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Loans

12 Months Ended

Dec. 31, 2018

Loans, Notes, Trade and Other Receivables, Excluding Allowance for Credit Losses [Text Block]

NOTE 7 - LOANS

Composition of Loan Portfolio



(Dollars in millions)	December 31, 2018		December 31, 2017
Commercial loans:
C&I ¹		$71,137		$66,356
CRE	7,265		5,317
Commercial construction	2,538		3,804
Total commercial LHFI	80,940		75,477
Consumer loans:
Residential mortgages - guaranteed	459		560
Residential mortgages - nonguaranteed ²	28,836		27,136
Residential home equity products	9,468		10,626
Residential construction	184		298
Guaranteed student	7,229		6,633
Other direct	10,615		8,729
Indirect	12,419		12,140
Credit cards	1,689		1,582
Total consumer LHFI	70,899		67,704
LHFI		$151,839		$143,181
LHFS ³		$1,468		$2,290

¹Includes $4.1 billion and $3.7 billion of lease financing, and $796 million and $778 million of installment loans at December 31, 2018 and 2017, respectively.

²Includes $163 million and $196 million of LHFI measured at fair value at December 31, 2018 and 2017, respectively.

³Includes $1.2 billion and $1.6 billion of LHFS measured at fair value at December 31, 2018 and 2017, respectively.

Loan Purchases, Sales, and Transfers



	Year Ended December 31
(Dollars in millions)	2018		2017
Non-routine purchases of LHFI: ¹
Consumer loans		$101		$233
Routine purchases of LHFI: ²
Consumer loans	2,122		1,729
Loan sales: ^{3, 4}
Commercial loans	170		703
Consumer loans	99		2
Transfers of loans from:
LHFI to LHFS	532		288
LHFS to LHFI	28		19
LHFI to OREO	62		57

¹Purchases are episodic in nature and are conducted based on specific business strategies.

² Purchases are routine in nature and are conducted in the normal course of business.

³Excludes sales of residential and commercial mortgage LHFS conducted in the normal course of business.

⁴ Net gain on loan sales were immaterial during the years ended December 31, 2018 and 2017.

At December 31, 2018 and 2017, the Company had $28.1 billion and $24.3 billion of net eligible loan collateral pledged to the Federal Reserve discount window to support $21.3 billion and $18.2 billion of available, unused borrowing capacity, respectively.

At December 31, 2018 and 2017, the Company had $39.2 billion and $38.0 billion of net eligible loan collateral pledged to the FHLB of Atlanta to support $31.0 billion and $30.5 billion of available borrowing capacity, respectively. The available FHLB borrowing capacity at December 31, 2018 was used to support $5.0 billion of long-term debt and $5.8 billion of letters of credit issued on the Company's behalf. At December 31, 2017, the available FHLB borrowing capacity was used to support $4 million of long-term debt and $6.7 billion of letters of credit issued on the Company's behalf.

Credit Quality Evaluation

The Company evaluates the credit quality of its loan portfolio by employing a dual internal risk rating system, which assigns both PD and LGD ratings to derive expected losses. Assignment of these ratings are predicated upon numerous factors, including consumer credit risk scores, rating agency information, borrower/guarantor financial capacity, LTV ratios, collateral type, debt service coverage ratios, collection experience, other internal metrics/analyses, and/or qualitative assessments.

For the commercial portfolio, the Company believes that the most appropriate credit quality indicator is an individual loan’s risk assessment expressed according to the broad regulatory agency classifications of Pass or Criticized. The Company conforms to the following regulatory classifications for Criticized assets: Other Assets Especially Mentioned (or Special Mention), Substandard, Doubtful, and Loss. However, for the purposes of disclosure, management believes the most meaningful distinction within the Criticized categories is between Criticized accruing (which includes Special Mention and a portion of Substandard) and Criticized nonaccruing (which includes a portion of Substandard as well as Doubtful and Loss). This distinction identifies those relatively higher risk loans for which there is a basis to believe that the Company will not collect all amounts due under those loan agreements. The Company's risk rating system is more granular, with multiple risk ratings in both the Pass and Criticized categories. Pass ratings reflect relatively low PDs; whereas, Criticized assets have higher PDs. The granularity in Pass ratings assists in establishing pricing, loan structures, approval requirements, reserves, and ongoing credit management requirements. Commercial risk ratings are refreshed at least annually, or more frequently as appropriate, based upon considerations such as market conditions, borrower characteristics, and portfolio trends. Additionally, management routinely reviews portfolio risk ratings, trends, and concentrations to support risk identification and mitigation activities. As reflected in the following risk rating table, the increases in Pass and Criticized accruing C&I loans at December 31, 2018 compared to December 31, 2017, were due to loan growth and normal variability in the portfolio. Criticized nonaccruing C&I loans remained low compared to December 31, 2017.

For consumer loans, the Company monitors credit risk based on indicators such as delinquencies and FICO scores. The Company believes that consumer credit risk, as assessed by the industry-wide FICO scoring method, is a relevant credit quality indicator. Borrower-specific FICO scores are obtained at origination as part of the Company’s formal underwriting

process, and refreshed FICO scores are obtained by the Company at least quarterly.

For guaranteed loans, the Company monitors the credit quality based primarily on delinquency status, as it is a more relevant indicator of credit quality due to the government guarantee. At December 31, 2018 and 2017, 27% and 28%,

respectively, of guaranteed residential mortgages were current with respect to payments. At December 31, 2018 and 2017, 72% and 75%, respectively, of guaranteed student loans were current with respect to payments. The Company's loss exposure on guaranteed residential mortgages and student loans is mitigated by the government guarantee.

LHFI by credit quality indicator are presented in the following tables:



	Commercial Loans
	C&I				CRE				Commercial Construction
(Dollars in millions)	December 31, 2018		December 31, 2017		December 31, 2018		December 31, 2017		December 31, 2018		December 31, 2017
Risk rating:
Pass		$69,095		$64,546		$7,165		$5,126		$2,459		$3,770
Criticized accruing	1,885		1,595		98		167		79		33
Criticized nonaccruing	157		215		2		24		—		1
Total		$71,137		$66,356		$7,265		$5,317		$2,538		$3,804



	Consumer Loans ¹
	Residential Mortgages - Nonguaranteed				Residential Home Equity Products				Residential Construction
(Dollars in millions)	December 31, 2018		December 31, 2017		December 31, 2018		December 31, 2017		December 31, 2018		December 31, 2017
Current FICO score range:
700 and above		$25,764		$23,602		$8,060		$8,946		$151		$240
620 - 699	2,367		2,721		1,015		1,242		27		50
Below 620 ²	705		813		393		438		6		8
Total		$28,836		$27,136		$9,468		$10,626		$184		$298



	Other Direct				Indirect				Credit Cards
(Dollars in millions)	December 31, 2018		December 31, 2017		December 31, 2018		December 31, 2017		December 31, 2018		December 31, 2017
Current FICO score range:
700 and above		$9,642		$7,929		$9,315		$9,094		$1,142		$1,088
620 - 699	935		757		2,395		2,344		420		395
Below 620 ²	38		43		709		702		127		99
Total		$10,615		$8,729		$12,419		$12,140		$1,689		$1,582

¹Excludes $7.2 billion and $6.6 billion of guaranteed student loans and $459 million and $560 million of guaranteed residential mortgages at December 31, 2018 and 2017, respectively, for which there was nominal risk of principal loss due to the government guarantee.

² For substantially all loans with refreshed FICO scores below 620, the borrower’s FICO score at the time of origination exceeded 620 but has since deteriorated as the loan has seasoned.

The LHFI portfolio by payment status is presented in the following tables:



	December 31, 2018
	Accruing
(Dollars in millions)	Current		30-89 Days Past Due		90+ Days Past Due		Nonaccruing ¹			Total
Commercial loans:
C&I		$70,901		$64		$15		$157			$71,137
CRE	7,259		3		1		2			7,265
Commercial construction	2,538		—		—		—			2,538
Total commercial LHFI	80,698		67		16		159			80,940
Consumer loans:
Residential mortgages - guaranteed	125		39		295		—		³	459
Residential mortgages - nonguaranteed ²	28,552		70		10		204			28,836
Residential home equity products	9,268		62		—		138			9,468
Residential construction	170		3		—		11			184
Guaranteed student	5,236		685		1,308		—		³	7,229
Other direct	10,559		45		4		7			10,615
Indirect	12,286		125		1		7			12,419
Credit cards	1,654		17		18		—			1,689
Total consumer LHFI	67,850		1,046		1,636		367			70,899
Total LHFI		$148,548		$1,113		$1,652		$526			$151,839

¹Includes nonaccruing LHFI past due 90 days or more of $306 million. Nonaccruing LHFI past due fewer than 90 days include nonaccrual loans modified in TDRs, performing second lien loans where the first lien loan is nonperforming, and certain energy-related commercial loans.

²Includes $163 million of loans measured at fair value, the majority of which were accruing current.

³Guaranteed loans are not placed on nonaccrual status regardless of delinquency because collection of principal and interest is reasonably assured by the government.



	December 31, 2017
	Accruing
(Dollars in millions)	Current		30-89 Days Past Due		90+ Days Past Due		Nonaccruing ¹			Total
Commercial loans:
C&I		$66,092		$42		$7		$215			$66,356
CRE	5,293		—		—		24			5,317
Commercial construction	3,803		—		—		1			3,804
Total commercial LHFI	75,188		42		7		240			75,477
Consumer loans:
Residential mortgages - guaranteed	159		55		346		—		³	560
Residential mortgages - nonguaranteed ²	26,778		148		4		206			27,136
Residential home equity products	10,348		75		—		203			10,626
Residential construction	280		7		—		11			298
Guaranteed student	4,946		659		1,028		—		³	6,633
Other direct	8,679		36		7		7			8,729
Indirect	12,022		111		—		7			12,140
Credit cards	1,556		13		13		—			1,582
Total consumer LHFI	64,768		1,104		1,398		434			67,704
Total LHFI		$139,956		$1,146		$1,405		$674			$143,181

¹Includes nonaccruing LHFI past due 90 days or more of $357 million. Nonaccruing LHFI past due fewer than 90 days include nonaccrual loans modified in TDRs, performing second lien loans where the first lien loan is nonperforming, and certain energy-related commercial loans.

²Includes $196 million of loans measured at fair value, the majority of which were accruing current.

³Guaranteed loans are not placed on nonaccrual status regardless of delinquency because collection of principal and interest is reasonably assured by the government.

Impaired Loans

A loan is considered impaired when it is probable that the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the agreement. Commercial nonaccrual loans greater than $3 million and certain commercial and consumer loans whose terms have been modified in a TDR are individually evaluated for

impairment. Smaller-balance homogeneous loans that are collectively evaluated for impairment and loans measured at fair value are not included in the following tables. Additionally, the following tables exclude guaranteed student loans and guaranteed residential mortgages for which there was nominal risk of principal loss due to the government guarantee.



	December 31, 2018						December 31, 2017
(Dollars in millions)	Unpaid Principal Balance		Carrying¹ Value		Related ALLL		Unpaid Principal Balance		Carrying¹ Value		Related ALLL
Impaired LHFI with no ALLL recorded:
Commercial loans:
C&I		$132		$79		$—		$38		$35		$—
CRE	10		—		—		—		—		—
Total commercial LHFI with no ALLL recorded	142		79		—		38		35		—
Consumer loans:
Residential mortgages - nonguaranteed	501		397		—		458		363		—
Residential construction	12		7		—		15		9		—
Total consumer LHFI with no ALLL recorded	513		404		—		473		372		—

Impaired LHFI with an ALLL recorded:
Commercial loans:
C&I	81		70		13		127		117		19
CRE	—		—		—		21		21		2
Total commercial LHFI with an ALLL recorded	81		70		13		148		138		21
Consumer loans:
Residential mortgages - nonguaranteed	1,006		984		96		1,133		1,103		113
Residential home equity products	849		799		44		953		895		54
Residential construction	79		76		6		93		90		7
Other direct	57		57		1		59		59		1
Indirect	133		133		5		123		122		7
Credit cards	30		9		2		26		7		1
Total consumer LHFI with an ALLL recorded	2,154		2,058		154		2,387		2,276		183
Total impaired LHFI		$2,890		$2,611		$167		$3,046		$2,821		$204

¹Carrying value reflects charge-offs that have been recognized plus other amounts that have been applied to adjust the net book balance.

Included in the impaired LHFI carrying values above at December 31, 2018 and 2017 were $2.3 billion and $2.4 billion of accruing TDRs, of which 97% and 96% were current, respectively. See Note 1, “Significant Accounting Policies,” for further information regarding the Company’s loan impairment policy.



	Year Ended December 31
	2018				2017				2016
(Dollars in millions)	Average Carrying Value		Interest¹ Income Recognized		Average Carrying Value		Interest¹ Income Recognized		Average Carrying Value		Interest ¹ Income Recognized
Impaired LHFI with no ALLL recorded:
Commercial loans:
C&I		$121		$7		$34		$1		$169		$3
CRE	39		—		—		—		—		—
Total commercial LHFI with no ALLL recorded	160		7		34		1		169		3
Consumer loans:
Residential mortgages - nonguaranteed	404		19		357		15		370		16
Residential construction	8		1		8		—		8		—
Total consumer LHFI with no ALLL recorded	412		20		365		15		378		16

Impaired LHFI with an ALLL recorded:
Commercial loans:
C&I	71		1		112		2		170		1
CRE	—		—		22		1		25		1
Total commercial LHFI with an ALLL recorded	71		1		134		3		195		2
Consumer loans:
Residential mortgages - nonguaranteed	993		48		1,123		58		1,251		64
Residential home equity products	816		36		914		32		812		29
Residential construction	78		3		94		5		110		6
Other direct	58		4		60		4		10		1
Indirect	147		7		136		6		114		6
Credit cards	8		1		6		1		6		1
Total consumer LHFI with an ALLL recorded	2,100		99		2,333		106		2,303		107
Total impaired LHFI		$2,743		$127		$2,866		$125		$3,045		$128

¹Of the interest income recognized during the years ended December 31, 2018, 2017, and 2016, cash basis interest income was immaterial.

NPAs are presented in the following table:



(Dollars in millions)	December 31, 2018		December 31, 2017
NPAs:
Commercial NPLs:
C&I		$157		$215
CRE	2		24
Commercial construction	—		1
Consumer NPLs:
Residential mortgages - nonguaranteed	204		206
Residential home equity products	138		203
Residential construction	11		11
Other direct	7		7
Indirect	7		7
Total nonaccrual loans/NPLs ¹	526		674
OREO ²	54		57
Other repossessed assets	9		10
Total NPAs		$589		$741

¹ Nonaccruing restructured loans are included in total nonaccrual loans/NPLs.

² Does not include foreclosed real estate related to loans insured by the FHA or guaranteed by the VA. Proceeds due from the FHA and the VA are recorded as a receivable in Other assets in the Consolidated Balance Sheets until the property is conveyed and the funds are received. The receivable related to proceeds due from the FHA and the VA totaled $50 million and $45 million at December 31, 2018 and 2017, respectively.

The Company's recorded investment of nonaccruing loans secured by residential real estate properties for which formal foreclosure proceedings were in process at December 31, 2018 and 2017 was $93 million and $73 million, respectively. The Company's recorded investment of accruing loans secured by residential real estate properties for which formal foreclosure proceedings were in process at December 31, 2018 and 2017 was $110 million and $101 million, of which $103 million and $97 million were insured by the FHA or guaranteed by the VA, respectively.

At December 31, 2018, OREO included $50 million of foreclosed residential real estate properties and $2 million of foreclosed commercial real estate properties, with the remaining $2 million related to land.

At December 31, 2017, OREO included $51 million of foreclosed residential real estate properties and $4 million of foreclosed commercial real estate properties, with the remaining $2 million related to land.

Restructured Loans

A TDR is a loan for which the Company has granted an economic concession to a borrower in response to financial difficulty experienced by the borrower, which the Company would not have considered otherwise. When a loan is modified under the terms of a TDR, the Company typically offers the borrower an extension of the loan maturity date and/or a reduction in the original contractual interest rate. In limited situations, the Company may offer to restructure a loan in a manner that

ultimately results in the forgiveness of a contractually specified principal balance.

At both December 31, 2018 and 2017, the Company had an immaterial amount of commitments to lend additional funds to debtors whose terms have been modified in a TDR. The number and carrying value of loans modified under the terms of a TDR, by type of modification, are presented in the following tables:



	Year Ended December 31, 2018 ¹
(Dollars in millions)	Number of Loans Modified	Rate Modification		Term Extension and/or Other Concessions		Total
Commercial loans:
C&I	169		$2		$77		$79
CRE	1	—		—		—
Consumer loans:
Residential mortgages - nonguaranteed	299	19		52		71
Residential home equity products	525	2		41		43
Residential construction	4	—		—		—
Other direct	701	—		10		10
Indirect	2,585	—		58		58
Credit cards	1,410	5		—		5
Total TDR additions	5,694		$28		$238		$266

¹Includes loans modified under the terms of a TDR that were charged-off during the period.



	Year Ended December 31, 2017 ¹
(Dollars in millions)	Number of Loans Modified	Rate Modification		Term Extension and/or Other Concessions		Total
Commercial loans:
C&I	178		$3		$43		$46
Consumer loans:
Residential mortgages - nonguaranteed	150	22		10		32
Residential home equity products	2,488	45		176		221
Other direct	661	—		9		9
Indirect	2,740	—		61		61
Credit cards	919	4		—		4
Total TDR additions	7,136		$74		$299		$373

¹Includes loans modified under the terms of a TDR that were charged-off during the period.



	Year Ended December 31, 2016 ¹
(Dollars in millions)	Number of Loans Modified	Rate Modification		Term Extension and/or Other Concessions		Total
Commercial loans:
C&I	84		$2		$68		$70
Commercial construction	1	—		—		—
Consumer loans:
Residential mortgages - nonguaranteed	397	79		12		91
Residential home equity products	2,611	9		227		236
Residential construction	1	—		—		—
Other direct ²	3,925	—		50		50
Indirect	1,539	—		32		32
Credit cards	720	3		—		3
Total TDR additions	9,278		$93		$389		$482

¹ Includes loans modified under the terms of a TDR that were charged-off during the period.

² Includes 3,321 loans with a carrying value of $41 million that were modified prior to 2016 and reclassified as TDRs in the fourth quarter of 2016.

TDRs that defaulted during the years ended December 31, 2018, 2017, and 2016, which were first modified within the previous 12 months, were immaterial. The majority of loans that were modified under the terms of a TDR and subsequently became 90 days or more delinquent have remained on nonaccrual status since the time of delinquency.

Concentrations of Credit Risk

The Company does not have a significant concentration of credit risk to any individual client except for the U.S. government and its agencies. However, a geographic concentration arises because the majority of the Company's LHFI portfolio represents borrowers that reside in Florida, Georgia, Virginia, Maryland, and North Carolina. The Company’s cross-border outstanding loans totaled $1.8 billion and $1.4 billion at December 31, 2018 and 2017, respectively.

With respect to collateral concentration, the Company's recorded investment in residential real estate secured LHFI totaled $38.9 billion at December 31, 2018 and represented 26% of total LHFI. At December 31, 2017, the Company's recorded investment in residential real estate secured LHFI totaled $38.6 billion and represented 27% of total LHFI. Additionally, at December 31, 2018 and 2017, the Company had commitments to extend credit on home equity lines of $10.3 billion and $10.1 billion, and had residential mortgage commitments outstanding of $2.7 billion and $3.0 billion, respectively. At both

December 31, 2018 and December 31, 2017, 1% of the Company's LHFI secured by residential real estate was insured by the FHA or guaranteed by the VA.

The following table presents loans in the residential mortgage portfolio that included a high original LTV ratio (in excess of 80%), an interest only feature, and/or a second lien position that may increase the Company's exposure to credit risk and result in a concentration of credit risk. At December 31, 2018 and December 31, 2017, the current weighted average FICO score for the borrowers of these loans was 759 and 756, respectively.



(Dollars in millions)	December 31, 2018		December 31, 2017
Interest only mortgages with MI or with combined original LTV ≤ 80%¹		$464		$569
Interest only mortgages with no MI and with combined original LTV > 80%¹	28		77
Total interest only mortgages ¹	492		646
Amortizing mortgages with combined original LTV > 80% and/or second liens ²	10,922		10,197
Total mortgages with potential concentration of credit risk		$11,414		$10,843

¹Comprised of first and/or second liens, primarily with an initial 10 year interest only period.

²Comprised of loans with no MI.