Loans and Allowance for Loan Losses

The following table provides the outstanding balances of loans at December 31, 2015 and 2014.



	December 31,
(Dollars in millions)	2015			2014
Loans held for investment:
Commercial and industrial	$	29,730		$	27,623
Commercial mortgage	13,904			14,016
Construction	2,297			1,746
Lease financing	737			800
Total commercial portfolio	46,668			44,185
Residential mortgage	27,344			28,977
Home equity and other consumer loans	3,251			3,117
Total consumer portfolio	30,595			32,094
Total loans held for investment, before purchased credit-impaired loans	77,263			76,279
Purchased credit-impaired loans⁽¹⁾	336			525
Total loans held for investment⁽²⁾	77,599			76,804
Allowance for loan losses	(721		)	(537		)
Loans held for investment, net	$	76,878		$	76,267


(1)	Includes $19 million and $126 million as of December 31, 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.

(2)Includes $100 million and $151 million at December 31, 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 Year Ended December 31, 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	199			6			9			—		214
Other	(2		)	—			—			—		(2		)
Loans charged-off	(28		)	(8		)	(12		)	—		(48		)
Recoveries of loans previously charged-off	17			2			1			—		20
Allowance for loan losses, end of period	$	651		$	49		$	1		$	20	$	721



	For the Year Ended December 31, 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	52			(13		)	2			(57		)	(16		)
Other	(3		)	—			—			—			(3		)
Loans charged-off	(38		)	(11		)	(1		)	—			(50		)
Recoveries of loans previously charged-off	33			4			1			—			38
Allowance for loan losses, end of period	$	465		$	49		$	3		$	20		$	537



	For the Year Ended December 31, 2013
(Dollars in millions)	Commercial			Consumer			Purchased Credit- Impaired			Unallocated			Total
Allowance for loan losses, beginning of period	$	418		$	124		$	1		$	110		$	653
(Reversal of) provision for loan losses	18			(29		)	(9		)	(33		)	(53		)
Loans charged-off	(44		)	(30		)	(3		)	—			(77		)
Recoveries of loans previously charged-off	29			4			12			—			45
Allowance for loan losses, end of period	$	421		$	69		$	1		$	77		$	568

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



	December 31, 2015
(Dollars in millions)	Commercial		Consumer		Purchased Credit- Impaired		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	101	$	13	$	—	$	—	$	114
Collectively evaluated for impairment	550		36		—		20		606
Purchased credit-impaired loans	—		—		1		—		1
Total allowance for loan losses	$	651	$	49	$	1	$	20	$	721
Loans held for investment:
Individually evaluated for impairment	$	525	$	307	$	1	$	—	$	833
Collectively evaluated for impairment	46,143		30,288		—		—		76,431
Purchased credit-impaired loans	—		—		335		—		335
Total loans held for investment	$	46,668	$	30,595	$	336	$	—	$	77,599



	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:
Collectively 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 December 31, 2015 and 2014.



	December 31,
(Dollars in millions)	2015		2014
Commercial and industrial	$	284	$	55
Commercial mortgage	37		40
Total commercial portfolio	321		95
Residential mortgage	190		231
Home equity and other consumer loans	35		40
Total consumer portfolio	225		271
Total nonaccrual loans, before purchased credit-impaired loans	546		366
Purchased credit-impaired loans	6		9
Total nonaccrual loans	$	552	$	375
Troubled debt restructured loans that continue to accrue interest	$	413	$	283
Troubled debt restructured nonaccrual loans (included in the total nonaccrual loans above)	$	409	$	184

The following tables show an aging of the balance of loans held for investment, excluding purchased credit-impaired loans, by class as of December 31, 2015 and 2014.



	December 31, 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	$	30,446	$	15	$	6	$	21	$	30,467
Commercial mortgage	13,880		17		7		24		13,904
Construction	2,292		5		—		5		2,297
Total commercial portfolio	46,618		37		13		50		46,668
Residential mortgage	27,206		92		46		138		27,344
Home equity and other consumer loans	3,225		14		12		26		3,251
Total consumer portfolio	30,431		106		58		164		30,595
Total loans held for investment, excluding purchased credit-impaired loans	$	77,049	$	143	$	71	$	214	$	77,263



	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

Loans 90 days or more past due and still accruing totaled $2 million and $3 million at December 31, 2015 and 2014, respectively. Purchased credit-impaired loans that were 90 days or more past due and still accruing totaled $16 million and $47 million at December 31, 2015 and 2014.

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. Loans within the commercial portfolio segment are classified as either pass or criticized. Criticized credits are those that are internally risk rated as special mention, substandard or doubtful. Special mention credits are potentially weak, as the borrower has begun to exhibit deteriorating trends, which, if not corrected, may jeopardize repayment of the loan and result in further downgrade. Adversely classified credits are those that are internally risk rated as substandard or doubtful. Substandard credits have well-defined weaknesses, which, if not corrected, could jeopardize the full satisfaction of the debt. A credit classified as doubtful has critical weaknesses that make full collection improbable on the basis of currently existing facts and conditions.

The following tables summarize the loans in the commercial portfolio segment and commercial loans outstanding within the purchased credit-impaired loans segment monitored for credit quality based on internal ratings, excluding $1 million and $98 million covered by FDIC loss share agreements, at December 31, 2015 and 2014, respectively. The amounts presented reflect unpaid principal balances less charge-offs.



	December 31, 2015
			Criticized
(Dollars in millions)	Pass		Special Mention		Classified		Total
Commercial and industrial	$	28,228	$	844	$	1,265	$	30,337
Commercial mortgage	13,470		139		149		13,758
Construction	2,240		57		—		2,297
Total commercial portfolio	43,938		1,040		1,414		46,392
Purchased credit-impaired loans	40		12		61		113
Total	$	43,978	$	1,052	$	1,475	$	46,505

At December 31, 2015, the commercial portfolio includes $1,226 million in criticized loans within the oil and gas industry sector of the portfolio. Criticized loans include both special mention and classified loans.



	December 31, 2014
			Criticized
(Dollars in millions)	Pass		Special Mention		Classified		Total
Commercial and industrial	$	27,471	$	452	$	360	$	28,283
Commercial mortgage	13,522		128		183		13,833
Construction	1,729		18		—		1,747
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 $18 million and $28 million of loans covered by FDIC loss share agreements, at December 31, 2015 and 2014, respectively.



	December 31, 2015
(Dollars in millions)	Accrual		Nonaccrual		Total
Residential mortgage	$	27,154	$	190	$	27,344
Home equity and other consumer loans	3,216		35		3,251
Total consumer portfolio	30,370		225		30,595
Purchased credit-impaired loans	148		—		148
Total	$	30,518	$	225	$	30,743



	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 December 31, 2015 and 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.



	December 31, 2015
	FICO scores
(Dollars in millions)	720 and Above			Below 720			No FICO Available⁽¹⁾			Total
Residential mortgage	$	21,209		$	5,412		$	488		$	27,109
Home equity and other consumer loans	2,276			818			85			3,179
Total consumer portfolio	23,485			6,230			573			30,288
Purchased credit-impaired loans	60			76			12			148
Total	$	23,545		$	6,306		$	585		$	30,436
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).



	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).



	December 31, 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	$	26,143		$	804		$	52		$	110		$	27,109
Home equity loans	2,190			217			83			55			2,545
Total consumer portfolio	28,333			1,021			135			165			29,654
Purchased credit-impaired loans	106			32			9			—			147
Total	$	28,439		$	1,053		$	144		$	165		$	29,801
percentage of total	95		%	4		%	—		%	1		%	100		%


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



	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 December 31, 2015 and 2014. The summary includes those TDRs that are on nonaccrual status and those that continue to accrue interest. The Company had $98 million and $33 million in commitments to lend additional funds to borrowers with loan modifications classified as TDRs as of December 31, 2015 and 2014, respectively.



	December 31,
(Dollars in millions)	2015		2014
Commercial and industrial	$	499	$	100
Commercial mortgage	16		28
Total commercial portfolio	515		128
Residential mortgage	276		308
Home equity and other consumer loans	31		30
Total consumer portfolio	307		338
Total restructured loans, excluding purchased credit-impaired loans	$	822	$	466

In 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. Charge-offs related to TDR modifications in the year ended December 31, 2015 were de minimis. Charge-offs related to TDR modifications totaled $2 million for the year ended December 31, 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 years ended December 31, 2015 and 2014.



	For the Year Ended December 31, 2015				For the Year Ended December 31, 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	$	495	$	495	$	111	$	111
Commercial mortgage	9		9		23		23
Total commercial portfolio	504		504		134		134
Residential mortgage	18		18		28		27
Home equity and other consumer loans	7		7		11		11
Total consumer portfolio	25		25		39		38
Total	$	529	$	529	$	173	$	172


(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 years ended December 31, 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.



	December 31,
(Dollars in millions)	2015		2014
Commercial and industrial	$	25	$	10
Commercial mortgage	4		8
Total commercial portfolio	29		18
Residential mortgage	4		8
Home equity and other consumer loans	—		1
Total consumer portfolio	4		9
Total	$	33	$	27

For the 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 and industrial, construction, and commercial mortgage loan portfolios and loans modified in a TDR. The Company records an impairment allowance when the value of an impaired loan is less than the recorded investment in the loan.

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



	December 31, 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	$	363	$	142	$	505	$	100	$	377	$	144
Commercial mortgage	14		6		20		1		15		9
Total commercial portfolio	377		148		525		101		392		153
Residential mortgage	183		93		276		13		199		109
Home equity and other consumer loans	9		22		31		—		10		35
Total consumer portfolio	192		115		307		13		209		144
Total, excluding purchased credit-impaired loans	569		263		832		114		601		297
Purchased credit-impaired loans	1		—		1		—		1		—
Total	$	570	$	263	$	833	$	114	$	602	$	297



	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 2015, 2014 and 2013 for the commercial, consumer and purchased credit-impaired loans portfolio segments.



	Years Ended December 31,
	2015				2014				2013
(Dollars in millions)	Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
Commercial and industrial	$	241	$	6	$	188	$	5	$	243	$	14
Commercial mortgage	28		1		36		2		53		9
Construction	—		—		—		—		8		3
Total commercial portfolio	269		7		224		7		304		26
Residential mortgage	294		9		310		10		293		10
Home equity and other consumer loans	30		2		27		2		22		1
Total consumer portfolio	324		11		337		12		315		11
Total, excluding purchased credit-impaired loans	593		18		561		19		619		37
Purchased credit-impaired loans	2		—		2		—		4		—
Total	$	595	$	18	$	563	$	19	$	623	$	37

The Company transferred a net $397 million and $203 million of commercial loans from held for investment to held for sale during 2015 and 2014, respectively. Proceeds from the sale of commercial loans were $380 million and $196 million during 2015 and 2014, respectively. The Company transferred $810 million of consumer loans from held for investment to held for sale which were all sold during 2015 with proceeds from sale of $827 million. No consumer loans were sold or transferred from held for investment to held for sale during 2014.

Loans Acquired in Business Combinations

The Company accounts for certain loans acquired in business combinations in accordance with accounting guidance related to loans acquired with deteriorated credit quality (purchased credit-impaired loans). The following table presents the outstanding balances and carrying amounts of the Company's purchased credit-impaired loans at December 31, 2015 and 2014.



(Dollars in millions)	December 31, 2015		December 31, 2014
Total outstanding balance	$	567	$	889
Carrying amount	330		516

The accretable yield for purchased credit-impaired loans for the years ended December 31, 2015, 2014, and 2013 was as follows:



	For the Year Ended December 31,
(Dollars in millions)	2015			2014			2013
Accretable yield, beginning of period	$	288		$	378		$	590
Additions	—			—			31
Accretion	(151		)	(268		)	(336		)
Reclassifications from nonaccretable difference during the period	58			178			93
Accretable yield, end of period	$	195		$	288		$	378

Loan Concentrations

The Company's most significant concentration of credit risk within its loan portfolio includes residential mortgage loans, commercial real estate loans, and commercial and industrial loans made to the financial and insurance industry, power and utilities industry, oil and gas industry, and manufacturing industry. At December 31, 2015, the Company had $27.3 billion in residential mortgage loans, primarily in California. The Company had $16.7 billion in loans made to the commercial real estate industry and an additional $5.4 billion in unfunded commitments. At December 31, 2015, the Company had $6.5 billion in loans made to the financial and insurance industry and an additional $4.5 billion in unfunded commitments. At December 31, 2015, the Company had $4.5 billion in loans made to the power and utilities industry and an additional $6.8 billion in unfunded commitments. At December 31, 2015, the Company had $3.7 billion in loans made to the oil and gas industry and an additional $3.7 billion in unfunded commitments. At December 31, 2015, the Company had $3.7 billion in loans made to the manufacturing industry and an additional $3.6 billion in unfunded commitments.