Loans, Leases, And Allowance For Credit Losses

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

LOANS, LEASES, AND ALLOWANCE FOR CREDIT LOSSES

LOANS, LEASES, AND ALLOWANCE FOR CREDIT LOSSES

Loans, Leases, and Loans Held for Sale

Loans and leases are summarized as follows according to major portfolio segment and specific loan class:

(In millions)	September 30, 2020		December 31, 2019
Loans held for sale	$	89	$	129
Commercial:
Commercial and industrial	$	13,543	$	14,760
PPP	6,810		—
Leasing	319		334
Owner-occupied	8,136		7,901
Municipal	2,706		2,393
Total commercial	31,514		25,388
Commercial real estate:
Construction and land development	2,298		2,211
Term	9,729		9,344
Total commercial real estate	12,027		11,555
Consumer:
Home equity credit line	2,797		2,917
1-4 family residential	7,209		7,568
Construction and other consumer real estate	633		624
Bankcard and other revolving plans	431		502
Other	134		155
Total consumer	11,204		11,766
Total loans and leases	$	54,745	$	48,709

Loans and leases are presented at their amortized cost basis, which includes net unamortized purchase premiums, discounts, and deferred loan fees and costs totaling $191 million and $60 million at September 30, 2020 and December 31, 2019, respectively. Amortized cost basis does not include accrued interest receivables of $197 million and $164 million at September 30, 2020 and December 31, 2019, respectively. These receivables are presented in the Consolidated Balance Sheet within the Other Assets line item.

Municipal loans generally include loans to state and local governments (“municipalities”) with the debt service being repaid from general funds or pledged revenues of the municipal entity, or to private commercial entities or 501(c)(3) not-for-profit entities utilizing a pass-through municipal entity to achieve favorable tax treatment.

Land acquisition and development loans included in the construction and land development loan portfolio were $119 million at September 30, 2020 and $158 million at December 31, 2019.

Loans with a carrying value of $26.3 billion at September 30, 2020 and $21.5 billion at December 31, 2019 have been pledged at the Federal Reserve or the FHLB of Des Moines as collateral for current and potential borrowings.

We sold loans totaling $463 million and $1.4 billion for the three and nine months ended September 30, 2020 and $278 million and $527 million for the three and nine months ended September 30, 2019, respectively, that were classified as loans held for sale. The sold loans were derecognized from the balance sheet. Loans classified as loans held for sale primarily consist of conforming residential mortgages and the guaranteed portion of Small Business Administration (“SBA”) loans, and does not consist of loans from the SBA's Payroll Protection Program. The loans are mainly sold to U.S. government agencies or participated to third parties. At times, we have continuing involvement in the transferred loans in the form of servicing rights or a guarantee from the respective issuer. Amounts added to loans held for sale during these same periods were $480 million and $1.4 billion for the three and nine months ended September 30, 2020 and $316 million and $579 million for the three and nine months ended September 30, 2019, respectively. See Note 5 for further information regarding guaranteed securities.

The principal balance of sold loans for which we retain servicing was approximately $2.5 billion at September 30, 2020 and $1.7 billion at December 31, 2019. Income from loans sold, excluding servicing, was $18 million and $44 million for the three and nine months ended September 30, 2020, and $8 million and $13 million for the three and nine months ended September 30, 2019, respectively.

Allowance for Credit Losses

The allowance for credit losses (“ACL”), which consists of the allowance for loan and lease losses ("ALLL") and the reserve for unfunded lending commitments, represents our estimate of current expected credit losses over the contractual term of the loan and lease portfolio and unfunded lending commitments as of the balance sheet date. The ACL for AFS and HTM debt securities is estimated separately from loans. For HTM securities, the ACL is assessed consistent with the approach for loans carried at amortized cost. See Note 5 for further discussion on our assessment of expected credit losses on AFS securities and disclosures related to AFS and HTM securities.

We determine our ACL as the best estimate within a range of estimated current expected losses by using the loan’s amortized cost basis (principal balance, net of unamortized premiums, discounts, and deferred fees and costs). We do not estimate the ACL for accrued interest receivables because we reverse or write-off uncollectible accrued interest receivable balances in a timely manner, generally within one month.

The methodologies we use to estimate the ACL depend upon the type of loan, the age and contractual term of the loan, expected payments (both contractual and assumed prepayments), credit quality indicators, economic forecasts, and the evaluation method (whether individually or collectively evaluated). Expected loan extensions, renewals, or modifications are not considered in the ACL, unless they are included in the original or modified contract at the reporting date and are not unconditionally cancellable, or we reasonably expect them to result in a TDR.

Losses are charged to the ACL when recognized. Generally, commercial and commercial real estate (“CRE”) loans are charged off or charged down when they are determined to be uncollectible in whole or in part, or when 180 days past due, unless the loan is well-secured and in process of collection. Consumer loans are either charged off or charged down to net realizable value no later than the month in which they become 180 days past due. Closed-end consumer loans that are not secured by residential real estate are either charged off or charged down to net realizable value no later than the month in which they become 120 days past due.

We establish the amount of the ACL by analyzing the portfolio at least quarterly, and we adjust the provision for loan losses and unfunded lending commitments to ensure the ACL is at an appropriate level at the balance sheet date.

For commercial and CRE loans with commitments greater than $1 million, we assign internal risk grades using a comprehensive loan grading system based on financial and statistical models, individual credit analysis, and loan officer experience and judgment. The credit quality indicators discussed subsequently are based on this grading system. Estimated credit losses on all loan segments, including consumer and small commercial and CRE loans with commitments less than or equal to $1 million that are evaluated on a collective basis, are derived from statistical analyses of our historical default and loss experience since January 2008.

We estimate current expected credit losses over the contractual remaining life of each loan, which considers historical credit loss experience, current conditions, and reasonable and supportable forecasts about the future. We use the following two types of credit loss estimation models:

•Econometric loss models, which rely on statistical analyses of our historical loss experience dependent upon economic factors and other loan-level characteristics. Statistically relevant economic factors vary depending upon the type of loan, but include variables such as unemployment, real estate price indices, energy prices, GDP, etc. The results associated with several economic scenarios are weighted to produce the credit loss estimate from these models.

•Loss models that are based on our long-term average historical credit loss experience since 2008, which rely on statistical analyses of our historical loss experience dependent upon loan-level characteristics.

Estimated credit losses during the first 12 months of a loan’s contractual remaining life, or reasonable and supportable period, are derived from the econometric loss models. Over a subsequent 12-month reversion period, we blend the estimated credit losses from the two models on a straight-line basis. For the remaining life of the loan, the estimated credit losses are derived from the long-term average historical credit loss models.

For loans that do not share risk characteristics with other loans, we estimate lifetime expected credit losses on an individual basis. We consider individually-evaluated loans to be nonaccrual loans with a balance greater than $1 million; TDR loans, including TDRs that subsequently default; a loan no longer reported as a TDR; or a loan where we reasonably expect it to become a TDR. When a loan is individually-evaluated for expected credit losses, we estimate a specific reserve for the loan based on the projected present value of the loan’s future cash flows discounted at the loan’s effective interest rate, or the observable market price of the loan, or the fair value of the loan’s underlying collateral.

The process of estimating future cash flows also incorporates the same determining factors discussed subsequently under nonaccrual loans. When we base the specific reserve on the fair value of the loan’s underlying collateral, we generally charge off the portion of the balance that is greater than fair value. For these loans, subsequent to the charge-off, if the fair value of the loan's underlying collateral increases according to an updated appraisal, we hold a negative reserve up to the lesser of the amount of the charge-off or the updated fair value.

The methodologies described above generally rely on historical loss information to help determine our quantitative portion of the ACL. However, we also consider other qualitative and environmental factors related to current conditions and reasonable and supportable forecasts that may indicate current expected credit losses may differ from the historical information reflected in our quantitative models. Thus, after applying historical loss experience, as described above, we review the quantitative portion of ACL for each segment using qualitative criteria, and we use those criteria to determine our qualitative estimate. We monitor various risk factors that influence our judgment regarding the level of the ACL across the portfolio segments. These factors primarily include:

•Actual and expected changes in international, national, regional, and local economic and business conditions and developments;

•The volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans;

•Lending policies and procedures, including changes in underwriting standards and practices for collection, charge-off, and recovery;

•The experience, ability, and depth of lending management and other relevant staff;

•The nature and volume of the portfolio;

•The quality of the credit review function;

•The existence, growth, and effect of any concentration of credit;

•The effect of other external factors such as regulatory, legal, and technological environments; fiscal and monetary actions; competition; and events such as natural disasters and pandemics.

The magnitude of the impact of these factors on our qualitative assessment of the ACL changes from quarter to quarter according to changes made by management in its assessment of these factors, the extent these factors are already reflected in quantitative loss estimates, and the extent changes in these factors diverge from one to another. We also consider the uncertainty and imprecision inherent in the estimation process when evaluating the ACL.

Off-Balance-Sheet Credit Exposures

As previously discussed, we estimate current expected credit losses for off-balance-sheet loan commitments, including standby letters of credit, that are not unconditionally cancellable. This estimate uses the same procedures and methodologies described previously for loans and is calculated by taking the difference between the estimated current expected credit loss and the funded balance, if greater than zero.

Changes in the Allowance for Credit Losses

On January 1, 2020, we adopted Accounting Standards Update (“ASU”) 2016-13, Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and its subsequent updates, often referred to as the Current Expected Credit Loss ("CECL") standard. Due to the adoption of the standard, the ACL methodology explained above has significantly changed from the prior period. For more information on our previous ACL methodology, see Note 6 in our 2019 Annual Report on Form 10-K.

The ACL was $917 million at September 30, 2020, compared with $914 million at June 30, 2020. During the third quarter of 2020, our estimate of current expected credit losses increased primarily due to the ongoing economic impact related to the effects of the COVID-19 pandemic.

Changes in the ACL are summarized as follows:

	Three Months Ended September 30, 2020
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses
Balance at beginning of period	$	571	$	144	$	145	$	860
Provision for loan losses	41		6		(2)		45
Gross loan and lease charge-offs	54		1		3		58
Recoveries	4		—		2		6
Net loan and lease charge-offs (recoveries)	50		1		1		52
Balance at end of period	$	562	$	149	$	142	$	853
Reserve for unfunded lending commitments
Balance at beginning of period	$	27	$	20	$	7	$	54
Provision for unfunded lending commitments	14		(4)		—		10
Balance at end of period	$	41	$	16	$	7	$	64
Total allowance for credit losses at end of period
Allowance for loan losses	$	562	$	149	$	142	$	853
Reserve for unfunded lending commitments	41		16		7		64
Total allowance for credit losses	$	603	$	165	$	149	$	917

	Nine Months Ended September 30, 2020
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses
Balance at December 31, 2019	$	341	$	101	$	53	$	495
Adjustment for change in accounting standard	(59)		(32)		93		2
Balance at beginning of period (January 1, 2020)	282		69		146		497
Provision for loan losses	364		81		1		446
Gross loan and lease charge-offs	95		1		11		107
Recoveries	11		—		6		17
Net loan and lease charge-offs (recoveries)	84		1		5		90
Balance at end of period	$	562	$	149	$	142	$	853
Reserve for unfunded lending commitments
Balance at December 31, 2019	$	39	$	20	$	—	$	59
Adjustment for change in accounting standard	(28)		(8)		6		(30)
Balance at beginning of period (January 1, 2020)	11		12		6		29
Provision for unfunded lending commitments	30		4		1		35
Balance at end of period	$	41	$	16	$	7	$	64
Total allowance for credit losses at end of period
Allowance for loan losses	$	562	$	149	$	142	$	853
Reserve for unfunded lending commitments	41		16		7		64
Total allowance for credit losses	$	603	$	165	$	149	$	917

	Three Months Ended September 30, 2019
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses
Balance at beginning of period	$	338	$	114	$	51	$	503
Provision for loan losses	9		(6)		5		8
Gross loan and lease charge-offs	6		—		5		11
Recoveries	7		1		2		10
Net loan and lease charge-offs (recoveries)	(1)		(1)		3		1
Balance at end of period	$	348	$	109	$	53	$	510
Reserve for unfunded lending commitments
Balance at beginning of period	$	41	$	19	$	—	$	60
Provision for unfunded lending commitments	—		2		—		2
Balance at end of period	$	41	$	21	$	—	$	62
Total allowance for credit losses at end of period
Allowance for loan losses	$	348	$	109	$	53	$	510
Reserve for unfunded lending commitments	41		21		—		62
Total allowance for credit losses	$	389	$	130	$	53	$	572

	Nine Months Ended September 30, 2019
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses
Balance at beginning of period	$	331	$	110	$	54	$	495
Provision for loan losses	31		(4)		3		30
Gross loan and lease charge-offs	33		1		12		46
Recoveries	19		4		8		31
Net loan and lease charge-offs (recoveries)	14		(3)		4		15
Balance at end of period	$	348	$	109	$	53	$	510
Reserve for unfunded lending commitments
Balance at beginning of period	$	40	$	17	$	—	$	57
Provision for unfunded lending commitments	1		4		—		5
Balance at end of period	$	41	$	21	$	—	$	62
Total allowance for credit losses at end of period
Allowance for loan losses	$	348	$	109	$	53	$	510
Reserve for unfunded lending commitments	41		21		—		62
Total allowance for credit losses	$	389	$	130	$	53	$	572

Nonaccrual Loans

Loans are generally placed on nonaccrual status when payment in full of principal and interest is not expected, or the loan is 90 days or more past due as to principal or interest, unless the loan is both well-secured and in the process of collection. Factors we consider in determining whether a loan is placed on nonaccrual include delinquency status, collateral value, borrower or guarantor financial statement information, bankruptcy status, and other information which would indicate that the full and timely collection of interest and principal is uncertain.

A nonaccrual loan may be returned to accrual status when all delinquent interest and principal become current in accordance with the terms of the loan agreement; the loan, if secured, is well-secured; the borrower has paid according to the contractual terms for a minimum of six months; and an analysis of the borrower indicates a reasonable assurance of the ability and willingness to maintain payments.

The amortized cost basis of loans on nonaccrual status are summarized as follows:

	September 30, 2020
	Amortized cost basis				Total amortized cost basis
(In millions)	with no allowance		with allowance				Related allowance
Loans held for sale	$	14	$	—	$	14	$	—
Commercial:
Commercial and industrial	$	48	$	110	$	158	$	21
PPP	—		—		—		—
Leasing	—		1		1		—
Owner-occupied	41		40		81		3
Municipal	—		—		—		—
Total commercial	89		151		240		24
Commercial real estate:
Construction and land development	—		—		—		—
Term	13		24		37		1
Total commercial real estate	13		24		37		1
Consumer:
Home equity credit line	2		14		16		3
1-4 family residential	7		52		59		4
Construction and other consumer real estate	—		—		—		—
Bankcard and other revolving plans	—		—		—		1
Other	—		—		—		—
Total consumer loans	9		66		75		8
Total	$	111	$	241	$	352	$	33

The amount of accrued interest receivables written off by reversing interest income during the period is summarized by loan portfolio segment as follows:

(In millions)	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
Commercial	$	5	$	13
Commercial real estate	1		2
Consumer	—		—
Total	$	6	$	15

Past Due Loans

Closed-end loans with payments scheduled monthly are reported as past due when the borrower is in arrears for two or more monthly payments. Similarly, open-end credits, such as charge-card plans and other revolving credit plans, are reported as past due when the minimum payment has not been made for two or more billing cycles. Other multi-payment obligations (i.e., quarterly, semi-annual, etc.), single payment, and demand notes, are reported as past due when either principal or interest is due and unpaid for a period of 30 days or more.

Past due loans (accruing and nonaccruing) are summarized as follows:

	September 30, 2020
(In millions)	Current		30-89 days past due		90+ days past due		Total past due		Total loans		Accruing loans 90+ days past due		Nonaccrual loans that are current 1
Commercial:
Commercial and industrial	$	13,467	$	27	$	49	$	76	$	13,543	$	3	$	106
PPP	6,810		—		—		—		6,810		—		—
Leasing	319		—		—		—		319		—		1
Owner-occupied	8,084		20		32		52		8,136		3		45
Municipal	2,706		—		—		—		2,706		—		—
Total commercial	31,386		47		81		128		31,514		6		152
Commercial real estate:
Construction and land development	2,291		7		—		7		2,298		—		—
Term	9,703		12		14		26		9,729		2		18
Total commercial real estate	11,994		19		14		33		12,027		2		18
Consumer:
Home equity credit line	2,788		6		3		9		2,797		—		9
1-4 family residential	7,164		9		36		45		7,209		—		19
Construction and other consumer real estate	633		—		—		—		633		—		—
Bankcard and other revolving plans	427		3		1		4		431		1		1
Other	133		1		—		1		134		—		—
Total consumer loans	11,145		19		40		59		11,204		1		29
Total	$	54,525	$	85	$	135	$	220	$	54,745	$	9	$	199

	December 31, 2019
(In millions)	Current		30-89 days past due		90+ days past due		Total past due		Total loans		Accruing loans 90+ days past due		Nonaccrual loans that are current 1
Commercial:
Commercial and industrial	$	14,665	$	57	$	38	$	95	$	14,760	$	8	$	54
PPP	—		—		—		—		—		—		—
Leasing	334		—		—		—		334		1		—
Owner-occupied	7,862		20		19		39		7,901		—		44
Municipal	2,393		—		—		—		2,393		—		—
Total commercial	25,254		77		57		134		25,388		9		98
Commercial real estate:
Construction and land development	2,206		5		—		5		2,211		—		1
Term	9,333		8		3		11		9,344		—		10
Total commercial real estate	11,539		13		3		16		11,555		—		11
Consumer:
Home equity credit line	2,908		6		3		9		2,917		—		7
1-4 family residential	7,532		12		24		36		7,568		—		13
Construction and other consumer real estate	624		—		—		—		624		—		—
Bankcard and other revolving plans	499		2		1		3		502		1		—
Other	154		1		—		1		155		—		—
Total consumer loans	11,717		21		28		49		11,766		1		20
Total	$	48,510	$	111	$	88	$	199	$	48,709	$	10	$	129

1 Represents nonaccrual loans that are not past due more than 30 days; however, full payment of principal and interest is still not expected.

Credit Quality Indicators

In addition to the nonaccrual and past due criteria, we also analyze loans using loan risk-grading systems, which vary based on the size and type of credit risk exposure. The internal risk grades assigned to loans follow our definitions of Pass, Special Mention, Substandard, and Doubtful, which are consistent with published definitions of regulatory risk classifications.

Definitions of Pass, Special Mention, Substandard, and Doubtful are summarized as follows:

•Pass – A Pass asset is higher-quality and does not fit any of the other categories described below. The likelihood of loss is considered low.

•Special Mention – A Special Mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date.

•Substandard – A Substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have well-defined weaknesses and are characterized by the distinct possibility that the Bank may sustain some loss if deficiencies are not corrected.

•Doubtful – A Doubtful asset has all the weaknesses inherent in a Substandard asset with the added characteristics that the weaknesses make collection or liquidation in full highly questionable and improbable.

The balance of loans classified as Doubtful as of September 30, 2020 and December 31, 2019 was insignificant.

We generally assign internal risk grades to commercial and CRE loans with commitments greater than $1 million based on financial and statistical models, individual credit analysis, and loan officer experience and judgment. For these larger loans, we assign one of multiple grades within the Pass classification or one of the following four grades: Special Mention, Substandard, Doubtful, and Loss. Loss indicates that the outstanding balance has been charged off. We confirm our internal risk grades quarterly, or as soon as we identify information that affects the credit risk of the loan.

For consumer loans and certain small commercial and CRE loans with commitments less than or equal to $1 million, we generally assign internal risk grades similar to those described previously based on automated rules that depend on refreshed credit scores, payment performance, and other risk indicators. These are generally assigned either a Pass or Substandard grade and are reviewed as we identify information that might warrant a grade change.

The amortized cost basis of loans and leases categorized by year of origination and by credit quality classifications as monitored by management are summarized as follows:

	September 30, 2020
	Term Loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
	Amortized cost basis by year of origination
(In millions)	2020		2019		2018		2017		2016		Prior						Total loans
Commercial:
Commercial and industrial
Pass	$	1,613	$	3,192	$	2,082	$	994	$	372	$	284	$	3,405	$	85	$	12,027
Special Mention	50		212		181		99		7		44		98		1		692
Accruing Substandard	98		110		222		76		18		17		120		5		666
Nonaccrual	42		7		8		37		2		17		35		10		158
Total commercial and industrial	1,803		3,521		2,493		1,206		399		362		3,658		101		13,543
PPP
Pass	6,810		—		—		—		—		—		—		—		6,810
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		—		—		—		—		—		—		—		—
Total leasing	6,810		—		—		—		—		—		—		—		6,810
Leasing
Pass	64		117		47		36		17		8		—		—		289
Special Mention	—		11		3		2		1		6		—		—		23
Accruing Substandard	2		2		1		1		—		—		—		—		6
Nonaccrual	—		—		—		—		1		—		—		—		1
Total leasing	66		130		51		39		19		14		—		—		319
Owner-occupied
Pass	1,083		1,312		1,234		956		664		1,956		154		17		7,376
Special Mention	55		50		50		75		56		40		12		2		340
Accruing Substandard	25		50		62		38		35		111		17		1		339
Nonaccrual	5		14		16		12		7		25		1		1		81
Total owner-occupied	1,168		1,426		1,362		1,081		762		2,132		184		21		8,136
Municipal
Pass	663		868		374		442		76		242		3		—		2,668
Special Mention	—		—		—		—		—		10		—		—		10
Accruing Substandard	—		—		21		—		—		7		—		—		28
Nonaccrual	—		—		—		—		—		—		—		—		—
Total municipal	663		868		395		442		76		259		3		—		2,706
Total commercial	10,510		5,945		4,301		2,768		1,256		2,767		3,845		122		31,514

	September 30, 2020
	Term Loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
	Amortized cost basis by year of origination
(In millions)	2020		2019		2018		2017		2016		Prior						Total loans
Commercial real estate:
Construction and land development
Pass	467		871		388		52		1		7		407		3		2,196
Special Mention	28		32		10		—		—		—		7		—		77
Accruing Substandard	—		4		—		21		—		—		—		—		25
Nonaccrual	—		—		—		—		—		—		—		—		—
Total construction and land development	495		907		398		73		1		7		414		3		2,298
Term
Pass	1,862		1,886		1,840		917		866		1,438		75		22		8,906
Special Mention	93		139		163		54		17		100		—		—		566
Accruing Substandard	55		25		63		31		16		30		—		—		220
Nonaccrual	—		5		—		3		1		27		1		—		37
Total term	2,010		2,055		2,066		1,005		900		1,595		76		22		9,729
Total commercial real estate	2,505		2,962		2,464		1,078		901		1,602		490		25		12,027
Consumer:
Home equity credit line
Pass	—		—		—		—		—		—		2,640		130		2,770
Accruing Substandard	—		—		—		—		—		—		10		1		11
Nonaccrual	—		—		—		—		—		—		11		5		16
Total home equity credit line	—		—		—		—		—		—		2,661		136		2,797
1-4 family residential
Pass	889		1,085		915		1,209		1,288		1,758		—		—		7,144
Accruing Substandard	—		—		1		—		1		4		—		—		6
Nonaccrual	—		2		4		10		6		37		—		—		59
Total 1-4 family residential	889		1,087		920		1,219		1,295		1,799		—		—		7,209
Construction and other consumer real estate
Pass	119		339		141		20		1		13		—		—		633
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		—		—		—		—		—		—		—		—
Total construction and other consumer real estate	119		339		141		20		1		13		—		—		633
Bankcard and other revolving plans
Pass	—		—		—		—		—		—		425		2		427
Accruing Substandard	—		—		—		—		—		—		4		—		4
Nonaccrual	—		—		—		—		—		—		—		—		—
Total bankcard and other revolving plans	—		—		—		—		—		—		429		2		431
Other consumer
Pass	46		42		27		12		5		2		—		—		134
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		—		—		—		—		—		—		—		—
Total other consumer	46		42		27		12		5		2		—		—		134
Total consumer	1,054		1,468		1,088		1,251		1,301		1,814		3,090		138		11,204
Total loans	$	14,069	$	10,375	$	7,853	$	5,097	$	3,458	$	6,183	$	7,425	$	285	$	54,745

Modified and Restructured Loans

Loans may be modified in the normal course of business for competitive reasons or to strengthen the Bank’s position. Loan modifications and restructurings may also occur when the borrower experiences financial difficulty and needs temporary or permanent relief from the original contractual terms of the loan. Loans that have been modified to accommodate a borrower who is experiencing financial difficulties, and for which the Bank has granted a concession that it would not otherwise consider, are considered troubled debt restructurings (“TDRs”).

Consistent with recent accounting and regulatory guidance, loan modifications provided to borrowers experiencing financial difficulties exclusively related to the COVID-19 pandemic, in which we provide certain short-term modifications or payment deferrals, are not classified as TDRs. The TDRs disclosed subsequently do not include these loan modifications. Other loan modifications above and beyond these short-term modifications or payment deferrals were assessed for TDR classification.

For further discussion of our policies and processes regarding TDRs, see Note 6 of our 2019 Annual Report on Form 10-K.

Selected information on TDRs that includes the recorded investment on an accruing and nonaccruing basis by loan class and modification type is summarized in the following schedules:

	September 30, 2020
	Recorded investment resulting from the following modification types:
(In millions)	Interest rate below market		Maturity or term extension		Principal forgiveness		Payment deferral		Other1		Multiple modification types2		Total
Accruing
Commercial:
Commercial and industrial	$	—	$	1	$	—	$	1	$	8	$	4	$	14
Owner-occupied	5		1		—		3		4		9		22
Total commercial	5		2		—		4		12		13		36
Commercial real estate:
Term	2		—		—		7		94		24		127
Total commercial real estate	2		—		—		7		94		24		127
Consumer:
Home equity credit line	—		1		7		—		1		2		11
1-4 family residential	1		1		4		—		1		16		23
Construction and other consumer real estate	—		—		—		—		—		—		—
Total consumer loans	1		2		11		—		2		18		34
Total accruing	8		4		11		11		108		55		197
Nonaccruing
Commercial:
Commercial and industrial	—		—		—		2		31		20		53
Owner-occupied	5		—		—		1		3		7		16
Total commercial	5		—		—		3		34		27		69
Commercial real estate:
Term	—		—		—		1		3		2		6
Total commercial real estate	—		—		—		1		3		2		6
Consumer:
Home equity credit line	—		—		1		—		—		1		2
1-4 family residential	—		—		1		—		1		5		7
Total consumer loans	—		—		2		—		1		6		9
Total nonaccruing	5		—		2		4		38		35		84
Total	$	13	$	4	$	13	$	15	$	146	$	90	$	281

1 Includes TDRs that resulted from other modification types including, but not limited to, a legal judgment awarded on different terms, a bankruptcy plan confirmed on different terms, a settlement that includes the delivery of collateral in exchange for debt reduction, etc.

2 Includes TDRs that resulted from a combination of any of the previous modification types.

	December 31, 2019
	Recorded investment resulting from the following modification types:
(In millions)	Interest rate below market		Maturity or term extension		Principal forgiveness		Payment deferral		Other1		Multiple modification types2		Total
Accruing
Commercial:
Commercial and industrial	$	1	$	2	$	—	$	—	$	8	$	5	$	16
Owner-occupied	3		1		—		—		4		7		15
Total commercial	4		3		—		—		12		12		31
Commercial real estate:
Term	2		—		—		1		—		3		6
Total commercial real estate	2		—		—		1		—		3		6
Consumer:
Home equity credit line	—		2		7		—		—		2		11
1-4 family residential	1		1		4		—		1		22		29
Construction and other consumer real estate	—		1		—		—		—		—		1
Total consumer loans	1		4		11		—		1		24		41
Total accruing	7		7		11		1		13		39		78
Nonaccruing
Commercial:
Commercial and industrial	—		4		—		20		4		22		50
Owner-occupied	5		—		—		—		1		4		10
Total commercial	5		4		—		20		5		26		60
Commercial real estate:
Term	1		—		—		—		3		3		7
Total commercial real estate	1		—		—		—		3		3		7
Consumer:
Home equity credit line	—		—		2		—		—		—		2
1-4 family residential	—		—		1		—		1		4		6
Total consumer loans	—		—		3		—		1		4		8
Total nonaccruing	6		4		3		20		9		33		75
Total	$	13	$	11	$	14	$	21	$	22	$	72	$	153

1 Includes TDRs that resulted from other modification types including, but not limited to, a legal judgment awarded on different terms, a bankruptcy plan confirmed on different terms, a settlement that includes the delivery of collateral in exchange for debt reduction, etc.

2 Includes TDRs that resulted from a combination of any of the previous modification types.

Unfunded lending commitments on TDRs amounted to $4 million and $5 million at September 30, 2020 and December 31, 2019, respectively.

The total recorded investment of all TDRs in which interest rates were modified below market was $62 million at September 30, 2020 and $73 million at December 31, 2019. These loans are included in the previous schedule in the columns for interest rate below market and multiple modification types.

The net financial impact on interest income due to interest rate modifications below market for accruing TDRs for the three and nine months ended September 30, 2020 and 2019 was not significant.

On an ongoing basis, we monitor the performance of all TDRs according to their restructured terms. Subsequent payment default is defined in terms of delinquency, when principal or interest payments are past due 90 days or more for commercial loans, or 60 days or more for consumer loans.

The recorded investment of accruing and nonaccruing TDRs that had a payment default during the period listed below (and are still in default at period end) and are within 12 months or less of being modified as TDRs is as follows:

	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
(In millions)	Accruing		Nonaccruing		Total		Accruing		Nonaccruing		Total
Commercial and industrial	$	—	$	3	$	3	$	—	$	1	$	1
Total	$	—	$	3	$	3	$	—	$	1	$	1
	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
(In millions)	Accruing		Nonaccruing		Total		Accruing		Nonaccruing		Total
Commercial and industrial	$	—	$	6	$	6	$	—	$	2	$	2
Owner-occupied	—		—		—		—		1		1
Total commercial	—		6		6		—		3		3
Total	$	—	$	6	$	6	$	—	$	3	$	3

Note: Total loans modified as TDRs during the 12 months previous to September 30, 2020 and 2019 were $190 million and $73 million, respectively.

Collateral-Dependent Loans

As discussed previously, when a loan is individually-evaluated for expected credit losses, we estimate a specific reserve for the loan based on the projected present value of the loan’s future cash flows discounted at the loan’s effective interest rate, or the observable market price of the loan, or the fair value of the loan’s underlying collateral.

Selected information on loans for which the repayment is expected to be provided substantially through the operation or sale of the underlying collateral and the borrower is experiencing financial difficulties, including the type of collateral and the extent to which the collateral secures the loans, is summarized as follows:

	September 30, 2020
(In millions)	Amortized Cost		Major Types of Collateral	Weighted Average LTV1
Commercial:
Commercial and industrial	$	19	Single family residential, Agriculture	53%
Owner-occupied	9		Office Building	46%
Commercial real estate:
Term	13		Multi-family, Hotel/Motel, Retail	60%
Consumer:
Home equity credit line	2		Single family residential	33%
1-4 family residential	3		Single family residential	52%
Total	$	46

1 The fair value is based on the most recent appraisal or other collateral evaluation.

Foreclosed Residential Real Estate

At September 30, 2020 and December 31, 2019, the amount of foreclosed residential real estate property held by the Bank was less than $1 million for both periods. The amortized cost basis of consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure was $7 million and $8 million for the same periods, respectively.

Concentrations of Credit Risk

Credit risk is the possibility of loss from the failure of a borrower, guarantor, or another obligor to fully perform under the terms of a credit-related contract. We perform an ongoing analysis of our loan portfolio to evaluate whether there is any significant exposure to any concentrations of credit risk. See Note 6 of our 2019 Annual Report

on Form 10-K for further discussion of our evaluation of credit risk concentrations. See also Note 7 of our 2019 Annual Report on Form 10-K for a discussion of counterparty risk associated with the Bank’s derivative transactions.