Significant Group Concentrations of Credit Risk

12 Months Ended

Dec. 31, 2016

Significant Group Concentrations of Credit Risk [Abstract]

Significant Group Concentrations of Credit Risk

SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

Concentrations of credit risk may exist when a number of borrowers are engaged in similar activities, or activities in the same geographic region, and have similar economic characteristics that would cause them to be similarly impacted by changes in economic or other conditions. Concentrations of both on-balance sheet and off-balance sheet credit risk are controlled and monitored as part of credit policies. The Corporation is a regional financial services holding company with a geographic concentration of its on-balance-sheet and off-balance-sheet activities in Michigan, California and Texas.

As outlined below, the Corporation has a concentration of credit risk with the automotive industry. Loans to automotive dealers and to borrowers involved with automotive production are reported as automotive, as management believes these loans have similar economic characteristics that might cause them to react similarly to changes in economic conditions. This aggregation involves the exercise of judgment. Included in automotive production are: (a) original equipment manufacturers and Tier 1 and Tier 2 suppliers that produce components used in vehicles and whose primary revenue source is automotive-related (“primary” defined as greater than 50%) and (b) other manufacturers that produce components used in vehicles and whose primary revenue source is automotive-related. Loans less than $1 million and loans recorded in the Small Business loan portfolio were excluded from the definition. Outstanding loans, included in "commercial loans" on the consolidated balance sheets, and total exposure from loans, unused commitments and standby letters of credit to companies related to the automotive industry were as follows:

(in millions)
December 31	2016		2015
Automotive loans:
Production	$	1,326	$	1,266
Dealer	7,123		6,573
Total automotive loans	$	8,449	$	7,839
Total automotive exposure:
Production	$	2,534	$	2,452
Dealer	8,730		8,209
Total automotive exposure	$	11,264	$	10,661

Further, the Corporation’s portfolio of commercial real estate loans, which includes real estate construction and commercial mortgage loans, was as follows.

(in millions)
December 31	2016		2015
Real estate construction loans:
Commercial Real Estate business line (a)	$	2,485	$	1,681
Other business lines (b)	384		320
Total real estate construction loans	2,869		2,001
Commercial mortgage loans:
Commercial Real Estate business line (a)	2,018		2,104
Other business lines (b)	6,913		6,873
Total commercial mortgage loans	8,931		8,977
Total commercial real estate loans	$	11,800	$	10,978
Total unused commitments on commercial real estate loans	$	3,046	$	3,063

(a) Primarily loans to real estate developers.

(b) Primarily loans secured by owner-occupied real estate.