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Loans and Allowance for Loan Losses
 12 Months Ended
Dec. 31, 2019
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 December 31, 2019 and 2018.
(Dollars in millions)
 
December 31,
2019
 
December 31,
2018
Loans held for investment:
 
 
 
 
Commercial and industrial
 
$
26,338

 
$
24,919

Commercial mortgage
 
16,895

 
15,354

Construction
 
1,511

 
1,613

Lease financing
 
1,001

 
1,249

Total commercial portfolio
 
45,745

 
43,135

Residential mortgage and home equity(1)
 
38,018

 
40,677

Other consumer(2)
 
4,450

 
2,695

Total consumer portfolio
 
42,468

 
43,372

Total loans held for investment(3)
 
88,213

 
86,507

Allowance for loan losses
 
(538
)
 
(474
)
Loans held for investment, net
 
$
87,675

 
$
86,033

 
 
(1)
Includes home equity loans of $2,049 million and $2,238 million at December 31, 2019 and December 31, 2018, respectively.
(2)
Other consumer loans substantially include unsecured consumer loans and consumer credit cards.
(3)
Includes $320 million and $340 million at December 31, 2019 and December 31, 2018, 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, 2019
(Dollars in millions)
 
Commercial
 
Consumer
 
Unallocated
 
Total
Allowance for loan losses, beginning of period
 
$
359

 
$
110

 
$
5

 
$
474

(Reversal of) provision for loan losses
 
124

 
164

 
(5
)
 
283

Loans charged-off
 
(158
)
 
(98
)
 
—

 
(256
)
Recoveries of loans previously charged-off
 
29

 
8

 
—

 
37

Allowance for loan losses, end of period
 
$
354

 
$
184

 
$
—

 
$
538

 
 
For the Year Ended December 31, 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
 
51

 
58

 
(25
)
 
84

Loans charged-off
 
(79
)
 
(41
)
 
—

 
(120
)
Recoveries of loans previously charged-off
 
27

 
7

 
—

 
34

Allowance for loan losses, end of period
 
$
359

 
$
110

 
$
5

 
$
474

 
 
For the Year Ended December 31, 2017
(Dollars in millions)
 
Commercial
 
Consumer
 
Unallocated
 
Total
Allowance for loan losses, beginning of period
 
$
556

 
$
83

 
$
—

 
$
639

(Reversal of) provision for loan losses
 
(132
)
 
37

 
30

 
(65
)
Other
 
2

 
—

 
—

 
2

Loans charged-off
 
(116
)
 
(39
)
 
—

 
(155
)
Recoveries of loans previously charged-off
 
50

 
5

 
—

 
55

Allowance for loan losses, end of period
 
$
360


$
86


$
30

 
$
476


The following tables show the allowance for loan losses and related loan balances by portfolio segment as of December 31, 2019 and 2018.
 
 
December 31, 2019
(Dollars in millions)
 
Commercial
 
Consumer
 
Unallocated
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
43

 
$
12

 
$
—

 
$
55

Collectively evaluated for impairment
 
311

 
172

 
—

 
483

Total allowance for loan losses
 
$
354

 
$
184

 
$
—

 
$
538

 
 
 
 
 
 
 
 
 
Loans held for investment:
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
436

 
$
246

 
$
—

 
$
682

Collectively evaluated for impairment
 
45,309

 
42,222

 
—

 
87,531

Total loans held for investment
 
$
45,745

 
$
42,468

 
$
—

 
$
88,213

 
 
December 31, 2018
(Dollars in millions)
 
Commercial
 
Consumer
 
Unallocated
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
62

 
$
13

 
$
—

 
$
75

Collectively evaluated for impairment
 
297

 
97

 
5

 
399

Total allowance for loan losses
 
$
359

 
$
110

 
$
5

 
$
474

 
 
 
 
 
 
 
 
 
Loans held for investment:
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
450

 
$
280

 
$
—

 
$
730

Collectively evaluated for impairment
 
42,685

 
43,092

 
—

 
85,777

Total loans held for investment
 
$
43,135

 
$
43,372

 
$
—

 
$
86,507


Nonaccrual and Past Due Loans
The following table presents nonaccrual loans as of December 31, 2019 and 2018.
(Dollars in millions)
 
December 31,
2019
 
December 31,
2018
Commercial and industrial
 
$
175

 
$
269

Commercial mortgage
 
15

 
12

  Total commercial portfolio
 
190

 
281

Residential mortgage and home equity
 
137

 
139

Other consumer
 
1

 
1

  Total consumer portfolio
 
138

 
140

        Total nonaccrual loans
 
$
328

 
$
421

Troubled debt restructured loans that continue to accrue interest
 
$
392

 
$
299

Troubled debt restructured nonaccrual loans (included in total nonaccrual loans above)
 
$
171

 
$
136


The following tables show the aging of the balance of loans held for investment by class as of December 31, 2019 and 2018.

 
 
December 31, 2019
 
 
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
 
$
27,241

 
$
37

 
$
61

 
$
98

 
$
27,339

Commercial mortgage
 
16,858

 
34

 
3

 
37

 
16,895

Construction
 
1,511

 
—

 
—

 
—

 
1,511

  Total commercial portfolio
 
45,610

 
71

 
64

 
135

 
45,745

Residential mortgage and home equity
 
37,788

 
179

 
51

 
230

 
38,018

Other consumer
 
4,400

 
33

 
17

 
50

 
4,450

  Total consumer portfolio
 
42,188

 
212

 
68

 
280

 
42,468

Total loans held for investment
 
$
87,798

 
$
283

 
$
132

 
$
415

 
$
88,213


 
 
December 31, 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
 
$
26,114

 
$
18

 
$
36

 
$
54

 
$
26,168

Commercial mortgage
 
15,333

 
17

 
4

 
21

 
15,354

Construction
 
1,593

 
20

 
—

 
20

 
1,613

  Total commercial portfolio
 
43,040

 
55

 
40

 
95

 
43,135

Residential mortgage and home equity
 
40,440

 
188

 
49

 
237

 
40,677

Other consumer
 
2,671

 
15

 
9

 
24

 
2,695

  Total consumer portfolio
 
43,111

 
203

 
58

 
261

 
43,372

Total loans held for investment
 
$
86,151

 
$
258

 
$
98

 
$
356

 
$
86,507


Loans held for investment 90 days or more past due and still accruing interest totaled $20 million and $23 million at December 31, 2019 and 2018, 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. 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.
 
 
December 31, 2019
 
 
 
 
Criticized
 
 
(Dollars in millions)
 
Pass
 
Special Mention
 
Classified
 
Total
Commercial and industrial
 
$
26,210

 
$
636

 
$
493

 
$
27,339

Commercial mortgage
 
16,569

 
114

 
212

 
16,895

Construction
 
1,399

 
50

 
62

 
1,511

Total commercial portfolio
 
$
44,178

 
$
800

 
$
767

 
$
45,745


 
 
December 31, 2018
 
 
 
 
Criticized
 
 
(Dollars in millions)
 
Pass
 
Special Mention
 
Classified
 
Total
Commercial and industrial
 
$
25,191

 
$
355

 
$
622

 
$
26,168

Commercial mortgage
 
15,138

 
105

 
111

 
15,354

Construction
 
1,542

 
8

 
63

 
1,613

Total commercial portfolio
 
$
41,871

 
$
468

 
$
796

 
$
43,135


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 $3 million and $6 million of loans covered by FDIC loss share agreements, at December 31, 2019 and 2018, respectively.
 
 
December 31, 2019
(Dollars in millions)
 
Accrual
 
Nonaccrual
 
Total
Residential mortgage and home equity
 
$
37,878

 
$
137

 
$
38,015

Other consumer
 
4,449

 
1

 
4,450

  Total consumer portfolio
 
$
42,327

 
$
138

 
$
42,465

 
 
December 31, 2018
(Dollars in millions)
 
Accrual
 
Nonaccrual
 
Total
Residential mortgage and home equity
 
$
40,532

 
$
139

 
$
40,671

Other consumer
 
2,694

 
1

 
2,695

  Total consumer portfolio
 
$
43,226

 
$
140

 
$
43,366





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 December 31, 2019 and 2018. 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, 2019
 
 
FICO scores
(Dollars in millions)
 
720 and Above
 
Below 720
 
No FICO
Available(1)
 
Total
Residential mortgage and home equity
 
$
31,441

 
$
5,742

 
$
454

 
$
37,637

Other consumer
 
2,567

 
1,841

 
3

 
4,411

  Total consumer portfolio
 
$
34,008

 
$
7,583

 
$
457

 
$
42,048

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).

 
 
December 31, 2018
 
 
FICO scores
(Dollars in millions)
 
720 and Above
 
Below 720
 
No FICO
Available(1)
 
Total
Residential mortgage and home equity
 
$
33,313

 
$
6,470

 
$
484

 
$
40,267

Other consumer
 
1,625

 
1,000

 
2

 
2,627

  Total consumer portfolio
 
$
34,938

 
$
7,470

 
$
486

 
$
42,894

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, 2019
 
 
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 and home equity
 
$
35,893

 
$
1,689

 
$
12

 
$
43

 
$
37,637

  Total consumer portfolio
 
$
35,893

 
$
1,689

 
$
12

 
$
43

 
$
37,637

Percentage of total
 
95
%
 
5
%
 
—
%
 
—
%
 
100
%
 
 

(1)
Represents loans for which management was not able to obtain refreshed property values.
 
 
December 31, 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 and home equity
 
$
38,570

 
$
1,582

 
$
16

 
$
99

 
$
40,267

  Total consumer portfolio
 
$
38,570

 
$
1,582

 
$
16

 
$
99

 
$
40,267

Percentage of total
 
96
%
 
4
%
 
—
%
 
—
%
 
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, 2019 and 2018. The summary includes those TDRs that are on nonaccrual status and those that continue to accrue interest. The Company had $61 million and $49 million in commitments to lend additional funds to borrowers with loan modifications classified as TDRs as of December 31, 2019 and 2018, respectively.
(Dollars in millions)
 
December 31,
2019
 
December 31,
2018
Commercial and industrial
 
$
140

 
$
109

Commercial mortgage
 
168

 
46

Construction
 
62

 
63

Total commercial portfolio
 
370

 
218

Residential mortgage and home equity
 
192

 
216

Other consumer
 
1

 
1

Total consumer portfolio
 
193

 
217

Total restructured loans
 
$
563

 
$
435


In 2019, TDR modifications in the commercial portfolio segment were substantially composed of maturity extensions, forbearance and reduction of spread. In the consumer portfolio segment, modifications were largely composed of maturity extensions and interest rate reductions. There were no charge-offs related to TDR modifications for the 2019 or 2018. For the commercial and consumer portfolio segments, the allowance for loan losses for TDRs was 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 years ended December 31, 2019 and 2018.
 
For the Year Ended December 31, 2019
 
For the Year Ended December 31, 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
$
170

 
$
172

 
$
165

 
$
165

Commercial mortgage
129

 
125

 
4

 
4

Total commercial portfolio
299

 
297

 
169

 
169

Residential mortgage and home equity
11

 
11

 
11

 
11

Other consumer
—

 
—

 
—

 
—

Total consumer portfolio
11

 
11

 
11

 
11

Total
$
310

 
$
308

 
$
180

 
$
180

 
 

(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, 2019 and 2018, 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 Year Ended December 31, 2019
 
For the Year Ended December 31, 2018
Commercial and industrial
 
$
40

 
$
—

Commercial mortgage
 
1

 
—

   Total commercial portfolio
 
41

 
—

Residential mortgage and home equity
 
$
1

 
$
3

Other consumer
 
—

 
—

 Total consumer portfolio
 
1

 
3

Total
 
$
42

 
$
3


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 December 31, 2019 and 2018.
 
 
December 31, 2019
 
 
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
 
$
186

 
$
13

 
$
199

 
$
43

 
$
227

 
$
99

Commercial mortgage
 
7

 
168

 
175

 
—

 
7

 
168

Construction
 
—

 
62

 
62

 
—

 
—

 
62

Total commercial portfolio
 
193

 
243

 
436

 
43

 
234

 
329

Residential mortgage and home equity
 
178

 
66

 
244

 
12

 
187

 
86

Other consumer
 
2

 
—

 
2

 
—

 
2

 
—

Total consumer portfolio
 
180

 
66

 
246

 
12

 
189

 
86

Total
 
$
373

 
$
309

 
$
682

 
$
55

 
$
423

 
$
415


 
 
December 31, 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
 
$
299

 
$
22

 
$
321

 
$
61

 
$
372

 
$
39

Commercial mortgage
 
25

 
41

 
66

 
1

 
25

 
41

Construction
 
—

 
63

 
63

 
—

 
—

 
63

Total commercial portfolio
 
324

 
126

 
450

 
62

 
397

 
143

Residential mortgage and home equity
 
196

 
83

 
279

 
13

 
205

 
106

Other consumer
 
1

 
—

 
1

 
—

 
1

 
—

Total consumer portfolio
 
197

 
83

 
280

 
13

 
206

 
106

Total
 
$
521

 
$
209

 
$
730

 
$
75

 
$
603

 
$
249

The following table presents the average recorded investment in impaired loans and the amount of interest income recognized for impaired loans during 2019, 2018 and 2017 for the commercial and consumer loans portfolio segments.
 
 
For the Years Ended December 31,
 
 
2019
 
2018
 
2017
(Dollars in millions)
 
Average
Recorded
Investment
 
Recognized
Interest
Income
 
Average
Recorded
Investment
 
Recognized
Interest
Income
 
Average
Recorded
Investment
 
Recognized
Interest
Income
Commercial and industrial
 
$
399

 
$
11

 
$
309

 
$
12

 
$
463

 
$
18

Commercial mortgage
 
119

 
16

 
60

 
27

 
58

 
41

Construction
 
62

 
10

 
95

 
8

 
45

 
5

Total commercial portfolio
 
580

 
37

 
464

 
47

 
566

 
64

Residential mortgage and home equity
 
262

 
16

 
298

 
17

 
355

 
20

Other consumer
 
2

 
—

 
1

 
—

 
1

 
—

Total consumer portfolio
 
264

 
16

 
299

 
17

 
356

 
20

Total
 
$
844

 
$
53

 
$
763

 
$
64

 
$
922

 
$
84


Loans Held for Sale    
The following table presents loan transfers from held for investment to held for sale and proceeds from sales of loans during 2019, 2018 and 2017 for the commercial and consumer loans portfolio segments.
 
 
Years Ended December 31,
 
 
2019
 
2018
 
2017
(Dollars in millions)
 
Transfer of loans from held for investment to held for sale, net
 
Proceeds from sale
 
Transfer of loans from held for investment to held for sale, net
 
Proceeds from sale
 
Transfer of loans from held for investment to held for sale, net
 
Proceeds from sale
Commercial portfolio
 
$
723

 
$
952

 
$
47

 
$
638

 
$
780

 
$
926

Consumer portfolio
 
(5
)
 
—

 
(3
)
 
—

 
(4
)
 
—

Total
 
$
718

 
$
952

 
$
44

 
$
638

 
$
776

 
$
926



Loan Concentrations
The Company's most significant concentrations of credit risk within its loan portfolio include residential mortgage loans, commercial real estate loans, and commercial and industrial loans made to the financial and insurance industry, power and utilities industry, manufacturing industry, and business services industry. At December 31, 2019, the Company had $36 billion in residential mortgage loans, substantially all of which were made to borrowers in California. The Company had $18 billion in loans made to the commercial real estate industry and an additional $5 billion in unfunded commitments. At December 31, 2019, the Company had $8 billion in loans made to the financial and insurance industry and an additional $9 billion in unfunded commitments. At December 31, 2019, the Company had $3 billion in loans made to the power and utilities industry and an additional $5 billion in unfunded commitments. At December 31, 2019, the Company had $4 billion in loans made to the manufacturing industry and an additional $3 billion in unfunded commitments. At December 31, 2019, the Company had $3 billion in loans made to the business services industry and an additional $2 billion in unfunded commitments.