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Asset Quality
 12 Months Ended
Dec. 31, 2018
Receivables [Abstract]  
Asset Quality 5. Asset Quality
We assess the credit quality of the loan portfolio by monitoring net credit losses, levels of nonperforming assets and delinquencies, and credit quality ratings as defined by management.
Credit Quality Indicators
The prevalent risk characteristic for both commercial and consumer loans is the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms. Evaluation of this risk is stratified and monitored by the loan risk rating grades assigned for the commercial loan portfolios and the regulatory risk ratings assigned for the consumer loan portfolios.
Most extensions of credit are subject to loan grading or scoring. Loan grades are assigned at the time of origination, verified by credit risk management, and periodically re-evaluated thereafter. This risk rating methodology blends our judgment with quantitative modeling. Commercial loans generally are assigned two internal risk ratings. The first rating reflects the probability that the borrower will default on an obligation; the second rating reflects expected recovery rates on the credit facility. Default probability is determined based on, among other factors, the financial strength of the borrower, an assessment of the borrower’s management, the borrower’s competitive position within its industry sector, and our view of industry risk in the context of the general economic outlook. Types of exposure, transaction structure, and collateral, including credit risk mitigants, affect the expected recovery assessment.
Commercial Credit Exposure — Excluding PCI
Credit Risk Profile by Creditworthiness Category (a), (b) 
December 31,
  
  
  
  
  
  
  
  
  
  
in millions
Commercial and industrial
RE — Commercial
RE — Construction
Commercial Lease
Total
RATING
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Pass
$
44,138

$
39,833

$
13,672

$
13,328

$
1,537

$
1,894

$
4,557

$
4,730

$
63,904

$
59,785

Criticized (Accruing)
1,402

1,790

354

482

125

38

41

90

1,922

2,400

Criticized (Nonaccruing)
152

153

81

30

2

2

8

6

243

191

Total
$
45,692

$
41,776

$
14,107

$
13,840

$
1,664

$
1,934

$
4,606

$
4,826

$
66,069

$
62,376

 
 
 
 
 
 
 
 
 
 
 
(a)
Credit quality indicators are updated on an ongoing basis and reflect credit quality information as of the dates indicated.
(b)
The term criticized refers to those loans that are internally classified by Key as special mention or worse, which are asset quality categories defined by regulatory authorities. These assets have an elevated level of risk and may have a high probability of default or total loss. Pass rated refers to all loans not classified as criticized.
Consumer Credit Exposure — Excluding PCI
Non-PCI Loans by Refreshed FICO Score (a) 
December 31,
 
 
 
 
 
 
 
 
 
 
in millions
Residential — Prime
Consumer direct loans
Credit cards
Consumer indirect loans
Total
FICO SCORE
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
750 and above
$
9,794

$
10,226

$
549

$
519

$
521

$
477

$
1,647

$
1,472

$
12,511

$
12,694

660 to 749
4,906

5,181

700

690

507

508

1,320

1,184

7,433

7,563

Less than 660
1,411

1,519

224

225

116

121

565

529

2,316

2,394

No Score
213

208

333

356

—

—

102

76

648

640

Total
$
16,324

$
17,134

$
1,806

$
1,790

$
1,144

$
1,106

$
3,634

$
3,261

$
22,908

$
23,291

 
 
 
 
 
 
 
 
 
 
 
(a)
Borrower FICO scores provide information about the credit quality of our consumer loan portfolio as they provide an indication as to the likelihood that a debtor will repay their debts. The scores are obtained from a nationally recognized consumer rating agency and are presented in the above table at the dates indicated.
Commercial Credit Exposure — PCI
Credit Risk Profile by Creditworthiness Category (a), (b) 
December 31,
  
  
  
  
  
  
  
  
  
  
in millions
Commercial and industrial
RE — Commercial
RE — Construction
Commercial Lease
Total
RATING
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Pass
$
37

$
41

$
125

$
153

$
2

$
26

—

—

$
164

$
220

Criticized
24

42

53

95

—

—

—

—

77

137

Total
$
61

$
83

$
178

$
248

$
2

$
26

—

—

$
241

$
357

 
 
 
 
 
 
 
 
 
 
 
(a)
Credit quality indicators are updated on an ongoing basis and reflect credit quality information as of the dates indicated.
(b)
The term criticized refers to those loans that are internally classified by Key as special mention or worse, which are asset quality categories defined by regulatory authorities. These assets have an elevated level of risk and may have a high probability of default or total loss. Pass rated refers to all loans not classified as criticized.

Consumer Credit Exposure — PCI
PCI Loans by Refreshed FICO Score (a) 
December 31,
 
 
 
 
 
 
 
 
 
 
in millions
Residential — Prime
Consumer direct loans
Credit cards
Consumer indirect loans
Total
FICO SCORE
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
750 and above
$
137

$
149

—

—

—

—

—

—

$
137

$
149

660 to 749
95

117

$
1

$
2

—

—

—

—

96

119

Less than 660
97

105

2

2

—

—

—

—

99

107

No Score
2

6

—

—

—

—

—

—

2

6

Total
$
331

$
377

$
3

$
4

—

—

—

—

$
334

$
381

 
 
 
 
 
 
 
 
 
 
 
(a)
Borrower FICO scores provide information about the credit quality of our consumer loan portfolio as they provide an indication as to the likelihood that a debtor will repay their debts. The scores are obtained from a nationally recognized consumer rating agency and are presented in the above table at the dates indicated.

Nonperforming and Past Due Loans

Our policies for determining past due loans, placing loans on nonaccrual, applying payments on nonaccrual loans, and resuming accrual of interest for our commercial and consumer loan portfolios are disclosed in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Nonperforming Loans.”
The following aging analysis of current and past due loans as of December 31, 2018, and December 31, 2017, provides further information regarding Key’s credit exposure.

Aging Analysis of Loan Portfolio (a) 
December 31, 2018
Current
30-59
Days Past
Due (b)
60-89
Days Past
Due (b)
90 and 
Greater
Days Past
Due (b)
Non-performing
Loans
Total Past Due and
Non-performing
Loans
Purchased
Credit
Impaired
Total
Loans (c), (d)
in millions
LOAN TYPE
 
 
 
 
 
 
 
 
Commercial and industrial
$
45,375

$
89

$
31

$
45

$
152

$
317

$
61

$
45,753

Commercial real estate:
 
 
 
 
 
 
 
 
Commercial mortgage
13,957

27

17

25

81

150

178

14,285

Construction
1,646

—

13

3

2

18

2

1,666

Total commercial real estate loans
15,603

27

30

28

83

168

180

15,951

Commercial lease financing
4,580

12

1

4

9

26

—

4,606

Total commercial loans
$
65,558

$
128

$
62

$
77

$
244

$
511

$
241

$
66,310

Real estate — residential mortgage
$
5,119

$
11

$
3

$
4

$
62

$
80

$
314

$
5,513

Home equity loans
10,862

31

12

10

210

263

17

11,142

Consumer direct loans
1,780

11

5

6

4

26

3

1,809

Credit cards
1,119

6

5

12

2

25

—

1,144

Consumer indirect loans
3,573

31

7

3

20

61

—

3,634

Total consumer loans
$
22,453

$
90

$
32

$
35

$
298

$
455

$
334

$
23,242

Total loans
$
88,011

$
218

$
94

$
112

$
542

$
966

$
575

$
89,552

 
 
 
 
 
 
 
 
 
(a)
Amounts in table represent recorded investment and exclude loans held for sale. Recorded investment represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs.
(b)
Past due loan amounts exclude purchased impaired loans, even if contractually past due (or if we do not expect to collect principal or interest in full based on the original contractual terms), as we are currently accreting income over the remaining term of the loans.
(c)
Net of unearned income, net deferred loan fees and costs, and unamortized discounts and premiums.
(d)
Future accretable yield related to PCI loans is not included in the analysis of the loan portfolio.
December 31, 2017
Current
30-59
Days Past
Due (b)
60-89
Days Past
Due (b)
90 and 
Greater
Days Past
Due (b)
Non-performing
Loans
Total Past Due and
Non-performing
Loans
Purchased
Credit
Impaired
Total
Loans (c), (d)
in millions
LOAN TYPE
 
 
 
 
 
 
 
 
Commercial and industrial
$
41,444

$
111

$
34

$
34

$
153

$
332

$
83

$
41,859

Commercial real estate:
 
 
 
 
 
 
 
 
Commercial mortgage
13,750

26

13

21

30

90

248

14,088

Construction
1,919

4

9

—

2

15

26

1,960

Total commercial real estate loans
15,669

30

22

21

32

105

274

16,048

Commercial lease financing
4,791

23

4

2

6

35

—

4,826

Total commercial loans
$
61,904

$
164

$
60

$
57

$
191

$
472

$
357

$
62,733

Real estate — residential mortgage
$
5,043

$
16

$
7

$
4

$
58

$
85

$
355

$
5,483

Home equity loans
11,721

32

15

9

229

285

22

12,028

Consumer direct loans
1,768

9

4

5

4

22

4

1,794

Credit cards
1,081

7

5

11

2

25

—

1,106

Consumer indirect loans
3,199

33

7

3

19

62

—

3,261

Total consumer loans
$
22,812

$
97

$
38

$
32

$
312

$
479

$
381

$
23,672

Total loans
$
84,716

$
261

$
98

$
89

$
503

$
951

$
738

$
86,405

 
 
 
 
 
 
 
 
 
(a)
Amounts in table represent recorded investment and exclude loans held for sale. Recorded investment represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs.
(b)
Past due loan amounts exclude purchased impaired loans, even if contractually past due (or if we do not expect to collect principal or interest in full based on the original contractual terms), as we are currently accreting income over the remaining term of the loans.
(c)
Net of unearned income, net deferred loan fees and costs, and unamortized discounts and premiums.
(d)
Future accretable yield related to PCI loans is not included in the analysis of the loan portfolio.
At December 31, 2018, the approximate carrying amount of our commercial nonperforming loans outstanding represented 75% of their original contractual amount owed, total nonperforming loans outstanding represented 80% of their original contractual amount owed, and nonperforming assets in total were carried at 81% of their original contractual amount owed.
Nonperforming loans reduced expected interest income by $30 million, $25 million, and $26 million for each of the twelve months ended December 31, 2018, December 31, 2017, and December 31, 2016, respectively.
The following tables set forth a further breakdown of individually impaired loans:
 
December 31, 2018
 
December 31, 2017
 
Recorded  
Investment (a)
Unpaid Principal Balance (b)
Specific  
Allowance (c)  
 
Recorded  
Investment (a)
Unpaid Principal Balance (b)
Specific  
Allowance (c)  
in millions
With no related allowance recorded:
 
 
 
 
 
 
 
Commercial and industrial
$
118

$
175

—

 
$
126

$
153

—

Commercial real estate:
 
 
 
 
 
 
 
Commercial mortgage
64

70

—

 
12

18

—

Total commercial real estate loans
64

70

—

 
12

18

—

Total commercial loans
182

245

—

 
138

171

—

Real estate — residential mortgage
4

5

—

 
17

17

—

Home equity loans
49

56

—

 
56

56

—

Consumer direct loans
1

1

—

 
—

—

—

Consumer indirect loans
2

4

—

 
2

2

—

Total consumer loans
56

66

—

 
75

75

—

Total loans with no related allowance recorded
238

311

—

 
213

246

—

With an allowance recorded:
 
 
 
 
 
 
 
Commercial and industrial
44

47

$
5

 
10

28

$
6

Commercial real estate:
 
 
 
 
 
 
 
Commercial mortgage
2

3

1

 
—

—

—

Total commercial real estate loans
2

3

1

 
—

—

—

Total commercial loans
46

50

6

 
10

28

6

Real estate — residential mortgage
45

70

3

 
32

32

5

Home equity loans
78

85

8

 
61

61

9

Consumer direct loans
3

3

—

 
4

4

—

Credit cards
3

3

—

 
2

2

—

Consumer indirect loans
34

34

2

 
32

32

3

Total consumer loans
163

195

13

 
131

131

17

Total loans with an allowance recorded
209

245

19

 
141

159

23

Total
$
447

$
556

$
19

 
$
354

$
405

$
23

 
 
 
 
 
 
 
 
(a)
The Recorded Investment represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs. This amount is a component of total loans on our consolidated balance sheet.
(b)
The Unpaid Principal Balance represents the customer’s legal obligation to us.
(c)
See Note 1 (“Summary of Significant Accounting Policies”) under the heading “Impaired Loans” for a description of the specific allowance methodology.

The following table sets forth a further breakdown of average individually impaired loans reported by Key:
Average Recorded Investment (a)
Twelve Months Ended December 31,
in millions
2018
2017
2016
Commercial and industrial
$
149

$
210

$
176

Commercial real estate:
 
 
 
Commercial mortgage
39

9

8

Construction
—

—

3

Total commercial real estate loans
39

9

11

Total commercial loans
188

219

187

Real estate — residential mortgage
49

50

53

Home equity loans
122

121

125

Consumer direct loans
4

3

3

Credit cards
3

3

3

Consumer indirect loans
35

32

34

Total consumer loans
213

209

218

Total
$
401

$
428

$
405

 
 
 
 
(a)
The Recorded Investment represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs. This amount is a component of total loans on our consolidated balance sheet.
For the twelve months ended December 31, 2018, December 31, 2017, and December 31, 2016, interest income recognized on the outstanding balances of accruing impaired loans totaled $13 million, $9 million, and $10 million, respectively.

TDRs

We classify loan modifications as TDRs when a borrower is experiencing financial difficulties and we have granted a concession without commensurate financial, structural, or legal consideration. Acquired loans that were previously modified by First Niagara in a TDR are no longer classified as TDRs at the Acquisition Date. An acquired loan may only be classified as a TDR if a modification meeting the above TDR criteria is performed after the Acquisition Date. PCI loans cannot be classified as TDRs. All commercial and consumer loan TDRs, regardless of size, are individually evaluated for impairment to determine the probable loss content and are assigned a specific loan allowance. This designation has the effect of moving the loan from the general reserve methodology (i.e., collectively evaluated) to the specific reserve methodology (i.e., individually evaluated) and may impact the ALLL through a charge-off or increased loan loss provision. These components affect the ultimate allowance level.

As TDRs are individually evaluated for impairment under the specific reserve methodology, subsequent defaults do not generally have a significant additional impact on the ALLL. Commitments outstanding to lend additional funds to borrowers whose loan terms have been modified in TDRs are $5 million and $2 million at December 31, 2018, and December 31, 2017, respectively.
Our loan modifications are handled on a case-by-case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet the borrower’s financial needs. The consumer TDR other concession category primarily includes those borrowers’ debts that are discharged through Chapter 7 bankruptcy and have not been formally re-affirmed. At December 31, 2018, and December 31, 2017, the recorded investment of loans secured by residential real estate in the process of foreclosure was approximately $113 million and $142 million, respectively. At December 31, 2018, and December 31, 2017, we had $35 million and $31 million, respectively, of OREO which included the carrying value of foreclosed residential real estate of approximately $35 million and $26 million, respectively.
The following table shows the period-end post-modification outstanding recorded investment by concession type for our commercial and consumer accruing and nonaccruing TDRs added during the periods indicated:
 
Twelve Months Ended December 31,
in millions
2018
2017
Commercial loans:
 
 
Extension of maturity date
$
15

12

Payment or covenant modification/deferment
99

$
46

Bankruptcy plan modification
7

31

Total
$
121

$
89

Consumer loans:
 
 
Interest rate reduction
$
27

$
13

Forgiveness of principal
—

—

Other
38

28

Total
$
65

$
41

Total commercial and consumer TDRs
$
186

$
130



The following table summarizes the change in the post-modification outstanding recorded investment of our accruing and nonaccruing TDRs during the periods indicated:
Year ended December 31,
 
 
in millions
2018
2017
Balance at beginning of the period
$
317

$
280

Additions
228

165

Payments
(110
)
(111
)
Charge-offs
(36
)
(17
)
Balance at end of period (a)
$
399

$
317

 
 
 

A further breakdown of TDRs included in nonperforming loans by loan category for the periods indicated are as follows:
 
December 31, 2018
 
December 31, 2017
 
Number  
of Loans  
Pre-modification  
Outstanding  
Recorded  
Investment  
Post-modification  
Outstanding  
Recorded  
Investment  
 
Number  
of Loans  
Pre-modification  
Outstanding  
Recorded  
Investment  
Post-modification  
Outstanding  
Recorded  
Investment  
dollars in millions
LOAN TYPE
 
 
 
 
 
 
 
Nonperforming:
 
 
 
 
 
 
 
Commercial and industrial
35

$
121

$
85

 
20

$
109

$
86

Commercial real estate:
 
 
 
 
 
 
 
Real estate — commercial mortgage
6

66

62

 
8

16

12

Total commercial real estate loans
6

66

62

 
8

16

12

Total commercial loans
41

187

147

 
28

125

98

Real estate — residential mortgage
281

21

20

 
308

18

18

Home equity loans
1,142

66

63

 
1,025

64

57

Consumer direct loans
171

2

1

 
114

2

2

Credit cards
330

2

2

 
322

2

1

Consumer indirect loans
1,098

18

14

 
825

16

13

Total consumer loans
3,022

109

100

 
2,594

102

91

Total nonperforming TDRs
3,063

296

247

 
2,622

227

189

Prior-year accruing: (a)
 
 
 
 
 
 
 
Commercial and industrial
11

37

32

 
4

30

13

Commercial real estate:
 
 
 
 
 
 
 
Real estate — commercial mortgage
2

—

—

 
—

—

—

Total commercial loans
13

37

32

 
4

30

13

Real estate — residential mortgage
491

36

30

 
484

31

31

Home equity loans
1,403

82

64

 
1,276

75

59

Consumer direct loans
79

4

3

 
48

3

2

Credit cards
479

3

1

 
430

1

1

Consumer indirect loans
556

33

22

 
320

31

22

Total consumer loans
3,008

158

120

 
2,558

141

115

Total prior-year accruing TDRs
3,021

195

152

 
2,562

171

128

Total TDRs
6,084

$
491

$
399

 
5,184

$
398

$
317

 
 
 
 
 
 
 
 
(a)
All TDRs that were restructured prior to January 1, 2018, and January 1, 2017, are fully accruing.

Commercial loan TDRs are considered defaulted when principal and interest payments are 90 days past due. Consumer loan TDRs are considered defaulted when principal and interest payments are more than 60 days past due. During the year ended December 31, 2018, there was one commercial loan TDR and 253 consumer loan TDRs with a combined recorded investment of $11 million that experienced payment defaults after modifications resulting in TDR status during 2017. During the year ended December 31, 2017, there were no commercial loan TDRs and 147 consumer loan TDRs with a combined recorded investment of $4 million that experienced payment defaults after modifications resulting in TDR status during 2016. During the year ended December 31, 2016, there were no commercial loan TDRs and 187 consumer loan TDRs with a combined recorded investment of $9 million that experienced payment defaults after modifications resulting in TDR status during 2015.

ALLL and Liability for Credit Losses on Unfunded Lending-Related Commitments

We determine the appropriate level of the ALLL on at least a quarterly basis. The methodology is described in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Allowance for Loan and Lease Losses.”

The ALLL on the acquired non-impaired loan portfolio is estimated using the same methodology as the originated portfolio, however, the estimated ALLL is compared to the remaining accretable yield to determine if an ALLL must be recorded. For PCI loans, Key estimates cash flows expected to be collected quarterly. Decreases in expected cash flows are recognized as impairment through a provision for loan and lease losses and an increase in the ALLL. There was a benefit of $2 million of provision for loan and lease losses on these PCI loans during the year ended December 31, 2018. There was $3 million of provision for loan and lease losses on these PCI loans during the year ended December 31, 2017.

The changes in the ALLL by loan category for the periods indicated are as follows:
in millions
December 31, 2017
Provision 
 
Charge-offs 
Recoveries   
December 31, 2018
Commercial and industrial
$
529

$
125

  
$
(159
)
$
37

$
532

Real estate — commercial mortgage
133

27

 
(21
)
3

142

Real estate — construction
30

1

 
—

2

33

Commercial lease financing
43

(2
)
 
(10
)
5

36

Total commercial loans
735

151

 
(190
)
47

743

Real estate — residential mortgage
7

1

 
(3
)
2

7

Home equity loans
43

2

 
(21
)
11

35

Consumer direct loans
28

31

 
(36
)
7

30

Credit cards
44

41

 
(44
)
7

48

Consumer indirect loans
20

14

 
(30
)
16

20

Total consumer loans
142

89

  
(134
)
43

140

Total ALLL — continuing operations
877

240

(a)  
(324
)
90

883

Discontinued operations
16

8

  
(15
)
5

14

Total ALLL — including discontinued operations
$
893

$
248

  
$
(339
)
$
95

$
897

 
 
 
 
 
 
 
(a)
Excludes a provision for losses on lending-related commitments of $6 million.
in millions
December 31, 2016
Provision 
 
Charge-offs 
Recoveries   
December 31, 2017
Commercial and industrial
$
508

$
114

  
$
(133
)
$
40

$
529

Real estate — commercial mortgage
144

(2
)
 
(11
)
2

133

Real estate — construction
22

9

 
(2
)
1

30

Commercial lease financing
42

9

 
(14
)
6

43

Total commercial loans
716

130

 
(160
)
49

735

Real estate — residential mortgage
17

(11
)
 
(3
)
4

7

Home equity loans
54

4

 
(30
)
15

43

Consumer direct loans
24

32

 
(34
)
6

28

Credit cards
38

45

 
(44
)
5

44

Consumer indirect loans
9

27

 
(31
)
15

20

Total consumer loans
142

97

 
(142
)
45

142

Total ALLL — continuing operations
858

227

(a)  
(302
)
94

877

Discontinued operations
24

10

  
(26
)
8

16

Total ALLL — including discontinued operations
$
882

$
237

  
$
(328
)
$
102

$
893

 
 
 
 
 
 
 
(a)
Excludes a provision for losses on lending-related commitments of $2 million.
in millions
December 31, 2015
Provision
 
Charge-offs
Recoveries  
December 31, 2016
Commercial and industrial
$
450

$
165

  
$
(118
)
$
11

$
508

Real estate — commercial mortgage
134

6

 
(5
)
9

144

Real estate — construction
25

4

 
(9
)
2

22

Commercial lease financing
47

4

 
(12
)
3

42

Total commercial loans
656

179

 
(144
)
25

716

Real estate — residential mortgage
18

2

 
(4
)
1

17

Home equity loans
57

13

 
(30
)
14

54

Consumer direct loans
20

26

  
(27
)
5

24

Credit cards
32

37

  
(35
)
4

38

Consumer indirect loans
13

10

 
(21
)
7

9

Total consumer loans
140

88

  
(117
)
31

142

Total ALLL — continuing operations
796

267

(a) 
(261
)
56

858

Discontinued operations
28

13

  
(28
)
11

24

Total ALLL — including discontinued operations
$
824

$
280

  
$
(289
)
$
67

$
882

 
 
 
 
 
 
 
(a)
Excludes a credit for losses on lending-related commitments of $1 million.

A breakdown of the individual and collective ALLL and the corresponding loan balances for the periods indicated are as follows:
 
Allowance
Outstanding
December 31, 2018
Individually
Evaluated for
Impairment
Collectively
Evaluated for
Impairment
Purchased
Credit
Impaired
Loans
 
Individually
Evaluated for
Impairment
Collectively
Evaluated for
Impairment
 
Purchased
Credit
Impaired
in millions
 
 
Commercial and industrial
$
5

$
526

$
1

$
45,753

  
$
162

$
45,530

  
$
61

Commercial real estate:
 
 
 
 
 
 
 
 
 
Commercial mortgage
—

139

3

14,285

  
66

14,041

  
178

Construction
—

33

—

1,666

  
—

1,664

  
2

Total commercial real estate loans
—

172

3

15,951

  
66

15,705

  
180

Commercial lease financing
—

36

—

4,606

  
—

4,606

  
—

Total commercial loans
5

734

4

66,310

  
228

65,841

  
241

Real estate — residential mortgage
3

4

—

5,513

  
49

5,150

  
314

Home equity loans
8

26

1

11,142

 
127

10,998

 
17

Consumer direct loans
—

30

—

1,809

  
4

1,802

  
3

Credit cards
—

48

—

1,144

  
3

1,141

  
—

Consumer indirect loans
3

17

—

3,634

 
36

3,598

 
—

Total consumer loans
14

125

1

23,242

  
219

22,689

  
334

Total ALLL — continuing operations
19

859

5

89,552

  
447

88,530

  
575

Discontinued operations
2

12

—

1,073

(a)  
23

1,050

(a)  
—

Total ALLL — including discontinued operations
$
21

$
871

$
5

$
90,625

  
$
470

$
89,580

  
$
575

 
 
 
 
 
 
 
 
 
 
(a)
Amount includes $2 million of loans carried at fair value that are excluded from ALLL consideration.
 
Allowance
Outstanding
December 31, 2017
Individually
Evaluated for
Impairment
Collectively
Evaluated for
Impairment
Purchased
Credit
Impaired
Loans
 
Individually
Evaluated for
Impairment
Collectively
Evaluated for
Impairment
 
Purchased
Credit
Impaired
in millions
 
 
Commercial and industrial
$
6

$
520

$
3

$
41,859

  
$
136

$
41,640

  
$
83

Commercial real estate:
 
 
 
 
 
 
 
 
 
Commercial mortgage
—

131

2

14,088

  
12

13,828

  
248

Construction
—

30

—

1,960

  
—

1,934

  
26

Total commercial real estate loans
—

161

2

16,048

  
12

15,762

  
274

Commercial lease financing
—

43

—

4,826

  
—

4,826

  
—

Total commercial loans
6

724

5

62,733

  
148

62,228

  
357

Real estate — residential mortgage
5

2

—

5,483

  
49

5,079

  
355

Home equity loans
9

33

1

12,028

 
117

11,889

 
22

Consumer direct loans
—

28

—

1,794

  
4

1,786

  
4

Credit cards
—

44

—

1,106

  
2

1,104

  
—

Consumer indirect loans
3

17

—

3,261

 
34

3,227

 
—

Total consumer loans
17

124

1

23,672

 
206

23,085

 
381

Total ALLL — continuing operations
23

848

6

86,405

 
354

85,313

 
738

Discontinued operations
3

13

—

1,314

(a) 
21

1,293

(a) 
—

Total ALLL — including discontinued operations
$
26

$
861

$
6

$
87,719

 
$
375

$
86,606

 
$
738

 
 
 
 
 
 
 
 
 
 
(a)
Amount includes $2 million of loans carried at fair value that are excluded from ALLL consideration.
The liability for credit losses inherent in lending-related unfunded commitments, such as letters of credit and unfunded loan commitments, is included in “accrued expense and other liabilities” on the balance sheet. We establish the amount of this reserve by considering both historical trends and current market conditions quarterly, or more often if deemed necessary.
Changes in the liability for credit losses on unfunded lending-related commitments are summarized as follows:
Year ended December 31,
in millions
2018
2017
2016
Balance at beginning of period
$
57

$
55

$
56

Provision (credit) for losses on lending-related commitments
6

2

(1
)
Balance at end of period
$
63

$
57

$
55

 
 
 
 


PCI Loans

Purchased loans that have evidence of deterioration in credit quality since origination and for which it is probable, at acquisition, that all contractually required payments will not be collected are deemed PCI. Our policies for determining, recording payments on, and derecognizing PCI loans are disclosed in Note 1 (Summary of Significant Accounting Policies) under the heading “Purchases Loans.”

We have PCI loans from two separate acquisitions, one in 2012 and one in 2016. The following tables present the rollforward of the accretable yield and the beginning and ending outstanding unpaid principal balance and carrying amount of all PCI loans for the for the periods indicated:
 
Twelve Months Ended December 31,
 
2018
 
2017
in millions
Accretable Yield
Carrying Amount
Outstanding Unpaid Principal Balance
 
Accretable Yield
Carrying Amount
Outstanding Unpaid Principal Balance
Balance at beginning of period
$
131

$
738

$
803

 
$
197

$
865

$
1,002

Additions
—

 
 
 
(32
)
 
 
Accretion
(42
)
 
 
 
(44
)
 
 
Net reclassifications from non-accretable to accretable
50

 
 
 
15

 
 
Payments received, net
(21
)
 
 
 
(4
)
 
 
Disposals
—

 
 
 
(1
)
 
 
Loans charged off
(1
)
 
 
 
—

 
 
Balance at end of period
$
117

$
571

$
607

 
$
131

$
738

$
803