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Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2019

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


	June 30, 2019					December 31, 2018
(Dollars in Millions)	Amount		Percent of Total			Amount		Percent of Total
Commercial
Commercial	$	98,444		33.7	%	$	96,849		33.8	%
Lease financing		5,536		1.9			5,595		1.9
Total commercial		103,980		35.6			102,444		35.7
Commercial Real Estate
Commercial mortgages		28,449		9.8			28,596		10.0
Construction and development		10,885		3.7			10,943		3.8
Total commercial real estate		39,334		13.5			39,539		13.8
Residential Mortgages
Residential mortgages		56,557		19.4			53,034		18.5
Home equity loans, first liens		11,356		3.9			12,000		4.2
Total residential mortgages		67,913		23.3			65,034		22.7
Credit Card		23,426		8.0			23,363		8.1
Other Retail
Retail leasing		8,467		2.9			8,546		3.0
Home equity and second mortgages		15,780		5.4			16,122		5.6
Revolving credit		2,942		1.0			3,088		1.1
Installment		10,711		3.6			9,676		3.4
Automobile		19,227		6.6			18,719		6.5
Student		248		.1			279		.1
Total other retail		57,375		19.6			56,430		19.7
Total loans	$	292,028		100.0	%	$	286,810		100.0	%

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			Covered Loans			Total Loans
2019
Balance at beginning of period	$	1,445		$	812		$	445		$	1,115		$	634		$	–		$	4,451
Add
Provision for credit losses		78			(17	)		(3	)		244			63			–			365
Deduct
Loans charged-off		98			3			11			262			90			–			464
Less recoveries of loans charged-off		(39	)		(2	)		(7	)		(35	)		(31	)		–			(114	)
Net loans charged-off		59			1			4			227			59			–			350
Balance at end of period	$	1,464		$	794		$	438		$	1,132		$	638		$	–		$	4,466

2018
Balance at beginning of period	$	1,386		$	826		$	443		$	1,064		$	672		$	26		$	4,417
Add
Provision for credit losses		63			(14	)		(3	)		228			55			(2	)		327
Deduct
Loans charged-off		83			2			12			248			92			–			437

Less recoveries of loans charged-off		(25	)		(2	)		(8	)		(38	)		(32	)		–			(105	)

Net loans charged-off		58			–			4			210			60			–			332

Other changes (a)		–			–			–			–			–			(1	)		(1	)
Balance at end of period	$	1,391		$	812		$	436		$	1,082		$	667		$	23		$	4,411



(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			Covered Loans			Total Loans
2019
Balance at beginning of period	$	1,454		$	800		$	455		$	1,102		$	630		$	–		$	4,441
Add
Provision for credit losses		142			(5	)		(10	)		482			133			–			742
Deduct
Loans charged-off		209			4			19			519			186			–			937

Less recoveries of loans charged-off		(77	)		(3	)		(12	)		(67	)		(61	)		–			(220	)
Net loans charged-off		132			1			7			452			125			–			717
Balance at end of period	$	1,464		$	794		$	438		$	1,132		$	638		$	–		$	4,466
2018
Balance at beginning of period	$	1,372		$	831		$	449		$	1,056		$	678		$	31		$	4,417
Add
Provision for credit losses		137			(22	)		(2	)		447			115			(7	)		668
Deduct
Loans charged-off		177			5			25			496			187			–			890
Less recoveries of loans charged-off		(59	)		(8	)		(14	)		(75	)		(61	)		–			(217	)
Net loans charged-off		118			(3	)		11			421			126			–			673

Other changes (a)		–			–			–			–			–			(1	)		(1	)
Balance at end of period	$	1,391		$	812		$	436		$	1,082		$	667		$	23		$	4,411

(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
Allowance Balance at June 30, 2019 Related to
Loans individually evaluated for impairment (a)	$	16	$	2	$	–	$	–	$	–	$	18
TDRs collectively evaluated for impairment		19		5		109		78		12		223
Other loans collectively evaluated for impairment		1,429		787		314		1,054		626		4,210
Loans acquired with deteriorated credit quality		–		–		15		–		–		15
Total allowance for credit losses	$	1,464	$	794	$	438	$	1,132	$	638	$	4,466
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

(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
June 30, 2019
Loans individually evaluated for impairment (a)	$	298	$	40	$	–	$	–	$	–	$	338
TDRs collectively evaluated for impairment		157		127		3,125		258		186		3,853
Other loans collectively evaluated for impairment		103,525		39,131		64,511		23,168		57,189		287,524
Loans acquired with deteriorated credit quality		–		36		277		–		–		313
Total loans	$	103,980	$	39,334	$	67,913	$	23,426	$	57,375	$	292,028
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

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

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, 2019
Commercial	$	103,075	$	353	$	273	$	279	$	103,980
Commercial real estate		39,214		27		1		92		39,334
Residential mortgages (a)		67,353		184		113		263		67,913
Credit card		22,871		288		267		–		23,426
Other retail		56,724		384		98		169		57,375
Total loans	$	289,237	$	1,236	$	752	$	803	$	292,028
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

(a)

At June 30, 2019, $

403

million of loans 30–89 days past due and $

1.6

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 $

430

million and $

1.7

billion at December 31, 2018, 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, 2019
Commercial	$	101,842	$	1,082	$	1,056	$	2,138	$	103,980
Commercial real estate		38,481		425		428		853		39,334
Residential mortgages (b)		67,485		3		425		428		67,913
Credit card		23,159		–		267		267		23,426
Other retail		57,078		3		294		297		57,375
Total loans	$	288,045	$	1,513	$	2,470	$	3,983	$	292,028
Total outstanding commitments	$	612,606	$	2,136	$	3,066	$	5,202	$	617,808
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

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

(b)

At June 30, 2019, $

1.6

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 $

1.7

billion and $

1.6

billion at December 31, 2018, 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, 2019
Commercial	$	521	$	1,140	$	39	$	156
Commercial real estate		229		556		8		–
Residential mortgages		1,620		1,772		78		–
Credit card		258		258		77		–
Other retail		317		390		14		3
Total loans, excluding loans purchased from GNMA mortgage pools		2,945		4,116		216		159
Loans purchased from GNMA mortgage pools		1,598		1,598		31		–
Total	$	4,543	$	5,714	$	247	$	159
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

(a)	Substantially all loans classified as impaired at June 30, 2019 and December 31, 2018, had an associated allowance for credit losses.

Impaired Loans Average Recorded Investment and Interest Income Recognized

Additional information on impaired loans follows:


	2019				2018
(Dollars in Millions)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Three Months Ended June 30
Commercial	$	512	$	2	$	514	$	1
Commercial real estate		248		3		242		2
Residential mortgages		1,652		23		1,846		19
Credit card		256		–		234		1
Other retail		321		3		303		4
Covered Loans		–		–		37		1
Total loans, excluding loans purchased from GNMA mortgage pools		2,989		31		3,176		28
Loans purchased from GNMA mortgage pools		1,588		17		1,616		12
Total	$	4,577	$	48	$	4,792	$	40
Six Months Ended June 30
Commercial	$	498	$	3	$	530	$	2
Commercial real estate		261		5		255		4
Residential mortgages		1,674		47		1,880		39
Credit card		253		–		233		2
Other retail		326		6		301		8
Covered Loans		–		–		37		1
Total loans, excluding loans purchased from GNMA mortgage pools		3,012		61		3,236		56
Loans purchased from GNMA mortgage pools		1,598		34		1,620		24
Total	$	4,610	$	95	$	4,856	$	80

Summary of Loans Modified as TDRs

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


	2019						2018
(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		823	$	90	$	86		724	$	132	$	126
Commercial real estate		24		25		24		30		15		14
Residential mortgages		105		12		13		105		20		20
Credit card		7,941		44		44		7,461		37		38
Other retail		642		13		13		535		17		17
Total loans, excluding loans purchased from GNMA mortgage pools		9,535		184		180		8,855		221		215
Loans purchased from GNMA mortgage pools		1,555		215		208		2,248		298		295
Total loans		11,090	$	399	$	388		11,103	$	519	$	510
Six Months Ended June 30
Commercial		1,736	$	126	$	115		1,347	$	213	$	201
Commercial real estate		44		72		70		59		31		30
Residential mortgages		201		26		26		253		37		36
Credit card		17,589		94		95		16,007		80		81
Other retail		1,215		24		23		1,094		28		27
Total loans, excluding loans purchased from GNMA mortgage pools		20,785		342		329		18,760		389		375
Loans purchased from GNMA mortgage pools		3,093		418		403		3,136		415		408
Total loans		23,878	$	760	$	732		21,896	$	804	$	783

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:


	2019				2018
(Dollars in Millions)	Number of Loans		Amount Defaulted		Number of Loans		Amount Defaulted
Three Months Ended June 30
Commercial		252	$	4		177	$	3
Commercial real estate		7		4		8		2
Residential mortgages		15		3		58		7
Credit card		1,922		10		1,933		8
Other retail		80		1		70		1
Covered loans		–		–		–		–
Total loans, excluding loans purchased from GNMA mortgage pools		2,276		22		2,246		21
Loans purchased from GNMA mortgage pools		310		43		517		67
Total loans		2,586	$	65		2,763	$	88
Six Months Ended June 30
Commercial		486	$	9		416	$	12
Commercial real estate		15		10		16		6
Residential mortgages		111		13		114		11
Credit card		3,976		19		3,969		17
Other retail		227		8		147		2
Covered loans		–		–		1		–
Total loans, excluding loans purchased from GNMA mortgage pools		4,815		59		4,663		48
Loans purchased from GNMA mortgage pools		434		60		749		98
Total loans		5,249	$	119		5,412	$	146