Loans and Allowance for Credit Losses (Tables)

12 Months Ended

Dec. 31, 2018

Commercial Loans by Industry Group and Geography Excluding Covered Loans

TABLE 7

Commercial Loans by Industry Group and Geography


	2018					2017
At December 31 (Dollars in Millions)	Loans		Percent			Loans		Percent
Industry Group
Manufacturing	$	15,064		14.7	%	$	14,710		15.1	%
Real estate, rental and leasing		12,270		12.0			12,461		12.8
Finance and insurance		10,301		10.0			8,639		8.8
Wholesale trade		8,310		8.1			7,383		7.6
Retail trade		8,211		8.0			8,952		9.2
Healthcare and social assistance		5,769		5.6			6,517		6.7
Public administration		4,773		4.7			5,116		5.2
Arts, entertainment and recreation		4,089		4.0			3,853		3.9
Information		3,576		3.5			3,403		3.5
Transport and storage		3,559		3.5			3,198		3.3
Professional, scientific and technical services		3,358		3.3			3,499		3.6
Educational services		3,139		3.1			3,414		3.5
Utilities		2,760		2.7			1,933		2.0
Other services		1,691		1.6			1,698		1.7
Mining		1,636		1.6			1,590		1.6
Agriculture, forestry, fishing and hunting		1,235		1.2			1,429		1.5
Other		12,703		12.4			9,766		10.0
Total	$	102,444		100.0	%	$	97,561		100.0	%
Geography
California	$	13,507		13.2	%	$	14,086		14.4	%
Colorado		4,071		4.0			3,979		4.1
Illinois		5,356		5.2			5,245		5.4
Minnesota		7,832		7.6			7,406		7.6
Missouri		3,274		3.2			3,525		3.6
Ohio		4,913		4.8			4,330		4.5
Oregon		2,135		2.1			2,044		2.1
Washington		3,672		3.6			3,699		3.8
Wisconsin		3,630		3.5			3,539		3.6
Iowa, Kansas, Nebraska, North Dakota, South Dakota		5,094		5.0			4,806		4.9
Arkansas, Indiana, Kentucky, Tennessee		5,488		5.3			5,206		5.3
Idaho, Montana, Wyoming		1,114		1.1			1,225		1.3
Arizona, Nevada, New Mexico, Utah		4,183		4.1			3,836		3.9
Total banking region		64,269		62.7			62,926		64.5
Florida, Michigan, New York, Pennsylvania, Texas		18,031		17.6			16,408		16.8
All other states		20,144		19.7			18,227		18.7
Total outside Company’s banking region		38,175		37.3			34,635		35.5
Total	$	102,444		100.0	%	$	97,561		100.0	%

Commercial Real Estate Loans by Property Type and Geography Excluding Covered Loans

TABLE 8

Commercial Real Estate Loans by Property Type and Geography


	2018					2017
At December 31 (Dollars in Millions)	Loans		Percent			Loans		Percent
Property Type
Business owner occupied	$	9,769		24.7	%	$	10,205		25.2	%
Commercial property
Industrial		1,695		4.3			1,580		3.9
Office		5,351		13.5			5,023		12.4
Retail		4,150		10.5			4,502		11.1
Other commercial		3,399		8.6			3,757		9.3
Multi-family		8,592		21.7			8,922		22.0
Hotel/motel		3,520		8.9			3,719		9.2
Residential homebuilders		2,764		7.0			2,489		6.2
Healthcare facilities		299		.8			266		.7
Total	$	39,539		100.0	%	$	40,463		100.0	%
Geography
California	$	9,784		24.7	%	$	9,558		23.6	%
Colorado		1,883		4.8			1,764		4.4
Illinois		1,484		3.8			1,605		4.0
Minnesota		1,896		4.8			2,031		5.0
Missouri		1,157		2.9			1,359		3.3
Ohio		1,278		3.2			1,445		3.6
Oregon		1,718		4.3			1,847		4.6
Washington		3,383		8.6			3,499		8.6
Wisconsin		1,892		4.8			2,036		5.0
Iowa, Kansas, Nebraska, North Dakota, South Dakota		2,085		5.3			2,210		5.5
Arkansas, Indiana, Kentucky, Tennessee		2,045		5.2			1,889		4.7
Idaho, Montana, Wyoming		962		2.4			1,163		2.9
Arizona, Nevada, New Mexico, Utah		3,130		7.9			3,134		7.7
Total banking region		32,697		82.7			33,540		82.9
Florida, Michigan, New York, Pennsylvania, Texas		3,613		9.1			3,688		9.1
All other states		3,229		8.2			3,235		8.0
Total outside Company’s banking region		6,842		17.3			6,923		17.1
Total	$	39,539		100.0	%	$	40,463		100.0	%

Summary of Nonperforming Assets

TABLE 16

Nonperforming Assets^(a)


At December 31 (Dollars in Millions)	2018			2017			2016			2015			2014
Commercial
Commercial	$	186		$	225		$	443		$	160		$	99
Lease financing		23			24			40			14			13
Total commercial		209			249			483			174			112
Commercial Real Estate
Commercial mortgages		76			108			87			92			175
Construction and development		39			34			37			35			84
Total commercial real estate		115			142			124			127			259
Residential Mortgages^(b)		296			442			595			712			864
Credit Card		–			1			3			9			30
Other Retail
Retail leasing		12			8			2			3			1
Home equity and second mortgages		145			126			128			136			170
Other		40			34			27			23			16
Total other retail		197			168			157			162			187
Covered Loans		–			6			6			8			14
Total nonperforming loans		817			1,008			1,368			1,192			1,466
Other Real Estate^(c)		111			141			186			280			288
Covered Other Real Estate		–			21			26			32			37
Other Assets		61			30			23			19			17
Total nonperforming assets	$	989		$	1,200		$	1,603		$	1,523		$	1,808
Accruing loans 90 days or more past due^(b)	$	584		$	720		$	764		$	831		$	945
Nonperforming loans to total loans		.28	%		.36	%		.50	%		.46	%		.59	%
Nonperforming assets to total loans plus other real estate^(c)		.34	%		.43	%		.59	%		.58	%		.73	%

Changes in Nonperforming Assets


(Dollars in Millions)	Commercial and Commercial Real Estate			Residential Mortgages, Credit Card and Other Retail			Total
Balance December 31, 2017	$	404		$	796		$	1,200
Additions to nonperforming assets
New nonaccrual loans and foreclosed properties		427			370			797
Advances on loans		18			4			22
Total additions		445			374			819
Reductions in nonperforming assets
Paydowns, payoffs		(167	)		(149	)		(316	)
Net sales		(131	)		(160	)		(291	)
Return to performing status		(20	)		(181	)		(201	)
Charge-offs^(d)		(193	)		(29	)		(222	)
Total reductions		(511	)		(519	)		(1,030	)
Net additions to (reductions in) nonperforming assets		(66	)		(145	)		(211	)
Balance December 31, 2018	$	338		$	651		$	989

(a)

Throughout this document, nonperforming assets and related ratios do not include accruing loans 90 days or more past due.

(b)

Excludes $1.7 billion, $1.9 billion, $2.5 billion, $2.9 billion and $3.1 billion at December 31, 2018, 2017, 2016, 2015 and 2014, respectively, of loans purchased from GNMA mortgage pools that are 90 days or more past due that continue to accrue interest, as their repayments are primarily insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs.

(c)

Foreclosed GNMA loans of $235 million, $267 million, $373 million, $535 million and $641 million at December 31, 2018, 2017, 2016, 2015 and 2014, respectively, continue to accrue interest and are recorded as other assets and excluded from nonperforming assets because they are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs.

(d)

Charge-offs exclude actions for certain card products and loan sales that were not classified as nonperforming at the time the charge-off occurred.

Composition of Loan Portfolio

The composition of the loan portfolio at December 31, disaggregated by class and underlying specific portfolio type, was as follows:


(Dollars in Millions)	2018		2017

Commercial
Commercial	$	96,849	$	91,958
Lease financing		5,595		5,603

Total commercial		102,444		97,561

Commercial Real Estate
Commercial mortgages		28,596		29,367
Construction and development		10,943		11,096

Total commercial real estate		39,539		40,463

Residential Mortgages
Residential mortgages		53,034		46,685
Home equity loans, first liens		12,000		13,098

Total residential mortgages		65,034		59,783

Credit Card		23,363		22,180

Other Retail
Retail leasing		8,546		7,988
Home equity and second mortgages		16,122		16,327
Revolving credit		3,088		3,183
Installment		9,676		8,989
Automobile		18,719		18,934
Student^(a)		279		1,903

Total other retail		56,430		57,324

Covered Loans^(b)		—		3,121

Total loans	$	286,810	$	280,432

(a)

During 2018, the Company sold all of its federally guaranteed student loans.

(b)

During 2018, the majority of the Company’s covered loans were sold and the loss share coverage expired. As of December 31, 2018, any remaining loan balances were reclassified to be included in their respective portfolio category.

Activity in Allowance for Credit Losses by Portfolio Class

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


(Dollars in Millions)	Commercial			Commercial Real Estate			Residential Mortgages			Credit Card			Other Retail			Covered Loans			Total Loans
Balance at December 31, 2017	$	1,372		$	831		$	449		$	1,056		$	678		$	31		$	4,417
Add
Provision for credit losses		333			(50	)		23			892			211			(30	)		1,379
Deduct
Loans charged-off		350			9			48			970			383			–			1,760
Less recoveries of loans charged-off		(99	)		(28	)		(31	)		(124	)		(124	)		–			(406	)

Net loans charged-off		251			(19	)		17			846			259			–			1,354
Other changes^(a)		–			–			–			–			–			(1	)		(1	)

Balance at December 31, 2018	$	1,454		$	800		$	455		$	1,102		$	630		$	–		$	4,441

Balance at December 31, 2016	$	1,450		$	812		$	510		$	934		$	617		$	34		$	4,357
Add
Provision for credit losses		186			19			(24	)		908			304			(3	)		1,390
Deduct
Loans charged-off		414			30			65			887			355			–			1,751
Less recoveries of loans charged-off		(150	)		(30	)		(28	)		(101	)		(112	)		–			(421	)

Net loans charged-off		264			–			37			786			243			–			1,330

Balance at December 31, 2017	$	1,372		$	831		$	449		$	1,056		$	678		$	31		$	4,417

Balance at December 31, 2015	$	1,287		$	724		$	631		$	883		$	743		$	38		$	4,306
Add
Provision for credit losses		488			75			(61	)		728			95			(1	)		1,324
Deduct
Loans charged-off		417			22			85			759			332			–			1,615
Less recoveries of loans charged-off		(92	)		(35	)		(25	)		(83	)		(111	)		–			(346	)

Net loans charged-off		325			(13	)		60			676			221			–			1,269
Other changes^(a)		–			–			–			(1	)		–			(3	)		(4	)

Balance at December 31, 2016	$	1,450		$	812		$	510		$	934		$	617		$	34		$	4,357

(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		Covered Loans		Total Loans

Allowance Balance at December 31, 2018 Related to
Loans individually evaluated for impairment^(a)	$	16	$	8	$	–	$	–	$	–	$	–	$	24
TDRs collectively evaluated for impairment		15		3		126		69		12		–		225
Other loans collectively evaluated for impairment		1,423		788		314		1,033		618		–		4,176
Loans acquired with deteriorated credit quality		–		1		15		–		–		–		16

Total allowance for credit losses	$	1,454	$	800	$	455	$	1,102	$	630	$	–	$	4,441

Allowance Balance at December 31, 2017 Related to
Loans individually evaluated for impairment^(a)	$	23	$	4	$	–	$	–	$	–	$	–	$	27
TDRs collectively evaluated for impairment		14		4		139		60		19		1		237
Other loans collectively evaluated for impairment		1,335		818		310		996		659		–		4,118
Loans acquired with deteriorated credit quality		–		5		–		–		–		30		35

Total allowance for credit losses	$	1,372	$	831	$	449	$	1,056	$	678	$	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		Covered Loans(b)		Total Loans

December 31, 2018
Loans individually evaluated for impairment^(a)	$	262	$	86	$	–	$	–	$	–	$	–	$	348
TDRs collectively evaluated for impairment		151		129		3,252		245		183		–		3,960
Other loans collectively evaluated for impairment		102,031		39,297		61,465		23,118		56,247		–		282,158
Loans acquired with deteriorated credit quality		–		27		317		–		–		–		344

Total loans	$	102,444	$	39,539	$	65,034	$	23,363	$	56,430	$	–	$	286,810

December 31, 2017
Loans individually evaluated for impairment^(a)	$	337	$	71	$	–	$	–	$	–	$	–	$	408
TDRs collectively evaluated for impairment		148		145		3,524		230		186		36		4,269
Other loans collectively evaluated for impairment		97,076		40,174		56,258		21,950		57,138		1,073		273,669
Loans acquired with deteriorated credit quality		–		73		1		–		–		2,012		2,086

Total loans	$	97,561	$	40,463	$	59,783	$	22,180	$	57,324	$	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

December 31, 2018
Commercial	$	101,844	$	322	$	69	$	209	$	102,444
Commercial real estate		39,354		70		–		115		39,539
Residential mortgages^(a)		64,443		181		114		296		65,034
Credit card		22,746		324		293		–		23,363
Other retail		55,722		403		108		197		56,430

Total loans	$	284,109	$	1,300	$	584	$	817	$	286,810

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
Covered loans		2,917		50		148		6		3,121

Total loans	$	277,492	$	1,212	$	720	$	1,008	$	280,432

(a)

At December 31, 2018, $430 million of loans 30–89 days past due and $1.7 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

December 31, 2018
Commercial	$	100,014	$	1,149	$	1,281	$	2,430	$	102,444
Commercial real estate		38,473		584		482		1,066		39,539
Residential mortgages^(b)		64,570		1		463		464		65,034
Credit card		23,070		–		293		293		23,363
Other retail		56,101		6		323		329		56,430

Total loans	$	282,228	$	1,740	$	2,842	$	4,582	$	286,810

Total outstanding commitments	$	600,407	$	2,801	$	3,448	$	6,249	$	606,656

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
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 December 31, 2018, $1.7 billion of GNMA loans 90 days or more past due and $1.6 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

December 31, 2018
Commercial	$	467	$	1,006	$	32	$	106
Commercial real estate		279		511		12		2
Residential mortgages		1,709		1,879		86		–
Credit card		245		245		69		–
Other retail		335		418		14		5

Total loans, excluding loans purchased from GNMA mortgage pools		3,035		4,059		213		113
Loans purchased from GNMA mortgage pools		1,639		1,639		41		–

Total	$	4,674	$	5,698	$	254	$	113

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
Covered loans		38		44		1		–

Total loans, excluding loans purchased from GNMA mortgage pools		3,346		4,524		254		204
Loans purchased from GNMA mortgage pools		1,681		1,681		25		–

Total	$	5,027	$	6,205	$	279	$	204

(a)

Substantially all loans classified as impaired at December 31, 2018 and 2017, had an associated allowance for credit losses. The total amount of interest income recognized during 2018 on loans classified as impaired at December 31, 2018, excluding those acquired with deteriorated credit quality, was $164 million, compared to what would have been recognized at the original contractual terms of the loans of $226 million.

Impaired Loans Average Recorded Investment and Interest Income Recognized

Additional information on impaired loans for the years ended December 31 follows:


(Dollars in Millions)	Average Recorded Investment		Interest Income Recognized

2018
Commercial	$	497	$	8
Commercial real estate		273		13
Residential mortgages		1,817		76
Credit card		236		3
Other retail		309		16
Covered loans		25		1

Total loans, excluding loans purchased from GNMA mortgage pools		3,157		117
Loans purchased from GNMA mortgage pools		1,640		47

Total	$	4,797	$	164

2017
Commercial	$	683	$	7
Commercial real estate		273		11
Residential mortgages		2,135		103
Credit card		229		3
Other retail		287		14
Covered loans		37		1

Total loans, excluding loans purchased from GNMA mortgage pools		3,644		139
Loans purchased from GNMA mortgage pools		1,672		65

Total	$	5,316	$	204

2016
Commercial	$	799	$	9
Commercial real estate		324		15
Residential mortgages		2,422		124
Credit card		214		4
Other retail		293		13
Covered loans		38		1

Total loans, excluding loans purchased from GNMA mortgage pools		4,090		166
Loans purchased from GNMA mortgage pools		1,620		71

Total	$	5,710	$	237

Summary of Loans Modified as TDRs

The following table provides a summary of loans modified as TDRs for the years ended December 31, by portfolio class:


(Dollars in Millions)	Number of Loans		Pre-Modification Outstanding Loan Balance		Post-Modification Outstanding Loan Balance

2018
Commercial		2,824	$	336	$	311
Commercial real estate		127		168		169
Residential mortgages		526		73		69
Credit card		33,318		169		171
Other retail		2,462		58		55
Covered loans		3		1		1

Total loans, excluding loans purchased from GNMA mortgage pools		39,260		805		776
Loans purchased from GNMA mortgage pools		6,268		821		803

Total loans		45,528	$	1,626	$	1,579

2017
Commercial		2,758	$	380	$	328
Commercial real estate		128		82		78
Residential mortgages		800		90		88
Credit card		33,615		161		162
Other retail		3,881		79		68
Covered loans		11		2		2

Total loans, excluding loans purchased from GNMA mortgage pools		41,193		794		726
Loans purchased from GNMA mortgage pools		6,791		881		867

Total loans		47,984	$	1,675	$	1,593

2016
Commercial		2,352	$	844	$	699
Commercial real estate		102		259		256
Residential mortgages		1,576		168		178
Credit card		31,394		151		153
Other retail		2,235		41		40
Covered loans		39		6		7

Total loans, excluding loans purchased from GNMA mortgage pools		37,698		1,469		1,333
Loans purchased from GNMA mortgage pools		11,260		1,274		1,267

Total loans		48,958	$	2,743	$	2,600

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) for the years ended December 31, that were modified as TDRs within 12 months previous to default:


(Dollars in Millions)	Number of Loans		Amount Defaulted

2018
Commercial		836	$	71
Commercial real estate		39		15
Residential mortgages		191		18
Credit card		8,012		35
Other retail		334		5
Covered loans		1		–

Total loans, excluding loans purchased from GNMA mortgage pools		9,413		144
Loans purchased from GNMA mortgage pools		1,447		187

Total loans		10,860	$	331

2017
Commercial		724	$	53
Commercial real estate		36		9
Residential mortgages		374		41
Credit card		8,372		36
Other retail		415		5
Covered loans		4		–

Total loans, excluding loans purchased from GNMA mortgage pools		9,925		144
Loans purchased from GNMA mortgage pools		1,369		177

Total loans		11,294	$	321

2016
Commercial		531	$	24
Commercial real estate		27		12
Residential mortgages		132		17
Credit card		6,827		30
Other retail		434		9
Covered loans		4		1

Total loans, excluding loans purchased from GNMA mortgage pools		7,955		93
Loans purchased from GNMA mortgage pools		202		25

Total loans		8,157	$	118