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Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2020

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


	June 30, 2020					December 31, 2019
(Dollars in Millions)	Amount		Percent of Total			Amount		Percent of Total
Commercial
Commercial	$	114,621		37.0	%	$	98,168		33.2	%
Lease financing		5,640		1.8			5,695		1.9
Total commercial		120,261		38.8			103,863		35.1
Commercial Real Estate
Commercial mortgages		30,098		9.7			29,404		9.9
Construction and development		10,978		3.5			10,342		3.5
Total commercial real estate		41,076		13.2			39,746		13.4
Residential Mortgages
Residential mortgages		61,169		19.7			59,865		20.2
Home equity loans, first liens		10,160		3.3			10,721		3.6
Total residential mortgages		71,329		23.0			70,586		23.8
Credit Card		21,257		6.8			24,789		8.4
Other Retail
Retail leasing		8,412		2.7			8,490		2.9
Home equity and second mortgages		13,932		4.5			15,036		5.1
Revolving credit		2,625		.8			2,899		1.0
Installment		12,556		4.1			11,038		3.7
Automobile		18,694		6.0			19,435		6.5
Student		193		.1			220		.1
Total other retail		56,412		18.2			57,118		19.3
Total loans	$	310,335		100.0	%	$	296,102		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			Total Loans
2020
Balance at beginning of period	$	2,240		$	841		$	412		$	2,012		$	1,085		$	6,590
Add
Provision for credit losses		516			450			218			373			180			1,737
Deduct
Loans charged-off		125			23			3			265			106			522
Less recoveries of loans charged-off		(14	)		(1	)		(6	)		(36	)		(28	)		(85	)
Net loans charged-off		111			22			(3	)		229			78			437
Balance at end of period	$	2,645		$	1,269		$	633		$	2,156		$	1,187		$	7,890
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

Six Months Ended June 30 (Dollars in Millions)	Commercial			Commercial Real Estate			Residential Mortgages			Credit Card			Other Retail			Total Loans
2020
Balance at beginning of period	$	1,484		$	799		$	433		$	1,128		$	647		$	4,491
Add
Change in accounting principle (a)		378			(122	)		(30	)		872			401			1,499
Provision for credit losses		968			612			228			619			303			2,730
Deduct
Loans charged-off		213			23			11			539			227			1,013
Less recoveries of loans charged-off		(28	)		(3	)		(13	)		(76	)		(63	)		(183	)
Net loans charged-off		185			20			(2	)		463			164			830
Balance at end of period	$	2,645		$	1,269		$	633		$	2,156		$	1,187		$	7,890
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

(a)	Effective January 1, 2020, the Company adopted accounting guidance which changed impairment recognition of financial instruments to a model that is based on expected losses rather than incurred losses.

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 (b)		Total
June 30, 2020
Commercial	$	119,316	$	399	$	90	$	456	$	120,261
Commercial real estate		40,776		103		2		195		41,076
Residential mortgages (a)		70,731		241		115		242		71,329
Credit card		20,768		230		259		–		21,257
Other retail		55,890		254		90		178		56,412
Total loans	$	307,481	$	1,227	$	556	$	1,071	$	310,335
December 31, 2019
Commercial	$	103,273	$	307	$	79	$	204	$	103,863
Commercial real estate		39,627		34		3		82		39,746
Residential mortgages (a)		70,071		154		120		241		70,586
Credit card		24,162		321		306		–		24,789
Other retail		56,463		393		97		165		57,118
Total loans	$	293,596	$	1,209	$	605	$	692	$	296,102

(a)

At June 30, 2020, $656 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 $428 million and $1.7 billion at December 31, 2019, respectively.

(b)

Substantially all nonperforming loans at June 30, 2020 and December 31, 2019, had an associated allowance for credit losses. The Company recognized interest income on nonperforming loans of $6 million for both the three months ended June 30, 2020 and 2019, and $10 million and $11 million for the six months ended June 30, 2020 and 2019, 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:


	June 30, 2020										December 31, 2019
			Criticized										Criticized
(Dollars in Millions)	Pass		Special Mention		Classified (a)		Total Criticized		Total		Pass		Special Mention		Classified (a)		Total Criticized		Total
Commercial
Originated in 2020	$	31,789	$	1,360	$	651	$	2,011	$	33,800	$	–	$	–	$	–	$	–	$	–
Originated in 2019		24,882		603		332		935		25,817		33,550		174		222		396		33,946
Originated in 2018		17,201		684		376		1,060		18,261		21,394		420		136		556		21,950
Originated in 2017		8,020		177		256		433		8,453		10,464		165		97		262		10,726
Originated in 2016		3,674		266		57		323		3,997		4,984		10		37		47		5,031
Originated prior to 2016		4,004		53		268		321		4,325		5,151		86		96		182		5,333
Revolving		24,470		678		460		1,138		25,608		26,307		292		278		570		26,877
Total commercial		114,040		3,821		2,400		6,221		120,261		101,850		1,147		866		2,013		103,863

Commercial real estate
Originated in 2020		5,903		706		140		846		6,749		–		–		–		–		–
Originated in 2019		10,813		1,214		228		1,442		12,255		12,976		108		108		216		13,192
Originated in 2018		7,470		826		226		1,052		8,522		9,455		71		56		127		9,582
Originated in 2017		3,773		409		231		640		4,413		5,863		99		64		163		6,026
Originated in 2016		2,644		243		129		372		3,016		3,706		117		60		177		3,883
Originated prior to 2016		3,692		267		153		420		4,112		4,907		78		101		179		5,086
Revolving		1,900		102		7		109		2,009		1,965		11		1		12		1,977
Total commercial real estate		36,195		3,767		1,114		4,881		41,076		38,872		484		390		874		39,746

Residential mortgages (b)
Originated in 2020		11,996		1		1		2		11,998		–		–		–		–		–
Originated in 2019		15,921		3		5		8		15,929		18,819		2		1		3		18,822
Originated in 2018		6,955		1		19		20		6,975		9,204		–		11		11		9,215
Originated in 2017		7,993		1		22		23		8,016		9,605		–		21		21		9,626
Originated in 2016		9,868		–		31		31		9,899		11,378		–		29		29		11,407
Originated prior to 2016		18,192		–		319		319		18,511		21,168		–		348		348		21,516
Revolving		1		–		–		–		1		–		–		–		–		–
Total residential mortgages		70,926		6		397		403		71,329		70,174		2		410		412		70,586

Credit card (c)		20,998		–		259		259		21,257		24,483		–		306		306		24,789

Other retail
Originated in 2020		8,265		–		3		3		8,268		–		–		–		–		–
Originated in 2019		13,648		–		22		22		13,670		15,907		–		11		11		15,918
Originated in 2018		8,449		–		29		29		8,478		10,131		–		23		23		10,154
Originated in 2017		5,809		–		27		27		5,836		7,907		–		28		28		7,935
Originated in 2016		2,611		–		16		16		2,627		3,679		–		20		20		3,699
Originated prior to 2016		2,481		–		20		20		2,501		3,274		–		28		28		3,302
Revolving		14,450		–		112		112		14,562		15,509		10		138		148		15,657
Revolving converted to term		438		–		32		32		470		418		–		35		35		453
Total other retail		56,151		–		261		261		56,412		56,825		10		283		293		57,118
Total loans	$	298,310	$	7,594	$	4,431	$	12,025	$	310,335	$	292,204	$	1,643	$	2,255	$	3,898	$	296,102
Total outstanding commitments	$	630,092	$	10,740	$	5,301	$	16,041	$	646,133	$	619,224	$	2,451	$	2,873	$	5,324	$	624,548

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

(b)

At June 30, 2020, $1.7 billion of GNMA loans 90 days or more past due and $1.5 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, 2019, respectively.

(c)	All credit card loans are considered revolving loans.

Summary of Loans Modified as TDRs

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


	2020						2019
(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		1,139	$	144	$	115		823	$	90	$	86
Commercial real estate		38		39		39		24		25		24
Residential mortgages		121		24		24		105		12		13
Credit card		6,168		37		38		7,941		44		44
Other retail		374		9		8		642		13		13
Total loans, excluding loans purchased from GNMA mortgage pools		7,840		253		224		9,535		184		180
Loans purchased from GNMA mortgage pools		1,009		142		138		1,555		215		208
Total loans		8,849	$	395	$	362		11,090	$	399	$	388

Six Months Ended June 30
Commercial		2,138	$	243	$	216		1,736	$	126	$	115
Commercial real estate		65		60		60		44		72		70
Residential mortgages		211		34		34		201		26		26
Credit card		14,583		83		85		17,589		94		95
Other retail		1,029		24		22		1,215		24		23
Total loans, excluding loans purchased from GNMA mortgage pools		18,026		444		417		20,785		342		329
Loans purchased from GNMA mortgage pools		2,913		408		398		3,093		418		403
Total loans		20,939	$	852	$	815		23,878	$	760	$	732

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:


	2020				2019
(Dollars in Millions)	Number of Loans		Amount Defaulted		Number of Loans		Amount Defaulted
Three Months Ended June 30
Commercial		330	$	8		252	$	4
Commercial real estate		12		6		7		4
Residential mortgages		5		1		15		3
Credit card		1,736		9		1,922		10
Other retail		82		1		80		1
Total loans, excluding loans purchased from GNMA mortgage pools		2,165		25		2,276		22
Loans purchased from GNMA mortgage pools		51		7		310		43
Total loans		2,216	$	32		2,586	$	65

Six Months Ended June 30
Commercial		617	$	28		486	$	9
Commercial real estate		28		16		15		10
Residential mortgages		18		2		111		13
Credit card		3,806		19		3,976		19
Other retail		190		2		227		8
Total loans, excluding loans purchased from GNMA mortgage pools		4,659		67		4,815		59
Loans purchased from GNMA mortgage pools		355		48		434		60
Total loans		5,014	$	115		5,249	$	119