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Loans

3 Months Ended

Mar. 31, 2019

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

NOTE 6 - LOANS

Composition of Loan Portfolio



(Dollars in millions)	March 31, 2019		December 31, 2018
Commercial loans:
C&I ¹		$73,278		$71,137
CRE	7,889		7,265
Commercial construction	2,562		2,538
Total commercial LHFI	83,729		80,940
Consumer loans:
Residential mortgages - guaranteed	467		459
Residential mortgages - nonguaranteed ²	28,461		28,836
Residential home equity products	9,167		9,468
Residential construction	167		184
Guaranteed student	7,308		7,229
Other direct	11,029		10,615
Indirect	13,268		12,419
Credit cards	1,637		1,689
Total consumer LHFI	71,504		70,899
LHFI		$155,233		$151,839
LHFS ³		$1,781		$1,468

¹Includes $4.1 billion of sales-type and direct financing leases at both March 31, 2019 and December 31, 2018, and $786 million and $796 million of installment loans at March 31, 2019 and December 31, 2018, respectively.

²Includes $134 million and $163 million of LHFI measured at fair value at March 31, 2019 and December 31, 2018, respectively.

³Includes $1.1 billion and $1.2 billion of LHFS measured at fair value at March 31, 2019 and December 31, 2018, respectively.



Loan Purchases, Sales, and Transfers
	Three Months Ended March 31
(Dollars in millions)	2019		2018
Non-routine purchases of LHFI ^{1, 2}:
Consumer loans		$173		$—
Routine purchases of LHFI ^{2, 3}:
Consumer loans	445		475
Loan sales ^{4, 5}:
Commercial loans	40		36
Transfers of loans from:
LHFI to LHFS	614		204
LHFS to LHFI	4		6
LHFI to OREO	10		19

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

²Represents UPB of loans purchased.

³ Purchases are routine in nature and are conducted in the normal course of business.

⁴Excludes sales of residential and commercial mortgage LHFS conducted in the normal course of business.

⁵ Net gain on loan sales was immaterial for the three months ended March 31, 2019 and 2018.

At March 31, 2019 and December 31, 2018, the Company had $30.2 billion and $28.1 billion of net eligible loan collateral pledged to the Federal Reserve discount window to support

$22.6 billion and $21.3 billion of available, unused borrowing capacity, respectively.

At March 31, 2019 and December 31, 2018, the Company had $39.8 billion and $39.2 billion of net eligible loan collateral pledged to the FHLB of Atlanta to support $32.1 billion and $31.0 billion of available borrowing capacity, respectively. The available FHLB borrowing capacity at March 31, 2019 was used to support $8.3 billion of long-term debt and $4.2 billion of letters of credit issued on the Company's behalf. At December 31, 2018, the available FHLB borrowing capacity 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.

Credit Quality Evaluation

The Company evaluates the credit quality of its LHFI 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 March 31, 2019 compared to December 31, 2018, were due to loan growth and normal variability in the portfolio. Criticized nonaccruing C&I loans remained low relative to accruing loans.

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 March 31, 2019 and December 31, 2018, 30% and

27%, respectively, of guaranteed residential mortgages were current with respect to payments. At March 31, 2019 and December 31, 2018, 73% and 72%, 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)	March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
Risk rating:
Pass		$71,078		$69,095		$7,761		$7,165		$2,543		$2,459
Criticized accruing	2,003		1,885		126		98		19		79
Criticized nonaccruing	197		157		2		2		—		—
Total		$73,278		$71,137		$7,889		$7,265		$2,562		$2,538



	Consumer Loans ¹
	Residential Mortgages - Nonguaranteed				Residential Home Equity Products				Residential Construction
(Dollars in millions)	March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
Current FICO score range:
700 and above		$25,541		$25,764		$7,761		$8,060		$137		$151
620 - 699	2,288		2,367		1,003		1,015		24		27
Below 620 ²	632		705		403		393		6		6
Total		$28,461		$28,836		$9,167		$9,468		$167		$184



	Other Direct				Indirect				Credit Cards
(Dollars in millions)	March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
Current FICO score range:
700 and above		$9,990		$9,642		$10,008		$9,315		$1,101		$1,142
620 - 699	996		935		2,449		2,395		411		420
Below 620 ²	43		38		811		709		125		127
Total		$11,029		$10,615		$13,268		$12,419		$1,637		$1,689

¹Excludes $7.3 billion and $7.2 billion of guaranteed student loans and $467 million and $459 million of guaranteed residential mortgages at March 31, 2019 and December 31, 2018, 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:



	March 31, 2019
	Accruing
(Dollars in millions)	Current		30-89 Days Past Due		90+ Days Past Due		Nonaccruing ¹			Total
Commercial loans:
C&I		$73,016		$49		$16		$197			$73,278
CRE	7,885		2		—		2			7,889
Commercial construction	2,561		1		—		—			2,562
Total commercial LHFI	83,462		52		16		199			83,729
Consumer loans:
Residential mortgages - guaranteed	141		35		291		—		³	467
Residential mortgages - nonguaranteed ²	28,215		50		18		178			28,461
Residential home equity products	8,983		60		—		124			9,167
Residential construction	158		—		1		8			167
Guaranteed student	5,350		648		1,310		—		³	7,308
Other direct	10,970		47		4		8			11,029
Indirect	13,183		79		1		5			13,268
Credit cards	1,603		16		18		—			1,637
Total consumer LHFI	68,603		935		1,643		323			71,504
Total LHFI		$152,065		$987		$1,659		$522			$155,233

¹Includes nonaccruing LHFI past due 90 days or more of $296 million. Nonaccruing LHFI past due fewer than 90 days include nonaccrual LHFI modified in TDRs, performing second lien LHFI where the first lien loan is nonperforming, and certain energy-related commercial LHFI.

²Includes $134 million of LHFI measured at fair value, the majority of which were accruing current.

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



	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 LHFI modified in TDRs, performing second lien LHFI where the first lien loan is nonperforming, and certain energy-related commercial LHFI.

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

³Guaranteed LHFI 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 LHFI whose terms have been modified in a TDR are individually evaluated for

impairment. Smaller-balance homogeneous LHFI that are collectively evaluated for impairment and LHFI 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.



	March 31, 2019						December 31, 2018
(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		$88		$69		$—		$132		$79		$—
CRE	—		—		—		10		—		—
Total commercial LHFI with no ALLL recorded	88		69		—		142		79		—
Consumer loans:
Residential mortgages - nonguaranteed	376		299		—		501		397		—
Residential construction	8		4		—		12		7		—
Total consumer LHFI with no ALLL recorded	384		303		—		513		404		—

Impaired LHFI with an ALLL recorded:
Commercial loans:
C&I	205		191		39		81		70		13
Total commercial LHFI with an ALLL recorded	205		191		39		81		70		13
Consumer loans:
Residential mortgages - nonguaranteed	594		589		58		1,006		984		96
Residential home equity products	826		779		45		849		799		44
Residential construction	76		73		5		79		76		6
Other direct	56		56		—		57		57		1
Indirect	134		133		5		133		133		5
Credit cards	31		9		2		30		9		2
Total consumer LHFI with an ALLL recorded	1,717		1,639		115		2,154		2,058		154
Total impaired LHFI		$2,394		$2,202		$154		$2,890		$2,611		$167

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 March 31, 2019 and December 31, 2018 were $1.8 billion and $2.3 billion, respectively, of accruing TDRs held for investment, of which 97% were current. See Note 1, “Significant Accounting

Policies,” to the Company's 2018 Annual Report on Form 10-K, for further information regarding the Company’s loan impairment policy.



	Three Months Ended March 31
	2019				2018
(Dollars in millions)	Average Carrying Value		Interest¹ Income Recognized		Average Carrying Value		Interest¹ Income Recognized
Impaired LHFI with no ALLL recorded:
Commercial loans:
C&I		$76		$1		$20		$—
CRE	—		—		21		—
Total commercial LHFI with no ALLL recorded	76		1		41		—
Consumer loans:
Residential mortgages - nonguaranteed	300		4		353		4
Residential construction	4		—		6		—
Total consumer LHFI with no ALLL recorded	304		4		359		4

Impaired LHFI with an ALLL recorded:
Commercial loans:
C&I	190		—		149		1
CRE	—		—		25		—
Total commercial LHFI with an ALLL recorded	190		—		174		1
Consumer loans:
Residential mortgages - nonguaranteed	617		13		1,093		12
Residential home equity products	781		9		873		9
Residential construction	74		1		90		1
Other direct	55		1		57		1
Indirect	136		2		131		2
Credit cards	9		—		7		—
Total consumer LHFI with an ALLL recorded	1,672		26		2,251		25
Total impaired LHFI		$2,242		$31		$2,825		$30

¹Of the interest income recognized during the three months ended March 31, 2019 and 2018, cash basis interest income was immaterial.

NPAs are presented in the following table:



(Dollars in millions)	March 31, 2019		December 31, 2018
NPAs:
Commercial NPLs:
C&I		$197		$157
CRE	2		2
Consumer NPLs:
Residential mortgages - nonguaranteed	178		204
Residential home equity products	124		138
Residential construction	8		11
Other direct	8		7
Indirect	5		7
Total nonaccrual LHFI/NPLs ¹	522		526
OREO ²	53		54
Other repossessed assets	9		9
Nonperforming LHFS	64		—
Total NPAs		$648		$589

¹ Nonaccruing restructured LHFI are included in total nonaccrual LHFI/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 at both March 31, 2019 and December 31, 2018.

The Company's recorded investment of nonaccruing LHFI secured by residential real estate properties for which formal foreclosure proceedings were in process at March 31, 2019 and December 31, 2018 was $86 million and $93 million, respectively. The Company's recorded investment of accruing LHFI secured by residential real estate properties for which formal foreclosure proceedings were in process at March 31, 2019 and December 31, 2018 was $107 million and $110 million, of which $99 million and $103 million were insured by the FHA or guaranteed by the VA, respectively.

At March 31, 2019, OREO included $49 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, 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.

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 March 31, 2019 and December 31, 2018, 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:



	Three Months Ended March 31, 2019 ¹
(Dollars in millions)	Number of Loans Modified	Rate Modification		Term Extension and/or Other Concessions		Total
Commercial loans:
C&I	34		$1		$56		$57
Consumer loans:
Residential mortgages - nonguaranteed	31	1		4		5
Residential home equity products	84	1		6		7
Other direct	140	—		2		2
Indirect	568	—		15		15
Credit cards	439	2		—		2
Total TDR additions	1,296		$5		$83		$88

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



	Three Months Ended March 31, 2018 ¹
(Dollars in millions)	Number of Loans Modified	Rate Modification		Term Extension and/or Other Concessions		Total
Commercial loans:
C&I	46		$—		$56		$56
Consumer loans:
Residential mortgages - nonguaranteed	61	9		8		17
Residential home equity products	136	—		13		13
Other direct	114	—		1		1
Indirect	778	—		20		20
Credit cards	308	1		1		2
Total TDR additions	1,443		$10		$99		$109

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

TDRs that defaulted during the three months ended March 31, 2019 and 2018, which were first modified within the previous twelve 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 $2.0 billion and $1.8 billion at March 31, 2019 and December 31, 2018, respectively.

With respect to collateral concentration, the Company's recorded investment in residential real estate secured LHFI totaled $38.3 billion at March 31, 2019 and represented 25% of total LHFI. At December 31, 2018, the Company's recorded investment in residential real estate secured LHFI totaled $38.9 billion and represented 26% of total LHFI. Additionally, at March 31, 2019 and December 31, 2018, the Company had commitments to extend credit on home equity lines of $10.5 billion and $10.3 billion, and had residential mortgage commitments outstanding of $3.1 billion and $2.7 billion, respectively. At both March 31, 2019 and December 31, 2018, 1% of the Company's LHFI secured by residential real estate was insured by the FHA or guaranteed by the VA.