Loans and Allowance for Loan Losses

The following table provides the outstanding balances of loans held for investment at June 30, 2015 and December 31, 2014:



(Dollars in millions)	June 30, 2015			December 31, 2014
Loans held for investment:
Commercial and industrial	$	27,854		$	27,623
Commercial mortgage	13,800			14,016
Construction	2,071			1,746
Lease financing	759			800
Total commercial portfolio	44,484			44,185
Residential mortgage	28,374			28,977
Home equity and other consumer loans	3,098			3,117
Total consumer portfolio	31,472			32,094
Total loans held for investment, before purchased credit-impaired loans	75,956			76,279
Purchased credit-impaired loans⁽¹⁾	443			525
Total loans held for investment⁽²⁾	76,399			76,804
Allowance for loan losses	(536		)	(537		)
Loans held for investment, net	$	75,863		$	76,267


(1)	Includes $101 million and $126 million as of June 30, 2015 and December 31, 2014, respectively, of loans for which the Company will be reimbursed a portion of any future losses under the terms of the FDIC loss share agreements. Subsequent to June 30, 2015, the FDIC loss share agreements expired for $77 million of these loans.


(2)	Includes $157 million and $151 million at June 30, 2015 and December 31, 2014, respectively, for net unamortized discounts and premiums and deferred fees and costs.

Allowance for Loan Losses

The following tables provide a reconciliation of changes in the allowance for loan losses by portfolio segment:



	For the Three Months Ended June 30, 2015
(Dollars in millions)	Commercial			Consumer			Purchased Credit- Impaired			Unallocated		Total
Allowance for loan losses, beginning of period	$	459		$	48		$	3		$	20	$	530
(Reversal of) provision for loan losses	12			5			9			—		26
Loans charged-off	(13		)	(3		)	(8		)	—		(24		)
Recoveries of loans previously charged-off	3			1			—			—		4
Allowance for loan losses, end of period	$	461		$	51		$	4		$	20	$	536



	For the Three Months Ended June 30, 2014
(Dollars in millions)	Commercial			Consumer			Purchased Credit- Impaired		Unallocated		Total
Allowance for loan losses, beginning of period	$	479		$	55		$	3	$	20	$	557
(Reversal of) provision for loan losses	7			(3		)	—		5		9
Loans charged-off	(8		)	(4		)	—		—		(12		)
Recoveries of loans previously charged-off	4			1			—		—		5
Allowance for loan losses, end of period	$	482		$	49		$	3	$	25	$	559



	For the Six Months Ended June 30, 2015
(Dollars in millions)	Commercial			Consumer			Purchased Credit- Impaired			Unallocated		Total
Allowance for loan losses, beginning of period	$	465		$	49		$	3		$	20	$	537
(Reversal of) provision for loan losses	7			7			9			—		23
Other	(1		)	—			—			—		(1		)
Loans charged-off	(17		)	(6		)	(8		)	—		(31		)
Recoveries of loans previously charged-off	7			1			—			—		8
Allowance for loan losses, end of period	$	461		$	51		$	4		$	20	$	536



	For the Six Months Ended June 30, 2014
(Dollars in millions)	Commercial			Consumer			Purchased Credit- Impaired		Unallocated			Total
Allowance for loan losses, beginning of period	$	421		$	69		$	1	$	77		$	568
(Reversal of) provision for loan losses	58			(15		)	2		(52		)	(7		)
Other	(1		)	—			—		—			(1		)
Loans charged-off	(14		)	(7		)	—		—			(21		)
Recoveries of loans previously charged-off	18			2			—		—			20
Allowance for loan losses, end of period	$	482		$	49		$	3	$	25		$	559

The following tables show the allowance for loan losses and related loan balances by portfolio segment as of June 30, 2015 and December 31, 2014:



	June 30, 2015
(Dollars in millions)	Commercial		Consumer		Purchased Credit- Impaired		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	17	$	16	$	—	$	—	$	33
Collectively evaluated for impairment	444		35		—		20		499
Purchased credit-impaired loans	—		—		4		—		4
Total allowance for loan losses	$	461	$	51	$	4	$	20	$	536

Loans held for investment:
Individually evaluated for impairment	$	219	$	324	$	3	$	—	$	546
Collectively evaluated for impairment	44,265		31,148		—		—		75,413
Purchased credit-impaired loans	—		—		440		—		440
Total loans held for investment	$	44,484	$	31,472	$	443	$	—	$	76,399



	December 31, 2014
(Dollars in millions)	Commercial		Consumer		Purchased Credit- Impaired		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	18	$	16	$	—	$	—	$	34
Collectively evaluated for impairment	447		33		—		20		500
Purchased credit-impaired loans	—		—		3		—		3
Total allowance for loan losses	$	465	$	49	$	3	$	20	$	537

Loans held for investment:
Individually evaluated for impairment	$	164	$	338	$	1	$	—	$	503
Collectively evaluated for impairment	44,021		31,756		—		—		75,777
Purchased credit-impaired loans	—		—		524		—		524
Total loans held for investment	$	44,185	$	32,094	$	525	$	—	$	76,804

Nonaccrual and Past Due Loans

The following table presents nonaccrual loans as of June 30, 2015 and December 31, 2014:



(Dollars in millions)	June 30, 2015		December 31, 2014
Commercial and industrial	$	64	$	55
Commercial mortgage	43		40
Total commercial portfolio	107		95
Residential mortgage	209		231
Home equity and other consumer loans	36		40
Total consumer portfolio	245		271
Total nonaccrual loans, before purchased credit-impaired loans	352		366
Purchased credit-impaired loans	10		9
Total nonaccrual loans	$	362	$	375
Troubled debt restructured loans that continue to accrue interest	$	329	$	283
Troubled debt restructured nonaccrual loans (included in the total nonaccrual loans above)	$	191	$	184

The following table shows an aging of the balance of loans held for investment, excluding purchased credit-impaired loans, by class as of June 30, 2015 and December 31, 2014:



	June 30, 2015
	Aging Analysis of Loans
(Dollars in millions)	Current		30 to 89 Days Past Due		90 Days or More Past Due		Total Past Due		Total
Commercial and industrial	$	28,572	$	6	$	35	$	41	$	28,613
Commercial mortgage	13,783		12		5		17		13,800
Construction	2,071						—		2,071
Total commercial portfolio	44,426		18		40		58		44,484
Residential mortgage	28,223		101		50		151		28,374
Home equity and other consumer loans	3,074		13		11		24		3,098
Total consumer portfolio	31,297		114		61		175		31,472
Total loans held for investment, excluding purchased credit-impaired loans	$	75,723	$	132	$	101	$	233	$	75,956



	December 31, 2014
	Aging Analysis of Loans
(Dollars in millions)	Current		30 to 89 Days Past Due		90 Days or More Past Due		Total Past Due		Total
Commercial and industrial	$	28,392	$	19	$	12	$	31	$	28,423
Commercial mortgage	13,991		21		4		25		14,016
Construction	1,744		2		—		2		1,746
Total commercial portfolio	44,127		42		16		58		44,185
Residential mortgage	28,802		112		63		175		28,977
Home equity and other consumer loans	3,084		20		13		33		3,117
Total consumer portfolio	31,886		132		76		208		32,094
Total loans held for investment, excluding purchased credit-impaired loans	$	76,013	$	174	$	92	$	266	$	76,279

The Company's loans 90 days or more past due and still accruing totaled $2 million and $3 million at June 30, 2015 and December 31, 2014, respectively. Purchased credit-impaired loans that were 90 days or more past due and still accruing totaled $36 million and $47 million at June 30, 2015 and December 31, 2014, respectively.

Credit Quality Indicators

Management analyzes the Company’s loan portfolios by applying specific monitoring policies and procedures that vary according to the relative risk profile and other characteristics within the various loan portfolios. For further information related to the credit quality indicators the Company uses to monitor the portfolio, see Note 4 to the Consolidated Financial Statements in Part II, Item 8. “Financial Statements and Supplementary Data” in our 2014 Form 10-K.

The following tables summarize the loans in the commercial portfolio segment and commercial loans within the purchased credit-impaired loans segment monitored for credit quality based on internal ratings, excluding $78 million and $98 million covered by FDIC loss share agreements, at June 30, 2015 and December 31, 2014, respectively. The amounts presented reflect unpaid principal balances less charge-offs.



	June 30, 2015
(Dollars in millions)	Pass		Special Mention		Classified		Total
Commercial and industrial	$	27,394	$	613	$	456	$	28,463
Construction	2,051		21		—		2,072
Commercial mortgage	13,330		140		165		13,635
Total commercial portfolio	42,775		774		621		44,170
Purchased credit-impaired loans	37		38		96		171
Total	$	42,812	$	812	$	717	$	44,341



	December 31, 2014
(Dollars in millions)	Pass		Special Mention		Classified		Total
Commercial and industrial	$	27,471	$	452	$	360	$	28,283
Construction	1,729		18		—		1,747
Commercial mortgage	13,522		128		183		13,833
Total commercial portfolio	42,722		598		543		43,863
Purchased credit-impaired loans	37		38		128		203
Total	$	42,759	$	636	$	671	$	44,066

The Company monitors the credit quality of its consumer portfolio segment and consumer loans within the purchased credit-impaired loans segment based primarily on payment status. The following tables summarize the loans in the consumer portfolio segment and purchased credit-impaired loans segment, which excludes $23 million and $28 million of loans covered by FDIC loss share agreements, at June 30, 2015 and December 31, 2014, respectively:



	June 30, 2015
(Dollars in millions)	Accrual		Nonaccrual		Total
Residential mortgage	$	28,165	$	209	$	28,374
Home equity and other consumer loans	3,062		36		3,098
Total consumer portfolio	31,227		245		31,472
Purchased credit-impaired loans	171		—		171
Total	$	31,398	$	245	$	31,643



	December 31, 2014
(Dollars in millions)	Accrual		Nonaccrual		Total
Residential mortgage	$	28,746	$	231	$	28,977
Home equity and other consumer loans	3,077		40		3,117
Total consumer portfolio	31,823		271		32,094
Purchased credit-impaired loans	196		—		196
Total	$	32,019	$	271	$	32,290

The Company also monitors the credit quality for substantially all of its consumer portfolio segment using credit scores provided by FICO and refreshed LTV ratios. FICO credit scores are refreshed at least quarterly to monitor the quality of the portfolio. Refreshed LTV measures the principal balance of the loan as a percentage of the estimated current value of the property securing the loan. Home equity loans are evaluated using combined LTV, which measures the principal balance of the combined loans that have liens against the property (including unused credit lines for home equity products) as a percentage of the estimated current value of the property securing the loans. The LTV ratios are refreshed on a quarterly basis, using the most recent home pricing index data available for the property location.

The following tables summarize the loans in the consumer portfolio segment and consumer loans within the purchased credit-impaired loans segment monitored for credit quality based on refreshed FICO scores and refreshed LTV ratios at June 30, 2015 and December 31, 2014. These tables exclude loans covered by FDIC loss share agreements, as discussed above. The amounts presented reflect unpaid principal balances less partial charge-offs.



	June 30, 2015
	FICO scores
(Dollars in millions)	720 and above			Below 720			No FICO Available⁽¹⁾			Total
Residential mortgage	$	22,023		$	5,554		$	537		$	28,114
Home equity and other consumer loans	2,180			768			84			3,032
Total consumer portfolio	24,203			6,322			621			31,146
Purchased credit-impaired loans	63			96			13			172
Total	$	24,266		$	6,418		$	634		$	31,318
Percentage of total	78		%	20		%	2		%	100		%



	December 31, 2014
	FICO scores
(Dollars in millions)	720 and above			Below 720			No FICO Available⁽¹⁾			Total
Residential mortgage	$	22,505		$	5,717		$	493		$	28,715
Home equity and other consumer loans	2,209			754			83			3,046
Total consumer portfolio	24,714			6,471			576			31,761
Purchased credit-impaired loans	73			111			13			197
Total	$	24,787		$	6,582		$	589		$	31,958
Percentage of total	77		%	21		%	2		%	100		%


(1)	Represents loans for which management was not able to obtain an updated FICO score (e.g., due to recent profile changes).



	June 30, 2015
	LTV ratios
(Dollars in millions)	Less than or Equal to 80 Percent			Greater than 80 and Less than 100 Percent			Greater than or Equal to 100 Percent			No LTV Available⁽¹⁾			Total
Residential mortgage	$	27,078		$	905		$	66		$	65		$	28,114
Home equity loans	2,296			222			92			51			2,661
Total consumer portfolio	29,374			1,127			158			116			30,775
Purchased credit-impaired loans	122			36			11			—			169
Total	$	29,496		$	1,163		$	169		$	116		$	30,944
Percentage of total	95		%	4		%	1		%	—		%	100		%



	December 31, 2014
	LTV ratios
(Dollars in millions)	Less than or Equal to 80 Percent			Greater than 80 and Less than 100 Percent			Greater than or Equal to 100 Percent			No LTV Available⁽¹⁾			Total
Residential mortgage	$	27,162		$	1,430		$	92		$	31		$	28,715
Home equity loans	2,364			270			118			50			2,802
Total consumer portfolio	29,526			1,700			210			81			31,517
Purchased credit-impaired loans	131			45			18			1			195
Total	$	29,657		$	1,745		$	228		$	82		$	31,712
Percentage of total	94		%	5		%	1		%	—		%	100		%


(1)	Represents loans for which management was not able to obtain refreshed property values.

Troubled Debt Restructurings

The following table provides a summary of the Company’s recorded investment in TDRs as of June 30, 2015 and December 31, 2014. The summary includes those TDRs that are on nonaccrual status and those that continue to accrue interest. The Company had $23 million and $33 million in commitments to lend additional funds to borrowers with loan modifications classified as TDRs as of June 30, 2015 and December 31, 2014, respectively.



(Dollars in millions)	June 30, 2015		December 31, 2014
Commercial and industrial	$	175	$	100
Commercial mortgage	21		28
Total commercial portfolio	196		128
Residential mortgage	294		308
Home equity and other consumer loans	30		30
Total consumer portfolio	324		338
Total restructured loans, excluding purchased credit-impaired loans	$	520	$	466

For the second quarter of 2015, TDR modifications in the commercial portfolio segment were primarily composed of interest rate changes, maturity extensions, covenant waivers, conversions from revolving lines of credit to term loans, or some combination thereof. In the consumer portfolio segment, primarily all of the modifications were composed of interest rate reductions and maturity extensions. There were no charge-offs related to TDR modifications for the six months ended June 30, 2015 and June 30, 2014. For the commercial and consumer portfolio segments, the allowance for loan losses for TDRs is measured on an individual loan basis or in pools with similar risk characteristics.

The following table provides the pre- and post-modification outstanding recorded investment amounts of TDRs as of the date of the restructuring that occurred during the three and six months ended June 30, 2015 and 2014:



	For the Three Months Ended June 30, 2015				For the Six Months Ended June 30, 2015
(Dollars in millions)	Pre-Modification Outstanding Recorded Investment⁽¹⁾		Post-Modification Outstanding Recorded Investment⁽²⁾		Pre-Modification Outstanding Recorded Investment⁽¹⁾		Post-Modification Outstanding Recorded Investment⁽²⁾
Commercial and industrial	$	34	$	34	$	106	$	106
Commercial mortgage	6		6		8		8
Total commercial portfolio	40		40		114		114
Residential mortgage	6		6		10		10
Home equity and other consumer loans	1		1		2		2
Total consumer portfolio	7		7		12		12
Total	$	47	$	47	$	126	$	126


(1)	Represents the recorded investment in the loan immediately prior to the restructuring event.


(2)	Represents the recorded investment in the loan immediately following the restructuring event. It includes the effect of paydowns that were required as part of the restructuring terms.



	For the Three Months Ended June 30, 2014				For the Six Months Ended June 30, 2014
(Dollars in millions)	Pre-Modification Outstanding Recorded Investment⁽¹⁾		Post-Modification Outstanding Recorded Investment⁽²⁾		Pre-Modification Outstanding Recorded Investment⁽¹⁾		Post-Modification Outstanding Recorded Investment⁽²⁾
Commercial and industrial	$	76	$	76	$	80	$	80
Commercial mortgage	7		7		18		18
Total commercial portfolio	83		83		98		98
Residential mortgage	4		4		10		9
Home equity and other consumer loans	2		2		4		4
Total consumer portfolio	6		6		14		13
Total	$	89	$	89	$	112	$	111


(1)	Represents the recorded investment in the loan immediately prior to the restructuring event.


(2)	Represents the recorded investment in the loan immediately following the restructuring event. It includes the effect of paydowns that were required as part of the restructuring terms.

The following table provides the recorded investment amounts of TDRs at the date of default, for which there was a payment default during the three and six months ended June 30, 2015 and 2014, and where the default occurred within the first twelve months after modification into a TDR. A payment default is defined as the loan being 60 days or more past due.



(Dollars in millions)	For the Three Months Ended June 30, 2015		For the Six Months Ended June 30, 2015
Commercial and industrial	$	21	$	25
Commercial mortgage	2		3
Total commercial portfolio	23		28
Residential mortgage	—		—
Home equity and other consumer loans	—		—
Total consumer portfolio	—		—
Total	$	23	$	28



(Dollars in millions)	For the Three Months Ended June 30, 2014		For the Six Months Ended June 30, 2014
Commercial and industrial	$	6	$	6
Commercial mortgage	3		3
Total commercial portfolio	9		9
Residential mortgage	2		4
Home equity and other consumer loans	—		1
Total consumer portfolio	2		5
Total	$	11	$	14

For the TDR consumer portfolio, historical payment defaults and the propensity to redefault are some of the factors considered when determining the allowance for loan losses for situations where impairment is measured using the present value of expected future cash flows discounted at the loan’s effective interest rate.

Loan Impairment

Loans that are individually evaluated for impairment include larger nonaccruing loans within the commercial portfolio and loans modified in a TDR. The Company records an impairment allowance when the value of a loan evaluated for impairment is less than the recorded investment in the loan.

The following tables show information about impaired loans by class as of June 30, 2015 and December 31, 2014:



	June 30, 2015
	Recorded Investment								Unpaid Principal Balance
(Dollars in millions)	With an Allowance		Without an Allowance		Total		Allowance for Impaired Loans		With an Allowance		Without an Allowance
Commercial and industrial	$	108	$	84	$	192	$	16	$	132	$	84
Commercial mortgage	23		4		27		1		26		4
Total commercial portfolio	131		88		219		17		158		88
Residential mortgage	191		103		294		15		204		119
Home equity and other consumer loans	7		23		30		1		7		36
Total consumer portfolio	198		126		324		16		211		155
Total, excluding purchased credit-impaired loans	329		214		543		33		369		243
Purchased credit-impaired loans	1		2		3		—		1		3
Total	$	330	$	216	$	546	$	33	$	370	$	246



	December 31, 2014
	Recorded Investment								Unpaid Principal Balance
(Dollars in millions)	With an Allowance		Without an Allowance		Total		Allowance for Impaired Loans		With an Allowance		Without an Allowance
Commercial and industrial	$	89	$	35	$	124	$	14	$	120	$	39
Commercial mortgage	37		3		40		4		39		3
Total commercial portfolio	126		38		164		18		159		42
Residential mortgage	198		110		308		16		211		127
Home equity and other consumer loans	6		24		30		—		7		37
Total consumer portfolio	204		134		338		16		218		164
Total, excluding purchased credit-impaired loans	330		172		502		34		377		206
Purchased credit-impaired loans	—		1		1		—		—		2
Total	$	330	$	173	$	503	$	34	$	377	$	208

The following table presents the average recorded investment in impaired loans and the amount of interest income recognized for impaired loans during the three and six months ended June 30, 2015 and 2014 for the commercial, consumer and purchased credit-impaired loans portfolio segments.



	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2015				2014				2015				2014
(Dollars in millions)	Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
Commercial and industrial	$	183	$	1	$	219	$	1	$	164	$	3	$	219	$	4
Commercial mortgage	29		1		35		—		32		1		37		2
Construction	—		—		—		1		—		—		—		1
Total commercial portfolio	212		2		254		2		196		4		256		7
Residential mortgage	298		2		310		3		301		5		312		6
Home equity and other consumer loans	30		—		26		—		30		1		25		1
Total consumer portfolio	328		2		336		3		331		6		337		7
Total, excluding purchased credit-impaired loans	540		4		590		5		527		10		593		14
Purchased credit-impaired loans	2		—		2		—		2		—		2		—
Total	$	542	$	4	$	592	$	5	$	529	$	10	$	595	$	14

The Company transferred a net $207 million of commercial loans from held for investment to held for sale, and sold $198 million of commercial loans during the six months ended June 30, 2015. The Company transferred a net $33 million of commercial loans from held for investment to held for sale, and sold $36 million of commercial loans during the six months ended June 30, 2014. No consumer loans were sold or transferred from held for investment to held for sale.