XML 41 R21.htm IDEA: XBRL DOCUMENT
v3.19.2

FAIR VALUE MEASUREMENTS | 6 Months Ended
--- | ---
Jun. 30, 2019
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | NOTE 13 - FAIR VALUE MEASUREMENTS Citizens measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities for which fair value is the required or elected measurement basis of accounting. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or for disclosure purposes. Nonrecurring fair value adjustments typically involve the application of lower of cost or market accounting or write-downs of individual assets. Citizens also applies the fair value measurement guidance to determine amounts reported for certain disclosures in this Note for assets and liabilities that are not required to be reported at fair value in the financial statements. Fair Value Option Citizens elected to account for residential mortgage LHFS and certain commercial and commercial real estate LHFS at fair value. For these LHFS, the aggregate fair value approximates the aggregate unpaid principal balance. For more information on the election of the fair value option for these assets see Note 19 “Fair Value Measurements,” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2018. The following table presents the changes in fair value for assets where the Company has elected the fair value option:
| Three Months Ended June 30, |  | Six Months Ended June 30, |
(in millions) | 2019 |  | 2018 |  | 2019 |  | 2018 | Affected Line Item in the Consolidated Statements of Operations
Residential mortgage loans held for sale, at fair value |  | $10 |  |  |  | $4 |  |  |  | $9 |  |  |  | $1 |  | Mortgage banking fees
Commercial and commercial real estate loans held for sale, at fair value | 1 |  |  | (1 | ) |  | 4 |  |  | — |  | Other income
Recurring Fair Value Measurements Citizens utilizes a variety of valuation techniques to measure its assets and liabilities at fair value on a recurring basis. For more information on the valuation techniques utilized to measure recurring fair value see Note 13 “Fair Value Measurements,” to the Company’s unaudited interim Consolidated Financial Statements in the Quarterly Report on Form 10-Q for the three months ended March 31, 2019. The following table presents assets and liabilities measured at fair value, including gross derivative assets and liabilities on a recurring basis at June 30, 2019:
(in millions) | Total |  | Level 1 |  | Level 2 |  | Level 3 |
Debt securities available for sale: |  |  |  |
Mortgage-backed securities |  | $21,603 |  |  | $— |  |  | $21,603 |  |  | $— |
State and political subdivisions | 5 |  | — |  | 5 |  | — |
U.S. Treasury and other | 90 |  | 90 |  | — |  | — |
Total debt securities available for sale | 21,698 |  | 90 |  | 21,608 |  | — |
Loans held for sale, at fair value: |  |  |  |
Residential loans held for sale | 1,615 |  | — |  | 1,615 |  | — |
Commercial loans held for sale | 135 |  | — |  | 135 |  | — |
Total loans held for sale, at fair value | 1,750 |  | — |  | 1,750 |  | — |
Mortgage servicing rights | 531 |  | — |  | — |  | 531 |
Derivative assets: |  |  |  |
Interest rate contracts | 808 |  | — |  | 808 |  | — |
Foreign exchange contracts | 132 |  | — |  | 132 |  | — |
Other contracts | 29 |  | — |  | 4 |  | 25 |
Total derivative assets | 969 |  | — |  | 944 |  | 25 |
Equity securities, at fair value: |  |  |  |
Money market mutual fund investments | 47 |  | 47 |  | — |  | — |
Total equity securities, at fair value | 47 |  | 47 |  | — |  | — |
Total assets |  | $24,995 |  |  | $137 |  |  | $24,302 |  |  | $556 |
Derivative liabilities: |  |  |  |
Interest rate contracts |  | $130 |  |  | $— |  |  | $130 |  |  | $— |
Foreign exchange contracts | 116 |  | — |  | 116 |  | — |
Other contracts | 34 |  | — |  | 34 |  | — |
Total derivative liabilities | 280 |  | — |  | 280 |  | — |
Total liabilities |  | $280 |  |  | $— |  |  | $280 |  |  | $— |
The following table presents assets and liabilities measured at fair value, including gross derivative assets and liabilities on a recurring basis at December 31, 2018:
(in millions) | Total |  | Level 1 |  | Level 2 |  | Level 3 |
Debt securities available for sale: |  |  |  |
Mortgage-backed securities |  | $19,866 |  |  | $— |  |  | $19,866 |  |  | $— |
State and political subdivisions | 5 |  | — |  | 5 |  | — |
U.S. Treasury and other | 24 |  | 24 |  | — |  | — |
Total debt securities available for sale | 19,895 |  | 24 |  | 19,871 |  | — |
Loans held for sale, at fair value: |  |  |  |
Residential loans held for sale | 967 |  | — |  | 967 |  | — |
Commercial loans held for sale | 252 |  | — |  | 252 |  | — |
Total loans held for sale, at fair value | 1,219 |  | — |  | 1,219 |  | — |
Mortgage servicing rights | 600 |  | — |  | — |  | 600 |
Derivative assets: |  |  |  |
Interest rate contracts | 306 |  | — |  | 306 |  | — |
Foreign exchange contracts | 129 |  | — |  | 129 |  | — |
Other contracts | 14 |  | — |  | 14 |  | — |
Total derivative assets | 449 |  | — |  | 449 |  | — |
Equity securities, at fair value: |  |  |  |
Money market mutual fund investments | 181 |  | 181 |  | — |  | — |
Total equity securities, at fair value | 181 |  | 181 |  | — |  | — |
Total assets |  | $22,344 |  |  | $205 |  |  | $21,539 |  |  | $600 |
Derivative liabilities: |  |  |  |
Interest rate contracts |  | $277 |  |  | $— |  |  | $277 |  |  | $— |
Foreign exchange contracts | 113 |  | — |  | 113 |  | — |
Other contracts | 25 |  | — |  | 25 |  | — |
Total derivative liabilities | 415 |  | — |  | 415 |  | — |
Total liabilities |  | $415 |  |  | $— |  |  | $415 |  |  | $— |
The following tables present a rollforward of the balance sheet amounts for assets measured at fair value on a recurring basis and classified as Level 3 for the three and six months ended June 30, 2019. There were no assets measured at fair value on a recurring basis and classified as Level 3 for the three and six months ended June 30, 2018.
| Three Months Ended June 30, |  | Six Months Ended June 30, 2019
(in millions) | Mortgage Servicing Rights |  | Other Derivative Contracts |  | Mortgage Servicing Rights |  | Other Derivative Contracts
Beginning balance |  | $563 |  |  |  | $18 |  |  |  | $600 |  |  |  | $— |
Issuances | 57 |  |  | 43 |  |  | 92 |  |  | 43 |
Settlements (1) | (31 | ) |  | (43 | ) |  | (57 | ) |  | (43 | )
Changes in fair value during the period recognized in earnings (2) | (58 | ) |  | 7 |  |  | (104 | ) |  | 7 |
Transfers from Level 2 to Level 3(3) | — |  |  | — |  |  | — |  |  | 18 |
Ending balance |  | $531 |  |  |  | $25 |  |  |  | $531 |  |  |  | $25 |
(1) Represents changes in value of the MSRs due to i) passage of time including the impact from both regularly scheduled loan principal payments and partial paydowns, and ii) loans that paid off during the period. (2) Represents changes in value primarily driven by market conditions. These changes are recorded in mortgage banking fees in the Consolidated Statements of Operations. (3) Reflects changes in the significance of unobservable inputs on derivative contracts associated with mortgage origination activities. Nonrecurring Fair Value Measurements Fair value is also used on a nonrecurring basis to evaluate certain assets for impairment or for disclosure purposes. Examples of nonrecurring uses of fair value include MSRs accounted for by the amortization method and loan impairments for certain loans and leases. For more information on the valuation techniques utilized to measure nonrecurring fair value see Note 19 “Fair Value Measurements,” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2018. The following table presents gains (losses) on assets and liabilities measured at fair value on a nonrecurring basis and recorded in earnings:
| Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions) | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Impaired collateral-dependent loans |  | ($24 | ) |  |  | ($4 | ) |  |  | ($28 | ) |  |  | ($6 | )
MSRs | (14 | ) |  | — |  |  | (14 | ) |  | 3 |
Foreclosed assets | (1 | ) |  | — |  |  | (1 | ) |  | (1 | )
Leased assets | — |  |  | (2 | ) |  | (3 | ) |  | (2 | )
The following table presents assets and liabilities measured at fair value on a nonrecurring basis:
| June 30, 2019 |  | December 31, 2018
(in millions) | Total |  | Level 1 |  | Level 2 |  | Level 3 |  |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |
Impaired collateral-dependent loans |  | $300 |  |  | $— |  |  | $300 |  |  | $— |  |  |  | $338 |  |  | $— |  |  | $338 |  |  | $— |
MSRs | 193 |  | — |  | — |  | 193 |  |  | 243 |  | — |  | — |  | 243 |
Foreclosed assets | 27 |  | — |  | 27 |  | — |  |  | 29 |  | — |  | 29 |  | — |
Leased assets | 61 |  | — |  | 61 |  | — |  |  | 92 |  | — |  | 92 |  | — |
The following table presents the estimated fair value for financial instruments not recorded at fair value in the unaudited interim Consolidated Financial Statements. The carrying amounts are recorded in the Consolidated Balance Sheets under the indicated captions:
| June 30, 2019
| Total |  | Level 1 |  | Level 2 |  | Level 3
(in millions) | Carrying Value | Estimated Fair Value |  | Carrying Value | Estimated Fair Value |  | Carrying Value | Estimated Fair Value |  | Carrying Value | Estimated Fair Value
Financial assets: |  |  |  |  |  |  |  |  |  |  |
Securities held to maturity |  | $3,447 |  |  | $3,441 |  |  |  | $— |  |  | $— |  |  |  | $3,447 |  |  | $3,441 |  |  |  | $— |  |  | $— |
Equity securities, at cost | 706 |  | 706 |  |  | — |  | — |  |  | 706 |  | 706 |  |  | — |  | — |
Other loans held for sale | 455 |  | 455 |  |  | — |  | — |  |  | — |  | — |  |  | 455 |  | 455 |
Loans and leases | 116,838 |  | 117,494 |  |  | — |  | — |  |  | 300 |  | 300 |  |  | 116,538 |  | 117,194 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |
Deposits | 124,004 |  | 124,028 |  |  | — |  | — |  |  | 124,004 |  | 124,028 |  |  | — |  | — |
Federal funds purchased and securities sold under agreements to repurchase | 1,132 |  | 1,132 |  |  | — |  | — |  |  | 1,132 |  | 1,132 |  |  | — |  | — |
Other short-term borrowed funds | 309 |  | 309 |  |  | — |  | — |  |  | 309 |  | 309 |  |  | — |  | — |
Long-term borrowed funds | 11,538 |  | 11,639 |  |  | — |  | — |  |  | 11,538 |  | 11,639 |  |  | — |  | — |
| December 31, 2018
| Total |  | Level 1 |  | Level 2 |  | Level 3
(in millions) | Carrying Value | Estimated Fair Value |  | Carrying Value | Estimated Fair Value |  | Carrying Value | Estimated Fair Value |  | Carrying Value | Estimated Fair Value
Financial assets: |  |  |  |  |  |  |  |  |  |  |
Securities held to maturity |  | $4,165 |  |  | $4,041 |  |  |  | $— |  |  | $— |  |  |  | $4,165 |  |  | $4,041 |  |  |  | $— |  |  | $— |
Equity securities, at cost | 834 |  | 834 |  |  | — |  | — |  |  | 834 |  | 834 |  |  | — |  | — |
Other loans held for sale | 101 |  | 101 |  |  | — |  | — |  |  | — |  | — |  |  | 101 |  | 101 |
Loans and leases | 116,660 |  | 116,627 |  |  | — |  | — |  |  | 338 |  | 338 |  |  | 116,322 |  | 116,289 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |
Deposits | 119,575 |  | 119,503 |  |  | — |  | — |  |  | 119,575 |  | 119,503 |  |  | — |  | — |
Federal funds purchased and securities sold under agreements to repurchase | 1,156 |  | 1,156 |  |  | — |  | — |  |  | 1,156 |  | 1,156 |  |  | — |  | — |
Other short-term borrowed funds | 161 |  | 161 |  |  | — |  | — |  |  | 161 |  | 161 |  |  | — |  | — |
Long-term borrowed funds | 15,925 |  | 15,877 |  |  | — |  | — |  |  | 15,925 |  | 15,877 |  |  | — |  | — |

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration