Loans and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2012

Composition of Loan Portfolio

The composition of the loan portfolio, disaggregated by class and underlying specific portfolio type, was as follows:

	September 30, 2012					December 31, 2011
(Dollars in Millions)	Amount		Percent of Total			Amount		Percent of Total
Commercial
Commercial	$	57,415		26.3	%	$	50,734		24.2	%
Lease financing		5,495		2.5			5,914		2.8
Total commercial		62,910		28.8			56,648		27.0
Commercial real estate
Commercial mortgages		30,831		14.1			29,664		14.1
Construction and development		5,982		2.8			6,187		3.0
Total commercial real estate		36,813		16.9			35,851		17.1
Residential mortgages
Residential mortgages		31,504		14.4			28,669		13.7
Home equity loans, first liens		10,398		4.8			8,413		4.0
Total residential mortgages		41,902		19.2			37,082		17.7
Credit card		16,402		7.5			17,360		8.3
Other retail
Retail leasing		5,332		2.4			5,118		2.4
Home equity and second mortgages		17,119		7.9			18,131		8.6
Revolving credit		3,320		1.5			3,344		1.6
Installment		5,474		2.5			5,348		2.6
Automobile		12,431		5.7			11,508		5.5
Student		4,289		2.0			4,658		2.2
Total other retail		47,965		22.0			48,107		22.9
Total loans, excluding covered loans		205,992		94.4			195,048		93.0
Covered loans		12,158		5.6			14,787		7.0
Total loans	$	218,150		100.0	%	$	209,835		100.0	%

Changes in Accretable Balance for Purchased Impaired Loans

Changes in the accretable balance for all purchased impaired loans, including those acquired in the BankEast transaction, were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in Millions)	2012			2011			2012			2011
Balance at beginning of period	$	2,431		$	3,015		$	2,619		$	2,890
Purchases		–			–			13			100
Accretion		(109	)		(110	)		(337	)		(337	)
Disposals		(37	)		(43	)		(135	)		(47	)
Reclassifications (to)/from nonaccretable difference (a)		58			(170	)		191			117
Other		(14	)		(7	)		(22	)		(38	)
Balance at end of period	$	2,329		$	2,685		$	2,329		$	2,685

(a) Primarily relates to changes in expected credit performance.

Activity in Allowance for Credit Losses

Activity in the allowance for credit losses by portfolio class was as follows:

Three Months Ended September 30 (Dollars in Millions)	Commercial			Commercial Real Estate			Residential Mortgages			Credit Card			Other Retail			Total Loans, Excluding Covered Loans			Covered Loans			Total Loans
2012
Balance at beginning of period	$	1,037		$	941		$	939		$	996		$	828		$	4,741		$	123		$	4,864
Add
Provision for credit losses		63			(22	)		143			119			185			488			–			488
Deduct
Loans charged off		90			47			127			186			187			637			2			639
Less recoveries of loans charged off		(24	)		(22	)		(6	)		(19	)		(30	)		(101	)		–			(101	)
Net loans charged off		66			25			121			167			157			536			2			538
Net change for credit losses to be reimbursed by the FDIC		–			–			–			–			–			–			(10	)		(10	)
Other changes		–			–			–			(33	)		–			(33	)		–			(33	)
Balance at end of period	$	1,034		$	894		$	961		$	915		$	856		$	4,660		$	111		$	4,771
2011
Balance at beginning of period	$	1,109		$	1,258		$	841		$	1,140		$	843		$	5,191		$	117		$	5,308
Add
Provision for credit losses		15			88			168			106			131			508			11			519
Deduct
Loans charged off		126			131			124			203			175			759			3			762
Less recoveries of loans charged off		(27	)		(6	)		(2	)		(25	)		(33	)		(93	)		–			(93	)
Net loans charged off		99			125			122			178			142			666			3			669
Net change for credit losses to be reimbursed by the FDIC		–			–			–			–			–			–			32			32
Balance at end of period	$	1,025		$	1,221		$	887		$	1,068		$	832		$	5,033		$	157		$	5,190

Nine Months Ended September 30 (Dollars in Millions)	Commercial			Commercial Real Estate			Residential Mortgages			Credit Card			Other Retail			Total Loans, Excluding Covered Loans			Covered Loans			Total Loans
2012
Balance at beginning of period	$	1,010		$	1,154		$	927		$	992		$	831		$	4,914		$	100		$	5,014
Add
Provision for credit losses		247			(111	)		376			462			431			1,405			34			1,439
Deduct
Loans charged off		296			206			357			585			503			1,947			4			1,951
Less recoveries of loans charged off		(73	)		(57	)		(15	)		(79	)		(97	)		(321	)		(1	)		(322	)
Net loans charged off		223			149			342			506			406			1,626			3			1,629
Net change for credit losses to be reimbursed by the FDIC		–			–			–			–			–			–			(20	)		(20	)
Other change		–			–			–			(33	)		–			(33	)		–			(33	)
Balance at end of period	$	1,034		$	894		$	961		$	915		$	856		$	4,660		$	111		$	4,771
2011
Balance at beginning of period	$	1,104		$	1,291		$	820		$	1,395		$	807		$	5,417		$	114		$	5,531
Add
Provision for credit losses		255			344			437			314			477			1,827			19			1,846
Deduct
Loans charged off		412			446			380			712			551			2,501			10			2,511
Less recoveries of loans charged off		(78	)		(32	)		(10	)		(71	)		(99	)		(290	)		–			(290	)
Net loans charged off		334			414			370			641			452			2,211			10			2,221
Net change for credit losses to be reimbursed by the FDIC		–			–			–			–			–			–			34			34
Balance at end of period	$	1,025		$	1,221		$	887		$	1,068		$	832		$	5,033		$	157		$	5,190

Additional Detail of Allowance for Credit Losses and Related Loan Balances by Portfolio Type

Additional detail of the allowance for credit losses by portfolio class was as follows:

(Dollars in Millions)	Commercial		Commercial Real Estate		Residential Mortgages		Credit Card		Other Retail		Total Loans, Excluding Covered Loans		Covered Loans		Total Loans
Allowance balance at September 30, 2012 related to
Loans individually evaluated for impairment (a)	$	6	$	33	$	–	$	–	$	–	$	39	$	–	$	39
TDRs collectively evaluated for impairment		31		28		464		167		59		749		1		750
Other loans collectively evaluated for impairment		997		828		497		748		797		3,867		21		3,888
Loans acquired with deteriorated credit quality		–		5		–		–		–		5		89		94
Total allowance for credit losses	$	1,034	$	894	$	961	$	915	$	856	$	4,660	$	111	$	4,771
Allowance balance at December 31, 2011 related to
Loans individually evaluated for impairment (a)	$	16	$	61	$	1	$	–	$	–	$	78	$	2	$	80
TDRs collectively evaluated for impairment		40		33		490		219		57		839		–		839
Other loans collectively evaluated for impairment		954		1,057		436		773		774		3,994		22		4,016
Loans acquired with deteriorated credit quality		–		3		–		–		–		3		76		79
Total allowance for credit losses	$	1,010	$	1,154	$	927	$	992	$	831	$	4,914	$	100	$	5,014

(a) Represents the allowance for credit losses related to loans greater than $5 million classified as nonperforming or TDRs.

Additional detail of loan balances by portfolio class was as follows:

(Dollars in Millions)	Commercial		Commercial Real Estate		Residential Mortgages		Credit Card		Other Retail		Total Loans, Excluding Covered Loans		Covered Loans (b)		Total Loans
September 30, 2012
Loans individually evaluated for impairment (a)	$	132	$	612	$	–	$	–	$	–	$	744	$	73	$	817
TDRs collectively evaluated for impairment		179		383		4,033		462		269		5,326		137		5,463
Other loans collectively evaluated for impairment		62,594		35,699		37,863		15,940		47,696		199,792		6,564		206,356
Loans acquired with deteriorated credit quality		5		119		6		–		–		130		5,384		5,514
Total loans	$	62,910	$	36,813	$	41,902	$	16,402	$	47,965	$	205,992	$	12,158	$	218,150
December 31, 2011
Loans individually evaluated for impairment (a)	$	222	$	812	$	6	$	–	$	–	$	1,040	$	204	$	1,244
TDRs collectively evaluated for impairment		277		331		3,430		584		148		4,770		113		4,883
Other loans collectively evaluated for impairment		56,138		34,574		33,642		16,776		47,959		189,089		8,616		197,705
Loans acquired with deteriorated credit quality		11		134		4		–		–		149		5,854		6,003
Total loans	$	56,648	$	35,851	$	37,082	$	17,360	$	48,107	$	195,048	$	14,787	$	209,835

(a) Represents loans greater than $5 million classified as nonperforming or TDRs.

(b) Includes expected reimbursements from the FDIC under loss sharing agreements.

Summary of Loans by Portfolio Type

The following table provides a summary of loans by portfolio class, including the delinquency status of those that continue to accrue interest, and those that are nonperforming:

	Accruing
(Dollars in Millions)	Current		30-89 Days Past Due		90 Days or More Past Due		Nonperforming		Total
September 30, 2012
Commercial	$	62,502	$	216	$	40	$	152	$	62,910
Commercial real estate		36,105		65		12		631		36,813
Residential mortgages (a)		40,451		393		301		757		41,902
Credit card		15,815		230		194		163		16,402
Other retail		47,358		300		97		210		47,965
Total loans, excluding covered loans		202,231		1,204		644		1,913		205,992
Covered loans		10,758		269		682		449		12,158
Total loans	$	212,989	$	1,473	$	1,326	$	2,362	$	218,150
December 31, 2011
Commercial	$	55,991	$	300	$	45	$	312	$	56,648
Commercial real estate		34,800		138		14		899		35,851
Residential mortgages (a)		35,664		404		364		650		37,082
Credit card		16,662		238		236		224		17,360
Other retail		47,516		340		184		67		48,107
Total loans, excluding covered loans		190,633		1,420		843		2,152		195,048
Covered loans		12,589		362		910		926		14,787
Total loans	$	203,222	$	1,782	$	1,753	$	3,078	$	209,835

(a) At September 30, 2012, $462 million of loans 30 – 89 days past due and $3.0 billion of loans 90 days or more past due purchased from Government National Mortgage Association (“GNMA”) mortgage pools whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs, were classified as current, compared with $545 million and $2.6 billion at December 31, 2011, respectively.

Summary of Loans by Portfolio Type and Company's Internal Credit Quality Rating

The following table provides a summary of loans by portfolio class and the Company’s internal credit quality rating:

			Criticized
(Dollars in Millions)	Pass		Special Mention		Classified (a)		Total Criticized		Total
September 30, 2012
Commercial	$	60,403	$	1,265	$	1,242	$	2,507	$	62,910
Commercial real estate		33,326		785		2,702		3,487		36,813
Residential mortgages (b)		40,666		24		1,212		1,236		41,902
Credit card		16,046		–		356		356		16,402
Other retail		47,522		43		400		443		47,965
Total loans, excluding covered loans		197,963		2,117		5,912		8,029		205,992
Covered loans		11,544		96		518		614		12,158
Total loans	$	209,507	$	2,213	$	6,430	$	8,643	$	218,150
Total outstanding commitments	$	431,162	$	3,725	$	7,276	$	11,001	$	442,163
December 31, 2011
Commercial	$	54,003	$	1,047	$	1,598	$	2,645	$	56,648
Commercial real estate		30,733		793		4,325		5,118		35,851
Residential mortgages (b)		35,814		19		1,249		1,268		37,082
Credit card		16,910		–		450		450		17,360
Other retail		47,665		24		418		442		48,107
Total loans, excluding covered loans		185,125		1,883		8,040		9,923		195,048
Covered loans		13,966		187		634		821		14,787
Total loans	$	199,091	$	2,070	$	8,674	$	10,744	$	209,835
Total outstanding commitments	$	410,457	$	3,418	$	9,690	$	13,108	$	423,565

(a) Classified rating on consumer loans primarily based on delinquency status.

(b) At September 30, 2012, $3.0 billion of GNMA loans 90 days or more past due and $2.2 billion of restructured GNMA loans whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs were classified with a pass rating, compared with $2.6 billion and $2.0 billion at December 31, 2011, respectively.

Summary of Impaired Loans by Portfolio Class

A summary of impaired loans by portfolio class was as follows:

(Dollars in Millions)	Period-end Recorded Investment (a)		Unpaid Principal Balance		Valuation Allowance		Commitments to Lend Additional Funds
September 30, 2012
Commercial	$	382	$	1,341	$	40	$	23
Commercial real estate		1,214		2,466		75		5
Residential mortgages		2,833		3,524		437		–
Credit card		463		462		167		–
Other retail		408		455		64		7
Total impaired loans, excluding GNMA and covered loans		5,300		8,248		783		35
Loans purchased from GNMA mortgage pools		1,631		1,631		36		–
Covered loans		820		1,612		18		13
Total	$	7,751	$	11,491	$	837	$	48
December 31, 2011
Commercial	$	657	$	1,437	$	62	$	68
Commercial real estate		1,436		2,503		124		25
Residential mortgages		2,652		3,193		482		2
Credit card		584		584		219		–
Other retail		188		197		57		–
Total impaired loans, excluding GNMA and covered loans		5,517		7,914		944		95
Loans purchased from GNMA mortgage pools		1,265		1,265		18		–
Covered loans		1,170		1,642		43		49
Total	$	7,952	$	10,821	$	1,005	$	144

(a) Substantially all loans classified as impaired at September 30, 2012 and December 31, 2011, had an associated allowance for credit losses.

Additional Information on Impaired Loans

Additional information on impaired loans follows:

	2012				2011
(Dollars in Millions)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Three months ended September 30
Commercial	$	413	$	6	$	536	$	4
Commercial real estate		1,250		12		1,558		6
Residential mortgages		2,752		31		2,573		24
Credit card		495		6		492		4
Other retail		354		3		165		1
Total impaired loans, excluding GNMA and covered loans		5,264		58		5,324		39
Loans purchased from GNMA mortgage pools		1,492		20		710		10
Covered loans		883		7		1,145		7
Total	$	7,639	$	85	$	7,179	$	56
Nine months ended September 30
Commercial	$	496	$	11	$	529	$	7
Commercial real estate		1,371		29		1,519		10
Residential mortgages		2,692		87		2,540		74
Credit card		529		22		471		10
Other retail		259		7		160		3
Total impaired loans, excluding GNMA and covered loans		5,347		156		5,219		104
Loans purchased from GNMA mortgage pools		1,363		51		433		19
Covered loans		1,042		20		584		34
Total	$	7,752	$	227	$	6,236	$	157

Loans Modified as TDRs

The following table provides a summary of loans modified as TDRs during the periods presented, by portfolio class:

	2012						2011
(Dollars in Millions)	Number of Loans		Pre-Modification Outstanding Loan Balance		Post-Modification Outstanding Loan Balance		Number of Loans		Pre-Modification Outstanding Loan Balance		Post-Modification Outstanding Loan Balance
Three months ended September 30
Commercial		1,754	$	54	$	58		1,137	$	89	$	74
Commercial real estate		63		91		80		115		124		115
Residential mortgages		2,717		344		336		748		155		156
Credit card		14,137		52		67		14,942		78		77
Other retail		6,231		159		156		956		15		16
Total loans, excluding GNMA and covered loans		24,902		700		697		17,898		461		438
Loans purchased from GNMA mortgage pools		4,859		660		589		2,110		291		312
Covered loans		73		49		46		67		148		133
Total loans		29,834	$	1,409	$	1,332		20,075	$	900	$	883
Nine months ended September 30
Commercial		4,081	$	215	$	195		3,984	$	337	$	310
Commercial real estate		245		416		390		380		906		896
Residential mortgages		3,788		529		517		2,571		515		512
Credit card		39,040		189		203		41,610		239		238
Other retail		8,028		194		191		3,020		55		55
Total loans, excluding GNMA and covered loans		55,182		1,543		1,496		51,565		2,052		2,011
Loans purchased from GNMA mortgage pools		8,436		1,116		1,087		6,042		813		871
Covered loans		166		246		234		233		456		430
Total loans		63,784	$	2,905	$	2,817		57,840	$	3,321	$	3,312

Loans Modified as TDRs have Subsequently been Fully or Partially Charged-Off

The following table provides a summary of TDR loans that defaulted (fully or partially charged-off or became 90 days or more past due) during the periods presented that were modified as TDRs within 12 months previous to default.

	2012				2011
(Dollars in Millions)	Number of Loans		Amount Defaulted		Number of Loans		Amount Defaulted
Three months ended September 30
Commercial		195	$	2		245	$	13
Commercial real estate		13		12		29		32
Residential mortgages		116		30		96		20
Credit card		2,536		14		1,803		9
Other retail		189		4		141		2
Total loans, excluding GNMA and covered loans		3,049		62		2,314		76
Loans purchased from GNMA mortgage pools		248		34		222		31
Covered loans		8		3		–		–
Total loans		3,305	$	99		2,536	$	107
Nine months ended September 30
Commercial		652	$	33		513	$	23
Commercial real estate		96		176		37		37
Residential mortgages		427		64		536		112
Credit card		7,452		42		5,366		27
Other retail		531		8		397		9
Total loans, excluding GNMA and covered loans		9,158		323		6,849		208
Loans purchased from GNMA mortgage pools		731		106		475		66
Covered loans		49		90		–		–
Total loans		9,938	$	519		7,324	$	274

Carrying Amount of Covered Assets

Covered assets represent loans and other assets acquired from the FDIC, subject to loss sharing agreements, and include expected reimbursements from the FDIC. The carrying amount of the covered assets consisted of purchased impaired loans, purchased nonimpaired loans, and other assets as shown in the following table:

	September 30, 2012								December 31, 2011
(Dollars in Millions)	Purchased Impaired Loans		Purchased Nonimpaired Loans		Other Assets		Total		Purchased Impaired Loans		Purchased Nonimpaired Loans		Other Assets		Total
Commercial loans	$	15	$	144	$	–	$	159	$	68	$	137	$	–	$	205
Commercial real estate loans		1,519		3,104		–		4,623		1,956		4,037		–		5,993
Residential mortgage loans		3,850		1,184		–		5,034		3,830		1,360		–		5,190
Credit card loans		–		5		–		5		–		6		–		6
Other retail loans		–		798		–		798		–		867		–		867
Losses reimbursable by the FDIC (a)		–		–		1,539		1,539		–		–		2,526		2,526
Covered loans		5,384		5,235		1,539		12,158		5,854		6,407		2,526		14,787
Foreclosed real estate		–		–		198		198		–		–		274		274
Total covered assets	$	5,384	$	5,235	$	1,737	$	12,356	$	5,854	$	6,407	$	2,800	$	15,061

(a) Relates to loss sharing agreements with remaining terms from 2 to 7 years.