Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Composition of Loan Portfolio

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

	June 30, 2018					December 31, 2017
(Dollars in Millions)	Amount		Percent of Total			Amount		Percent of Total
Commercial
Commercial	$	93,786		33.5	%	$	91,958		32.8	%
Lease financing		5,571		2.0			5,603		2.0
Total commercial		99,357		35.5			97,561		34.8
Commercial Real Estate
Commercial mortgages		28,187		10.0			29,367		10.5
Construction and development		11,212		4.0			11,096		4.0
Total commercial real estate		39,399		14.0			40,463		14.5
Residential Mortgages
Residential mortgages		48,682		17.4			46,685		16.6
Home equity loans, first liens		12,627		4.5			13,098		4.7
Total residential mortgages		61,309		21.9			59,783		21.3
Credit Card		21,566		7.7			22,180		7.9
Other Retail
Retail leasing		8,253		3.0			7,988		2.8
Home equity and second mortgages		16,083		5.7			16,327		5.8
Revolving credit		3,144		1.1			3,183		1.1
Installment		9,363		3.4			8,989		3.2
Automobile		18,567		6.6			18,934		6.8
Student (a)		313		.1			1,903		.7
Total other retail		55,723		19.9			57,324		20.4
Total loans, excluding covered loans		277,354		99.0			277,311		98.9
Covered Loans		2,823		1.0			3,121		1.1
Total loans	$	280,177		100.0	%	$	280,432		100.0	%

(a) During the first six months of 2018, the Company sold all of its federally guaranteed student loans.

Changes in Accretable Balance for Purchased Impaired Loans

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

	Three Months Ended June 30						Six Months Ended June 30
(Dollars in Millions)	2018			2017			2018			2017
Balance at beginning of period	$	257		$	637		$	350		$	698
Accretion		(90	)		(89	)		(181	)		(179	)
Disposals		(15	)		(28	)		(27	)		(51	)
Reclassifications from nonaccretable difference (a)		5			30			15			83
Other		–			(4	)		–			(5	)
Balance at end of period	$	157		$	546		$	157		$	546

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

Activity in Allowance for Credit Losses by Portfolio Class

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

Three Months Ended June 30 (Dollars in Millions)	Commercial			Commercial Real Estate			Residential Mortgages			Credit Card			Other Retail			Total Loans, Excluding Covered Loans			Covered Loans			Total Loans
2018
Balance at beginning of period	$	1,386		$	826		$	443		$	1,064		$	672		$	4,391		$	26		$	4,417
Add
Provision for credit losses		63			(14	)		(3	)		228			55			329			(2	)		327
Deduct
Loans charged-off		83			2			12			248			92			437			–			437
Less recoveries of loans charged-off		(25	)		(2	)		(8	)		(38	)		(32	)		(105	)		–			(105	)
Net loans charged-off		58			–			4			210			60			332			–			332
Other changes (a)		–			–			–			–			–			–			(1	)		(1	)
Balance at end of period	$	1,391		$	812		$	436		$	1,082		$	667		$	4,388		$	23		$	4,411
2017
Balance at beginning of period	$	1,429		$	842		$	485		$	955		$	622		$	4,333		$	33		$	4,366
Add
Provision for credit losses		44			5			(22	)		239			85			351			(1	)		350
Deduct
Loans charged-off		104			2			16			227			88			437			–			437
Less recoveries of loans charged-off		(26	)		(11	)		(8	)		(23	)		(29	)		(97	)		–			(97	)
Net loans charged-off		78			(9	)		8			204			59			340			–			340
Other changes (a)		–			–			–			–			–			–			1			1
Balance at end of period	$	1,395		$	856		$	455		$	990		$	648		$	4,344		$	33		$	4,377

(a) Includes net changes in credit losses to be reimbursed by the FDIC and 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, and the impact of any loan sales.

Six Months Ended June 30 (Dollars in Millions)	Commercial			Commercial Real Estate			Residential Mortgages			Credit Card			Other Retail			Total Loans, Excluding Covered Loans			Covered Loans			Total Loans
2018
Balance at beginning of period	$	1,372		$	831		$	449		$	1,056		$	678		$	4,386		$	31		$	4,417
Add
Provision for credit losses		137			(22	)		(2	)		447			115			675			(7	)		668
Deduct
Loans charged-off		177			5			25			496			187			890			–			890
Less recoveries of loans charged-off		(59	)		(8	)		(14	)		(75	)		(61	)		(217	)		–			(217	)
Net loans charged-off		118			(3	)		11			421			126			673			–			673
Other changes (a)		–			–			–			–			–			–			(1	)		(1	)
Balance at end of period	$	1,391		$	812		$	436		$	1,082		$	667		$	4,388		$	23		$	4,411
2017
Balance at beginning of period	$	1,450		$	812		$	510		$	934		$	617		$	4,323		$	34		$	4,357
Add
Provision for credit losses		98			33			(35	)		450			150			696			(1	)		695
Deduct
Loans charged-off		200			5			33			439			177			854			–			854
Less recoveries of loans charged-off		(47	)		(16	)		(13	)		(45	)		(58	)		(179	)		–			(179	)
Net loans charged-off		153			(11	)		20			394			119			675			–			675
Other changes (a)		–			–			–			–			–			–			–			–
Balance at end of period	$	1,395		$	856		$	455		$	990		$	648		$	4,344		$	33		$	4,377

(a) Includes net changes in credit losses to be reimbursed by the FDIC and 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, and the impact of any loan sales.

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

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 June 30, 2018 Related to
Loans individually evaluated for impairment (a)	$	19	$	3	$	–	$	–	$	–	$	22	$	–	$	22
TDRs collectively evaluated for impairment		14		3		136		61		16		230		1		231
Other loans collectively evaluated for impairment		1,358		803		300		1,021		651		4,133		–		4,133
Loans acquired with deteriorated credit quality		–		3		–		–		–		3		22		25
Total allowance for credit losses	$	1,391	$	812	$	436	$	1,082	$	667	$	4,388	$	23	$	4,411
Allowance Balance at December 31, 2017 Related to
Loans individually evaluated for impairment (a)	$	23	$	4	$	–	$	–	$	–	$	27	$	–	$	27
TDRs collectively evaluated for impairment		14		4		139		60		19		236		1		237
Other loans collectively evaluated for impairment		1,335		818		310		996		659		4,118		–		4,118
Loans acquired with deteriorated credit quality		–		5		–		–		–		5		30		35
Total allowance for credit losses	$	1,372	$	831	$	449	$	1,056	$	678	$	4,386	$	31	$	4,417

(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
June 30, 2018
Loans individually evaluated for impairment (a)	$	272	$	53	$	–	$	–	$	–	$	325	$	–	$	325
TDRs collectively evaluated for impairment		158		135		3,377		233		184		4,087		34		4,121
Other loans collectively evaluated for impairment		98,927		39,175		57,931		21,333		55,539		272,905		876		273,781
Loans acquired with deteriorated credit quality		–		36		1		–		–		37		1,913		1,950
Total loans	$	99,357	$	39,399	$	61,309	$	21,566	$	55,723	$	277,354	$	2,823	$	280,177
December 31, 2017
Loans individually evaluated for impairment (a)	$	337	$	71	$	–	$	–	$	–	$	408	$	–	$	408
TDRs collectively evaluated for impairment		148		145		3,524		230		186		4,233		36		4,269
Other loans collectively evaluated for impairment		97,076		40,174		56,258		21,950		57,138		272,596		1,073		273,669
Loans acquired with deteriorated credit quality		–		73		1		–		–		74		2,012		2,086
Total loans	$	97,561	$	40,463	$	59,783	$	22,180	$	57,324	$	277,311	$	3,121	$	280,432

(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 Class, Including Delinquency Status of those that Continue to Accrue Interest and are Nonperforming

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
June 30, 2018
Commercial	$	98,847	$	228	$	58	$	224	$	99,357
Commercial real estate		39,250		42		3		104		39,399
Residential mortgages (a)		60,636		160		113		400		61,309
Credit card		21,054		263		249		–		21,566
Other retail		55,134		320		91		178		55,723
Total loans, excluding covered loans		274,921		1,013		514		906		277,354
Covered loans		2,644		47		126		6		2,823
Total loans	$	277,565	$	1,060	$	640	$	912	$	280,177
December 31, 2017
Commercial	$	97,005	$	250	$	57	$	249	$	97,561
Commercial real estate		40,279		36		6		142		40,463
Residential mortgages (a)		59,013		198		130		442		59,783
Credit card		21,593		302		284		1		22,180
Other retail		56,685		376		95		168		57,324
Total loans, excluding covered loans		274,575		1,162		572		1,002		277,311
Covered loans		2,917		50		148		6		3,121
Total loans	$	277,492	$	1,212	$	720	$	1,008	$	280,432

(a) At June 30, 2018, $371 million of loans 30–89 days past due and $1.8 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 United States Department of Veterans Affairs, were classified as current, compared with $385 million and $1.9 billion at December 31, 2017, respectively.

Summary of Loans by Portfolio Class 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
June 30, 2018
Commercial	$	97,207	$	1,216	$	934	$	2,150	$	99,357
Commercial real estate		38,192		543		664		1,207		39,399
Residential mortgages (b)		60,738		14		557		571		61,309
Credit card		21,317		–		249		249		21,566
Other retail		55,409		9		305		314		55,723
Total loans, excluding covered loans		272,863		1,782		2,709		4,491		277,354
Covered loans		2,780		–		43		43		2,823
Total loans	$	275,643	$	1,782	$	2,752	$	4,534	$	280,177
Total outstanding commitments	$	591,015	$	2,462	$	3,449	$	5,911	$	596,926
December 31, 2017
Commercial	$	95,297	$	1,130	$	1,134	$	2,264	$	97,561
Commercial real estate		39,162		648		653		1,301		40,463
Residential mortgages (b)		59,141		16		626		642		59,783
Credit card		21,895		–		285		285		22,180
Other retail		57,009		6		309		315		57,324
Total loans, excluding covered loans		272,504		1,800		3,007		4,807		277,311
Covered loans		3,072		–		49		49		3,121
Total loans	$	275,576	$	1,800	$	3,056	$	4,856	$	280,432
Total outstanding commitments	$	584,072	$	3,142	$	3,987	$	7,129	$	591,201

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

(b) At June 30, 2018, $1.8 billion of GNMA loans 90 days or more past due and $1.7 billion of restructured GNMA loans whose repayments are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs were classified with a pass rating, compared with $1.9 billion and $1.7 billion at December 31, 2017, respectively.

Summary of Impaired Loans, which Include Nonaccrual and TDR Loans, by Portfolio Class

A summary of impaired loans, which include all nonaccrual and TDR 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
June 30, 2018
Commercial	$	488	$	860	$	34	$	170
Commercial real estate		230		481		8		–
Residential mortgages		1,811		2,031		99		1
Credit card		233		233		61		–
Other retail		308		387		19		5
Total loans, excluding GNMA and covered loans		3,070		3,992		221		176
Loans purchased from GNMA mortgage pools		1,665		1,665		38		–
Covered loans		36		40		1		–
Total	$	4,771	$	5,697	$	260	$	176
December 31, 2017
Commercial	$	550	$	915	$	44	$	199
Commercial real estate		280		596		11		–
Residential mortgages		1,946		2,339		116		1
Credit card		230		230		60		–
Other retail		302		400		22		4
Total loans, excluding GNMA and covered loans		3,308		4,480		253		204
Loans purchased from GNMA mortgage pools		1,681		1,681		25		–
Covered loans		38		44		1		–
Total	$	5,027	$	6,205	$	279	$	204

(a) Substantially all loans classified as impaired at June 30, 2018 and December 31, 2017, had an associated allowance for credit losses.

Impaired Loans Average Recorded Investment and Interest Income Recognized

Additional information on impaired loans follows:

	2018				2017
(Dollars in Millions)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Three Months Ended June 30
Commercial	$	514	$	1	$	720	$	1
Commercial real estate		242		2		272		3
Residential mortgages		1,846		19		2,182		28
Credit card		234		1		229		1
Other retail		303		4		279		3
Total loans, excluding GNMA and covered loans		3,139		27		3,682		36
Loans purchased from GNMA mortgage pools		1,616		12		1,746		19
Covered loans		37		1		38		–
Total	$	4,792	$	40	$	5,466	$	55
Six Months Ended June 30
Commercial	$	530	$	2	$	769	$	2
Commercial real estate		255		4		275		5
Residential mortgages		1,880		39		2,211		57
Credit card		233		2		227		2
Other retail		301		8		279		7
Total loans, excluding GNMA and covered loans		3,199		55		3,761		73
Loans purchased from GNMA mortgage pools		1,620		24		1,696		37
Covered loans		37		1		37		–
Total	$	4,856	$	80	$	5,494	$	110

Summary of Loans Modified as TDRs

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

	2018						2017
(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 June 30
Commercial		724	$	132	$	126		671	$	62	$	40
Commercial real estate		30		15		14		41		29		31
Residential mortgages		105		20		20		144		17		16
Credit card		7,461		37		38		8,146		40		40
Other retail		535		17		17		639		15		14
Total loans, excluding GNMA and covered loans		8,855		221		215		9,641		163		141
Loans purchased from GNMA mortgage pools		2,248		298		295		1,043		141		137
Covered loans		–		–		–		3		1		1
Total loans		11,103	$	519	$	510		10,687	$	305	$	279
Six Months Ended June 30
Commercial		1,347	$	213	$	201		1,501	$	199	$	168
Commercial real estate		59		31		30		64		38		39
Residential mortgages		253		37		36		500		57		57
Credit card		16,007		80		81		17,551		85		86
Other retail		1,094		28		27		1,261		26		23
Total loans, excluding GNMA and covered loans		18,760		389		375		20,877		405		373
Loans purchased from GNMA mortgage pools		3,136		415		408		3,972		528		515
Covered loans		–		–		–		7		2		2
Total loans		21,896	$	804	$	783		24,856	$	935	$	890

Summary of Loans Modified as TDRs in the Past Twelve Months that have Subsequently Defaulted

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:

	2018				2017
(Dollars in Millions)	Number of Loans		Amount Defaulted		Number of Loans		Amount Defaulted
Three Months Ended June 30
Commercial		177	$	3		182	$	16
Commercial real estate		8		2		10		1
Residential mortgages		58		7		95		10
Credit card		1,933		8		1,984		8
Other retail		70		1		102		1
Total loans, excluding GNMA and covered loans		2,246		21		2,373		36
Loans purchased from GNMA mortgage pools		517		67		139		19
Covered loans		–		–		1		–
Total loans		2,763	$	88		2,513	$	55
Six Months Ended June 30
Commercial		416	$	12		355	$	24
Commercial real estate		16		6		18		3
Residential mortgages		114		11		167		19
Credit card		3,969		17		4,031		17
Other retail		147		2		231		3
Total loans, excluding GNMA and covered loans		4,662		48		4,802		66
Loans purchased from GNMA mortgage pools		749		98		357		49
Covered loans		1		–		1		–
Total loans		5,412	$	146		5,160	$	115

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:

	June 30, 2018								December 31, 2017
(Dollars in Millions)	Purchased Impaired Loans		Purchased Nonimpaired Loans		Other		Total		Purchased Impaired Loans		Purchased Nonimpaired Loans		Other		Total
Residential mortgage loans	$	1,913	$	353	$	–	$	2,266	$	2,012	$	400	$	–	$	2,412
Other retail loans		–		110		–		110		–		151		–		151
Losses reimbursable by the FDIC (a)		–		–		331		331		–		–		320		320
Unamortized changes in FDIC asset (b)		–		–		116		116		–		–		238		238
Covered loans		1,913		463		447		2,823		2,012		551		558		3,121
Foreclosed real estate		–		–		20		20		–		–		21		21
Total covered assets	$	1,913	$	463	$	467	$	2,843	$	2,012	$	551	$	579	$	3,142

(a) Relates to loss sharing agreements with remaining terms up through the fourth quarter of 2019.

(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.