Loans and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2013

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


	September 30, 2013					December 31, 2012
(Dollars in Millions)	Amount		Percent of Total			Amount		Percent of Total
Commercial
Commercial	$	63,696		27.5	%	$	60,742		27.2	%
Lease financing		5,262		2.3			5,481		2.5
Total commercial		68,958		29.8			66,223		29.7
Commercial Real Estate
Commercial mortgages		31,467		13.6			31,005		13.9
Construction and development		7,211		3.1			5,948		2.6
Total commercial real estate		38,678		16.7			36,953		16.5
Residential Mortgages
Residential mortgages		36,484		15.8			32,648		14.6
Home equity loans, first liens		13,686		5.9			11,370		5.1
Total residential mortgages		50,170		21.7			44,018		19.7
Credit Card		17,063		7.4			17,115		7.7
Other Retail
Retail leasing		5,761		2.5			5,419		2.4
Home equity and second mortgages		15,544		6.7			16,726		7.5
Revolving credit		3,289		1.4			3,332		1.5
Installment		5,717		2.4			5,463		2.4
Automobile		13,130		5.7			12,593		5.6
Student		3,673		1.6			4,179		1.9
Total other retail		47,114		20.3			47,712		21.3
Total loans, excluding covered loans		221,983		95.9			212,021		94.9
Covered Loans		9,396		4.1			11,308		5.1
Total loans	$	231,379		100.0	%	$	223,329		100.0	%

Changes in Accretable Balance for Purchased Impaired Loans

Changes in the accretable balance for purchased impaired loans were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in Millions)	2013			2012			2013			2012
Balance at beginning of period	$	1,802		$	2,431		$	1,709		$	2,619
Purchases		–			–			–			13
Accretion		(119	)		(109	)		(380	)		(337	)
Disposals		(51	)		(37	)		(120	)		(135	)
Reclassifications (to)/from nonaccretable difference (a)		119			58			177			191
Other (b)		–			(14	)		365			(22	)
Balance at end of period	$	1,751		$	2,329		$	1,751		$	2,329

(a)

Primarily relates to changes in expected credit performance.

(b)

The amount for the nine months ended September 30, 2013, primarily represents the reclassification of unamortized decreases in the FDIC asset (which are now presented as a separate component within the covered assets table on page 55), partially offset by the impact of changes in expectations about retaining covered single-family loans beyond the term of the indemnification agreements.

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
2013
Balance at beginning of period	$	1,023		$	777		$	921		$	874		$	838		$	4,433		$	179		$	4,612
Add
Provision for credit losses		19			(22	)		70			151			84			302			(4	)		298
Deduct
Loans charged off		65			17			62			175			122			441			9			450
Less recoveries of loans charged off		(54	)		(23	)		(5	)		(15	)		(24	)		(121	)		(1	)		(122	)

Net loans charged off		11			(6	)		57			160			98			320			8			328
Other changes (a)		–			–			–			–			–			–			(4	)		(4	)

Balance at end of period	$	1,031		$	761		$	934		$	865		$	824		$	4,415		$	163		$	4,578

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
Other changes (a)		–			–			–			(33	)		–			(33	)		(10	)		(43	)

Balance at end of period	$	1,034		$	894		$	961		$	915		$	856		$	4,660		$	111		$	4,771

(a)

Includes net changes in credit losses to be reimbursed by the FDIC and for the three months ended September 30, 2013, reductions in the allowance for covered loans where the reversal of a previously recorded allowance was offset by an associated decrease in the indemnification asset.


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
2013
Balance at beginning of period	$	1,051		$	857		$	935		$	863		$	848		$	4,554		$	179		$	4,733
Add
Provision for credit losses		64			(100	)		222			495			305			986			77			1,063
Deduct
Loans charged off		184			76			243			559			412			1,474			31			1,505
Less recoveries of loans charged off		(100	)		(80	)		(20	)		(66	)		(83	)		(349	)		(3	)		(352	)

Net loans charged off		84			(4	)		223			493			329			1,125			28			1,153
Other changes (a)		–			–			–			–			–			–			(65	)		(65	)

Balance at end of period	$	1,031		$	761		$	934		$	865		$	824		$	4,415		$	163		$	4,578

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
Other changes (a)		–			–			–			(33	)		–			(33	)		(20	)		(53	)

Balance at end of period	$	1,034		$	894		$	961		$	915		$	856		$	4,660		$	111		$	4,771

(a)

Includes net changes in credit losses to be reimbursed by the FDIC and for the nine months ended September 30, 2013, reductions in the allowance for covered loans where the reversal of a previously recorded allowance was offset by an associated decrease in the indemnification asset.

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, 2013 Related to
Loans individually evaluated for impairment (a)	$	9	$	7	$	–	$	–	$	–	$	16	$	–	$	16
TDRs collectively evaluated for impairment		21		21		341		101		83		567		5		572
Other loans collectively evaluated for impairment		1,001		719		593		764		741		3,818		10		3,828
Loans acquired with deteriorated credit quality		–		14		–		–		–		14		148		162

Total allowance for credit losses	$	1,031	$	761	$	934	$	865	$	824	$	4,415	$	163	$	4,578

Allowance Balance at December 31, 2012 Related to
Loans individually evaluated for impairment (a)	$	10	$	30	$	–	$	–	$	–	$	40	$	–	$	40
TDRs collectively evaluated for impairment		28		29		446		153		97		753		1		754
Other loans collectively evaluated for impairment		1,013		791		489		710		751		3,754		17		3,771
Loans acquired with deteriorated credit quality		–		7		–		–		–		7		161		168

Total allowance for credit losses	$	1,051	$	857	$	935	$	863	$	848	$	4,554	$	179	$	4,733

(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, 2013
Loans individually evaluated for impairment (a)	$	171	$	253	$	–	$	–	$	–	$	424	$	48	$	472
TDRs collectively evaluated for impairment		171		360		4,357		335		281		5,504		100		5,604
Other loans collectively evaluated for impairment		68,615		37,979		45,812		16,728		46,833		215,967		5,172		221,139
Loans acquired with deteriorated credit quality		1		86		1		–		–		88		4,076		4,164

Total loans	$	68,958	$	38,678	$	50,170	$	17,063	$	47,114	$	221,983	$	9,396	$	231,379

December 31, 2012
Loans individually evaluated for impairment (a)	$	171	$	510	$	–	$	–	$	–	$	681	$	48	$	729
TDRs collectively evaluated for impairment		185		391		4,199		442		313		5,530		145		5,675
Other loans collectively evaluated for impairment		65,863		35,952		39,813		16,673		47,399		205,700		5,814		211,514
Loans acquired with deteriorated credit quality		4		100		6		–		–		110		5,301		5,411

Total loans	$	66,223	$	36,953	$	44,018	$	17,115	$	47,712	$	212,021	$	11,308	$	223,329

(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 and Delinquency Status

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, 2013
Commercial	$	68,573	$	219	$	50	$	116	$	68,958
Commercial real estate		38,253		62		7		356		38,678
Residential mortgages (a)		48,820		350		268		732		50,170
Credit card		16,567		212		190		94		17,063
Other retail		46,598		234		76		206		47,114

Total loans, excluding covered loans		218,811		1,077		591		1,504		221,983
Covered loans		8,584		142		514		156		9,396

Total loans	$	227,395	$	1,219	$	1,105	$	1,660	$	231,379

December 31, 2012
Commercial	$	65,701	$	341	$	58	$	123	$	66,223
Commercial real estate		36,241		158		8		546		36,953
Residential mortgages (a)		42,728		348		281		661		44,018
Credit card		16,525		227		217		146		17,115
Other retail		47,109		290		96		217		47,712

Total loans, excluding covered loans		208,304		1,364		660		1,693		212,021
Covered loans		9,900		359		663		386		11,308

Total loans	$	218,204	$	1,723	$	1,323	$	2,079	$	223,329

(a)

At September 30, 2013, $399 million of loans 30–89 days past due and $3.5 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 $441 million and $3.2 billion at December 31, 2012, 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, 2013
Commercial	$	66,791	$	1,103	$	1,064	$	2,167	$	68,958
Commercial real estate		36,796		578		1,304		1,882		38,678
Residential mortgages (b)		49,052		6		1,112		1,118		50,170
Credit card		16,779		–		284		284		17,063
Other retail		46,744		34		336		370		47,114

Total loans, excluding covered loans		216,162		1,721		4,100		5,821		221,983
Covered loans		9,061		39		296		335		9,396

Total loans	$	225,223	$	1,760	$	4,396	$	6,156	$	231,379

Total outstanding commitments	$	460,484	$	3,124	$	5,055	$	8,179	$	468,663

December 31, 2012
Commercial	$	63,906	$	1,114	$	1,203	$	2,317	$	66,223
Commercial real estate		34,096		621		2,236		2,857		36,953
Residential mortgages (b)		42,897		18		1,103		1,121		44,018
Credit card		16,752		–		363		363		17,115
Other retail		47,294		36		382		418		47,712

Total loans, excluding covered loans		204,945		1,789		5,287		7,076		212,021
Covered loans		10,786		61		461		522		11,308

Total loans	$	215,731	$	1,850	$	5,748	$	7,598	$	223,329

Total outstanding commitments	$	442,047	$	3,231	$	6,563	$	9,794	$	451,841

(a)

Classified rating on consumer loans primarily based on delinquency status.

(b)

At September 30, 2013, $3.5 billion of GNMA loans 90 days or more past due and $1.9 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 $3.2 billion and $2.4 billion at December 31, 2012, 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, 2013
Commercial	$	375	$	857	$	38	$	25
Commercial real estate		721		1,570		36		14
Residential mortgages		2,762		3,404		323		2
Credit card		335		335		101		–
Other retail		408		609		86		3

Total impaired loans, excluding GNMA and covered loans		4,601		6,775		584		44
Loans purchased from GNMA mortgage pools		1,915		1,915		29		–
Covered loans		503		1,186		34		7

Total	$	7,019	$	9,876	$	647	$	51

December 31, 2012
Commercial	$	404	$	1,200	$	40	$	39
Commercial real estate		1,077		2,251		70		4
Residential mortgages		2,748		3,341		415		–
Credit card		442		442		153		–
Other retail		443		486		101		3

Total impaired loans, excluding GNMA and covered loans		5,114		7,720		779		46
Loans purchased from GNMA mortgage pools		1,778		1,778		39		–
Covered loans		767		1,584		20		12

Total	$	7,659	$	11,082	$	838	$	58

(a)

Substantially all loans classified as impaired at September 30, 2013 and December 31, 2012, had an associated allowance for credit losses.

Impaired Loans Average Recorded Investment and Interest Income

Additional information on impaired loans follows:


	2013				2012
(Dollars in Millions)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Three Months Ended September 30
Commercial	$	380	$	5	$	413	$	6
Commercial real estate		819		6		1,250		12
Residential mortgages		2,765		32		2,752		31
Credit card		347		3		495		6
Other retail		417		7		354		3

Total impaired loans, excluding GNMA and covered loans		4,728		53		5,264		58
Loans purchased from GNMA mortgage pools		1,883		22		1,492		20
Covered loans		519		6		883		7

Total	$	7,130	$	81	$	7,639	$	85

Nine Months Ended September 30
Commercial	$	384	$	24	$	496	$	11
Commercial real estate		950		27		1,371		29
Residential mortgages		2,744		99		2,692		87
Credit card		380		12		529		22
Other retail		431		19		259		7

Total impaired loans, excluding GNMA and covered loans		4,889		181		5,347		156
Loans purchased from GNMA mortgage pools		1,869		68		1,363		51
Covered loans		588		21		1,042		20

Total	$	7,346	$	270	$	7,752	$	227

Loans Modified as TDRs

The following table provides a summary of loans modified as TDRs by portfolio class:


	2013						2012
(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		551	$	62	$	60		1,754	$	54	$	58
Commercial real estate		48		76		73		63		91		80
Residential mortgages		338		42		42		2,717		344		336
Credit card		6,447		39		38		14,137		52		67
Other retail		847		21		21		6,231		159		156

Total loans, excluding GNMA and covered loans		8,231		240		234		24,902		700		697
Loans purchased from GNMA mortgage pools		2,315		300		284		4,859		660		589
Covered loans		38		19		11		73		49		46

Total loans		10,584	$	559	$	529		29,834	$	1,409	$	1,332

Nine Months Ended September 30
Commercial		1,962	$	150	$	140		4,081	$	215	$	195
Commercial real estate		147		193		186		245		416		390
Residential mortgages		1,575		214		210		3,788		529		517
Credit card		20,147		122		122		39,040		189		203
Other retail		3,519		86		85		8,028		194		191

Total loans, excluding GNMA and covered loans		27,350		765		743		55,182		1,543		1,496
Loans purchased from GNMA mortgage pools		6,450		822		782		8,436		1,116		1,087
Covered loans		109		85		64		166		246		234

Total loans		33,909	$	1,672	$	1,589		63,784	$	2,905	$	2,817

Schedule of Loans Modified as TDRs that have Subsequently been Fully or Partially Charged-Off or Became 90 Days or More Past Due

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:


	2013				2012
(Dollars in Millions)	Number of Loans		Amount Defaulted		Number of Loans		Amount Defaulted
Three Months Ended September 30
Commercial		143	$	37		195	$	2
Commercial real estate		30		18		13		12
Residential mortgages		303		41		116		30
Credit card		1,485		8		2,536		14
Other retail		278		10		189		4

Total loans, excluding GNMA and covered loans		2,239		114		3,049		62
Loans purchased from GNMA mortgage pools		492		69		248		34
Covered loans		24		25		8		3

Total loans		2,755	$	208		3,305	$	99

Nine Months Ended September 30
Commercial		483	$	42		652	$	33
Commercial real estate		72		90		96		176
Residential mortgages		673		100		427		64
Credit card		5,109		29		7,452		42
Other retail		1,164		53		531		8

Total loans, excluding GNMA and covered loans		7,501		314		9,158		323
Loans purchased from GNMA mortgage pools		4,795		615		731		106
Covered loans		49		37		49		90

Total loans		12,345	$	966		9,938	$	519

Carrying Amount of Covered Assets

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, 2013								December 31, 2012
(Dollars in Millions)	Purchased Impaired Loans		Purchased Nonimpaired Loans		Other Assets		Total		Purchased Impaired Loans		Purchased Nonimpaired Loans		Other Assets		Total
Commercial loans	$	–	$	109	$	–	$	109	$	–	$	143	$	–	$	143
Commercial real estate loans		973		1,803		–		2,776		1,323		2,695		–		4,018
Residential mortgage loans		3,103		935		–		4,038		3,978		1,109		–		5,087
Credit card loans		–		5		–		5		–		5		–		5
Other retail loans		–		683		–		683		–		775		–		775
Losses reimbursable by the FDIC (a)		–		–		820		820		–		–		1,280		1,280
Unamortized changes in FDIC asset (b)		–		–		965		965		–		–		–		–

Covered loans		4,076		3,535		1,785		9,396		5,301		4,727		1,280		11,308
Foreclosed real estate		–		–		176		176		–		–		197		197

Total covered assets	$	4,076	$	3,535	$	1,961	$	9,572	$	5,301	$	4,727	$	1,477	$	11,505

(a)

Relates to loss sharing agreements with remaining terms up to six years.

(b)

Represents decreases in expected reimbursements by the FDIC as a result of decreases in expected losses on the covered loans. These amounts are amortized as a reduction in interest income on covered loans over the shorter of the expected life of the respective covered loans or the remaining contractual term of the indemnification agreements. These amounts were presented within the separate loan categories prior to January 1, 2013.