Loans and Allowance for Credit Losses

12 Months Ended

Dec. 31, 2018

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

Loans and Allowance for Credit Losses

Note 6:  Loans and Allowance for Credit Losses

Table 6.1 presents total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include a total net reduction of $1.3 billion and $3.9 billion at December 31, 2018 and 2017, respectively, for unearned income, net deferred loan fees, and unamortized discounts and premiums, which among other things, reflect the

impact of various loan sales.

Table 6.1:Loans Outstanding

	December 31,
(in millions)	2018		2017	2016	2015	2014
Commercial:
Commercial and industrial	$	350,199	333,125	330,840	299,892	271,795
Real estate mortgage	121,014		126,599	132,491	122,160	111,996
Real estate construction	22,496		24,279	23,916	22,164	18,728
Lease financing	19,696		19,385	19,289	12,367	12,307
Total commercial	513,405		503,388	506,536	456,583	414,826
Consumer:
Real estate 1-4 family first mortgage	285,065		284,054	275,579	273,869	265,386
Real estate 1-4 family junior lien mortgage	34,398		39,713	46,237	53,004	59,717
Credit card	39,025		37,976	36,700	34,039	31,119
Automobile	45,069		53,371	62,286	59,966	55,740
Other revolving credit and installment	36,148		38,268	40,266	39,098	35,763
Total consumer	439,705		453,382	461,068	459,976	447,725
Total loans	$	953,110	956,770	967,604	916,559	862,551

Our foreign loans are reported by respective class of financing receivable in the table above. Substantially all of our foreign loan portfolio is commercial loans. Loans are classified as foreign primarily based on whether the borrower’s primary address is outside of the United States. Table 6.2 presents total commercial foreign loans outstanding by class of financing receivable.

Table 6.2:Commercial Foreign Loans Outstanding

	December 31,
(in millions)	2018		2017	2016	2015	2014
Commercial foreign loans:
Commercial and industrial	$	62,564	60,106	55,396	49,049	44,707
Real estate mortgage	6,731		8,033	8,541	8,350	4,776
Real estate construction	1,011		655	375	444	218
Lease financing	1,159		1,126	972	274	336
Total commercial foreign loans	$	71,465	69,920	65,284	58,117	50,037

Loan Concentrations

Loan concentrations may exist when there are amounts loaned to borrowers engaged in similar activities or similar types of loans extended to a diverse group of borrowers that would cause them to be similarly impacted by economic or other conditions. At December 31, 2018 and 2017, we did not have concentrations representing 10% or more of our total loan portfolio in domestic commercial and industrial loans and lease financing by industry or CRE loans (real estate mortgage and real estate construction) by state or property type. Real estate 1-4 family non-PCI mortgage loans to borrowers in the state of California represented 12% of total loans at both December 31, 2018 and 2017, and PCI loans were under 1% in both years. These California loans are generally diversified among the larger metropolitan areas in California, with no single area consisting of more than 5% of total loans. We continuously monitor changes in real estate values and underlying economic or market conditions for all geographic areas of our real estate 1-4 family mortgage portfolio as part of our credit risk management process.

Some of our real estate 1-4 family first and junior lien mortgage loans include an interest-only feature as part of the loan terms. These interest-only loans were approximately 4% of total loans at both December 31, 2018 and 2017. Substantially all of these interest-only loans at origination were considered to be prime or near prime. We do not offer option adjustable-rate mortgage (ARM) products, nor do we offer variable-rate mortgage products with fixed payment amounts, commonly referred to within the financial services industry as negative amortizing mortgage loans. We acquired an option payment loan portfolio (Pick-a-Pay) from Wachovia at December 31, 2008. A majority of the portfolio was identified as PCI loans. Since the acquisition, we have reduced our exposure to the option payment portion of the portfolio through our modification efforts and loss mitigation actions. At December 31, 2018, approximately 1% of total loans remained with the payment option feature compared with 10% at December 31, 2008.

Our first and junior lien lines of credit products generally have draw periods of 10, 15 or 20 years, with variable interest rate and payment options during the draw period of (1) interest only or (2) 1.5% of total outstanding balance plus accrued interest. During the draw period, the borrower has the option of converting all or a portion of the line from a variable interest rate to a fixed rate with terms including interest-only payments for a fixed period between three to seven years or a fully amortizing payment with a fixed period between five to 30 years. At the end of the draw period, a line of credit generally converts to an amortizing payment schedule with repayment terms of up to 30 years based on the balance at time of conversion. At December 31, 2018, our lines of credit portfolio had an outstanding balance of $43.6 billion, of which $11.1 billion, or 25%, is in its amortization period, another $1.3 billion, or 3%, of our total outstanding balance, will reach their end of draw period during 2019 through 2020, $11.3 billion, or 26%, during 2021 through 2023, and $19.9 billion, or 46%, will convert in subsequent years. This portfolio had unfunded credit commitments of $60.1 billion at December 31, 2018. The lines that enter their amortization period may experience higher delinquencies and higher loss rates than the lines in their draw period. At December 31, 2018, $488 million, or 4%, of outstanding lines of credit that are in their amortization period were 30 or more days past due, compared with $553 million, or 2%, for lines in their draw period. We have considered this increased inherent risk in our allowance for credit loss estimate. In anticipation of our borrowers reaching the end of their contractual commitment, we have created a program to inform, educate and help these borrowers transition from interest-only to fully-amortizing payments or full repayment. We monitor the performance of the borrowers moving through the program in an effort to refine our ongoing program strategy.

Loan Purchases, Sales, and Transfers

Table 6.3 summarizes the proceeds paid or received for purchases and sales of loans and transfers from loans held for investment to mortgages/loans held for sale at lower of cost or fair value. This loan activity primarily includes loans purchased and sales of whole loan or participating interests, whereby we receive or transfer a portion of a loan after origination. The table excludes PCI loans and loans recorded at fair value, including loans originated for sale because their loan activity normally does not impact the allowance for credit losses.

Table 6.3:Loan Purchases, Sales, and Transfers

								Year ended December 31,
	2018							2017
(in millions)	Commercial			Consumer (1)		Total		Commercial		Consumer (1)		Total
Purchases	$	2,065		16		2,081		3,675		2		3,677
Sales	(1,905		)	(261	)	(2,166	)	(2,066	)	(425	)	(2,491	)
Transfers to MLHFS/LHFS	(617		)	(1,995	)	(2,612	)	(736	)	(2	)	(738	)

(1) Excludes activity in government insured/guaranteed real estate 1-4 family first mortgage loans. As servicer, we are able to buy delinquent insured/guaranteed loans out of the Government National Mortgage Association (GNMA) pools, and manage and/or resell them in accordance with applicable requirements. These loans are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Accordingly, these loans have limited impact on the allowance for loan losses.

Commitments to Lend

A commitment to lend is a legally binding agreement to lend funds to a customer, usually at a stated interest rate, if funded, and for specific purposes and time periods. We generally require a fee to extend such commitments. Certain commitments are subject to loan agreements with covenants regarding the financial performance of the customer or borrowing base formulas on an ongoing basis that must be met before we are required to fund the commitment. We may reduce or cancel consumer commitments, including home equity lines and credit card lines, in accordance with the contracts and applicable law.

We may, as a representative for other lenders, advance funds or provide for the issuance of letters of credit under syndicated loan or letter of credit agreements. Any advances are generally repaid in less than a week and would normally require default of both the customer and another lender to expose us to loss. These temporary advance arrangements totaled approximately $91 billion at December 31, 2018, and $85 billion at December 31, 2017.

We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At December 31, 2018 and 2017, we had $919 million and $982 million, respectively, of outstanding issued commercial letters of credit. We also originate multipurpose lending commitments under which borrowers have the option to draw on the facility for different purposes in one of several forms, including a standby letter of credit. See Note 15 (Guarantees, Pledged Assets and Collateral, and Other Commitments) for additional information on standby letters of credit.

When we make commitments, we are exposed to credit risk. The maximum credit risk for these commitments will generally be lower than the contractual amount because a significant portion of these commitments are expected to expire without being used by the customer. In addition, we manage the potential risk in commitments to lend by limiting the total amount of commitments, both by individual customer and in total, by monitoring the size and maturity structure of these commitments and by applying the same credit standards for these commitments as for all of our credit activities.

For loans and commitments to lend, we generally require collateral or a guarantee. We may require various types of collateral, including commercial and consumer real estate, automobiles, other short-term liquid assets such as accounts receivable or inventory and long-lived assets, such as equipment and other business assets. Collateral requirements for each loan or commitment may vary based on the loan product and our assessment of a customer’s credit risk according to the specific credit underwriting, including credit terms and structure.

The contractual amount of our unfunded credit commitments, including unissued standby and commercial letters of credit, is summarized by portfolio segment and class of financing receivable in Table 6.4. The table excludes the issued standby and commercial letters of credit and temporary advance arrangements described above.

Table 6.4:Unfunded Credit Commitments

(in millions)	Dec 31, 2018		Dec 31, 2017
Commercial:
Commercial and industrial	$	330,492	326,626
Real estate mortgage	6,984		7,485
Real estate construction	16,400		16,621
Total commercial	353,876		350,732
Consumer:
Real estate 1-4 family first mortgage	29,736		29,876
Real estate 1-4 family junior lien mortgage	37,719		38,897
Credit card	109,840		108,465
Other revolving credit and installment	27,530		27,541
Total consumer	204,825		204,779
Total unfunded credit commitments	$	558,701	555,511

Allowance for Credit Losses

Table 6.5 presents the allowance for credit losses, which consists of the allowance for loan losses and the allowance for unfunded credit commitments.

Table 6.5:Allowance for Credit Losses

	Year ended December 31,
(in millions)	2018			2017		2016		2015		2014
Balance, beginning of year	$	11,960		12,540		12,512		13,169		14,971
Provision for credit losses	1,744			2,528		3,770		2,442		1,395
Interest income on certain impaired loans (1)	(166		)	(186	)	(205	)	(198	)	(211	)
Loan charge-offs:
Commercial:
Commercial and industrial	(727		)	(789	)	(1,419	)	(734	)	(627	)
Real estate mortgage	(42		)	(38	)	(27	)	(59	)	(66	)
Real estate construction	—			—		(1	)	(4	)	(9	)
Lease financing	(70		)	(45	)	(41	)	(14	)	(15	)
Total commercial	(839		)	(872	)	(1,488	)	(811	)	(717	)
Consumer:
Real estate 1-4 family first mortgage	(179		)	(240	)	(452	)	(507	)	(721	)
Real estate 1-4 family junior lien mortgage	(179		)	(279	)	(495	)	(635	)	(864	)
Credit card	(1,599		)	(1,481	)	(1,259	)	(1,116	)	(1,025	)
Automobile	(947		)	(1,002	)	(845	)	(742	)	(729	)
Other revolving credit and installment	(685		)	(713	)	(708	)	(643	)	(668	)
Total consumer	(3,589		)	(3,715	)	(3,759	)	(3,643	)	(4,007	)
Total loan charge-offs	(4,428		)	(4,587	)	(5,247	)	(4,454	)	(4,724	)
Loan recoveries:
Commercial:
Commercial and industrial	304			297		263		252		369
Real estate mortgage	70			82		116		127		160
Real estate construction	13			30		38		37		136
Lease financing	23			17		11		8		8
Total commercial	410			426		428		424		673
Consumer:
Real estate 1-4 family first mortgage	267			288		373		245		212
Real estate 1-4 family junior lien mortgage	219			266		266		259		238
Credit card	307			239		207		175		161
Automobile	363			319		325		325		349
Other revolving credit and installment	118			121		128		134		146
Total consumer	1,274			1,233		1,299		1,138		1,106
Total loan recoveries	1,684			1,659		1,727		1,562		1,779
Net loan charge-offs	(2,744		)	(2,928	)	(3,520	)	(2,892	)	(2,945	)
Other	(87		)	6		(17	)	(9	)	(41	)
Balance, end of year	$	10,707		11,960		12,540		12,512		13,169
Components:
Allowance for loan losses	$	9,775		11,004		11,419		11,545		12,319
Allowance for unfunded credit commitments	932			956		1,121		967		850
Allowance for credit losses	$	10,707		11,960		12,540		12,512		13,169
Net loan charge-offs as a percentage of average total loans	0.29		%	0.31		0.37		0.33		0.35
Allowance for loan losses as a percentage of total loans	1.03			1.15		1.18		1.26		1.43
Allowance for credit losses as a percentage of total loans	1.12			1.25		1.30		1.37		1.53

(1) Certain impaired loans with an allowance calculated by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in allowance attributable to the passage of time as interest income.

Table 6.6 summarizes the activity in the allowance for credit losses by our commercial and consumer portfolio segments. 

Table 6.6:Allowance Activity by Portfolio Segment

	Year ended December 31,
	2018							2017
(in millions)	Commercial			Consumer		Total		Commercial		Consumer		Total
Balance, beginning of year	$	6,632		5,328		11,960		7,394		5,146		12,540
Provision (reversal of provision) for credit losses	281			1,463		1,744		(261	)	2,789		2,528
Interest income on certain impaired loans	(47		)	(119	)	(166	)	(59	)	(127	)	(186	)
Loan charge-offs	(839		)	(3,589	)	(4,428	)	(872	)	(3,715	)	(4,587	)
Loan recoveries	410			1,274		1,684		426		1,233		1,659
Net loan charge-offs	(429		)	(2,315	)	(2,744	)	(446	)	(2,482	)	(2,928	)
Other	(20		)	(67	)	(87	)	4		2		6
Balance, end of year	$	6,417		4,290		10,707		6,632		5,328		11,960

Table 6.7 disaggregates our allowance for credit losses and recorded investment in loans by impairment methodology.

Table 6.7:Allowance by Impairment Methodology

	Allowance for credit losses				Recorded investment in loans
(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total
December 31, 2018
Collectively evaluated (1)	$	5,903	3,361	9,264	510,180	421,574	931,754
Individually evaluated (2)	514		929	1,443	3,221	13,126	16,347
PCI (3)	—		—	—	4	5,005	5,009
Total	$	6,417	4,290	10,707	513,405	439,705	953,110
December 31, 2017
Collectively evaluated (1)	$	5,927	4,143	10,070	499,342	425,919	925,261
Individually evaluated (2)	705		1,185	1,890	3,960	14,714	18,674
PCI (3)	—		—	—	86	12,749	12,835
Total	$	6,632	5,328	11,960	503,388	453,382	956,770

(1) Represents loans collectively evaluated for impairment in accordance with Accounting Standards Codification (ASC) 450-20, Loss Contingencies (formerly FAS 5), and pursuant to amendments by ASU 2010-20 regarding allowance for non-impaired loans.

(2) Represents loans individually evaluated for impairment in accordance with ASC 310-10, Receivables (formerly FAS 114), and pursuant to amendments by ASU 2010-20 regarding allowance for impaired loans.

(3) Represents the allowance and related loan carrying value determined in accordance with ASC 310-30, Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality (formerly SOP 3-3) and pursuant to amendments by ASU 2010-20 regarding allowance for PCI loans.

Credit Quality

We monitor credit quality by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the allowance for credit losses. The following sections provide the credit quality indicators we most closely monitor. The credit quality indicators are generally based on information as of our financial statement date, with the exception of updated Fair Isaac Corporation (FICO) scores and updated loan-to-value (LTV)/combined LTV (CLTV). We obtain FICO scores at loan origination and the scores are generally updated at least quarterly, except in limited circumstances, including compliance with the Fair Credit Reporting Act (FCRA). Generally, the LTV and CLTV indicators are updated in the second month of each quarter, with updates no older than September 30, 2018. See the “Purchased Credit-Impaired Loans” section in this Note for credit quality information on our PCI portfolio.

COMMERCIAL CREDIT QUALITY INDICATORS In addition to monitoring commercial loan concentration risk, we manage a consistent process for assessing commercial loan credit quality. Generally, commercial loans are subject to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to Pass and Criticized categories. The Criticized category includes Special Mention, Substandard, and Doubtful categories which are defined by bank regulatory agencies.

Table 6.8 provides a breakdown of outstanding commercial loans by risk category. Of the $14.8 billion in criticized commercial and industrial loans and $4.8 billion in criticized commercial real estate (CRE) loans at December 31, 2018, $1.5 billion and $612 million, respectively, have been placed on nonaccrual status and written down to net realizable collateral value.

Table 6.8:Commercial Loans by Risk Category

(in millions)	Commercial and industrial		Real estate mortgage	Real estate construction	Lease financing	Total
December 31, 2018
By risk category:
Pass	$	335,412	116,514	22,207	18,671	492,804
Criticized	14,783		4,500	289	1,025	20,597
Total commercial loans (excluding PCI)	350,195		121,014	22,496	19,696	513,401
Total commercial PCI loans (carrying value)	4		—	—	—	4
Total commercial loans	$	350,199	121,014	22,496	19,696	513,405
December 31, 2017
By risk category:
Pass	$	316,431	122,312	23,981	18,162	480,886
Criticized	16,608		4,287	298	1,223	22,416
Total commercial loans (excluding PCI)	333,039		126,599	24,279	19,385	503,302
Total commercial PCI loans (carrying value)	86		—	—	—	86
Total commercial loans	$	333,125	126,599	24,279	19,385	503,388

Table 6.9 provides past due information for commercial loans, which we monitor as part of our credit risk management practices.

Table 6.9:Commercial Loans by Delinquency Status

(in millions)	Commercial and industrial		Real estate mortgage	Real estate construction	Lease financing	Total
December 31, 2018
By delinquency status:
Current-29 days past due (DPD) and still accruing	$	348,158	120,176	22,411	19,443	510,188
30-89 DPD and still accruing	508		207	53	163	931
90+ DPD and still accruing	43		51	—	—	94
Nonaccrual loans	1,486		580	32	90	2,188
Total commercial loans (excluding PCI)	350,195		121,014	22,496	19,696	513,401
Total commercial PCI loans (carrying value)	4		—	—	—	4
Total commercial loans	$	350,199	121,014	22,496	19,696	513,405
December 31, 2017
By delinquency status:
Current-29 DPD and still accruing	$	330,319	125,642	24,107	19,148	499,216
30-89 DPD and still accruing	795		306	135	161	1,397
90+ DPD and still accruing	26		23	—	—	49
Nonaccrual loans	1,899		628	37	76	2,640
Total commercial loans (excluding PCI)	333,039		126,599	24,279	19,385	503,302
Total commercial PCI loans (carrying value)	86		—	—	—	86
Total commercial loans	$	333,125	126,599	24,279	19,385	503,388

CONSUMER CREDIT QUALITY INDICATORS We have various classes of consumer loans that present unique risks. Loan delinquency, FICO credit scores and LTV for loan types are common credit quality indicators that we monitor and utilize in our evaluation of the appropriateness of the allowance for credit losses for the consumer portfolio segment.

Many of our loss estimation techniques used for the allowance for credit losses rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality and the establishment of our allowance for credit losses. Table 6.10 provides the outstanding balances of our consumer portfolio by delinquency status.

Table 6.10:Consumer Loans by Delinquency Status

(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Credit card	Automobile	Other revolving credit and installment	Total
December 31, 2018
By delinquency status:
Current-29 DPD	$	263,881	33,644	38,008	43,604	35,794	414,931
30-59 DPD	1,411		247	292	1,040	140	3,130
60-89 DPD	549		126	212	314	87	1,288
90-119 DPD	257		74	192	109	80	712
120-179 DPD	225		77	320	2	27	651
180+ DPD	822		213	1	—	20	1,056
Government insured/guaranteed loans (1)	12,688		—	—	—	—	12,688
Loans held at fair value	244		—	—	—	—	244
Total consumer loans (excluding PCI)	280,077		34,381	39,025	45,069	36,148	434,700
Total consumer PCI loans (carrying value)	4,988		17	—	—	—	5,005
Total consumer loans	$	285,065	34,398	39,025	45,069	36,148	439,705
December 31, 2017
By delinquency status:
Current-29 DPD	$	251,786	38,746	36,996	51,445	37,885	416,858
30-59 DPD	1,893		336	287	1,385	155	4,056
60-89 DPD	742		163	201	392	93	1,591
90-119 DPD	369		103	192	146	80	890
120-179 DPD	308		95	298	3	30	734
180+ DPD	1,091		243	2	—	25	1,361
Government insured/guaranteed loans (1)	14,767		—	—	—	—	14,767
Loans held at fair value	376		—	—	—	—	376
Total consumer loans (excluding PCI)	271,332		39,686	37,976	53,371	38,268	440,633
Total consumer PCI loans (carrying value)	12,722		27	—	—	—	12,749
Total consumer loans	$	284,054	39,713	37,976	53,371	38,268	453,382

(1) Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA. Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled $7.7 billion at December 31, 2018, compared with $10.5 billion at December 31, 2017.

Of the $2.4 billion of consumer loans not government insured/guaranteed that are 90 days or more past due at December 31, 2018, $885 million was accruing, compared with $3.0 billion past due and $1.0 billion accruing at December 31, 2017.

Real estate 1-4 family first mortgage loans 180 days or more past due totaled $822 million, or 0.3% of total first mortgages (excluding PCI), at December 31, 2018, compared with $1.1 billion, or 0.4%, at December 31, 2017.

Table 6.11 provides a breakdown of our consumer portfolio by FICO. Most of the scored consumer portfolio has an updated FICO of 680 and above, reflecting a strong current borrower credit profile. FICO is not available for certain loan types, or may not be required if we deem it unnecessary due to strong collateral and other borrower attributes. Substantially all loans not requiring a FICO score are securities-based loans originated through retail brokerage, and totaled $8.9 billion at December 31, 2018, and $8.5 billion at December 31, 2017.

Table 6.11:Consumer Loans by FICO

(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Credit card	Automobile	Other revolving credit and installment	Total
December 31, 2018
By FICO:
< 600	$	4,273	1,454	3,292	7,071	697	16,787
600-639	2,974		994	2,777	4,431	725	11,901
640-679	5,810		1,898	6,464	6,225	1,822	22,219
680-719	13,568		3,908	9,445	7,354	3,384	37,659
720-759	27,258		5,323	7,949	6,853	4,395	51,778
760-799	57,193		6,315	5,227	5,947	5,322	80,004
800+	151,465		13,190	3,794	7,099	8,411	183,959
No FICO available	4,604		1,299	77	89	2,507	8,576
FICO not required	—		—	—	—	8,885	8,885
Government insured/guaranteed loans (1)	12,932		—	—	—	—	12,932
Total consumer loans (excluding PCI)	280,077		34,381	39,025	45,069	36,148	434,700
Total consumer PCI loans (carrying value)	4,988		17	—	—	—	5,005
Total consumer loans	$	285,065	34,398	39,025	45,069	36,148	439,705
December 31, 2017
By FICO:
< 600	$	5,145	1,768	3,525	8,858	863	20,159
600-639	3,487		1,253	3,101	5,615	904	14,360
640-679	6,789		2,387	5,690	7,696	1,959	24,521
680-719	14,977		4,797	7,628	8,825	3,582	39,809
720-759	27,926		6,246	8,097	7,806	5,089	55,164
760-799	55,590		7,323	6,372	6,468	6,257	82,010
800+	136,729		15,144	2,994	7,845	8,455	171,167
No FICO available	5,546		768	569	258	2,648	9,789
FICO not required	—		—	—	—	8,511	8,511
Government insured/guaranteed loans (1)	15,143		—	—	—	—	15,143
Total consumer loans (excluding PCI)	271,332		39,686	37,976	53,371	38,268	440,633
Total consumer PCI loans (carrying value)	12,722		27	—	—	—	12,749
Total consumer loans	$	284,054	39,713	37,976	53,371	38,268	453,382

(1) Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.

LTV refers to the ratio comparing the loan’s unpaid principal balance to the property’s collateral value. CLTV refers to the combination of first mortgage and junior lien mortgage (including unused line amounts for credit line products) ratios. LTVs and CLTVs are updated quarterly using a cascade approach which first uses values provided by automated valuation models (AVMs) for the property. If an AVM is not available, then the value is estimated using the original appraised value adjusted by the change in Home Price Index (HPI) for the property location. If an HPI is not available, the original appraised value is used. The HPI value is normally the only method considered for high value properties, generally with an original value of $1 million or more, as the AVM values have proven less accurate for these properties.

Table 6.12 shows the most updated LTV and CLTV distribution of the real estate 1-4 family first and junior lien mortgage loan portfolios. We consider the trends in residential real estate markets as we monitor credit risk and establish our allowance for credit losses. In the event of a default, any loss should be limited to the portion of the loan amount in excess of the net realizable value of the underlying real estate collateral value. Certain loans do not have an LTV or CLTV due to industry data availability and portfolios acquired from or serviced by other institutions.

Table 6.12:Consumer Loans by LTV/CLTV

	December 31, 2018				December 31, 2017
(in millions)	Real estate 1-4 family first mortgage by LTV		Real estate 1-4 family junior lien mortgage by CLTV	Total	Real estate 1-4 family first mortgage by LTV	Real estate 1-4 family junior lien mortgage by CLTV	Total
By LTV/CLTV:
0-60%	$	147,666	15,753	163,419	133,902	16,301	150,203
60.01-80%	104,477		11,183	115,660	104,639	12,918	117,557
80.01-100%	12,372		4,874	17,246	13,924	6,580	20,504
100.01-120% (1)	1,211		1,596	2,807	1,868	2,427	4,295
> 120% (1)	484		578	1,062	783	1,008	1,791
No LTV/CLTV available	935		397	1,332	1,073	452	1,525
Government insured/guaranteed loans (2)	12,932		—	12,932	15,143	—	15,143
Total consumer loans (excluding PCI)	280,077		34,381	314,458	271,332	39,686	311,018
Total consumer PCI loans (carrying value)	4,988		17	5,005	12,722	27	12,749
Total consumer loans	$	285,065	34,398	319,463	284,054	39,713	323,767

(1) Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV.

(2) Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.

NONACCRUAL LOANS Table 6.13 provides loans on nonaccrual status. PCI loans are excluded from this table because they continue to earn interest from accretable yield, independent of performance in accordance with their contractual terms.

Table 6.13:Nonaccrual Loans

	Dec 31,		Dec 31,
(in millions)	2018		2017
Commercial:
Commercial and industrial	$	1,486	1,899
Real estate mortgage	580		628
Real estate construction	32		37
Lease financing	90		76
Total commercial	2,188		2,640
Consumer:
Real estate 1-4 family first mortgage (1)	3,183		3,732
Real estate 1-4 family junior lien mortgage	945		1,086
Automobile	130		130
Other revolving credit and installment	50		58
Total consumer	4,308		5,006
Total nonaccrual loans (excluding PCI)	$	6,496	7,646

(1) Prior period has been revised to exclude $390 million of MLHFS, LHFS and loans held at fair value.

LOANS IN PROCESS OF FORECLOSURE Our recorded investment in consumer mortgage loans collateralized by residential real estate property that are in process of foreclosure was $4.6 billion and $6.3 billion at December 31, 2018 and 2017, respectively, which included $3.2 billion and $4.0 billion, respectively, of loans that are government insured/guaranteed. Under the Consumer Financial Protection Bureau guidelines, we do not commence the foreclosure process on consumer real estate loans until after the loan is 120 days delinquent. Foreclosure procedures and timelines vary depending on whether the property address resides in a judicial or non-judicial state. Judicial states require the foreclosure to be processed through the state’s courts while non-judicial states are processed without court intervention. Foreclosure timelines vary according to state law.

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING  Certain loans 90 days or more past due as to interest or principal are still accruing, because they are (1) well-secured and in the process of collection or (2) real estate 1‑4 family mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. PCI loans of $370 million at December 31, 2018, and $1.4 billion at December 31, 2017, are not included in these past due and still accruing loans even when they are 90 days or more contractually past due. These PCI loans are considered to be accruing because they continue to earn interest from accretable yield, independent of performance in accordance with their contractual terms.

Table 6.14 shows non-PCI loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed.

Table 6.14:Loans 90 Days or More Past Due and Still Accruing (1)

	Dec 31,		Dec 31,
(in millions)	2018		2017
Total (excluding PCI):	$	8,704	11,532
Less: FHA insured/VA guaranteed (2)	7,725		10,475
Total, not government insured/guaranteed	$	979	1,057
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial	$	43	26
Real estate mortgage	51		23
Total commercial	94		49
Consumer:
Real estate 1-4 family first mortgage	124		213
Real estate 1-4 family junior lien mortgage	32		60
Credit card	513		492
Automobile	114		143
Other revolving credit and installment	102		100
Total consumer	885		1,008
Total, not government insured/guaranteed	$	979	1,057

(1) Financial information for the prior period December 31, 2017 has been revised to exclude MLHFS, LHFS and loans held at fair value, which reduced “Total, not government insured/guaranteed” by $6 million.

(2) Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.

IMPAIRED LOANSTable 6.15 summarizes key information for impaired loans. Our impaired loans predominantly include loans on nonaccrual status in the commercial portfolio segment and loans modified in a TDR, whether on accrual or nonaccrual status. These impaired loans generally have estimated losses which are included in the allowance for credit losses. We have impaired loans with no allowance for credit losses when loss content has been previously recognized through charge-offs and we do not anticipate additional charge-offs or losses, or certain loans are currently performing in accordance with their terms and for which no loss has been estimated. Impaired loans exclude PCI loans. Table 6.15 includes trial modifications that totaled $149 million at December 31, 2018, and $194 million at December 31, 2017.

For additional information on our impaired loans and allowance for credit losses, see Note 1 (Summary of Significant Accounting Policies).

Table 6.15:Impaired Loans Summary

			Recorded investment
(in millions)	Unpaid principal balance (1)		Impaired loans	Impaired loans with related allowance for credit losses	Related allowance for credit losses
December 31, 2018
Commercial:
Commercial and industrial	$	3,057	2,030	1,730	319
Real estate mortgage	1,228		1,032	1,009	154
Real estate construction	74		47	46	9
Lease financing	146		112	112	32
Total commercial	4,505		3,221	2,897	514
Consumer:
Real estate 1-4 family first mortgage	12,309		10,738	4,420	525
Real estate 1-4 family junior lien mortgage	1,886		1,694	1,133	183
Credit card	449		449	449	172
Automobile	153		89	43	8
Other revolving credit and installment	162		156	136	41
Total consumer (2)	14,959		13,126	6,181	929
Total impaired loans (excluding PCI)	$	19,464	16,347	9,078	1,443
December 31, 2017
Commercial:
Commercial and industrial	$	3,577	2,568	2,310	462
Real estate mortgage	1,502		1,239	1,207	211
Real estate construction	95		54	45	9
Lease financing	132		99	89	23
Total commercial	5,306		3,960	3,651	705
Consumer:
Real estate 1-4 family first mortgage	14,020		12,225	6,060	770
Real estate 1-4 family junior lien mortgage	2,135		1,918	1,421	245
Credit card	356		356	356	136
Automobile	157		87	34	5
Other revolving credit and installment	136		128	117	29
Total consumer (2)	16,804		14,714	7,988	1,185
Total impaired loans (excluding PCI)	$	22,110	18,674	11,639	1,890

(1) Excludes the unpaid principal balance for loans that have been fully charged off or otherwise have zero recorded investment.

(2) Includes the recorded investment of $1.3 billion and $1.4 billion at December 31, 2018 and 2017, respectively, of government insured/guaranteed loans that are predominantly insured by the FHA or guaranteed by the VA and generally do not have an allowance. Impaired loans may also have limited, if any, allowance when the recorded investment of the loan approximates estimated net realizable value as a result of charge-offs prior to a TDR modification.

Commitments to lend additional funds on loans whose terms have been modified in a TDR amounted to $513 million and $579 million at December 31, 2018 and 2017, respectively.

Table 6.16 provides the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans by portfolio segment and class.

Table 6.16:Average Recorded Investment in Impaired Loans

	Year ended December 31,
	2018			2017		2016
(in millions)	Average recorded investment		Recognized interest income	Average recorded investment	Recognized interest income	Average recorded investment	Recognized interest income
Commercial:
Commercial and industrial	$	2,287	173	3,241	118	3,408	101
Real estate mortgage	1,193		89	1,328	91	1,636	128
Real estate construction	60		7	66	14	115	11
Lease financing	125		1	105	1	88	—
Total commercial	3,665		270	4,740	224	5,247	240
Consumer:
Real estate 1-4 family first mortgage	11,522		664	13,326	730	15,857	828
Real estate 1-4 family junior lien mortgage	1,804		116	2,041	121	2,294	132
Credit card	407		50	323	36	295	34
Automobile	86		11	86	11	93	11
Other revolving credit and installment	142		10	117	8	89	6
Total consumer	13,961		851	15,893	906	18,628	1,011
Total impaired loans (excluding PCI)	$	17,626	1,121	20,633	1,130	23,875	1,251

Interest income:
Cash basis of accounting	$	338	299	353
Other (1)	783		831	898
Total interest income	$	1,121	1,130	1,251

(1) Includes interest recognized on accruing TDRs, interest recognized related to certain impaired loans which have an allowance calculated using discounting, and amortization of purchase accounting adjustments related to certain impaired loans.

TROUBLED DEBT RESTRUCTURINGS (TDRs) When, for economic or legal reasons related to a borrower’s financial difficulties, we grant a concession for other than an insignificant period of time to a borrower that we would not otherwise consider, the related loan is classified as a TDR, the balance of which totaled $15.5 billion and $17.8 billion at December 31, 2018 and 2017, respectively. We do not consider loan resolutions such as foreclosure or short sale to be a TDR.

We may require some consumer borrowers experiencing financial difficulty to make trial payments generally for a period of three to four months, according to the terms of a planned permanent modification, to determine if they can perform according to those terms. These arrangements represent trial modifications, which we classify and account for as TDRs. While loans are in trial payment programs, their original terms are not considered modified and they continue to advance through delinquency status and accrue interest according to their original terms.

Table 6.17 summarizes our TDR modifications for the periods presented by primary modification type and includes the financial effects of these modifications. For those loans that modify more than once, the table reflects each modification that occurred during the period. Loans that both modify and pay off within the period, as well as changes in recorded investment during the period for loans modified in prior periods, are not included in the table.

Table 6.17:TDR Modifications

	Primary modification type (1)							Financial effects of modifications
(in millions)	Principal (2)		Interest rate reduction	Other  concessions (3)		Total		Charge- offs (4)	Weighted average interest rate reduction		Recorded investment related to interest rate reduction (5)
Year ended December 31, 2018
Commercial:
Commercial and industrial	$	13	29	2,310		2,352		58	1.18	%	$	29
Real estate mortgage	—		44	375		419		—	0.88		44
Real estate construction	—		—	25		25		—	—		—
Lease financing	—		—	63		63		—	—		—
Total commercial	13		73	2,773		2,859		58	1.00		73
Consumer:
Real estate 1-4 family first mortgage	209		26	1,042		1,277		4	2.25		119
Real estate 1-4 family junior lien mortgage	7		41	113		161		5	2.14		45
Credit card	—		336	—		336		—	12.54		336
Automobile	13		16	55		84		30	6.21		16
Other revolving credit and installment	—		49	12		61		—	7.95		49
Trial modifications (6)	—		—	8		8		—	—		—
Total consumer	229		468	1,230		1,927		39	8.96		565
Total	$	242	541	4,003		4,786		97	8.06	%	$	638
Year ended December 31, 2017
Commercial:
Commercial and industrial	$	24	45	2,912		2,981		173	0.64	%	$	45
Real estate mortgage	5		59	507		571		20	1.28		59
Real estate construction	—		1	26		27		—	0.69		1
Lease financing	—		—	37		37		—	—		—
Total commercial	29		105	3,482		3,616		193	1.00		105
Consumer:
Real estate 1-4 family first mortgage	231		140	1,035		1,406		15	2.57		257
Real estate 1-4 family junior lien mortgage	25		82	81		188		14	3.26		93
Credit card	—		257	—		257		—	11.98		257
Automobile	2		15	67		84		39	5.89		15
Other revolving credit and installment	—		47	8		55		1	7.47		47
Trial modifications (6)	—		—	(28	)	(28	)	—	—		—
Total consumer	258		541	1,163		1,962		69	6.70		669
Total	$	287	646	4,645		5,578		262	5.92	%	$	774
Year ended December 31, 2016
Commercial:
Commercial and industrial	$	42	130	3,154		3,326		360	1.91	%	$	130
Real estate mortgage	2		105	560		667		1	1.15		105
Real estate construction	—		27	72		99		—	1.02		27
Lease financing	—		—	8		8		—	—		—
Total commercial	44		262	3,794		4,100		361	1.51		262
Consumer:
Real estate 1-4 family first mortgage	338		288	1,411		2,037		49	2.69		507
Real estate 1-4 family junior lien mortgage	23		109	106		238		37	3.07		130
Credit card	—		180	—		180		—	12.09		180
Automobile	2		16	57		75		36	6.07		16
Other revolving credit and installment	1		33	10		44		2	6.83		33
Trial modifications (6)	—		—	44		44		—	—		—
Total consumer	364		626	1,628		2,618		124	4.92		866
Total	$	408	888	5,422		6,718		485	4.13	%	$	1,128

(1) Amounts represent the recorded investment in loans after recognizing the effects of the TDR, if any. TDRs may have multiple types of concessions, but are presented only once in the first modification type based on the order presented in the table above. The reported amounts include loans remodified of $1.9 billion, $2.1 billion and $1.6 billion, for the years ended December 31, 2018, 2017, and 2016, respectively.

(2) Principal modifications include principal forgiveness at the time of the modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with a zero percent contractual interest rate.

(3) Other concessions include loans discharged in bankruptcy, loan renewals, term extensions and other interest and noninterest adjustments, but exclude modifications that also forgive principal and/or reduce the contractual interest rate.

(4) Charge-offs include write-downs of the investment in the loan in the period it is contractually modified. The amount of charge-off will differ from the modification terms if the loan has been charged down prior to the modification based on our policies. In addition, there may be cases where we have a charge-off/down with no legal principal modification. Modifications resulted in legally forgiving principal (actual, contingent or deferred) of $28 million, $32 million and $67 million for the years ended December 31, 2018, 2017, and 2016, respectively.

(5) Reflects the effect of reduced interest rates on loans with an interest rate concession as one of their concession types, which includes loans reported as a principal primary modification type that also have an interest rate concession.

(6) Trial modifications are granted a delay in payments due under the original terms during the trial payment period. However, these loans continue to advance through delinquency status and accrue interest according to their original terms. Any subsequent permanent modification generally includes interest rate related concessions; however, the exact concession type and resulting financial effect are usually not known until the loan is permanently modified. Trial modifications for the period are presented net of previously reported trial modifications that became permanent in the current period.

Table 6.18 summarizes permanent modification TDRs that have defaulted in the current period within 12 months of their permanent modification date. We are reporting these defaulted TDRs based on a payment default definition of 90 days past due for the commercial portfolio segment and 60 days past due for the consumer portfolio segment.

Table 6.18:Defaulted TDRs

	Recorded investment of defaults
	Year ended December 31,
(in millions)	2018		2017	2016
Commercial:
Commercial and industrial	$	198	173	124
Real estate mortgage	76		61	66
Real estate construction	36		4	3
Lease financing	—		1	—
Total commercial	310		239	193
Consumer:
Real estate 1-4 family first mortgage	60		114	138
Real estate 1-4 family junior lien mortgage	14		19	20
Credit card	79		74	56
Automobile	14		15	13
Other revolving credit and installment	6		5	4
Total consumer	173		227	231
Total	$	483	466	424

Purchased Credit-Impaired Loans

Substantially all of our PCI loans were acquired from Wachovia on December 31, 2008, at which time we acquired commercial and consumer loans with a carrying value of $18.7 billion and $40.1 billion, respectively. The unpaid principal balance on December 31, 2008, was $98.2 billion for the total of commercial and consumer PCI loans. Table 6.19 presents PCI loans net of any remaining purchase accounting adjustments. Real estate 1-4 family first mortgage PCI loans are predominantly Pick-a-Pay loans.

Table 6.19:PCI Loans

	Dec 31,		Dec 31,
(in millions)	2018		2017
Total commercial	$	4	86
Consumer:
Real estate 1-4 family first mortgage	4,988		12,722
Real estate 1-4 family junior lien mortgage	17		27
Total consumer	5,005		12,749
Total PCI loans (carrying value)	$	5,009	12,835
Total PCI loans (unpaid principal balance)	$	7,348	18,975

ACCRETABLE YIELD The excess of cash flows expected to be

collected over the carrying value of PCI loans is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the loan, or pools of loans. The accretable yield is affected by:

• changes in interest rate indices for variable rate PCI loans – expected future cash flows are based on the variable rates in effect at the time of the regular evaluations of cash flows expected to be collected;

• changes in prepayment assumptions – prepayments affect the estimated life of PCI loans which may change the amount of interest income, and possibly principal, expected to be collected; and

• changes in the expected principal and interest payments over the estimated weighted-average life – updates to expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected.

The change in the accretable yield related to PCI loans since the merger with Wachovia is presented in Table 6.20. Changes during 2018 also reflect $2.4 billion in gains on the sale of $6.2 billion Pick-a-Pay PCI loans.

Table 6.20:Change in Accretable Yield

(in millions)	2018			2017		2016		2009-2015
Total, beginning of period	$	8,887		11,216		16,301		10,447
Addition of accretable yield due to acquisitions	—			2		27		132
Accretion into interest income (1)	(1,094		)	(1,406	)	(1,365	)	(14,212	)
Accretion into noninterest income due to sales (2)	(2,374		)	(334	)	(9	)	(458	)
Reclassification from nonaccretable difference for loans with improving credit-related cash flows	403			642		1,221		9,734
Changes in expected cash flows that do not affect nonaccretable difference (3)	(2,789		)	(1,233	)	(4,959	)	10,658
Total, end of period	$	3,033		8,887		11,216		16,301

(1) Includes accretable yield released as a result of settlements with borrowers, which is included in interest income.

(2) Includes accretable yield released as a result of sales to third parties, which is included in noninterest income.

(3) Represents changes in cash flows expected to be collected due to the impact of modifications, changes in prepayment assumptions, changes in interest rates on variable rate PCI loans and sales to third parties.

COMMERCIAL PCI CREDIT QUALITY INDICATORS Table 6.21 provides a breakdown of commercial PCI loans by risk category.

Table 6.21:Commercial PCI Loans by Risk Category

(in millions)	Dec. 31, 2018		Dec. 31, 2017
By risk category:
Pass	$	1	8
Criticized	3		78
Total commercial PCI loans	$	4	86

Table 6.22 provides past due information for commercial PCI loans.

Table 6.22:Commercial PCI Loans by Delinquency Status

(in millions)	Dec. 31, 2018		Dec. 31, 2017
By delinquency status:
Current-29 DPD and still accruing	$	3	86
30-89 DPD and still accruing	1		—
Total commercial PCI loans	$	4	86

CONSUMER PCI CREDIT QUALITY INDICATORS Our consumer PCI loans were aggregated into several pools of loans at acquisition. Below, we have provided credit quality indicators based on the unpaid principal balance (adjusted for write-downs) of the individual loans included in the pool, but we have not allocated the remaining purchase accounting adjustments, which were established at a pool level. Table 6.23 provides the delinquency status of consumer PCI loans.

Table 6.23:Consumer PCI Loans by Delinquency Status

	December 31, 2018				December 31, 2017
(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Total	Real estate 1-4 family first mortgage	Real estate 1-4 family junior lien mortgage	Total
By delinquency status:
Current-29 DPD and still accruing	$	5,545	117	5,662	13,127	138	13,265
30-59 DPD and still accruing	495		8	503	1,317	8	1,325
60-89 DPD and still accruing	229		3	232	622	3	625
90-119 DPD and still accruing	99		2	101	293	2	295
120-179 DPD and still accruing	54		1	55	219	2	221
180+ DPD and still accruing	353		3	356	1,310	4	1,314
Total consumer PCI loans (adjusted unpaid principal balance)	$	6,775	134	6,909	16,888	157	17,045
Total consumer PCI loans (carrying value)	$	4,988	17	5,005	12,722	27	12,749

Table 6.24 provides FICO scores for consumer PCI loans.

Table 6.24:Consumer PCI Loans by FICO

	December 31, 2018				December 31, 2017
(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Total	Real estate 1-4 family first mortgage	Real estate 1-4 family junior lien mortgage	Total
By FICO:
< 600	$	1,418	27	1,445	4,014	37	4,051
600-639	713		18	731	2,086	20	2,106
640-679	898		20	918	2,393	24	2,417
680-719	970		24	994	2,242	29	2,271
720-759	843		20	863	1,779	23	1,802
760-799	523		11	534	933	12	945
800+	381		6	387	468	6	474
No FICO available	1,029		8	1,037	2,973	6	2,979
Total consumer PCI loans (adjusted unpaid principal balance)	$	6,775	134	6,909	16,888	157	17,045
Total consumer PCI loans (carrying value)	$	4,988	17	5,005	12,722	27	12,749

Table 6.25 shows the distribution of consumer PCI loans by LTV for real estate 1-4 family first mortgages and by CLTV for real estate 1-4 family junior lien mortgages.

Table 6.25:Consumer PCI Loans by LTV/CLTV

	December 31, 2018				December 31, 2017
(in millions)	Real estate 1-4 family first mortgage by LTV		Real estate 1-4 family junior lien mortgage by CLTV	Total	Real estate 1-4 family first mortgage by LTV	Real estate 1-4 family junior lien mortgage by CLTV	Total
By LTV/CLTV:
0-60%	$	3,970	44	4,014	8,010	45	8,055
60.01-80%	2,161		53	2,214	6,510	63	6,573
80.01-100%	542		28	570	1,975	35	2,010
100.01-120% (1)	82		8	90	319	10	329
> 120% (1)	19		1	20	73	3	76
No LTV/CLTV available	1		—	1	1	1	2
Total consumer PCI loans (adjusted unpaid principal balance)	$	6,775	134	6,909	16,888	157	17,045
Total consumer PCI loans (carrying value)	$	4,988	17	5,005	12,722	27	12,749

(1) Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV.