Loans and Allowance for Loan Losses

The following table provides the outstanding balances of loans held for investment at March 31, 2020 and December 31, 2019.



(Dollars in millions)	March 31, 2020			December 31, 2019
Loans held for investment:
Commercial and industrial	$	29,872		$	26,338
Commercial mortgage	16,943			16,895
Construction	1,583			1,511
Lease financing	980			1,001
Total commercial portfolio	49,378			45,745
Residential mortgage and home equity⁽¹⁾	36,036			38,018
Other consumer⁽²⁾	4,372			4,450
Total consumer portfolio	40,408			42,468
Total loans held for investment⁽³⁾	89,786			88,213
Allowance for loan losses	(1,152		)	(538		)
Loans held for investment, net	$	88,634		$	87,675


(1)	Includes home equity loans of $2,006 million and $2,049 million at March 31, 2020 and December 31, 2019, respectively.


(2)	Other consumer loans substantially include unsecured consumer loans and consumer credit cards.


(3)	Includes $279 million and $320 million at March 31, 2020 and December 31, 2019, respectively, for net unamortized (discounts) and premiums and deferred (fees) and costs.

Accrued interest receivable on loans held for investment and securities totaled $469 million at March 31, 2020 and is included in the other assets on the consolidated balance sheet.

Allowance for Loan Losses

The provision for loan losses was $448 million for the three months ended March 31, 2020, largely due to the impact of COVID-19 and the corresponding deterioration in the economic environment on the collectively-assessed allowance for credit losses. The provision for loan losses was $274 million and $174 million for the commercial and consumer loan segments, respectively, largely due to economic deterioration observed late in the first quarter of 2020. Downgrades of several obligors also contributed to the commercial segment provision. The economic forecast incorporated management's expectations at March 31, 2020, which included declining gross domestic product, unemployment approaching double digits by June 2020 and lower stock prices in 2020, with a modest recovery emerging in the fourth quarter of 2020 and continuing into subsequent years. The collectively-assessed allowance for credit losses estimate also incorporated management’s qualitatively-determined model adjustment overlays that reflect the anticipated loss mitigating impact of monetary and fiscal stimulus policies and loan modification programs, and additional qualitative adjustments largely driven by estimated impacts of COVID-19 that are not otherwise incorporated into the collectively-assessed modeling methodology. The following tables provide a reconciliation of changes in the allowance for loan losses by portfolio segment.




	For the Three Months Ended March 31, 2020
(Dollars in millions)	Commercial			Consumer			Total
Allowance for loan losses, beginning of period	$	354		$	184		$	538
Cumulative effect adjustment from adoption of ASC 326 ⁽¹⁾	76			153			229
Allowance for loan losses, beginning of period, adjusted for adoption of ASC 326 ⁽¹⁾	430			337			767
(Reversal of) provision for loan losses	274			174			448
Loans charged-off	(32		)	(41		)	(73		)
Recoveries of loans previously charged-off	7			3			10
Allowance for loan losses, end of period	$	679		$	473		$	1,152


(1)	For further information see Note 1 to these Consolidated Financial Statements.




	For the Three Months Ended March 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	32			27			—		59
Loans charged-off	(11		)	(17		)	—		(28		)
Recoveries of loans previously charged-off	9			2			—		11
Allowance for loan losses, end of period	$	389		$	122		$	5	$	516

The following table shows the allowance for loan losses and related loan balances by portfolio segment as of December 31, 2019.



	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

Nonaccrual and Past Due Loans

The following table presents nonaccrual loans as of March 31, 2020 and December 31, 2019. The nonaccrual loans all have related allowance for credit losses accrued as of March 31, 2020.



(Dollars in millions)	March 31, 2020		December 31, 2019
Commercial and industrial	$	103	$	175
Commercial mortgage	16		15
Construction	55		—
Total commercial portfolio	174		190
Residential mortgage and home equity	146		137
Other consumer	3		1
Total consumer portfolio	149		138
Total nonaccrual loans	$	323	$	328
Troubled debt restructured loans that continue to accrue interest	$	331	$	392
Troubled debt restructured nonaccrual loans (included in total nonaccrual loans above)	$	145	$	171

The following tables show the aging of the balance of loans held for investment by class as of March 31, 2020 and December 31, 2019.



	March 31, 2020
	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	$	30,645	$	158	$	49	$	207	$	30,852
Commercial mortgage	16,896		45		2		47		16,943
Construction	1,582		1		—		1		1,583
Total commercial portfolio	49,123		204		51		255		49,378
Residential mortgage and home equity	35,680		298		58		356		36,036
Other consumer	4,318		36		18		54		4,372
Total consumer portfolio	39,998		334		76		410		40,408
Total loans held for investment	$	89,121	$	538	$	127	$	665	$	89,786



	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

Loans held for investment 90 days or more past due and still accruing interest totaled $18 million at March 31, 2020 and $20 million at December 31, 2019. The following table presents the loans that are 90 days or more past due, but are not on nonaccrual status by loan class.



(Dollars in millions)	March 31, 2020		December 31, 2019
Commercial and industrial	$	2	$	3
Total commercial portfolio	2		3
Other consumer	16		17
Total consumer portfolio	16		17
Total loans that are 90 days or more past due and still accruing	$	18	$	20

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.



	March 31, 2020
	Non-Revolving Loans at Amortized Cost by Origination Year												Revolving Loans		Total
(Dollars in millions)	2020		2019		2018		2017		2016		Prior
Commercial and industrial:
Pass	$	673	$	2,680	$	2,090	$	1,357	$	873	$	2,372	$	17,905	$	27,950
Criticized:
Special Mention	49		305		84		61		9		135		594		1,237
Classified	—		5		71		40		—		72		497		685
Total	722		2,990		2,245		1,458		882		2,579		18,996		29,872
Commercial mortgage:
Pass	498		3,913		3,577		2,037		1,869		4,508		111		16,513
Criticized:
Special Mention	—		13		33		2		2		100		—		150
Classified	—		2		5		4		4		265		—		280
Total	498		3,928		3,615		2,043		1,875		4,873		111		16,943
Construction:
Pass	84		612		427		278		35		—		21		1,457
Criticized:
Special Mention	—		4		14		2		8		—		—		28
Classified	—		4		55		13		—		26		—		98
Total	84		620		496		293		43		26		21		1,583
Lease financing:
Pass	48		256		1		1		51		522		—		879
Criticized:
Special Mention	—		—		—		—		—		89		—		89
Classified	—		12		—		—		—		—		—		12
Total	48		268		1		1		51		611		—		980
Total commercial portfolio	$	1,352	$	7,806	$	6,357	$	3,795	$	2,851	$	8,089	$	19,128	$	49,378



	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

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 of loans covered by FDIC loss share agreements at December 31, 2019.



Payment Status	March 31, 2020
	Non-Revolving Loans at Amortized Cost by Origination Year												Revolving Loans		Total
(Dollars in millions)	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Residential mortgage and home equity:
Accrual	$	666	$	5,905	$	4,315	$	7,918	$	7,035	$	8,783	$	1,268	$	35,890
Nonaccrual	—		2		3		7		8		121		5		146
Total	666		5,907		4,318		7,925		7,043		8,904		1,273		36,036
Other consumer:
Accrual	513		2,567		863		74		11		43		298		4,369
Nonaccrual	—		—		—		—		1		2		—		3
Total	513		2,567		863		74		12		45		298		4,372
Total consumer portfolio	$	1,179	$	8,474	$	5,181	$	7,999	$	7,055	$	8,949	$	1,571	$	40,408



	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

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 March 31, 2020 and December 31, 2019. The December 31, 2019 amounts presented reflect unpaid principal balances less partial charge-offs.



FICO Scores	March 31, 2020
	Non-Revolving Loans by Origination Year																		Revolving Loans			Total
(Dollars in millions)	2020			2019			2018			2017			2016			Prior			Revolving Loans			Total
Residential mortgage and home equity:
720 and Above	$	430		$	5,039		$	3,521		$	6,660		$	5,948		$	7,005		$	1,001		$	29,604
Below 720	45			848			703			1,103			880			1,585			259			5,423
No FICO Available⁽¹⁾	191			20			94			162			215			314			13			1,009
Total	666			5,907			4,318			7,925			7,043			8,904			1,273			36,036
Other consumer loans:
720 and Above	302			1,471			500			43			7			8			130			2,461
Below 720	211			1,096			363			31			5			5			166			1,877
No FICO Available⁽¹⁾	—			—			—			—			—			32			2			34
Total	513			2,567			863			74			12			45			298			4,372
Total consumer portfolio	$	1,179		$	8,474		$	5,181		$	7,999		$	7,055		$	8,949		$	1,571		$	40,408
Percentage of total	3		%	21		%	13		%	20		%	17		%	22		%	4		%	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
	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).



LTV Ratios	March 31, 2020
	Non-Revolving Loans by Origination Year																		Revolving Loans			Total
(Dollars in millions)	2020			2019			2018			2017			2016			Prior			Revolving Loans			Total
Residential mortgage and home equity:
80% or below	$	662		$	5,093		$	3,819		$	7,799		$	7,030		$	8,809		$	1,112		$	34,324
80% to 100%	4			812			494			124			12			54			155			1,655
100% or more	—			—			3			—			—			9			1			13
No LTV Available⁽¹⁾	—			2			2			2			1			32			5			44
Total	666			5,907			4,318			7,925			7,043			8,904			1,273			36,036
Total consumer portfolio	$	666		$	5,907		$	4,318		$	7,925		$	7,043		$	8,904		$	1,273		$	36,036
Percentage of total	2		%	16		%	12		%	22		%	20		%	25		%	3		%	100		%


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



	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.

Troubled Debt Restructurings

The following table provides a summary of the Company’s recorded investment in TDRs as of March 31, 2020 and December 31, 2019. The summary includes those TDRs that are on nonaccrual status and those that continue to accrue interest. The Company had $33 million and $61 million in commitments to lend additional funds to borrowers with loan modifications classified as TDRs as of March 31, 2020 and December 31, 2019, respectively.



(Dollars in millions)	March 31, 2020		December 31, 2019
Commercial and industrial	$	59	$	140
Commercial mortgage	168		168
Construction	62		62
Total commercial portfolio	289		370
Residential mortgage and home equity	186		192
Other consumer	1		1
Total consumer portfolio	187		193
Total restructured loans	$	476	$	563

For the first quarter of 2020, TDR modifications in the commercial portfolio segment were substantially composed of maturity extensions and conversions of revolving lines of credit into fixed terms. 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 three months ended March 31, 2020 and March 31, 2019. 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 three months ended March 31, 2020 and 2019.



	For the Three Months Ended March 31, 2020
(Dollars in millions)	Pre-Modification Outstanding Recorded Investment⁽¹⁾		Post-Modification Outstanding Recorded Investment⁽²⁾
Commercial and industrial	$	3	$	3
Total commercial portfolio	3		3
Residential mortgage and home equity	1		1
Total consumer portfolio	1		1
Total	$	4	$	4


(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 March 31, 2019
(Dollars in millions)	Pre-Modification Outstanding Recorded Investment⁽¹⁾		Post-Modification Outstanding Recorded Investment⁽²⁾
Commercial and industrial	$	41	$	41
Commercial mortgage	2		2
Total commercial portfolio	43		43
Residential mortgage and home equity	5		5
Total consumer portfolio	5		5
Total	$	48	$	48


(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 recorded investment amounts of TDRs at the date of default, for which there was a payment default during the three months ended March 31, 2020 and 2019, and where the default occurred within the first twelve months after modification into a TDR were de minimis. A payment default is defined as the loan being 60 days or more past due.

For loans in the consumer portfolio in which allowance for loan losses 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.

On March 22, 2020, the federal bank regulatory agencies issued joint guidance advising that the agencies have confirmed with the staff of the FASB that short-term modifications due to COVID-19 made on a good faith basis to borrowers who were current prior to relief, are not TDRs. On March 27, 2020 the CARES Act, which provides relief from TDR classification for certain COVID-19 related loan modifications, was signed into law. For COVID-19 related loan modifications which occurred from March 1, 2020, through March 31, 2020, and met the loan modification criteria under either the CARES Act or the criteria specified by the regulatory agencies, we elected to suspend TDR accounting for such loan modifications.

Loans Held for Sale

The following tables present transfers from loans held for investment to loans held for sale, transfers from loans held for sale to loans held for investment, sales of loans held for sale, and sales of loans held for investment during the three months ended March 31, 2020 and 2019 for the commercial and consumer loan portfolio segments.



	Transfers from LHFI to LHFS
	For the Three Months Ended March 31, 2020
(Dollars in millions)	Amortized Cost of LHFI		Amortized Cost of LHFS
Commercial portfolio	$	114	$	114
Total	$	114	$	114



	Transfers from LHFS to LHFI
	For the Three Months Ended March 31, 2020
(Dollars in millions)	Amortized Cost
Commercial portfolio	$	36
Consumer portfolio	5
Total	$	41



	Sales of LHFS
	For the Three Months Ended March 31, 2020
(Dollars in millions)	Amortized Cost Derecognized		Proceeds from Sale		Gain (Loss) on Sales
Commercial portfolio	$	751	$	752	$	3
Consumer portfolio	544		553		8
Total	$	1,295	$	1,305	$	11



	Sales of LHFI
	For the Three Months Ended March 31, 2020
(Dollars in millions)	Amortized Cost Derecognized		Proceeds from Sale		Gain (Loss) on Sales
Commercial portfolio	$	89	$	91	$	2
Total	$	89	$	91	$	2



	For the Three Months Ended March 31,
	2019
(Dollars in millions)	Net Transfer of LHFI to (from) LHFS		Proceeds from Sale
Commercial portfolio	$	71	$	121
Total	$	71	$	121