Supplemental Disclosures:
Loans transferred from loans held for sale to loans		$23			$726
Loans transferred from loans to loans held for sale	315			1,734
Loans transferred from loans and loans held for sale to other real estate owned	46			52
Non-cash impact of debt assumed by purchaser in lease sale	74			129



Standard	Description	Required Date of Adoption	Effect on the Financial Statements or Other Significant Matters
~~Standards~~Standard(s) Adopted in 2017 (or partially ~~adopted) in 2016~~
~~ASU 2015-02, Amendments to the Consolidation Analysis~~	~~The ASU rescinds the indefinite deferral of previous amendments to ASC Topic 810,~~ ~~Consolidation~~, for certain entities and amends components of the consolidation analysis under ASC Topic 810, including evaluating limited partnerships and similar legal entities, evaluating fees paid to a decision maker or service provider as a variable interest, the effects of fee arrangements and/or related parties on the primary beneficiary determination and investment fund specific matters. The ASU may be adopted ~~either retrospectively or on a modified retrospective basis.~~	~~January 1, 2016~~	~~The Company adopted this ASU on a modified retrospective basis beginning January 1, 2016. The adoption of this standard had no impact to the Consolidated Financial Statements.~~previously)
ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities	The ASU amends ASC Topic 825, Financial Instruments-Overall, and addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The main provisions require investments in equity securities to be measured at fair value through net income, unless they qualify for a practicability exception, and require fair value changes arising from changes in instrument-specific credit risk for financial liabilities that are measured under the fair value option to be recognized in other comprehensive income. With the exception of disclosure requirements that will be adopted prospectively, the ASU must be adopted on a modified retrospective basis.	January 1, 2018 Early adoption is permitted beginning January 1, 2016 or 2017 for the provision related to changes in instrument-specific credit risk for financial liabilities under the FVO.	The Company early adopted the provision related to changes in instrument-specific credit risk beginning January 1, 2016, which resulted in an immaterial, cumulative effect adjustment from retained earnings to AOCI. See Note 1, “Significant Accounting Policies,” to the Company's 2016 Annual Report on Form 10-K for additional information. The Company ~~is evaluating the impact of~~does not expect the remaining provisions of this ASU to have a material impact on ~~the~~its Consolidated Financial Statements and related ~~disclosures; however, the impact is not expected to be material.~~



~~Standard~~	~~Description~~	~~Required Date of Adoption~~	~~Effect on the Financial Statements or Other Significant Matters~~
~~ASU 2016-09, Improvements to Employee Share-Based Payment Accounting~~	~~The ASU amends ASC Topic 718,~~ ~~Compensation-Stock Compensation~~, which simplifies several aspects of the accounting for employee share-based payments transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Adoption methods are specific to the component of the ASU, ranging from a retrospective and modified retrospective basis to a prospective basis.	~~January 1, 2017~~ ~~Early adoption is permitted.~~	The Company early adopted the ASU on April 1, 2016 with an effective date of January 1, 2016, which resulted in a reclassification of $4 million from APIC to provision for income taxes, representing excess tax benefits previously recognized in APIC, during the first quarter of 2016. For the second and third quarters of 2016, the Company recognized excess tax benefits of $6 million and $1 million, respectively, in the provision for income taxes. The early adoption favorably impacted both basic and diluted EPS by $0.02 per share for the nine months ended September 30, 2016. The effect of the retrospective change in presentation in the Consolidated Statements of Cash Flows related to excess tax benefits for the nine months ended September 30, 2015 (comparative prior year period) was a reclassification of $18 million of excess tax benefits from financing activities to operating activities and a reclassification of $32 million of taxes paid related to net share settlement of equity awards from operating activities to financing activities. The net impact on the Consolidated Statements of Cash Flows was immaterial. The Company had no previously unrecognized excess tax benefits; therefore, there was no impact to the Consolidated Financial Statements as it related to the elimination of the requirement that excess tax benefits be realized before recognition. ~~The Company elected to retain its existing accounting policy election to estimate award forfeitures.~~
~~Standards~~Standard(s) Not Yet Adopted
~~ASU 2014-09, Revenue from Contracts with Customers~~ ~~ASU 2015-14, Deferral of the Effective Date~~ ~~ASU 2016-08, Principal versus Agent Considerations~~ ~~ASU 2016-10, Identifying Performance Obligations and Licensing~~ ~~ASU 2016-12, Narrow-Scope Improvements and Practical Expedients~~	~~These ASUs supersede the revenue recognition requirements in ASC Topic 605,~~ ~~Revenue Recognition~~, and most industry-specific guidance throughout the Industry Topics of the Codification. The core principle of the ASUs is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASUs may be adopted either retrospectively or on a modified retrospective basis to new contracts and existing contracts, with remaining performance obligations as of the effective date.	~~January 1, 2018~~ ~~Early adoption is permitted beginning January 1, 2017.~~	The Company is evaluating the alternative methods of adoption and the anticipated effects on the Consolidated Financial Statements and related disclosures. The Company does not plan to early adopt the standard.
ASU 2016-02, Leases	The ASU creates ASC Topic 842, Leases, ~~and~~which supersedes ASC Topic 840, Leases. ASC Topic 842 requires lessees to recognize right-of-use assets and associated liabilities that arise from leases, with the exception of short-term leases. The ASU does not make significant changes to lessor accounting; however, there were certain improvements made to align lessor accounting with the lessee accounting model and ASC Topic 606, Revenue from Contracts with Customers. There are several new qualitative and quantitative disclosures required. Upon transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach.	January 1, 2019 Early adoption is permitted.	The Company has formed a cross-functional team to oversee the implementation of this ASU. The Company's implementation efforts are ongoing, including the review of its lease portfolios and related lease accounting policies, the review of its service contracts for embedded leases, and the deployment of a new lease software solution. The Company's adoption of this ASU will result in an increase ~~to the Consolidated Balance Sheets for~~in right-of-use assets and associated lease liabilities, ~~for~~arising from operating leases in which the Company is the ~~lessee.~~lessee, on its Consolidated Balance Sheets. The amount of the right-of-use assets and associated lease liabilities recorded upon adoption will be based primarily on the present value of unpaid future minimum lease payments, the amount of which will depend on the population of leases in effect at the date of adoption. At September 30, 2017, the Company’s estimate of right-of-use assets and lease liabilities that would be recorded on its Consolidated Balance Sheets upon adoption is in excess of $1 billion. The Company ~~is evaluating the other effects~~does not expect this ASU to have a material impact on its Consolidated Statements of ~~adoption on the Consolidated Financial Statements and related disclosures.~~Income.


(Dollars in millions)	Gross Amount		Amount Offset		Net Amount Presented in Consolidated Balance Sheets			Held/Pledged Financial Instruments		Net Amount		Gross Amount		Amount Offset		Net Amount Presented in Consolidated Balance Sheets			Held/Pledged Financial Instruments		Net Amount
September 30, 2016
September 30, 2017
Financial assets:
Securities borrowed or purchased under agreements to resell		$1,666		$—		$1,666	¹		$1,652		$14		$1,182		$—		$1,182	¹		$1,165		$17
Financial liabilities:
Securities sold under agreements to repurchase	1,724		—		1,724			1,724		—		1,422		—		1,422			1,422		—

December 31, 2015
December 31, 2016
Financial assets:
Securities borrowed or purchased under agreements to resell		$1,239		$—		$1,239	¹		$1,229		$10		$1,249		$—		$1,249	¹		$1,241		$8
Financial liabilities:
Securities sold under agreements to repurchase	1,654		—		1,654			1,654		—		1,633		—		1,633			1,633		—


	Distribution of Remaining Maturities															Distribution of Remaining Maturities
(Dollars in millions)	Due in 1 Year or Less			Due After 1 Year through 5 Years			Due After 5 Years through 10 Years			Due After 10 Years			Total			Due in 1 Year or Less			Due After 1 Year through 5 Years			Due After 5 Years through 10 Years			Due After 10 Years			Total
Amortized Cost:
U.S. Treasury securities		$—			$1,847			$3,003			$—			$4,850			$—			$2,002			$2,298			$—			$4,300
Federal agency securities	118			92			7			107			324			126			46			4			90			266
U.S. states and political subdivisions	20			21			125			84			250			6			46			179			327			558
MBS - agency	2,024			13,277			7,104			201			22,606			1,475			9,092			13,785			508			24,860
MBS - non-agency residential	—			75			—			—			75			—			59			—			—			59
MBS - non-agency commercial																5			12			730			—			747
ABS	7			1			1			—			9			—			6			—			—			6
Corporate and other debt securities	—			35			—			—			35			23			10			—			—			33
Total debt securities AFS		$2,169			$15,348			$10,240			$392			$28,149			$1,635			$11,273			$16,996			$925			$30,829
Fair Value:
U.S. Treasury securities		$—			$1,874			$3,109			$—			$4,983			$—			$1,996			$2,265			$—			$4,261
Federal agency securities	118			98			8			110			334			129			47			4			90			270
U.S. states and political subdivisions	20			23			133			85			261			6			48			185			324			563
MBS - agency	2,129			13,719			7,259			209			23,316			1,544			9,199			13,730			507			24,980
MBS - non-agency residential	—			76			—			—			76			—			62			—			—			62
MBS - non-agency commercial																5			12			733			—			750
ABS	7			3			1			—			11			—			8			—			—			8
Corporate and other debt securities	—			36			—			—			36			23			10			—			—			33
Total debt securities AFS		$2,274			$15,829			$10,510			$404			$29,017			$1,707			$11,382			$16,917			$921			$30,927
Weighted average yield ¹	2.75		%	2.38		%	2.42		%	3.17		%	2.44		%	3.51		%	2.35		%	2.67		%	3.15		%	2.62		%


	September 30, 2016												September 30, 2017
	Less than twelve months				Twelve months or longer				Total				Less than twelve months				Twelve months or longer				Total
(Dollars in millions)	Fair Value		Unrealized Losses ²		Fair Value		Unrealized Losses ²		Fair Value		Unrealized Losses ²		Fair Value		Unrealized Losses ²		Fair Value		Unrealized Losses ²		Fair Value		Unrealized Losses ²
Temporarily impaired securities AFS:
U.S. Treasury securities		$350		$2		$—		$—		$350		$2		$1,092		$9		$1,382		$39		$2,474		$48
Federal agency securities	15		—		3		—		18		—		43		—		33		1		76		1
U.S. states and political subdivisions	52		—		—		—		52		—		178		1		119		3		297		4
MBS - agency	611		1		513		3		1,124		4		9,571		92		2,709		75		12,280		167
MBS - non-agency commercial													207		2		47		1		254		3
ABS	—		—		6		—		6		—		—		—		5		—		5		—
Corporate and other debt securities													10		—		—		—		10		—
Other equity securities	—		—		4		1		4		1		—		—		3		2		3		2
Total temporarily impaired securities AFS	1,028		3		526		4		1,554		7		11,101		104		4,298		121		15,399		225
OTTI securities AFS ¹:
MBS - non-agency residential	17		—		—		—		17		—		14		1		—		—		14		1
ABS	1		—		—		—		1		—		—		—		1		—		1		—
Total OTTI securities AFS	18		—		—		—		18		—		14		1		1		—		15		1
Total impaired securities AFS		$1,046		$3		$526		$4		$1,572		$7		$11,115		$105		$4,299		$121		$15,414		$226


	Residential Loans ¹												Residential Loans ¹
	Residential Mortgages - Nonguaranteed				Residential Home Equity Products				Residential Construction				Residential Mortgages - Nonguaranteed				Residential Home Equity Products				Residential Construction
(Dollars in millions)	September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Current FICO score range:
700 and above		$22,342		$20,422		$10,016		$10,772		$331		$313		$23,444		$22,194		$9,067		$9,826		$274		$292
620 - 699	3,037		3,262		1,590		1,741		51		58		2,769		3,042		1,334		1,540		43		96
Below 620 ²	927		1,060		572		658		11		13		828		901		464		546		10		16
Total		$26,306		$24,744		$12,178		$13,171		$393		$384		$27,041		$26,137		$10,865		$11,912		$327		$404


	Consumer Loans ³												Consumer Loans ³
	Other Direct				Indirect				Credit Cards				Other Direct				Indirect				Credit Cards
(Dollars in millions)	September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Current FICO score range:
700 and above		$6,649		$5,501		$7,377		$7,015		$878		$759		$7,778		$7,008		$8,907		$7,642		$1,000		$974
620 - 699	659		576		2,483		2,481		317		265		783		703		2,339		2,381		370		351
Below 620 ²	50		50		574		631		74		62		36		60		706		713		96		85
Total		$7,358		$6,127		$10,434		$10,127		$1,269		$1,086		$8,597		$7,771		$11,952		$10,736		$1,466		$1,410



Item 1.	FINANCIAL STATEMENTS (UNAUDITED)



	Three Months Ended September 30, 2016 ¹
(Dollars in millions)	Number of Loans Modified	Principal Forgiveness ²		Rate Modification		Term Extension and/or Other Concessions		Total
Commercial loans:
C&I	44		$—		$—		$49		$49
CRE	2	—		—		—		—
Residential loans:
Residential mortgages - nonguaranteed	311	2		22		1		25
Residential home equity products	884	—		—		55		55
Residential construction	26	—		—		—		—
Consumer loans:
Other direct	41	—		—		—		—
Indirect	897	—		—		9		9
Credit cards	187	—		1		—		1
Total TDRs	2,392		$2		$23		$114		$139


	Nine months ended September 30, 2016 ¹									Three Months Ended September 30, 2017 ¹
(Dollars in millions)	Number of Loans Modified	Principal Forgiveness ²		Rate Modification		Term Extension and/or Other Concessions		Total		Number of Loans Modified	Rate Modification		Term Extension and/or Other Concessions		Total
Commercial loans:
C&I	79		$—		$—		$95		$95	76		$2		$7		$9
CRE	2	—		—		—		—
Commercial construction	1	—		—		—		—
Residential loans:
Residential mortgages - nonguaranteed	550	2		80		9		91		41	6		4		10
Residential home equity products	2,415	—		9		182		191		696	18		45		63
Residential construction	26	—		—		—		—
Consumer loans:
Other direct	73	—		—		1		1		135	—		2		2
Indirect	1,815	—		—		30		30		738	—		17		17
Credit cards	539	—		2		—		2		182	1		—		1
Total TDRs	5,500		$2		$91		$317		$410
Total TDR additions										1,868		$27		$75		$102



	Three Months Ended September 30, 2015 ¹
(Dollars in millions)	Number of Loans Modified	Principal Forgiveness ²		Rate Modification		Term Extension and/or Other Concessions		Total
Commercial loans:
C&I	18		$—		$—		$—		$—
Residential loans:
Residential mortgages - nonguaranteed	175	3		32		10		45
Residential home equity products	419	—		7		21		28
Residential construction	6	—		—		—		—
Consumer loans:
Other direct	10	—		—		—		—
Indirect	611	—		—		13		13
Credit cards	157	—		1		—		1
Total TDRs	1,396		$3		$40		$44		$87


	Nine months ended September 30, 2015 ¹									Nine Months Ended September 30, 2017 ¹
(Dollars in millions)	Number of Loans Modified	Principal Forgiveness ²		Rate Modification		Term Extension and/or Other Concessions		Total		Number of Loans Modified	Rate Modification		Term Extension and/or Other Concessions		Total
Commercial loans:
C&I	63		$—		$1		$5		$6	136		$2		$86		$88
CRE	1	—		—		—		—
Residential loans:
Residential mortgages - nonguaranteed	632	10		95		20		125		119	17		8		25
Residential home equity products	1,386	—		20		62		82		1,971	18		172		190
Residential construction	17	—		—		—		—
Consumer loans:
Other direct	47	—		—		1		1		425	—		6		6
Indirect	1,999	—		—		39		39		2,034	—		50		50
Credit cards	529	—		2		—		2		615	3		—		3
Total TDRs	4,674		$10		$118		$127		$255
Total TDR additions										5,300		$40		$322		$362


	Three Months Ended September 30, 2016												Three Months Ended September 30, 2017
(Dollars in millions)	Commercial			Residential			Consumer			Total			Commercial			Residential			Consumer			Total
Balance, beginning of period		$1,147			$439			$188			$1,774			$1,140			$337			$254			$1,731
Provision/(benefit) for loan losses	81			(36		)	50			95
Provision for loan losses													5			29			85			119
Loan charge-offs	(78		)	(28		)	(44		)	(150		)	(33		)	(23		)	(53		)	(109		)
Loan recoveries	7			7			10			24			11			8			12			31
Balance, end of period		$1,157			$382			$204			$1,743			$1,123			$351			$298			$1,772

	Three Months Ended September 30, 2015												Three Months Ended September 30, 2016
(Dollars in millions)	Commercial			Residential			Consumer			Total			Commercial			Residential			Consumer			Total
Balance, beginning of period		$993			$676			$165			$1,834			$1,147			$439			$188			$1,774
Provision/(benefit) for loan losses	33			(39		)	29			23			81			(36		)	50			95
Loan charge-offs	(23		)	(47		)	(32		)	(102		)	(78		)	(28		)	(44		)	(150		)
Loan recoveries	10			11			10			31			7			7			10			24
Balance, end of period		$1,013			$601			$172			$1,786			$1,157			$382			$204			$1,743

	Nine Months Ended September 30, 2016												Nine Months Ended September 30, 2017
(Dollars in millions)	Commercial			Residential			Consumer			Total			Commercial			Residential			Consumer			Total
Balance, beginning of period		$1,047			$534			$171			$1,752			$1,124			$369			$216			$1,709
Provision/(benefit) for loan losses	293			(72		)	117			338
Provision for loan losses													89			33			202			324
Loan charge-offs	(209		)	(102		)	(117		)	(428		)	(122		)	(78		)	(157		)	(357		)
Loan recoveries	26			22			33			81			32			27			37			96
Balance, end of period		$1,157			$382			$204			$1,743			$1,123			$351			$298			$1,772

	Nine Months Ended September 30, 2015												Nine Months Ended September 30, 2016
(Dollars in millions)	Commercial			Residential			Consumer			Total			Commercial			Residential			Consumer			Total
Balance, beginning of period		$986			$777			$174			$1,937			$1,047			$534			$171			$1,752
Provision/(benefit) for loan losses	74			(30		)	63			107			293			(72		)	117			338
Loan charge-offs	(82		)	(177		)	(97		)	(356		)	(209		)	(102		)	(117		)	(428		)
Loan recoveries	35			31			32			98			26			22			33			81
Balance, end of period		$1,013			$601			$172			$1,786			$1,157			$382			$204			$1,743



(Dollars in millions)	Consumer		Wholesale		Total
Balance, January 1, 2017		$4,262		$2,075		$6,337
Measurement period adjustment related to the acquisition of Pillar	—		1		1
Balance, September 30, 2017		$4,262		$2,076		$6,338


(Dollars in millions)	MSRs - Fair Value			Other			Total			Residential MSRs - Fair Value			Other			Total
Balance, January 1, 2017											$1,572			$85			$1,657
Amortization ¹										—			(16		)	(16		)
Servicing rights originated										252			10			262
Changes in fair value:
Due to changes in inputs and assumptions ²										(27		)	—			(27		)
Other changes in fair value ³										(168		)	—			(168		)
Servicing rights sold										(1		)	—			(1		)
Other ⁴										—			(1		)	(1		)
Balance, September 30, 2017											$1,628			$78			$1,706

Balance, January 1, 2016		$1,307			$18			$1,325			$1,307			$18			$1,325
Amortization ¹	—			(6		)	(6		)	—			(6		)	(6		)
Servicing rights originated	198			—			198			198			—			198
Servicing rights purchased	104			—			104			104			—			104
Changes in fair value:
Due to changes in inputs and assumptions ²	(328		)	—			(328		)	(328		)	—			(328		)
Other changes in fair value ³	(160		)	—			(160		)	(160		)	—			(160		)
Servicing rights sold	(2		)	—			(2		)	(2		)	—			(2		)
Balance, September 30, 2016		$1,119			$12			$1,131			$1,119			$12			$1,131

Balance, January 1, 2015		$1,206			$13			$1,219
Amortization ¹	—			(6		)	(6		)
Servicing rights originated	185			13			198
Servicing rights purchased	109			—			109
Changes in fair value:
Due to changes in inputs and assumptions ²	(74		)	—			(74		)
Other changes in fair value ³	(161		)	—			(161		)
Servicing rights sold	(3		)	—			(3		)
Balance, September 30, 2015		$1,262			$20			$1,282


	Portfolio Balance ¹				Past Due and Nonaccrual ²						Net Charge-offs												Portfolio Balance				Past Due and Nonaccrual				Net Charge-offs
	September 30, 2016		December 31, 2015		September 30, 2016			December 31, 2015			Three Months Ended September 30						Nine Months Ended September 30						September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions)											2016			2015			2016			2015											2017			2016			2017			2016
LHFI portfolio:
Commercial		$77,229		$75,252		$523			$344			$71			$13			$183			$47			$76,960		$78,224		$314		$426		$22			$71			$90			$183
Residential	39,398		38,928		756			729			21			36			80			146			38,730		38,990		677		758		15			21			51			80
Consumer	24,905		22,262		814			580			34			22			84			65			28,574		26,084		1,049		949		41			34			120			84
Total LHFI portfolio	141,532		136,442		2,093			1,653			126			71			347			258			144,264		143,298		2,040		2,133		78			126			261			347
Managed securitized loans ³:
Managed securitized loans ¹:
Commercial ²																							5,385		4,761		—		—		—			—			—			—
Residential	120,668		116,990		117		³	126		³	2		⁴	4		⁴	6		⁴	10		⁴	133,052		126,641		96		114		2		³	2		³	5		³	6		³
Consumer	578		807		—			1			1			1			2			1			337		512		—		1		1			1			2			2
Total managed securitized loans	121,246		117,797		117			127			3			5			8			11			138,774		131,914		96		115		3			3			7			8
Managed unsecuritized loans ⁵	3,269		3,973		501			597			—			—			—			—
Managed unsecuritized loans ⁴																							2,359		2,985		351		438		—			—			—			—
Total managed loans		$266,047		$258,212		$2,711			$2,377			$129			$76			$355			$269			$285,397		$278,197		$2,487		$2,686		$81			$129			$268			$355


	Pension Benefits ¹												Other Postretirement Benefits												Pension Benefits ¹												Other Postretirement Benefits
	Three Months Ended September 30						Nine Months Ended September 30						Three Months Ended September 30						Nine Months Ended September 30						Three Months Ended September 30						Nine Months Ended September 30						Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions)	2016			2015			2016			2015			2016			2015			2016			2015			2017			2016			2017			2016			2017			2016			2017			2016
Service cost		$1			$2			$4			$4			$—			$—			$—			$—			$1			$1			$4			$4			$—			$—			$—			$—
Interest cost	24			29			73			87			—			1			1			2			24			24			71			73			—			—			1			1
Expected return on plan assets	(46		)	(52		)	(140		)	(155		)	(1		)	(2		)	(3		)	(4		)	(49		)	(46		)	(146		)	(140		)	(1		)	(1		)	(4		)	(3		)
Amortization of prior service credit	—			—			—			—			(1		)	(1		)	(4		)	(4		)	—			—			—			—			(1		)	(1		)	(4		)	(4		)
Amortization of actuarial loss	6			5			19			16			—			—			—			—			6			6			18			19			—			—			—			—
Net periodic benefit		($15	)		($16	)		($44	)		($48	)		($2	)		($2	)		($6	)		($6	)		($18	)		($15	)		($53	)		($44	)		($2	)		($2	)		($7	)		($6	)


	September 30, 2016										September 30, 2017
	Asset Derivatives					Liability Derivatives					Asset Derivatives					Liability Derivatives
(Dollars in millions)	Notional Amounts		Fair Value			Notional Amounts		Fair Value			Notional Amounts		Fair Value			Notional Amounts		Fair Value
Derivative instruments designated in cash flow hedging relationships ¹
Interest rate contracts hedging floating rate loans		$18,950		$359			$1,500		$3
Interest rate contracts hedging floating rate LHFI												$3,150		$3			$10,550		$187

Derivative instruments designated in fair value hedging relationships ²
Interest rate contracts hedging fixed rate debt	2,480		26			1,600		1			500		—			5,420		36
Interest rate contracts hedging brokered CDs	60		—			30		—			30		—			30		—
Total	2,540		26			1,630		1			530		—			5,450		36

Derivative instruments not designated as hedging instruments ³
Interest rate contracts hedging:
MSRs ⁴	13,499		812			19,800		516
Residential MSRs ⁴											23,954		145			15,062		128
LHFS, IRLCs ⁵	4,620		12			7,015		32			5,628		13			4,218		13
LHFI	15		2			40		4			90		2			85		2
Trading activity ⁶	66,678		2,600			66,930		2,412			73,673		1,126			57,454		1,014
Foreign exchange rate contracts hedging trading activity	3,603		102			3,440		83			3,668		126			3,468		112
Credit contracts hedging:
Loans	15		—			635		9
LHFI											—		—			620		8
Trading activity ⁷	2,334		28			2,472		26			2,517		17			2,534		13
Equity contracts hedging trading activity ⁶	19,841		2,059			29,182		2,464			16,512		2,315			28,295		2,836
Other contracts:
IRLCs and other ⁸	4,884		79			277		15			1,786		26			820		22
Commodities	629		59			626		56
Commodity derivatives											756		39			744		37
Total	116,118		5,753			130,417		5,617			128,584		3,809			113,300		4,185
Total derivative instruments		$137,608		$6,138			$133,547		$5,621			$132,264		$3,812			$129,300		$4,408

Total gross derivative instruments, before netting				$6,138					$5,621					$3,812					$4,408
Less: Legally enforceable master netting agreements			(3,932		)			(3,932		)			(2,611		)			(2,611		)
Less: Cash collateral received/paid			(675		)			(1,377		)			(303		)			(1,420		)
Total derivative instruments, after netting				$1,531					$312					$898					$377



(Dollars in millions)	Classification of Gain/(Loss) Recognized in Income on Derivatives	Amount of Gain/(Loss) Recognized in Income on Derivatives During the Three Months Ended September 30, 2017			Amount of Gain/(Loss) Recognized in Income on Derivatives During the Nine Months Ended September 30, 2017
Derivative instruments not designated as hedging instruments:
Interest rate contracts hedging:
Residential MSRs	Mortgage servicing related income		$14			$34
LHFS, IRLCs	Mortgage production related income	(20		)	(57		)
LHFI	Other noninterest income	—			(1		)
Trading activity	Trading income	11			33
Foreign exchange rate contracts hedging trading activity	Trading income	(10		)	(43		)
Credit contracts hedging:
LHFI	Other noninterest income	(1		)	(3		)
Trading activity	Trading income	8			19
Equity contracts hedging trading activity	Trading income	(1		)	(1		)
Other contracts:
IRLCs and other	Mortgage production related income, Commercial real estate related income	49			154
Commodity derivatives	Trading income	—			1
Total			$50			$136



(Dollars in millions)	Classification of Gain/(Loss) Recognized in Income on Derivatives	Amount of Gain/(Loss) Recognized in Income on Derivatives During the Three Months Ended September 30, 2016			Amount of Gain/(Loss) Recognized in Income on Derivatives During the Nine Months Ended September 30, 2016
Derivative instruments not designated as hedging instruments:
Interest rate contracts hedging:
MSRs	Mortgage servicing related income		$15			$306
LHFS, IRLCs	Mortgage production related income	(35		)	(162		)
LHFI	Other noninterest income	—			(3		)
Trading activity	Trading income	11			24
Foreign exchange rate contracts hedging trading activity	Trading income	36			52
Credit contracts hedging:
Loans	Other noninterest income	(1		)	(3		)
Trading activity	Trading income	5			14
Equity contracts hedging trading activity	Trading income	1			5
Other contracts:
IRLCs	Mortgage production related income	122			291
Commodities	Trading income	1			2
Total			$155			$526


	September 30, 2016											September 30, 2017
	Fair Value Measurements											Fair Value Measurements
(Dollars in millions)	Level 1		Level 2		Level 3		Netting Adjustments ¹			Assets/Liabilities at Fair Value		Level 1		Level 2		Level 3		Netting Adjustments ¹			Assets/Liabilities at Fair Value
Assets
Trading assets and derivative instruments:
U.S. Treasury securities		$547		$—		$—		$—			$547		$366		$—		$—		$—			$366
Federal agency securities	—		259		—		—			259		—		303		—		—			303
U.S. states and political subdivisions	—		187		—		—			187		—		53		—		—			53
MBS - agency	—		883		—		—			883		—		666		—		—			666
CLO securities	—		1		—		—			1
Corporate and other debt securities	—		723		—		—			723		—		665		—		—			665
CP	—		202		—		—			202		—		383		—		—			383
Equity securities	51		—		—		—			51		30		—		—		—			30
Derivative instruments	356		5,703		79		(4,607		)	1,531		350		3,439		23		(2,914		)	898
Trading loans	—		2,660		—		—			2,660		—		2,954		—		—			2,954
Total trading assets and derivative instruments	954		10,618		79		(4,607		)	7,044		746		8,463		23		(2,914		)	6,318

Securities AFS:
U.S. Treasury securities	4,983		—		—		—			4,983		4,261		—		—		—			4,261
Federal agency securities	—		334		—		—			334		—		270		—		—			270
U.S. states and political subdivisions	—		257		4		—			261		—		563		—		—			563
MBS - agency	—		23,316		—		—			23,316		—		24,980		—		—			24,980
MBS - non-agency residential	—		—		76		—			76		—		—		62		—			62
MBS - non-agency commercial												—		750		—		—			750
ABS	—		—		11		—			11		—		—		8		—			8
Corporate and other debt securities	—		31		5		—			36		—		28		5		—			33
Other equity securities ²	104		—		551		—			655		44		—		473		—			517
Total securities AFS	5,087		23,938		647		—			29,672		4,305		26,591		548		—			31,444

Residential LHFS	—		3,023		3		—			3,026
LHFS												—		2,251		1		—			2,252
LHFI	—		—		234		—			234		—		—		206		—			206
MSRs	—		—		1,119		—			1,119
Residential MSRs												—		—		1,628		—			1,628

Liabilities
Trading liabilities and derivative instruments:
U.S. Treasury securities	918		—		—		—			918		555		—		—		—			555
MBS - agency	—		2		—		—			2
Corporate and other debt securities	—		252		—		—			252		—		347		—		—			347
Equity securities												5		—		—		—			5
Derivative instruments	152		5,454		15		(5,309		)	312		147		4,244		17		(4,031		)	377
Total trading liabilities and derivative instruments	1,070		5,708		15		(5,309		)	1,484		707		4,591		17		(4,031		)	1,284

Brokered time deposits	—		54		—		—			54		—		207		—		—			207
Long-term debt	—		963		—		—			963		—		758		—		—			758


(Dollars in millions)	Fair Value at September 30, 2016		Aggregate UPB at September 30, 2016		Fair Value Over/(Under) Unpaid Principal			Fair Value at September 30, 2017		Aggregate UPB at September 30, 2017		Fair Value Over/(Under) Unpaid Principal
Assets:
Trading loans		$2,660		$2,607		$53			$2,954		$2,917		$37
LHFS:
Accruing	3,026		2,914		112			2,252		2,180		72
LHFI:
Accruing	232		233		(1		)	203		208		(5		)
Nonaccrual	2		3		(1		)	3		4		(1		)
Liabilities:
Brokered time deposits	54		54		—			207		208		(1		)
Long-term debt	963		907		56			758		736		22

(Dollars in millions)	Fair Value at December 31, 2015		Aggregate UPB at December 31, 2015		Fair Value Over/(Under) Unpaid Principal			Fair Value at December 31, 2016		Aggregate UPB at December 31, 2016		Fair Value Over/(Under) Unpaid Principal
Assets:
Trading loans		$2,655		$2,605		$50			$2,517		$2,488		$29
LHFS:
Accruing	1,494		1,453		41			3,540		3,516		24
LHFI:
Accruing	254		259		(5		)	219		225		(6		)
Nonaccrual	3		5		(2		)	3		4		(1		)
Liabilities:
Brokered time deposits								78		80		(2		)
Long-term debt	973		907		66			963		924		39


	Fair Value Gain/(Loss) for the Three Months Ended September 30, 2016 for Items Measured at Fair Value Pursuant to Election of the FVO													Fair Value Gain/(Loss) for the Nine Months Ended September 30, 2016 for Items Measured at Fair Value Pursuant to Election of the FVO												Fair Value Gain/(Loss) for the Three Months Ended September 30, 2017 for Items Measured at Fair Value Pursuant to Election of the FVO												Fair Value Gain/(Loss) for the Nine Months Ended September 30, 2017 for Items Measured at Fair Value Pursuant to Election of the FVO
(Dollars in millions)	Trading Income		Mortgage Production Related Income ¹		Mortgage Servicing Related Income			Other Noninterest Income			Total Changes in Fair Values Included in Earnings ²			Trading Income		Mortgage Production Related Income ¹		Mortgage Servicing Related Income			Other Noninterest Income		Total Changes in Fair Values Included in Earnings ²			Trading Income		Mortgage Production Related Income ¹		Mortgage Servicing Related Income			Other Noninterest Income		Total Changes in Fair Values Included in Earnings ²			Trading Income		Mortgage Production Related Income ¹		Mortgage Servicing Related Income			Other Noninterest Income		Total Changes in Fair Values Included in Earnings ²
Assets:
Trading loans		$6		$—		$—			$—			$6			$11		$—		$—			$—		$11			$8		$—		$—			$—		$8			$16		$—		$—			$—		$16
LHFS	—		15		—			—			15			—		92		—			—		92			—		21		—			—		21			—		44		—			—		44
LHFI	—		—		—			(1		)	(1		)	—		—		—			5		5			—		—		—			—		—			—		—		—			1		1
MSRs	—		—		(56		)	—			(56		)	—		2		(488		)	—		(486		)
Residential MSRs																										—		1		(70		)	—		(69		)	—		3		(195		)	—		(192		)
Liabilities:
Brokered time deposits	1		—		—			—			1			1		—		—			—		1			—		—		—			—		—			2		—		—			—		2
Long-term debt	7		—		—			—			7			10		—		—			—		10			5		—		—			—		5			16		—		—			—		16



	Fair Value (Loss)/Gain for the Three Months Ended September 30, 2015 for Items Measured at Fair Value Pursuant to Election of the FVO													Fair Value Gain/(Loss) for the Nine Months Ended September 30, 2015 for Items Measured at Fair Value Pursuant to Election of the FVO
(Dollars in millions)	Trading Income			Mortgage Production Related Income ¹		Mortgage Servicing Related Income			Other Noninterest Income		Total Changes in Fair Values Included in Earnings ²			Trading Income		Mortgage Production Related Income ¹		Mortgage Servicing Related Income			Other Noninterest Income		Total Changes in Fair Values Included in Earnings ²
Assets:
Trading loans		($1	)		$—		$—			$—		($1	)		$1		$—		$—			$—		$1
LHFS	—			20		—			—		20			—		32		—			—		32
LHFI	—			—		—			4		4			—		—		—			3		3
MSRs	—			—		(198		)	—		(198		)	—		1		(235		)	—		(234		)
Liabilities:
Long-term debt	9			—		—			—		9			28		—		—			—		28



	Level 3 Significant Unobservable Input Assumptions
(Dollars in millions)	Fair value September 30, ~~2016~~2017		Valuation Technique	Unobservable Input ¹	Range (weighted average)
Assets
Trading assets and derivative instruments:
Derivative instruments, net ²		$646	Internal model	Pull through rate	~~44-100% (77%~~46-100% (79%)
Derivative instruments, net ²		$646	Internal model	MSR value	~~18-147~~27-160 bps ~~(95~~(104 bps)
Securities AFS:
~~U.S. states and political subdivisions~~	4		~~Cost~~	~~N/A~~
MBS - non-agency residential	7662		Third party pricing	N/A
ABS	118		Third party pricing	N/A
Corporate and other debt securities	5		Cost	N/A
Other equity securities	~~551~~473		Cost	N/A
Residential LHFS	31		Monte Carlo/Discounted cash flow	Option adjusted spread	~~104-197~~125 bps (125 bps)
				Conditional prepayment rate	~~4-26~~5-30 CPR ~~(16~~(14 CPR)
				Conditional default rate	0-2 CDR ~~(0.6~~(0.5 CDR)
LHFI	~~232~~203		Monte Carlo/Discounted cash flow	Option adjusted spread	62-784 bps ~~(185~~(188 bps)
				Conditional prepayment rate	~~5-37~~3-36 CPR ~~(16~~(11 CPR)
				Conditional default rate	~~0-5~~0-9 CDR ~~(1.8~~(1.4 CDR)
	23		Collateral based pricing	Appraised value	NM ³
Residential MSRs	~~1,119~~1,628		Monte Carlo/Discounted cash flow	Conditional prepayment rate	~~3-28~~7-29 CPR ~~(14~~(13 CPR)
Residential MSRs	~~1,119~~1,628		Monte Carlo/Discounted cash flow	Option adjusted spread	~~0-124% (9%~~0-111% (4%)



	Level 3 Significant Unobservable Input Assumptions
(Dollars in millions)	Fair value December 31, ~~2015~~2016		Valuation Technique	Unobservable Input ¹	Range (weighted average)
Assets
Trading assets and derivative instruments:
~~Corporate and other debt securities~~		~~$89~~	~~Market comparables~~	~~Yield adjustment~~	~~126-447 bps (287 bps)~~
Derivative instruments, net ²	15	$6	Internal model	Pull through rate	~~24-100% (79%~~40-100% (81%)
Derivative instruments, net ²	15	$6	Internal model	MSR value	~~29-210~~22-170 bps ~~(103~~(106 bps)
Securities AFS:
U.S. states and political subdivisions	54		Cost	N/A
MBS - non-agency residential	9474		Third party pricing	N/A
ABS	1210		Third party pricing	N/A
Corporate and other debt securities	5		Cost	N/A
Other equity securities	~~440~~540		Cost	N/A
Residential LHFS	512		Monte Carlo/Discounted cash flow	Option adjusted spread	~~104-197~~104-125 bps ~~(125~~(124 bps)
				Conditional prepayment rate	~~2-17~~2-28 CPR (8(7 CPR)
				Conditional default rate	~~0-2~~0-3 CDR ~~(0.5~~(0.4 CDR)
LHFI	~~251~~219		Monte Carlo/Discounted cash flow	Option adjusted spread	62-784 bps ~~(193~~(184 bps)
				Conditional prepayment rate	~~5-36~~3-36 CPR ~~(14~~(13 CPR)
				Conditional default rate	0-5 CDR ~~(1.7~~(2.1 CDR)
	63		Collateral based pricing	Appraised value	NM ⁴³
Residential MSRs	~~1,307~~1,572		Monte Carlo/Discounted cash flow	Conditional prepayment rate	~~2-21~~1-25 CPR ~~(10~~(9 CPR)
Residential MSRs	~~1,307~~1,572		Monte Carlo/Discounted cash flow	Option adjusted spread	~~(5)-110%~~0-122% (8%)
~~Liabilities~~
~~Other liabilities~~ ³	23		~~Internal model~~	~~Loan production volume~~	~~150% (150%~~)



	Fair Value Measurements Using Significant Unobservable Inputs
(Dollars in millions)	Beginning Balance July 1, 2016		Included in Earnings				OCI			Purchases		Sales			Settlements			Transfers to/from Other Balance Sheet Line Items			Transfers into Level 3		Transfers out of Level 3		Fair Value September 30, 2016		Included in Earnings (held at September 30, 2016) ¹
Assets
Trading assets:
Derivative instruments, net		$60		$118		²		$—			$—		$—			$2			($116	)		$—		$—		$64		$73		²
Securities AFS:
U.S. states and political subdivisions	4		—				—			—		—			—			—			—		—		4		—
MBS - non-agency residential	83		—				—			—		—			(7		)	—			—		—		76		—
ABS	11		—				1		³	—		—			(1		)	—			—		—		11		—
Corporate and other debt securities	5		—				—			—		—			—			—			—		—		5		—
Other equity securities	610		—				—			—		—			(59		)	—			—		—		551		—
Total securities AFS	713		—				1		³	—		—			(67		)	—			—		—		647		—

Residential LHFS	4		—				—			—		(13		)	—			(2		)	14		—		3		—
LHFI	246		(2		)	⁴	—			—		—			(10		)	(2		)	2		—		234		(2		)	⁴



	Fair Value Measurements Using Significant Unobservable Inputs
(Dollars in millions)	Beginning Balance July 1, 2017		Included in Earnings			OCI			Purchases		Sales			Settlements			Transfers to/from Other Balance Sheet Line Items			Transfers into Level 3		Transfers out of Level 3		Fair Value September 30, 2017		Included in Earnings (held at September 30, 2017 ¹)
Assets
Trading assets:
Derivative instruments, net		$4		$52	²		$—			$—		$—			$1			($51	)		$—		$—		$6		$19	²
Securities AFS:
MBS - non-agency residential	67		—			1		³	—		—			(6		)	—			—		—		62		—
ABS	9		—			—			—		—			(1		)	—			—		—		8		—
Corporate and other debt securities	5		—			—			—		—			—			—			—		—		5		—
Other equity securities	547		—			—			—		—			(74		)	—			—		—		473		—
Total securities AFS	628		—			1		³	—		—			(81		)	—			—		—		548		—

Residential LHFS	2		—			—			—		(2		)	(1		)	(1		)	3		—		1		—
LHFI	214		—			—			—		—			(9		)	1			—		—		206		—