Commitments, Contingent Liabilities and Guarantees (Tables)

9 Months Ended

Sep. 30, 2019

Commitments, Contingent Liabilities and Guarantees

Summary of Significant Commitments

Commitments
The Bancorp has certain commitments to make future payments under contracts. The following table reflects a summary of significant commitments as of:
		September 30,	December 31,
($ in millions)		2019	2018
Commitments to extend credit	$	79,076	70,415
Letters of credit		2,219	2,041
Forward contracts related to residential mortgage loans held for sale		2,693	926
Purchase obligations		114	126
Capital commitments for private equity investments		77	32
Capital expenditures		85	45

Credit Risk Associated With Commitments

Risk ratings of outstanding commitments to extend credit under this risk rating system are summarized in the following table as of:
		September 30,	December 31,
($ in millions)		2019	2018
Pass	$	78,124	69,928
Special mention		474	271
Substandard		477	216
Doubtful		1	-
Total commitments to extend credit	$	79,076	70,415

Standby and Commercial Letters of Credit, Conditional Commitments Issued to Guarantee the Performance of a Customer to a Third Party

Standby and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party and expire as summarized in the following table as of September 30, 2019:
($ in millions)
Less than 1 year(a)	$	1,124
1 - 5 years(a)		1,056
Over 5 years		39
Total letters of credit	$	2,219

(a) Includes $1 and $5 issued on behalf of commercial customers to facilitate trade payments in U.S. dollars and foreign currencies which expire less than 1 year and between 1 - 5 years, respectively.

Credit Risk associated with Letters of Credit

Risk ratings of outstanding letters of credit under this risk rating system are summarized in the following table as of:
		September 30,	December 31,
($ in millions)		2019	2018
Pass	$	2,075	1,905
Special mention		11	10
Substandard		132	126
Doubtful		1	-
Total letters of credit	$	2,219	2,041

Activity in Reserve for Representation and Warranty Provisions

The following table summarizes activity in the reserve for representation and warranty provisions:
		For the three months ended		For the nine months ended
		September 30,		September 30,
($ in millions)		2019	2018	2019	2018
Balance, beginning of period	$	7	7	6	9
Net additions (reductions) to the reserve		-	(1)	1	(3)
Balance, end of period	$	7	6	7	6

Schedule of Liability for Unpaid Claims and Claims Adjustment Expense

The following tables provide a rollforward of unresolved claims by claimant type for the nine months ended:
	GSE			Private Label
September 30, 2019 ($ in millions)	Units		Dollars	Units		Dollars
Balance, beginning of period	9	$	1	1	$	-
New demands	213		38	7		-
Loan paydowns/payoffs	(3)		-	-		-
Resolved demands	(194)		(34)	(3)		-
Balance, end of period	25	$	5	5	$	-

	GSE			Private Label
September 30, 2018 ($ in millions)	Units		Dollars	Units		Dollars
Balance, beginning of period	6	$	1	1	$	-
New demands	104		17	-		-
Resolved demands	(85)		(13)	-		-
Balance, end of period	25	$	5	1	$	-

Visa Funding and Bancorp Cash Payments

After the Bancorp’s sale of the Class B Shares, Visa funded additional amounts into the litigation escrow account which have resulted in further dilutive adjustments to the conversion of Class B Shares into Class A Shares, and along with other terms of the total return swap, required the Bancorp to make cash payments in varying amounts to the swap counterparty as follows:

		Visa	Bancorp Cash
Period ($ in millions)		Funding Amount	Payment Amount
Q2 2010	$	500	20
Q4 2010		800	35
Q2 2011		400	19
Q1 2012		1,565	75
Q3 2012		150	6
Q3 2014		450	18
Q2 2018		600	26	i
Q3 2019		300	(a)

(a) The Bancorp made a cash payment of $12 million to the swap counterparty on October 8, 2019 as a result of the Visa escrow funding in the third quarter of 2019.