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Loans and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2020

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


	September 30, 2020					December 31, 2019
(Dollars in Millions)	Amount		Percent of Total			Amount		Percent of Total
Commercial
Commercial	$	105,109		34.2	%	$	98,168		33.2	%
Lease financing		5,655		1.9			5,695		1.9
Total commercial		110,764		36.1			103,863		35.1
Commercial Real Estate
Commercial mortgages		29,264		9.6			29,404		9.9
Construction and development		11,116		3.6			10,342		3.5
Total commercial real estate		40,380		13.2			39,746		13.4
Residential Mortgages
Residential mortgages		66,952		21.8			59,865		20.2
Home equity loans, first liens		9,837		3.2			10,721		3.6
Total residential mortgages		76,789		25.0			70,586		23.8
Credit Card		21,898		7.1			24,789		8.4
Other Retail
Retail leasing		8,405		2.7			8,490		2.9
Home equity and second mortgages		13,208		4.3			15,036		5.1
Revolving credit		2,660		.9			2,899		1.0
Installment		13,513		4.4			11,038		3.7
Automobile		19,188		6.2			19,435		6.5
Student		180		.1			220		.1
Total other retail		57,154		18.6			57,118		19.3
Total loans	$	306,985		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 September 30 (Dollars in Millions)	Commercial			Commercial Real Estate			Residential Mortgages			Credit Card			Other Retail			Total Loans
2020
Balance at beginning of period	$	2,645		$	1,269		$	633		$	2,156		$	1,187		$	7,890
Add
Provision for credit losses		20			263			(49	)		369			32			635
Deduct
Loans charged-off		193			89			4			236			89			611
Less recoveries of loans charged-off		(15	)		(6	)		(7	)		(35	)		(33	)		(96	)
Net loans charged-off		178			83			(3	)		201			56			515
Balance at end of period	$	2,487		$	1,449		$	587		$	2,324		$	1,163		$	8,010
2019
Balance at beginning of period	$	1,464		$	794		$	438		$	1,132		$	638		$	4,466
Add
Provision for credit losses		101			3			(10	)		212			61			367
Deduct
Loans charged-off		91			7			8			248			97			451
Less recoveries of loans charged-off		(16	)		(1	)		(11	)		(37	)		(34	)		(99	)
Net loans charged-off		75			6			(3	)		211			63			352
Balance at end of period	$	1,490		$	791		$	431		$	1,133		$	636		$	4,481

Nine Months Ended September 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		988			875			179			988			335			3,365
Deduct
Loans charged-off		406			112			15			775			316			1,624
Less recoveries of loans charged-off		(43	)		(9	)		(20	)		(111	)		(96	)		(279	)
Net loans charged-off		363			103			(5	)		664			220			1,345
Balance at end of period	$	2,487		$	1,449		$	587		$	2,324		$	1,163		$	8,010
2019
Balance at beginning of period	$	1,454		$	800		$	455		$	1,102		$	630		$	4,441
Add
Provision for credit losses		243			(2	)		(20	)		694			194			1,109
Deduct
Loans charged-off		300			11			27			767			283			1,388
Less recoveries of loans charged-off		(93	)		(4	)		(23	)		(104	)		(95	)		(319	)
Net loans charged-off		207			7			4			663			188			1,069
Balance at end of period	$	1,490		$	791		$	431		$	1,133		$	636		$	4,481

(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
September 30, 2020
Commercial	$	109,994	$	243	$	68	$	459	$	110,764
Commercial real estate		39,957		92		1		330		40,380
Residential mortgages (a)		76,197		238		114		240		76,789
Credit card		21,493		206		199		–		21,898
Other retail		56,666		257		79		152		57,154
Total loans	$	304,307	$	1,036	$	461	$	1,181	$	306,985
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 September 30, 2020, $1.3 billion 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 $428 million and $1.7 billion at December 31, 2019, respectively.

(b)

Substantially all nonperforming loans at September 30, 2020 and December 31, 2019, had an associated allowance for credit losses. The Company recognized interest income on nonperforming loans of $9 million and $7 million for the three months ended September 30, 2020 and 2019, respectively, and $19 million and $18 million for the nine months ended September 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:


	September 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	$	34,060	$	2,211	$	1,239	$	3,450	$	37,510	$	–	$	–	$	–	$	–	$	–
Originated in 2019		20,897		469		249		718		21,615		33,550		174		222		396		33,946
Originated in 2018		14,093		453		160		613		14,706		21,394		420		136		556		21,950
Originated in 2017		6,356		182		222		404		6,760		10,464		165		97		262		10,726
Originated in 2016		2,761		52		46		98		2,859		4,984		10		37		47		5,031
Originated prior to 2016		3,235		61		68		129		3,364		5,151		86		96		182		5,333
Revolving		22,906		756		288		1,044		23,950		26,307		292		278		570		26,877
Total commercial		104,308		4,184		2,272		6,456		110,764		101,850		1,147		866		2,013		103,863

Commercial real estate
Originated in 2020		7,276		921		382		1,303		8,579		–		–		–		–		–
Originated in 2019		10,517		1,022		313		1,335		11,852		12,976		108		108		216		13,192
Originated in 2018		6,880		728		356		1,084		7,964		9,455		71		56		127		9,582
Originated in 2017		3,305		370		172		542		3,847		5,863		99		64		163		6,026
Originated in 2016		2,338		224		183		407		2,745		3,706		117		60		177		3,883
Originated prior to 2016		3,167		248		163		411		3,578		4,907		78		101		179		5,086
Revolving		1,712		97		5		102		1,814		1,965		11		1		12		1,977
Revolving converted to term		1		–		–		–		1		–		–		–		–		–
Total commercial real estate		35,196		3,610		1,574		5,184		40,380		38,872		484		390		874		39,746

Residential mortgages (b)
Originated in 2020		18,800		1		3		4		18,804		–		–		–		–		–
Originated in 2019		15,313		3		9		12		15,325		18,819		2		1		3		18,822
Originated in 2018		6,468		1		20		21		6,489		9,204		–		11		11		9,215
Originated in 2017		7,745		1		17		18		7,763		9,605		–		21		21		9,626
Originated in 2016		9,469		–		30		30		9,499		11,378		–		29		29		11,407
Originated prior to 2016		18,597		–		311		311		18,908		21,168		–		348		348		21,516
Revolving		1		–		–		–		1		–		–		–		–		–
Total residential mortgages		76,393		6		390		396		76,789		70,174		2		410		412		70,586

Credit card (c)		21,699		–		199		199		21,898		24,483		–		306		306		24,789

Other retail
Originated in 2020		13,416		–		3		3		13,419		–		–		–		–		–
Originated in 2019		12,527		–		16		16		12,543		15,907		–		11		11		15,918
Originated in 2018		7,574		–		23		23		7,597		10,131		–		23		23		10,154
Originated in 2017		4,708		–		22		22		4,730		7,907		–		28		28		7,935
Originated in 2016		2,162		–		12		12		2,174		3,679		–		20		20		3,699
Originated prior to 2016		2,135		–		17		17		2,152		3,274		–		28		28		3,302
Revolving		13,939		–		116		116		14,055		15,509		10		138		148		15,657
Revolving converted to term		449		–		35		35		484		418		–		35		35		453
Total other retail		56,910		–		244		244		57,154		56,825		10		283		293		57,118
Total loans	$	294,506		7,800	$	4,679	$	12,479	$	306,985	$	292,204	$	1,643	$	2,255	$	3,898	$	296,102
Total outstanding commitments	$	635,980	$	10,868	$	5,664	$	16,532	$	652,512	$	619,224	$	2,451	$	2,873	$	5,324	$	624,548

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

(b)

At September 30, 2020, $1.6 billion of GNMA loans 90 days or more past due and $1.4 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 September 30
Commercial		699	$	262	$	159		886	$	116	$	100
Commercial real estate		51		105		81		32		23		23
Residential mortgages		374		108		108		117		17		15
Credit card		4,699		27		27		8,429		46		46
Other retail		508		26		26		814		20		19
Total loans, excluding loans purchased from GNMA mortgage pools		6,331		528		401		10,278		222		203
Loans purchased from GNMA mortgage pools		735		106		105		1,524		211		203
Total loans		7,066	$	634	$	506		11,802	$	433	$	406

Nine Months Ended September 30
Commercial		2,837	$	505	$	375		2,622	$	242	$	215
Commercial real estate		116		165		141		76		95		93
Residential mortgages		585		142		142		318		43		41
Credit card		19,282		110		112		26,018		140		141
Other retail		1,537		50		48		2,029		44		42
Total loans, excluding loans purchased from GNMA mortgage pools		24,357		972		818		31,063		564		532
Loans purchased from GNMA mortgage pools		3,648		514		503		4,617		629		606
Total loans		28,005	$	1,486	$	1,321		35,680	$	1,193	$	1,138

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 September 30
Commercial		305	$	21		263	$	9
Commercial real estate		5		8		8		7
Residential mortgages		5		2		13		1
Credit card		1,363		8		2,025		10
Other retail		55		1		72		1
Total loans, excluding loans purchased from GNMA mortgage pools		1,733		40		2,381		28
Loans purchased from GNMA mortgage pools		72		9		263		33
Total loans		1,805	$	49		2,644	$	61

Nine Months Ended September 30
Commercial		922	$	49		749	$	18
Commercial real estate		33		24		23		17
Residential mortgages		23		4		124		14
Credit card		5,169		27		6,001		29
Other retail		245		3		299		9
Total loans, excluding loans purchased from GNMA mortgage pools		6,392		107		7,196		87
Loans purchased from GNMA mortgage pools		427		57		697		93
Total loans		6,819	$	164		7,893	$	180