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Loans and Allowance for Loan Losses
 6 Months Ended
Jun. 30, 2018
Receivables [Abstract]  
Loans and Allowance for Loan Losses
Loans and Allowance for Loan Losses
The following table provides the outstanding balances of loans held for investment at June 30, 2018 and December 31, 2017.
(Dollars in millions)
 
June 30, 2018
 
December 31, 2017
Loans held for investment:
 
 
 
 
Commercial and industrial
 
$
23,033

 
$
23,281

Commercial mortgage
 
14,790

 
14,320

Construction
 
1,562

 
1,775

Lease financing
 
1,445

 
1,533

Total commercial portfolio
 
40,830

 
40,909

Residential mortgage
 
37,552

 
35,643

Home equity and other consumer loans
 
3,854

 
3,462

Total consumer portfolio
 
41,406

 
39,105

Total loans held for investment(1)
 
82,236

 
80,014

Allowance for loan losses
 
(445
)
 
(476
)
Loans held for investment, net
 
$
81,791

 
$
79,538

 
 

(1)
Includes $326 million and $301 million at June 30, 2018 and December 31, 2017, 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, 2018
(Dollars in millions)
 
Commercial
 
Consumer
 
Unallocated
 
Total
Allowance for loan losses, beginning of period
 
$
371

 
$
84

 
$
5

 
$
460

(Reversal of) provision for loan losses
 
(15
)
 
2

 
—

 
(13
)
Loans charged-off
 
(1
)
 
(9
)
 
—

 
(10
)
Recoveries of loans previously charged-off
 
7

 
1

 
—

 
8

Allowance for loan losses, end of period
 
$
362

 
$
78

 
$
5

 
$
445

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended June 30, 2017
(Dollars in millions)
 
Commercial
 
Consumer
 
Unallocated
 
Total
Allowance for loan losses, beginning of period
 
$
485

 
$
85

 
$
—

 
$
570

(Reversal of) provision for loan losses
 
(24
)
 
4

 
—

 
(20
)
Other
 
(1
)
 
—

 
—

 
(1
)
Loans charged-off
 
(29
)
 
(11
)
 
—

 
(40
)
Recoveries of loans previously charged-off
 
4

 
—

 
—

 
4

Allowance for loan losses, end of period
 
$
435

 
$
78

 
$
—

 
$
513

 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30, 2018
(Dollars in millions)
 
Commercial
 
Consumer
 
Unallocated
 
Total
Allowance for loan losses, beginning of period
 
$
360

 
$
86

 
$
30

 
$
476

(Reversal of) provision for loan losses
 
(1
)
 
8

 
(25
)
 
(18
)
Loans charged-off
 
(7
)
 
(19
)
 
—

 
(26
)
Recoveries of loans previously charged-off
 
10

 
3

 
—

 
13

Allowance for loan losses, end of period
 
$
362

 
$
78

 
$
5

 
$
445

 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30, 2017
(Dollars in millions)
 
Commercial
 
Consumer
 
Unallocated
 
Total
Allowance for loan losses, beginning of period
 
$
556

 
$
83

 
$
—

 
$
639

(Reversal of) provision for loan losses
 
(50
)
 
16

 
—

 
(34
)
Loans charged-off
 
(84
)
 
(22
)
 
—

 
(106
)
Recoveries of loans previously charged-off
 
13

 
1

 
—

 
14

Allowance for loan losses, end of period
 
$
435

 
$
78

 
$
—

 
$
513


The following tables show the allowance for loan losses and related loan balances by portfolio segment as of June 30, 2018 and December 31, 2017.
 
 
June 30, 2018
(Dollars in millions)
 
Commercial
 
Consumer
 
Unallocated
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
64

 
$
13

 
$
—

 
$
77

Collectively evaluated for impairment
 
298

 
65

 
5

 
368

Total allowance for loan losses
 
$
362

 
$
78

 
$
5

 
$
445

 
 
 
 
 
 
 
 
 
Loans held for investment:
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
480

 
$
297

 
$
—

 
$
777

Collectively evaluated for impairment
 
40,350

 
41,109

 
—

 
81,459

Total loans held for investment
 
$
40,830

 
$
41,406

 
$
—

 
$
82,236

 
 
December 31, 2017
(Dollars in millions)
 
Commercial
 
Consumer
 
Unallocated
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
58

 
$
15

 
$
—

 
$
73

Collectively evaluated for impairment
 
302

 
71

 
30

 
403

Total allowance for loan losses
 
$
360

 
$
86

 
$
30

 
$
476

 
 
 
 
 
 
 
 
 
Loans held for investment:
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
544

 
$
321

 
$
—

 
$
865

Collectively evaluated for impairment
 
40,365

 
38,784

 
—

 
79,149

Total loans held for investment
 
$
40,909

 
$
39,105

 
$
—

 
$
80,014



Nonaccrual and Past Due Loans
The following table presents nonaccrual loans as of June 30, 2018 and December 31, 2017.
(Dollars in millions)
 
June 30, 2018
 
December 31, 2017
Commercial and industrial
 
$
270

 
$
319

Commercial mortgage
 
11

 
20

  Total commercial portfolio
 
281

 
339

Residential mortgage
 
100

 
104

Home equity and other consumer loans
 
23

 
22

  Total consumer portfolio
 
123

 
126

        Total nonaccrual loans
 
$
404

 
$
465

Troubled debt restructured loans that continue to accrue interest
 
$
337

 
$
348

Troubled debt restructured nonaccrual loans (included in total nonaccrual loans above)
 
$
239

 
$
229



The following tables show the aging of the balance of loans held for investment, by class, as of June 30, 2018 and December 31, 2017.

 
 
June 30, 2018
 
 
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
 
$
24,384

 
$
16

 
$
78

 
$
94

 
$
24,478

Commercial mortgage
 
14,771

 
17

 
2

 
19

 
14,790

Construction
 
1,562

 
—

 
—

 
—

 
1,562

  Total commercial portfolio
 
40,717

 
33

 
80

 
113

 
40,830

Residential mortgage
 
37,380

 
139

 
33

 
172

 
37,552

Home equity and other consumer loans
 
3,823

 
20

 
11

 
31

 
3,854

  Total consumer portfolio
 
41,203

 
159

 
44

 
203

 
41,406

Total loans held for investment
 
$
81,920

 
$
192

 
$
124

 
$
316

 
$
82,236


 
 
December 31, 2017
 
 
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
 
$
24,734

 
$
17

 
$
63

 
$
80

 
$
24,814

Commercial mortgage
 
14,298

 
16

 
6

 
22

 
14,320

Construction
 
1,775

 
—

 
—

 
—

 
1,775

  Total commercial portfolio
 
40,807

 
33

 
69

 
102

 
40,909

Residential mortgage
 
35,453

 
151

 
39

 
190

 
35,643

Home equity and other consumer loans
 
3,427

 
23

 
12

 
35

 
3,462

  Total consumer portfolio
 
38,880

 
174

 
51

 
225

 
39,105

Total loans held for investment
 
$
79,687

 
$
207

 
$
120

 
$
327

 
$
80,014



Loans 90 days or more past due and still accruing totaled $10 million at June 30, 2018 and $12 million at December 31, 2017.

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 have regulatory risk ratings of special mention, substandard or doubtful; classified credits are those that have regulatory risk ratings of 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. 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 monitored for credit quality based on regulatory risk ratings.

 
 
June 30, 2018
 
 
 
 
Criticized
 
 
(Dollars in millions)
 
Pass
 
Special Mention
 
Classified
 
Total
Commercial and industrial
 
$
23,333

 
$
418

 
$
727

 
$
24,478

Commercial mortgage
 
14,532

 
83

 
175

 
14,790

Construction
 
1,467

 
17

 
78

 
1,562

  Total commercial portfolio
 
$
39,332

 
$
518

 
$
980

 
$
40,830


 
 
December 31, 2017
 
 
 
 
Criticized
 
 
(Dollars in millions)
 
Pass
 
Special Mention
 
Classified
 
Total
Commercial and industrial
 
$
23,632

 
$
435

 
$
747

 
$
24,814

Commercial mortgage
 
14,081

 
80

 
159

 
14,320

Construction
 
1,632

 
15

 
128

 
1,775

  Total commercial portfolio
 
$
39,345

 
$
530

 
$
1,034

 
$
40,909



The Company monitors the credit quality of its consumer portfolio segment based primarily on payment status. The following tables summarize the loans in the consumer portfolio segment, which exclude $7 million and $8 million of loans covered by FDIC loss share agreements, at June 30, 2018 and December 31, 2017, respectively.
 
 
June 30, 2018
(Dollars in millions)
 
Accrual
 
Nonaccrual
 
Total
Residential mortgage
 
$
37,447

 
$
100

 
$
37,547

Home equity and other consumer loans
 
3,829

 
23

 
3,852

  Total consumer portfolio
 
$
41,276

 
$
123

 
$
41,399


 
 
December 31, 2017
(Dollars in millions)
 
Accrual
 
Nonaccrual
 
Total
Residential mortgage
 
$
35,534

 
$
104

 
$
35,638

Home equity and other consumer loans
 
3,437

 
22

 
3,459

  Total consumer portfolio
 
$
38,971

 
$
126

 
$
39,097



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 based on refreshed FICO scores and refreshed LTV ratios at June 30, 2018 and December 31, 2017. 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, 2018
 
 
FICO scores
(Dollars in millions)
 
720 and above
 
Below 720
 
No FICO
Available(1)
 
Total
Residential mortgage
 
$
30,742

 
$
6,028

 
$
397

 
$
37,167

Home equity and other consumer loans
 
2,717

 
1,021

 
55

 
3,793

  Total consumer portfolio
 
$
33,459

 
$
7,049

 
$
452

 
$
40,960

Percentage of total
 
82
%
 
17
%
 
1
%
 
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, 2017
 
 
FICO scores
(Dollars in millions)
 
720 and above
 
Below 720
 
No FICO
Available(1)
 
Total
Residential mortgage
 
$
28,786

 
$
6,082

 
$
411

 
$
35,279

Home equity and other consumer loans
 
2,404

 
918

 
84

 
3,406

  Total consumer portfolio
 
$
31,190

 
$
7,000

 
$
495

 
$
38,685

Percentage of total
 
81
%
 
18
%
 
1
%
 
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, 2018
 
 
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
 
$
36,615

 
$
522

 
$
27

 
$
3

 
$
37,167

Home equity loans
 
1,988

 
219

 
15

 
30

 
2,252

Total consumer portfolio
 
$
38,603

 
$
741

 
$
42

 
$
33

 
$
39,419

Percentage of total
 
98
%
 
2
%
 
—
%
 
—
%
 
100
%
 
 
(1)
Represents loans for which management was not able to obtain refreshed property values.
 
 
December 31, 2017
 
 
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
 
$
34,472

 
$
771

 
$
4

 
$
32

 
$
35,279

Home equity loans
 
2,052

 
248

 
24

 
33

 
2,357

Total consumer portfolio
 
$
36,524

 
$
1,019

 
$
28

 
$
65

 
$
37,636

Percentage of total
 
97
%
 
3
%
 
—
%
 
—
%
 
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, 2018 and December 31, 2017. The summary includes those TDRs that are on nonaccrual status and those that continue to accrue interest. The Company had $40 million and $66 million in commitments to lend additional funds to borrowers with loan modifications classified as TDRs as of June 30, 2018 and December 31, 2017, respectively.

(Dollars in millions)
 
June 30, 2018
 
December 31, 2017
Commercial and industrial
 
$
219

 
$
202

Commercial mortgage
 
54

 
7

Construction
 
78

 
128

Total commercial portfolio
 
351

 
337

Residential mortgage
 
202

 
215

Home equity and other consumer loans
 
23

 
25

Total consumer portfolio
 
225

 
240

Total restructured loans
 
$
576

 
$
577



For the second quarter of 2018, 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 or maturity extensions. Charge-offs related to TDR modifications for the six months ended June 30, 2018 and June 30, 2017 were de minimis. 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 tables provide 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, 2018 and 2017.
 
 
For the Three Months Ended June 30, 2018
 
For the Six Months Ended June 30, 2018
(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
 
$
90

 
$
90

 
$
104

 
$
104

Total commercial portfolio
 
90

 
90

 
104

 
104

Residential mortgage
 
1

 
1

 
2

 
2

Home equity and other consumer loans
 
1

 
1

 
1

 
1

Total consumer portfolio
 
2

 
2

 
3

 
3

Total
 
$
92

 
$
92

 
$
107

 
$
107

 
 
(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, 2017
 
For the Six Months Ended June 30, 2017
(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
 
$
18

 
$
18

 
$
96

 
$
96

Commercial mortgage
 
1

 
1

 
1

 
1

Construction
 
—

 
—

 
61

 
61

Total commercial portfolio
 
19

 
19

 
158

 
158

Residential mortgage
 
4

 
4

 
8

 
8

Home equity and other consumer loans
 
2

 
2

 
2

 
2

Total consumer portfolio
 
6

 
6

 
10

 
10

Total
 
$
25

 
$
25

 
$
168

 
$
168

 
 
(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 tables provide 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, 2018 and 2017, 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, 2018
 
For the Six Months Ended June 30, 2018
Residential mortgage
 
$
2

 
$
2

 Total consumer portfolio
 
2

 
2

Total
 
$
2

 
$
2

 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
For the Three Months Ended June 30, 2017
 
For the Six Months Ended June 30, 2017
Commercial and industrial
 
$
17

 
$
19

Commercial mortgage
 
—

 
1

   Total commercial portfolio
 
17

 
20

Residential mortgage
 
—

 
1

 Total consumer portfolio
 
—

 
1

Total
 
$
17

 
$
21



For loans in the consumer portfolio in which impairment is measured using the present value of expected future cash flows discounted at the loan’s effective interest rate, historical payment defaults and the propensity to redefault are some of the factors considered when determining the allowance for loan losses.
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 June 30, 2018 and December 31, 2017.
 
 
June 30, 2018
 
 
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
 
$
288

 
$
34

 
$
322

 
$
64

 
$
346

 
$
54

Commercial mortgage
 
26

 
54

 
80

 
—

 
26

 
54

Construction
 
—

 
78

 
78

 
—

 
—

 
78

Total commercial portfolio
 
314

 
166

 
480

 
64

 
372

 
186

Residential mortgage
 
205

 
55

 
260

 
13

 
219

 
64

Home equity and other consumer loans
 
24

 
13

 
37

 
—

 
25

 
22

Total consumer portfolio
 
229

 
68

 
297

 
13

 
244

 
86

Total
 
$
543

 
$
234

 
$
777

 
$
77

 
$
616

 
$
272


 
 
December 31, 2017
 
 
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
 
$
287

 
$
93

 
$
380

 
$
57

 
$
348

 
$
102

Commercial mortgage
 
33

 
3

 
36

 
1

 
33

 
3

Construction
 
—

 
128

 
128

 
—

 
—

 
128

Total commercial portfolio
 
320

 
224

 
544

 
58

 
381

 
233

Residential mortgage
 
218

 
59

 
277

 
15

 
234

 
69

Home equity and other consumer loans
 
29

 
15

 
44

 
—

 
30

 
24

Total consumer portfolio
 
247

 
74

 
321

 
15

 
264

 
93

Total
 
$
567

 
$
298

 
$
865

 
$
73

 
$
645

 
$
326



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, 2018 and 2017 for the commercial and consumer loans portfolio segments.

 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2018
 
2017
 
2018
 
2017
(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
 
$
296

 
$
3

 
$
419

 
$
—

 
$
294

 
$
5

 
$
447

 
$
4

Commercial mortgage
 
51

 
8

 
61

 
1

 
44

 
18

 
40

 
1

Construction
 
111

 
2

 
11

 
—

 
120

 
4

 
14

 
—

Total commercial portfolio
 
458

 
13

 
491

 
1

 
458

 
27

 
501

 
5

Residential mortgage
 
264

 
3

 
233

 
2

 
268

 
7

 
235

 
4

Home equity and other consumer loans
 
38

 
1

 
28

 
1

 
40

 
2

 
29

 
1

Total consumer portfolio
 
302

 
4

 
261

 
3

 
308

 
9

 
264

 
5

Total
 
$
760

 
$
17

 
$
752

 
$
4

 
$
766

 
$
36

 
$
765

 
$
10



The following table presents loan transfers from held to investment to held for sale and proceeds from
sales of loans during the three and six months ended June 30, 2018 and 2017 for the commercial and consumer loans portfolio segments.
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2018
 
2017
 
2018
 
2017
(Dollars in millions)
 
Net transfer of loans held for investment to (from) loans held for sale
 
Proceeds from sale
 
Net transfer of loans held for investment to (from) loans held for sale
 
Proceeds from sale
 
Net transfer of loans held for investment to (from) loans held for sale
 
Proceeds from sale
 
Net transfer of loans held for investment to (from) loans held for sale
 
Proceeds from sale
Commercial portfolio
 
$
24

 
$
274

 
$
126

 
$
299

 
$
(67
)
 
$
514

 
$
360

 
$
646

Consumer portfolio
 
—

 
—

 
—

 
—

 
—

 
—

 
(4
)
 
—

Total
 
$
24


$
274


$
126


$
299

 
$
(67
)
 
$
514

 
$
356

 
$
646