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Credit Quality and the Allowance for Loan and Lease Losses (Tables)

9 Months Ended

Sep. 30, 2018

Credit Quality and the Allowance for Loan and Leases Losses


Allowance for Loan and Lease Losses
The following tables summarize transactions in the ALLL by portfolio segment:

				Residential
For the three months ended September 30, 2018 ($ in millions)			Commercial	Mortgage	Consumer	Unallocated	Total
Balance, beginning of period		$	654	86	229	108	1,077
	Losses charged-off^(a)		(36)	(3)	(73)	-	(112)
	Recoveries of losses previously charged-off^(a)		9	1	30	-	40
	Provision for (benefit from) loan and lease losses		29	(1)	57	1	86
Balance, end of period		$	656	83	243	109	1,091
(a) For the three months ended September 30, 2018, the Bancorp recorded $8 in both losses charged-off and recoveries of losses charged-off related to customer defaults on point-of-sale consumer loans for which the Bancorp obtained recoveries under third-party credit enhancements.


				Residential
For the three months ended September 30, 2017 ($ in millions)			Commercial	Mortgage	Consumer	Unallocated	Total
Balance, beginning of period		$	817	93	206	110	1,226
	Losses charged-off		(33)	(2)	(50)	-	(85)
	Recoveries of losses previously charged-off		3	3	11	-	17
	Provision for (benefit from) loan and lease losses		9	(4)	51	11	67
	Deconsolidation of a VIE^(a)		(19)	-	-	(1)	(20)
Balance, end of period		$	777	90	218	120	1,205
(a) Refer to Note 10 for further discussion on the deconsolidation of a VIE.

				Residential
For the nine months ended September 30, 2018 ($ in millions)			Commercial	Mortgage	Consumer	Unallocated	Total
Balance, beginning of period		$	753	89	234	120	1,196
	Losses charged-off^(a)		(124)	(10)	(200)	-	(334)
	Recoveries of losses previously charged-off^(a)		19	4	64	-	87
	Provision for (benefit from) loan and lease losses		8	-	145	(11)	142
Balance, end of period		$	656	83	243	109	1,091
(a) For the nine months ended September 30, 2018, the Bancorp recorded $18 in both losses charged-off and recoveries of losses charged-off related to customer defaults on point-of-sale consumer loans for which the Bancorp obtained recoveries under third-party credit enhancements.


				Residential
For the nine months ended September 30, 2017 ($ in millions)			Commercial	Mortgage	Consumer	Unallocated	Total
Balance, beginning of period		$	831	96	214	112	1,253
	Losses charged-off		(119)	(12)	(156)	-	(287)
	Recoveries of losses previously charged-off		25	7	34	-	66
	Provision for (benefit from) loan and lease losses		59	(1)	126	9	193
	Deconsolidation of a VIE^(a)		(19)	-	-	(1)	(20)
Balance, end of period		$	777	90	218	120	1,205
(a) Refer to Note 10 for further discussion on the deconsolidation of a VIE.

Summary of the ALLL and Related Loans and Leases Classified by Portfolio Segment

The following tables provide a summary of the ALLL and related loans and leases classified by portfolio segment:

				Residential
As of September 30, 2018 ($ in millions)			Commercial	Mortgage	Consumer	Unallocated	Total
ALLL:^(a)
	Individually evaluated for impairment	$	66	64	38	-	168
	Collectively evaluated for impairment		590	19	205	-	814
	Unallocated		-	-	-	109	109
Total ALLL		$	656	83	243	109	1,091
Portfolio loans and leases:^(b)
	Individually evaluated for impairment	$	345	757	285	-	1,387
	Collectively evaluated for impairment		57,570	14,656	19,658	-	91,884
Total portfolio loans and leases		$	57,915	15,413	19,943	-	93,271

Includes $1 related to leveraged leases at September 30, 2018.
Excludes $172 of residential mortgage loans measured at fair value and includes $638 of leveraged leases, net of unearned income at September 30, 2018.

				Residential
As of December 31, 2017 ($ in millions)			Commercial	Mortgage	Consumer	Unallocated	Total
ALLL:^(a)
	Individually evaluated for impairment	$	94	64	42	-	200
	Collectively evaluated for impairment		659	25	192	-	876
	Unallocated		-	-	-	120	120
Total ALLL		$	753	89	234	120	1,196
Portfolio loans and leases:^(b)
	Individually evaluated for impairment	$	560	665	320	-	1,545
	Collectively evaluated for impairment		55,835	14,787	19,664	-	90,286
	Loans acquired with deteriorated credit quality		-	2	-	-	2
Total portfolio loans and leases		$	56,395	15,454	19,984	-	91,833

Includes $1 related to leveraged leases at December 31, 2017.
Excludes $137 of residential mortgage loans measured at fair value and includes $674 of leveraged leases, net of unearned income at December 31, 2017.

Loan and leases balances by credit quality indicator

The following tables summarize the credit risk profile of the Bancorp’s commercial portfolio segment, by class:

			Special
As of September 30, 2018 ($ in millions)		Pass	Mention	Substandard	Doubtful	Total
Commercial and industrial loans	$	41,008	776	847	-	42,631
Commercial mortgage owner-occupied loans		3,162	50	112	-	3,324
Commercial mortgage nonowner-occupied loans		3,316	40	15	-	3,371
Commercial construction loans		4,892	-	-	-	4,892
Commercial leases		3,538	74	85	-	3,697
Total commercial loans and leases	$	55,916	940	1,059	-	57,915

			Special
As of December 31, 2017 ($ in millions)		Pass	Mention	Substandard	Doubtful	Total
Commercial and industrial loans	$	38,813	1,115	1,235	7	41,170
Commercial mortgage owner-occupied loans		3,207	75	80	-	3,362
Commercial mortgage nonowner-occupied loans		3,117	28	97	-	3,242
Commercial construction loans		4,553	-	-	-	4,553
Commercial leases		3,922	72	74	-	4,068
Total commercial loans and leases	$	53,612	1,290	1,486	7	56,395

The following table presents a summary of the Bancorp’s residential mortgage and consumer portfolio segments, by class, disaggregated into performing versus nonperforming status as of:

		September 30, 2018		December 31, 2017
($ in millions)		Performing	Nonperforming	Performing	Nonperforming
Residential mortgage loans^(a)	$	15,390	23	15,424	30
Home equity		6,411	74	6,940	74
Automobile loans		9,001	1	9,111	1
Credit card		2,299	26	2,273	26
Other consumer loans		2,130	1	1,559	-
Total residential mortgage and consumer loans	$	35,231	125	35,307	131

(a) Excludes $172 and $137 of residential mortgage loans measured at fair value at September 30, 2018 and December 31, 2017, respectively.

Summary by Age and Class of the Recorded Investment in Delinquencies Included in the Bancorp's Portfolio of Loans and Leases

Age Analysis of Past Due Loans and Leases
The following tables summarize the Bancorp’s recorded investment in portfolio loans and leases, by age and class:

			Current	Past Due				90 Days Past
			Loans and	30-89	90 Days	Total	Total Loans	Due and Still
As of September 30, 2018 ($ in millions)			Leases^(b)(c)	Days^(c)	or More^(c)	Past Due	and Leases	Accruing
Commercial loans and leases:
	Commercial and industrial loans	$	42,481	22	128	150	42,631	3
	Commercial mortgage owner-occupied loans		3,314	3	7	10	3,324	1
	Commercial mortgage nonowner-occupied loans		3,363	5	3	8	3,371	-
	Commercial construction loans		4,884	8	-	8	4,892	-
	Commercial leases		3,693	-	4	4	3,697	-
Residential mortgage loans^(a)			15,321	29	63	92	15,413	40
Consumer loans:
	Home equity		6,366	68	51	119	6,485	-
	Automobile loans		8,891	99	12	111	9,002	11
	Credit card		2,245	42	38	80	2,325	32
	Other consumer loans		2,116	14	1	15	2,131	-
Total portfolio loans and leases		$	92,674	290	307	597	93,271	87

Excludes $172 of residential mortgage loans measured at fair value at September 30, 2018.
Information includes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the VA. As of September 30, 2018, $80 of these loans were 30-89 days past due and $198 were 90 days or more past due. The Bancorp recognized $1 and $4 of losses during the three and nine months ended September 30, 2018, respectively, due to claim denials and curtailments associated with these insured or guaranteed loans.
Includes accrual and nonaccrual loans and leases.

			Current	Past Due				90 Days Past
			Loans and	30-89	90 Days	Total	Total Loans	Due and Still
As of December 31, 2017 ($ in millions)			Leases^(b)(c)	Days^(c)	or More^(c)	Past Due	and Leases	Accruing
Commercial loans and leases:
	Commercial and industrial loans	$	41,027	42	101	143	41,170	3
	Commercial mortgage owner-occupied loans		3,351	3	8	11	3,362	-
	Commercial mortgage nonowner-occupied loans		3,235	-	7	7	3,242	-
	Commercial construction loans		4,552	1	-	1	4,553	-
	Commercial leases		4,065	3	-	3	4,068	-
Residential mortgage loans^(a)			15,301	66	87	153	15,454	57
Consumer loans:
	Home equity		6,888	70	56	126	7,014	-
	Automobile loans		8,992	107	13	120	9,112	10
	Credit card		2,230	36	33	69	2,299	27
	Other consumer loans		1,554	5	-	5	1,559	-
Total portfolio loans and leases		$	91,195	333	305	638	91,833	97

Excludes $137 of residential mortgage loans measured at fair value at December 31, 2017.
Information includes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the VA. As of December 31, 2017, $95 of these loans were 30-89 days past due and $290 were 90 days or more past due. The Bancorp recognized $1 and $4 of losses during the three and nine months ended September 30, 2017, respectively, due to claim denials and curtailments associated with these insured or guaranteed loans.
Includes accrual and nonaccrual loans and leases.

Summarizes the Bancorp's Recorded Investment in Impaired Loans and Related Allowance by Class

The following tables summarize the Bancorp’s impaired portfolio loans and leases, by class, that were subject to individual review, which includes all portfolio loans and leases restructured in a TDR:

			Unpaid
			Principal	Recorded
As of September 30, 2018 ($ in millions)			Balance	Investment		ALLL
With a related ALLL:
Commercial loans and leases:
	Commercial and industrial loans	$	199	150		55
	Commercial mortgage owner-occupied loans		2	2		1
	Commercial mortgage nonowner-occupied loans		1	1		-
	Commercial leases		27	27		10
Restructured residential mortgage loans			484	481		64
Restructured consumer loans:
	Home equity		152	152		22
	Automobile loans		5	5		1
	Credit card		47	43		15
Total impaired portfolio loans and leases with a related ALLL		$	917	861		168
With no related ALLL:
Commercial loans:
	Commercial and industrial loans	$	171	148		-
	Commercial mortgage owner-occupied loans		8	5		-
	Commercial mortgage nonowner-occupied loans		13	12		-
Restructured residential mortgage loans			294	276		-
Restructured consumer loans:
	Home equity		87	84		-
	Automobile loans		2	1		-
Total impaired portfolio loans with no related ALLL		$	575	526		-
Total impaired portfolio loans and leases		$	1,492	1,387	^(a)	168

Includes $80, $745 and $242, respectively, of commercial, residential mortgage and consumer portfolio TDRs on accrual status and $180, $12 and $43, respectively, of commercial, residential mortgage and consumer portfolio TDRs on nonaccrual status at September 30, 2018.


			Unpaid
			Principal	Recorded
As of December 31, 2017 ($ in millions)			Balance	Investment		ALLL
With a related ALLL:
Commercial loans and leases:
	Commercial and industrial loans	$	433	358		87
	Commercial mortgage owner-occupied loans		16	14		7
	Commercial mortgage nonowner-occupied loans		4	3		-
	Commercial leases		4	4		-
Restructured residential mortgage loans			469	465		64
Restructured consumer loans:
	Home equity		172	172		27
	Automobile loans		8	7		1
	Credit card		52	45		14
Total impaired portfolio loans and leases with a related ALLL		$	1,158	1,068		200
With no related ALLL:
Commercial loans:
	Commercial and industrial loans	$	151	131		-
	Commercial mortgage owner-occupied loans		18	15		-
	Commercial mortgage nonowner-occupied loans		35	35		-
Restructured residential mortgage loans			218	200		-
Restructured consumer loans:
	Home equity		97	94		-
	Automobile loans		2	2		-
Total impaired portfolio loans with no related ALLL		$	521	477		-
Total impaired portfolio loans and leases		$	1,679	1,545	a^(a)	200

Includes $249, $652 and $275, respectively, of commercial, residential mortgage and consumer portfolio TDRs on accrual status and $150, $13 and $45, respectively, of commercial, residential mortgage and consumer portfolio TDRs on nonaccrual status at December 31, 2017.

The following tables summarize the Bancorp’s average impaired portfolio loans and leases, by class, and interest income, by class:

			For the three months ended		For the nine months ended
			September 30, 2018		September 30, 2018
			Average	Interest	Average	Interest
			Recorded	Income	Recorded	Income
($ in millions)			Investment	Recognized	Investment	Recognized
Commercial loans and leases:
	Commercial and industrial loans	$	313	3	408	13
	Commercial mortgage owner-occupied loans		11	-	17	-
	Commercial mortgage nonowner-occupied loans		21	-	27	-
	Commercial leases		28	-	17	-
Restructured residential mortgage loans			767	7	744	21
Restructured consumer loans:
	Home equity		239	3	248	9
	Automobile loans		7	-	8	-
	Credit card		44	1	44	3
Total average impaired portfolio loans and leases		$	1,430	14	1,513	46


			For the three months ended		For the nine months ended
			September 30, 2017		September 30, 2017
			Average	Interest	Average	Interest
			Recorded	Income	Recorded	Income
($ in millions)			Investment	Recognized	Investment	Recognized
Commercial loans and leases:
	Commercial and industrial loans	$	581	4	611	6
	Commercial mortgage owner-occupied loans		50	-	55	-
	Commercial mortgage nonowner-occupied loans		40	-	69	1
	Commercial leases		1	-	2	-
Restructured residential mortgage loans			654	6	655	18
Restructured consumer loans:
	Home equity		275	3	285	9
	Automobile loans		11	-	12	-
	Credit card		48	1	49	3
Total average impaired loans and leases		$	1,660	14	1,738	37

Summary of the Bancorp's Nonperforming Loans and Leases by Class


Nonperforming Assets
Nonperforming assets include nonaccrual loans and leases for which ultimate collectability of the full amount of the principal and/or interest is uncertain; restructured commercial and credit card loans which have not yet met the requirements to be classified as a performing asset; restructured consumer loans which are 90 days past due based on the restructured terms unless the loan is both well-secured and in the process of collection; and certain other assets, including OREO and other repossessed property. The following table presents the Bancorp’s nonaccrual loans and leases, by class, and OREO and other repossessed property as of:

			September 30,	December 31,
($ in millions)			2018	2017
Commercial loans and leases:
	Commercial and industrial loans	$	240	276
	Commercial mortgage owner-occupied loans		9	19
	Commercial mortgage nonowner-occupied loans		3	7
	Commercial leases		26	4
Total nonaccrual portfolio commercial loans and leases			278	306
Residential mortgage loans			23	30
Consumer loans:
	Home equity		74	74
	Automobile loans		1	1
	Credit card		26	26
	Other consumer loans		1	-
Total nonaccrual portfolio consumer loans			102	101
Total nonaccrual portfolio loans and leases^(a)(b)		$	403	437
OREO and other repossessed property			45	52
Total nonperforming portfolio assets^(a)(b)		$	448	489

Excludes $35 and $6 of nonaccrual loans held for sale at September 30, 2018 and December 31, 2017, respectively.
Includes $4 and $3 of nonaccrual government insured commercial loans whose repayments are insured by the SBA at September 30, 2018 and December 31, 2017, respectively, of which $2 and $3 are restructured nonaccrual government insured commercial loans at September 30, 2018 and December 31, 2017, respectively.

Summary of Loans Modified in a TDR

The following tables provide a summary of loans and leases, by class, modified in a TDR by the Bancorp during the three months ended:

			Recorded Investment		(Decrease)
		Number of Loans	in Loans Modified		Increase	Charge-offs
		Modified in a TDR	in a TDR		to ALLL Upon	Recognized Upon
September 30, 2018 ($ in millions)^(a)		During the Period^(b)	During the Period		Modification	Modification
Commercial loans:
	Commercial and industrial loans	16	$	52	(7)	7
Residential mortgage loans		185		24	1	-
Consumer loans:
	Home equity	30		2	-	-
	Automobile loans	25		-	-	-
	Credit card	1,547		8	2	-
Total portfolio loans		1,803	$	86	(4)	7

Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality which were accounted for within a pool.
Represents number of loans post-modification and excludes loans previously modified in a TDR.

			Recorded Investment		(Decrease)
		Number of Loans	in Loans Modified		Increase	Charge-offs
		Modified in a TDR	in a TDR		to ALLL Upon	Recognized Upon
September 30, 2017 ($ in millions)^(a)		During the Period^(b)	During the Period		Modification	Modification
Commercial loans:
	Commercial and industrial loans	17	$	73	(6)	-
	Commercial mortgage owner-occupied loans	1		-	-	-
	Commercial mortgage nonowner-occupied loans	1		-	-	-
Residential mortgage loans		247		35	1	-
Consumer loans:
	Home equity	38		2	-	-
	Automobile loans	28		-	-	-
	Credit card	2,021		10	2	-
Total portfolio loans		2,353	$	120	(3)	-

Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality which were accounted for within a pool.
Represents number of loans post-modification and excludes loans previously modified in a TDR.

The following tables provide a summary of loans and leases, by class, modified in a TDR by the Bancorp during the nine months ended:

			Recorded Investment
		Number of Loans	in Loans Modified		Increase	Charge-offs
		Modified in a TDR	in a TDR		to ALLL Upon	Recognized Upon
September 30, 2018 ($ in millions)^(a)		During the Period^(b)	During the Period		Modification	Modification
Commercial loans:
	Commercial and industrial loans	41	$	187	2	7
	Commercial mortgage owner-occupied loans	2		-	-	-
Residential mortgage loans		969		148	4	-
Consumer loans:
	Home equity	84		6	-	-
	Automobile loans	64		-	-	-
	Credit card	5,187		27	6	1
Total portfolio loans		6,347	$	368	12	8

Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality which were accounted for within a pool.
Represents number of loans post-modification and excludes loans previously modified in a TDR.

			Recorded Investment		Increase
		Number of Loans	in Loans and Leases		(Decrease)	Charge-offs
		Modified in a TDR	Modified in a TDR		to ALLL Upon	Recognized Upon
September 30, 2017 ($ in millions)^(a)		During the Period^(b)	During the Period		Modification	Modification
Commercial loans and leases:
	Commercial and industrial loans	67	$	226	(4)	6
	Commercial mortgage owner-occupied loans	8		8	5	-
	Commercial mortgage nonowner-occupied loans	3		-	-	-
Residential mortgage loans		649		92	4	-
Consumer loans:
	Home equity	113		7	-	-
	Automobile loans	73		-	-	-
	Credit card	5,929		27	5	1
Total portfolio loans and leases		6,842	$	360	10	7

Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality which were accounted for within a pool.
Represents number of loans post-modification and excludes loans previously modified in a TDR.

Summary of Subsequent Defaults

The following tables provide a summary of TDRs that subsequently defaulted during the three months ended September 30, 2018 and 2017 and were within twelve months of the restructuring date:

		Number of		Recorded
September 30, 2018 ($ in millions)^(a)		Contracts		Investment
Commercial loans:
	Commercial and industrial loans	5	$	32
Residential mortgage loans		28		4
Consumer loans:
	Home equity	4		-
	Credit card	146		1
Total portfolio loans		183	$	37

(a) Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality.

		Number of		Recorded
September 30, 2017 ($ in millions)^(a)		Contracts		Investment
Commercial loans:
	Commercial and industrial loans	3	$	1
	Commercial mortgage owner-occupied loans	1		-
Residential mortgage loans		49		7
Consumer loans:
	Home equity	2		-
	Credit card	417		2
Total portfolio loans		472	$	10

(a) Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality.

The following tables provide a summary of TDRs that subsequently defaulted during the nine months ended September 30, 2018 and 2017 and were within twelve months of the restructuring date:

		Number of		Recorded
September 30, 2018 ($ in millions)^(a)		Contracts		Investment
Commercial loans:
	Commercial and industrial loans	8	$	61
	Commercial mortgage owner-occupied loans	2		-
Residential mortgage loans		138		24
Consumer loans:
	Home equity	6		-
	Credit card	525		3
Total portfolio loans		679	$	88

(a) Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality.

		Number of		Recorded
September 30, 2017 ($ in millions)^(a)		Contracts		Investment
Commercial loans:
	Commercial and industrial loans	7	$	17
	Commercial mortgage owner-occupied loans	4		1
Residential mortgage loans		132		19
Consumer loans:
	Home equity	13		2
	Credit card	1,254		6
Total portfolio loans		1,410	$	45

(a) Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality.