Loans |
Loan Portfolio Composition Our loan portfolio consists of loans held for investment, including loans held in our consolidated trusts, and loans held for sale, and is divided into three portfolio segments: credit card, consumer banking and commercial banking. Credit card loans consist of domestic and international credit card loans. Consumer banking loans consist of auto and retail banking loans and in prior periods also consisted of home loans. Commercial banking loans primarily consist of commercial and multifamily real estate as well as commercial and industrial loans. We sold all of our consumer home loan portfolio and the related servicing during 2018. The information presented in this section excludes loans held for sale, which are carried at lower of cost or fair value. Credit Quality We closely monitor economic conditions and loan performance trends to manage and evaluate our exposure to credit risk. Trends in delinquency rates are an indicator, among other considerations, of credit risk within our loan portfolio. The level of nonperforming loans represents another indicator of the potential for future credit losses. Accordingly, key metrics we track and use in evaluating the credit quality of our loan portfolio include delinquency and nonperforming loan rates, as well as net charge-off rates and our internal risk ratings of commercial loans.The table below presents the composition and an aging analysis of our loans held for investment as of September 30, 2019 and December 31, 2018. The delinquency aging includes all past due loans, both performing and nonperforming. Table 4.1: Loan Portfolio Composition and Aging Analysis | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2019 | (Dollars in millions) | | Current | | 30-59 Days | | 60-89 Days | | > 90 Days | | Total Delinquent Loans | | PCI Loans | | Total Loans | Credit Card: | | | | | | | | | | | | | | | Domestic credit card | | $ | 100,784 |
| | $ | 1,175 |
| | $ | 832 |
| | $ | 1,873 |
| | $ | 3,880 |
| | $ | 0 |
| | $ | 104,664 |
| International card businesses | | 8,683 |
| | 128 |
| | 81 |
| | 125 |
| | 334 |
| | 0 |
| | 9,017 |
| Total credit card | | 109,467 |
| | 1,303 |
| | 913 |
| | 1,998 |
| | 4,214 |
| | 0 |
| | 113,681 |
| Consumer Banking: | | | | | | | | | | | | | | | Auto | | 55,071 |
| | 2,607 |
| | 1,258 |
| | 342 |
| | 4,207 |
| | 0 |
| | 59,278 |
| Retail banking | | 2,690 |
| | 24 |
| | 7 |
| | 14 |
| | 45 |
| | 2 |
| | 2,737 |
| Total consumer banking | | 57,761 |
| | 2,631 |
| | 1,265 |
| | 356 |
| | 4,252 |
| | 2 |
| | 62,015 |
| Commercial Banking: | | | | | | | | | | | | | | | Commercial and multifamily real estate | | 29,930 |
| | 18 |
| | 7 |
| | 33 |
| | 58 |
| | 21 |
| | 30,009 |
| Commercial and industrial | | 43,404 |
| | 57 |
| | 79 |
| | 100 |
| | 236 |
| | 10 |
| | 43,650 |
| Total commercial banking | | 73,334 |
| | 75 |
| | 86 |
| | 133 |
| | 294 |
| | 31 |
| | 73,659 |
| Total loans(1) | | $ | 240,562 |
| | $ | 4,009 |
| | $ | 2,264 |
| | $ | 2,487 |
| | $ | 8,760 |
| | $ | 33 |
| | $ | 249,355 |
| % of Total loans | | 96.5 | % | | 1.6 | % | | 0.9 | % | | 1.0 | % | | 3.5 | % | | 0.0 | % | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2018 | (Dollars in millions) | | Current | | 30-59 Days | | 60-89 Days | | > 90 Days | | Total Delinquent Loans | | PCI Loans | | Total Loans | Credit Card: | | | | | | | | | | | | | | | Domestic credit card | | $ | 103,014 |
| | $ | 1,270 |
| | $ | 954 |
| | $ | 2,111 |
| | $ | 4,335 |
| | $ | 1 |
| | $ | 107,350 |
| International card businesses | | 8,678 |
| | 127 |
| | 78 |
| | 128 |
| | 333 |
| | 0 |
| | 9,011 |
| Total credit card | | 111,692 |
| | 1,397 |
| | 1,032 |
| | 2,239 |
| | 4,668 |
| | 1 |
| | 116,361 |
| Consumer Banking: | | | | | | | | | | | | | | | Auto | | 52,032 |
| | 2,624 |
| | 1,326 |
| | 359 |
| | 4,309 |
| | 0 |
| | 56,341 |
| Retail banking | | 2,809 |
| | 23 |
| | 8 |
| | 20 |
| | 51 |
| | 4 |
| | 2,864 |
| Total consumer banking | | 54,841 |
| | 2,647 |
| | 1,334 |
| | 379 |
| | 4,360 |
| | 4 |
| | 59,205 |
| Commercial Banking: | | | | | | | | | | | | | | | Commercial and multifamily real estate | | 28,737 |
| | 101 |
| | 20 |
| | 19 |
| | 140 |
| | 22 |
| | 28,899 |
| Commercial and industrial | | 40,704 |
| | 135 |
| | 43 |
| | 101 |
| | 279 |
| | 108 |
| | 41,091 |
| Total commercial lending | | 69,441 |
| | 236 |
| | 63 |
| | 120 |
| | 419 |
| | 130 |
| | 69,990 |
| Small-ticket commercial real estate | | 336 |
| | 2 |
| | 1 |
| | 4 |
| | 7 |
| | 0 |
| | 343 |
| Total commercial banking | | 69,777 |
| | 238 |
| | 64 |
| | 124 |
| | 426 |
| | 130 |
| | 70,333 |
| Total loans(1) | | $ | 236,310 |
| | $ | 4,282 |
| | $ | 2,430 |
| | $ | 2,742 |
| | $ | 9,454 |
| | $ | 135 |
| | $ | 245,899 |
| % of Total loans | | 96.1 | % | | 1.7 | % | | 1.0 | % | | 1.1 | % | | 3.8 | % | | 0.1 | % | | 100.0 | % |
__________ | | (1) | Loans, other than PCI loans, include unamortized premiums and discounts, and unamortized deferred fees and costs totaling $1.0 billion and $818 million as of September 30, 2019 and December 31, 2018, respectively. | We pledged loan collateral of $14.4 billion and $15.8 billion to secure a portion of our FHLB borrowing capacity of $19.2 billion and $19.3 billion as of September 30, 2019 and December 31, 2018, respectively. We also pledged loan collateral of $7.2 billion and $9.2 billion to secure our Federal Reserve Discount Window borrowing capacity of $5.8 billion and $7.6 billion as of September 30, 2019 and December 31, 2018, respectively. In addition to loans pledged, we securitized a portion of our credit card and auto loans. See “Note 6—Variable Interest Entities and Securitizations” for additional information.The following table presents the outstanding balance of loans 90 days or more past due that continue to accrue interest and loans classified as nonperforming as of September 30, 2019 and December 31, 2018. Nonperforming loans generally include loans that have been placed on nonaccrual status. PCI loans are excluded from the table below. See “Note 1—Summary of Significant Accounting Policies” in our 2018 Form 10-K for additional information on our policies for nonperforming loans and accounting for PCI loans. Table 4.2: 90+ Day Delinquent Loans Accruing Interest and Nonperforming Loans | | | | | | | | | | | | | | | | | | | | September 30, 2019 | | December 31, 2018 | (Dollars in millions) | | > 90 Days and Accruing | | Nonperforming Loans | | > 90 Days and Accruing | | Nonperforming Loans | Credit Card: | | | | | | | | | Domestic credit card | | $ | 1,873 |
| | N/A |
| | $ | 2,111 |
| | N/A |
| International card businesses | | 119 |
| | $ | 23 |
| | 122 |
| | $ | 22 |
| Total credit card | | 1,992 |
| | 23 |
| | 2,233 |
| | 22 |
| Consumer Banking: | | | | | | | | | Auto | | 0 |
| | 432 |
| | 0 |
| | 449 |
| Retail banking | | 0 |
| | 25 |
| | 0 |
| | 30 |
| Total consumer banking | | 0 |
| | 457 |
| | 0 |
| | 479 |
|
| | | | | | | | | | | | | | | | | | | | September 30, 2019 | | December 31, 2018 | (Dollars in millions) | | > 90 Days and Accruing | | Nonperforming Loans | | > 90 Days and Accruing | | Nonperforming Loans | Commercial Banking: | | | | | | | | | Commercial and multifamily real estate | | $ | 31 |
| | $ | 36 |
| | $ | 0 |
| | $ | 83 |
| Commercial and industrial | | 0 |
| | 413 |
| | 0 |
| | 223 |
| Total commercial lending | | 31 |
| | 449 |
| | 0 |
| | 306 |
| Small-ticket commercial real estate | | 0 |
| | 0 |
| | 0 |
| | 6 |
| Total commercial banking | | 31 |
| | 449 |
| | 0 |
| | 312 |
| Total | | $ | 2,023 |
| | $ | 929 |
| | $ | 2,233 |
| | $ | 813 |
| % of Total loans held for investment | | 0.8 | % | | 0.4 | % | | 0.9 | % | | 0.3 | % |
Credit Card Our credit card loan portfolio is highly diversified across millions of accounts and numerous geographies without significant individual exposure. We therefore generally manage credit risk based on portfolios with common risk characteristics. The risk in our credit card loan portfolio correlates to broad economic trends, such as unemployment rates and home values, as well as consumers’ financial condition, all of which can have a material effect on credit performance. The primary indicators we assess in monitoring the credit quality and risk of our credit card loan portfolio are delinquency and charge-off trends, including an analysis of loan migration between delinquency categories over time. The table below displays the geographic profile of our credit card loan portfolio as of September 30, 2019 and December 31, 2018. Table 4.3: Credit Card Risk Profile by Geographic Region | | | | | | | | | | | | | | | | | | September 30, 2019 | | December 31, 2018 | (Dollars in millions) | | Amount | | % of Total | | Amount | | % of Total | Domestic credit card: | | | | | | | | | California | | $ | 11,297 |
| | 9.9 | % | | $ | 11,591 |
| | 10.0 | % | Texas | | 8,078 |
| | 7.1 |
| | 8,173 |
| | 7.0 |
| New York | | 7,224 |
| | 6.4 |
| | 7,400 |
| | 6.4 |
| Florida | | 7,009 |
| | 6.2 |
| | 7,086 |
| | 6.1 |
| Illinois | | 4,574 |
| | 4.0 |
| | 4,761 |
| | 4.1 |
| Pennsylvania | | 4,382 |
| | 3.9 |
| | 4,575 |
| | 3.9 |
| Ohio | | 3,818 |
| | 3.4 |
| | 3,967 |
| | 3.4 |
| New Jersey | | 3,541 |
| | 3.1 |
| | 3,641 |
| | 3.1 |
| Michigan | | 3,415 |
| | 3.0 |
| | 3,544 |
| | 3.0 |
| Other | | 51,326 |
| | 45.1 |
| | 52,612 |
| | 45.3 |
| Total domestic credit card | | 104,664 |
| | 92.1 |
| | 107,350 |
| | 92.3 |
| International card businesses: | | | | | | | | | Canada | | 6,155 |
| | 5.4 |
| | 6,023 |
| | 5.1 |
| United Kingdom | | 2,862 |
| | 2.5 |
| | 2,988 |
| | 2.6 |
| Total international card businesses | | 9,017 |
| | 7.9 |
| | 9,011 |
| | 7.7 |
| Total credit card | | $ | 113,681 |
| | 100.0 | % | | $ | 116,361 |
| | 100.0 | % |
The table below presents net charge-offs for the three and nine months ended September 30, 2019 and 2018. Table 4.4: Credit Card Net Charge-Offs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | 2019 | | 2018 | | 2019 | | 2018 | (Dollars in millions) | | Amount | | Rate(1) | | Amount | | Rate(1) | | Amount | | Rate(1) | | Amount | | Rate(1) | Net charge-offs:(1) | | | | | | | | | | | | | | | | | Domestic credit card | | $ | 1,065 |
| | 4.12 | % | | $ | 1,094 |
| | 4.35 | % | | $ | 3,599 |
| | 4.67 | % | | $ | 3,581 |
| | 4.78 | % | International card businesses | | 86 |
| | 3.78 |
| | 43 |
| | 1.92 |
| | 236 |
| | 3.54 |
| | 193 |
| | 2.85 |
| Total credit card | | $ | 1,151 |
| | 4.09 |
| | $ | 1,137 |
| | 4.15 |
| | $ | 3,835 |
| | 4.58 |
| | $ | 3,774 |
| | 4.62 |
|
__________ (1) Net charge-offs consist of the unpaid principal balance of loans held for investment that we determine to be uncollectible, net of recovered amounts. Net charge-off rate is calculated by dividing annualized net charge-offs by average loans held for investment for the period for each loan category. Net charge-offs and the net charge-off rates are impacted periodically by fluctuations in recoveries, including loan sales. Consumer Banking Our consumer banking loan portfolio consists of auto and retail banking loans. Similar to our credit card loan portfolio, the risk in our consumer banking loan portfolio correlates to broad economic trends, such as unemployment rates, gross domestic product and home values, as well as consumers’ financial condition, all of which can have a material effect on credit performance. Delinquency, nonperforming loans and charge-off trends are key indicators we assess in monitoring the credit quality and risk of our consumer banking loan portfolio. The table below displays the geographic profile of our consumer banking loan portfolio as of September 30, 2019 and December 31, 2018. Table 4.5: Consumer Banking Risk Profile by Geographic Region | | | | | | | | | | | | | | | | | | September 30, 2019 | | December 31, 2018 | (Dollars in millions) | | Amount | | % of Total | | Amount | | % of Total | Auto: | | | | | | | | | Texas | | $ | 7,541 |
| | 12.2 | % | | $ | 7,264 |
| | 12.3 | % | California | | 6,786 |
| | 10.9 |
| | 6,352 |
| | 10.7 |
| Florida | | 4,891 |
| | 7.9 |
| | 4,623 |
| | 7.8 |
| Georgia | | 2,712 |
| | 4.4 |
| | 2,665 |
| | 4.5 |
| Ohio | | 2,633 |
| | 4.2 |
| | 2,502 |
| | 4.2 |
| Pennsylvania | | 2,286 |
| | 3.7 |
| | 2,167 |
| | 3.7 |
| Illinois | | 2,210 |
| | 3.6 |
| | 2,171 |
| | 3.7 |
| Louisiana | | 2,104 |
| | 3.4 |
| | 2,174 |
| | 3.7 |
| Other | | 28,115 |
| | 45.3 |
| | 26,423 |
| | 44.6 |
| Total auto | | 59,278 |
| | 95.6 |
| | 56,341 |
| | 95.2 |
| Retail banking: | | | | | | | | | New York | | 799 |
| | 1.3 |
| | 837 |
| | 1.4 |
| Louisiana | | 729 |
| | 1.2 |
| | 772 |
| | 1.3 |
| Texas | | 604 |
| | 0.9 |
| | 647 |
| | 1.1 |
| New Jersey | | 194 |
| | 0.3 |
| | 201 |
| | 0.3 |
| Maryland | | 158 |
| | 0.3 |
| | 161 |
| | 0.3 |
| Virginia | | 126 |
| | 0.2 |
| | 137 |
| | 0.2 |
| Other | | 127 |
| | 0.2 |
| | 109 |
| | 0.2 |
| Total retail banking | | 2,737 |
| | 4.4 |
| | 2,864 |
| | 4.8 |
| Total consumer banking | | $ | 62,015 |
| | 100.0 | % | | $ | 59,205 |
| | 100.0 | % |
The table below presents net charge-offs in our consumer banking loan portfolio for the three and nine months ended September 30, 2019 and 2018, as well as nonperforming loans as of September 30, 2019 and December 31, 2018. Table 4.6: Consumer Banking Net Charge-Offs (Recoveries) and Nonperforming Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | 2019 | | 2018 | | 2019 | | 2018 | (Dollars in millions) | | Amount | | Rate(1) | | Amount | | Rate(1) | | Amount | | Rate(1) | | Amount | | Rate(1) | Net charge-offs (recoveries): | | | | | | | | | | | | | | | | | Auto | | $ | 234 |
| | 1.60 | % | | $ | 243 |
| | 1.73 | % | | $ | 592 |
| | 1.38 | % | | $ | 633 |
| | 1.53 | % | Retail banking | | 17 |
| | 2.55 |
| | 19 |
| | 2.62 |
| | 52 |
| | 2.51 |
| | 51 |
| | 2.18 |
| Home loan | | 0 |
| | 0.00 |
| | 0 |
| | 0.00 |
| | 0 |
| | 0.00 |
| | (1 | ) | | (0.02 | ) | Total consumer banking | | $ | 251 |
| | 1.64 |
| | $ | 262 |
| | 1.77 |
| | $ | 644 |
| | 1.43 |
| | $ | 683 |
| | 1.36 |
|
| | | | | | | | | | | | | | | | | | September 30, 2019 | | December 31, 2018 | (Dollars in millions) | | Amount | | Rate(2) | | Amount | | Rate(2) | Nonperforming loans: | | | | | | | | | Auto | | $ | 432 |
| | 0.73 | % | | $ | 449 |
| | 0.80 | % | Retail banking | | 25 |
| | 0.91 |
| | 30 |
| | 1.04 |
| Total consumer banking | | $ | 457 |
| | 0.74 |
| | $ | 479 |
| | 0.81 |
|
__________ | | (1) | Net charge-off (recovery) rates are calculated by dividing annualized net charge-offs (recoveries) by average loans held for investment for the period for each loan category. |
(2) Nonperforming loan rates are calculated based on nonperforming loans for each category divided by period-end total loans held for investment for each respective category. Commercial Banking We evaluate the credit risk of commercial loans using a risk rating system. We assign internal risk ratings to loans based on relevant information about the ability of the borrowers to repay their debt. In determining the risk rating of a particular loan, some of the factors considered are the borrower’s current financial condition, historical and projected future credit performance, prospects for support from financially responsible guarantors, the estimated realizable value of any collateral and current economic trends. The scale based on our internal risk rating system is as follows: | | • | Noncriticized: Loans that have not been designated as criticized, frequently referred to as “pass” loans. |
| | • | Criticized performing: Loans in which the financial condition of the obligor is stressed, affecting earnings, cash flows or collateral values. The borrower currently has adequate capacity to meet near-term obligations; however, the stress, left unabated, may result in deterioration of the repayment prospects at some future date. |
| | • | Criticized nonperforming: Loans that are not adequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Loans classified as criticized nonperforming have a well-defined weakness, or weaknesses, which jeopardize the full repayment of the debt. These loans are characterized by the distinct possibility that we will sustain a credit loss if the deficiencies are not corrected and are generally placed on nonaccrual status. |
We use our internal risk rating system for regulatory reporting, determining the frequency of credit exposure reviews, and evaluating and determining the allowance for loan and lease losses for commercial loans. Generally, loans that are designated as criticized performing and criticized nonperforming are reviewed quarterly by management to determine if they are appropriately classified/rated and whether any impairment exists. Noncriticized loans are also generally reviewed, at least annually, to determine the appropriate risk rating. In addition, we evaluate the risk rating during the renewal process of any loan or if a loan becomes past due. The following table presents the geographic concentration and internal risk ratings of our commercial loan portfolio as of September 30, 2019 and December 31, 2018. Table 4.7: Commercial Banking Risk Profile by Geographic Region and Internal Risk Rating | | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2019 | (Dollars in millions) | | Commercial and Multifamily Real Estate | | % of Total | | Commercial and Industrial | | % of Total | | Total Commercial Banking | | % of Total | Geographic concentration:(1) | | | | | | | | | | | | | Northeast | | $ | 16,301 |
| | 54.3 | % | | $ | 8,403 |
| | 19.3 | % | | $ | 24,704 |
| | 33.5 | % | Mid-Atlantic | | 3,080 |
| | 10.3 |
| | 5,572 |
| | 12.8 |
| | 8,652 |
| | 11.7 |
| South | | 4,437 |
| | 14.8 |
| | 15,386 |
| | 35.2 |
| | 19,823 |
| | 26.9 |
| Other | | 6,191 |
| | 20.6 |
| | 14,289 |
| | 32.7 |
| | 20,480 |
| | 27.9 |
| Total | | $ | 30,009 |
| | 100.0 | % | | $ | 43,650 |
| | 100.0 | % | | $ | 73,659 |
| | 100.0 | % | Internal risk rating:(2) | | | | | | | | | | | | | Noncriticized | | $ | 29,272 |
| | 97.5 | % | | $ | 41,872 |
| | 96.0 | % | | $ | 71,144 |
| | 96.6 | % | Criticized performing | | 680 |
| | 2.3 |
| | 1,355 |
| | 3.1 |
| | 2,035 |
| | 2.8 |
| Criticized nonperforming | | 36 |
| | 0.1 |
| | 413 |
| | 0.9 |
| | 449 |
| | 0.6 |
| PCI loans | | 21 |
| | 0.1 |
| | 10 |
| | 0.0 |
| | 31 |
| | 0.0 |
| Total | | $ | 30,009 |
| | 100.0 | % | | $ | 43,650 |
| | 100.0 | % | | $ | 73,659 |
| | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2018 | (Dollars in millions) | | Commercial and Multifamily Real Estate | | % of Total | | Commercial and Industrial | | % of Total | | Small-Ticket Commercial Real Estate | | % of Total | | Total Commercial Banking | | % of Total | Geographic concentration:(1) | | | | | | | | | | | | | | | | | Northeast | | $ | 15,562 |
| | 53.8 | % | | $ | 7,573 |
| | 18.4 | % | | $ | 213 |
| | 62.1 | % | | $ | 23,348 |
| | 33.2 | % | Mid-Atlantic | | 3,410 |
| | 11.8 |
| | 4,710 |
| | 11.5 |
| | 12 |
| | 3.5 |
| | 8,132 |
| | 11.6 |
| South | | 4,247 |
| | 14.7 |
| | 15,367 |
| | 37.4 |
| | 20 |
| | 5.8 |
| | 19,634 |
| | 27.9 |
| Other | | 5,680 |
| | 19.7 |
| | 13,441 |
| | 32.7 |
| | 98 |
| | 28.6 |
| | 19,219 |
| | 27.3 |
| Total | | $ | 28,899 |
| | 100.0 | % | | $ | 41,091 |
| | 100.0 | % | | $ | 343 |
| | 100.0 | % | | $ | 70,333 |
| | 100.0 | % | Internal risk rating:(2) | | | | | | | | | | | | | | | | | Noncriticized | | $ | 28,239 |
| | 97.7 | % | | $ | 39,468 |
| | 96.1 | % | | $ | 336 |
| | 98.0 | % | | $ | 68,043 |
| | 96.8 | % | Criticized performing | | 555 |
| | 1.9 |
| | 1,292 |
| | 3.1 |
| | 1 |
| | 0.3 |
| | 1,848 |
| | 2.6 |
| Criticized nonperforming | | 83 |
| | 0.3 |
| | 223 |
| | 0.5 |
| | 6 |
| | 1.7 |
| | 312 |
| | 0.4 |
| PCI loans | | 22 |
| | 0.1 |
| | 108 |
| | 0.3 |
| | 0 |
| | 0.0 |
| | 130 |
| | 0.2 |
| Total | | $ | 28,899 |
| | 100.0 | % | | $ | 41,091 |
| | 100.0 | % | | $ | 343 |
| | 100.0 | % | | $ | 70,333 |
| | 100.0 | % |
__________ | | (1) | Geographic concentration is generally determined by the location of the borrower’s business or the location of the collateral associated with the loan. Northeast consists of CT, MA, ME, NH, NJ, NY, PA and VT. Mid-Atlantic consists of DC, DE, MD, VA and WV. South consists of AL, AR, FL, GA, KY, LA, MO, MS, NC, SC, TN and TX. |
(2) Criticized exposures correspond to the “Special Mention,” “Substandard” and “Doubtful” asset categories defined by bank regulatory authorities. Impaired Loans The following table presents information on our impaired loans as of September 30, 2019 and December 31, 2018, and for the three and nine months ended September 30, 2019 and 2018. Impaired loans include loans modified in troubled debt restructurings (“TDRs”), all nonperforming commercial loans and nonperforming home loans with a specific impairment. Impaired loans without an allowance generally represent loans that have been charged down to the fair value of the underlying collateral for which we believe no additional losses have been incurred, or where the fair value of the underlying collateral meets or exceeds the loan’s amortized cost. PCI loans are excluded from the following table. Table 4.8: Impaired Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2019 | (Dollars in millions) | | With an Allowance | | Without an Allowance | | Total Recorded Investment | | Related Allowance | | Net Recorded Investment | | Unpaid Principal Balance | Credit Card: | | | | | | | | | | | | | Domestic credit card | | $ | 625 |
| | $ | 0 |
| | $ | 625 |
| | $ | 115 |
| | $ | 510 |
| | $ | 615 |
| International card businesses | | 190 |
| | 0 |
| | 190 |
| | 82 |
| | 108 |
| | 185 |
| Total credit card(1) | | 815 |
| | 0 |
| | 815 |
| | 197 |
| | 618 |
| | 800 |
| Consumer Banking: | | | | | | | | | | | | | Auto | | 294 |
| | 41 |
| | 335 |
| | 26 |
| | 309 |
| | 445 |
| Retail banking | | 45 |
| | 2 |
| | 47 |
| | 6 |
| | 41 |
| | 52 |
| Total consumer banking | | 339 |
| | 43 |
| | 382 |
| | 32 |
| | 350 |
| | 497 |
| Commercial Banking: | | | | | | | | | | | | | Commercial and multifamily real estate | | 36 |
| | 33 |
| | 69 |
| | 1 |
| | 68 |
| | 71 |
| Commercial and industrial | | 516 |
| | 141 |
| | 657 |
| | 97 |
| | 560 |
| | 779 |
| Total commercial banking | | 552 |
| | 174 |
| | 726 |
| | 98 |
| | 628 |
| | 850 |
| Total | | $ | 1,706 |
| | $ | 217 |
| | $ | 1,923 |
| | $ | 327 |
| | $ | 1,596 |
| | $ | 2,147 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2018 | (Dollars in millions) | | With an Allowance | | Without an Allowance | | Total Recorded Investment | | Related Allowance | | Net Recorded Investment | | Unpaid Principal Balance | Credit Card: | | | | | | | | | | | | | Domestic credit card | | $ | 666 |
| | $ | 0 |
| | $ | 666 |
| | $ | 186 |
| | $ | 480 |
| | $ | 654 |
| International card businesses | | 189 |
| | 0 |
| | 189 |
| | 91 |
| | 98 |
| | 183 |
| Total credit card(1) | | 855 |
| | 0 |
| | 855 |
| | 277 |
| | 578 |
| | 837 |
| Consumer Banking: | | | | | | | | | | | | | Auto(2) | | 301 |
| | 38 |
| | 339 |
| | 22 |
| | 317 |
| | 420 |
| Retail banking | | 42 |
| | 12 |
| | 54 |
| | 5 |
| | 49 |
| | 60 |
| Total consumer banking | | 343 |
| | 50 |
| | 393 |
| | 27 |
| | 366 |
| | 480 |
| Commercial Banking: | | | | | | | | | | | | | Commercial and multifamily real estate | | 92 |
| | 28 |
| | 120 |
| | 5 |
| | 115 |
| | 121 |
| Commercial and industrial | | 301 |
| | 169 |
| | 470 |
| | 29 |
| | 441 |
| | 593 |
| Total commercial lending | | 393 |
| | 197 |
| | 590 |
| | 34 |
| | 556 |
| | 714 |
| Small-ticket commercial real estate | | 0 |
| | 6 |
| | 6 |
| | 0 |
| | 6 |
| | 9 |
| Total commercial banking | | 393 |
| | 203 |
| | 596 |
| | 34 |
| | 562 |
| | 723 |
| Total | | $ | 1,591 |
| | $ | 253 |
| | $ | 1,844 |
| | $ | 338 |
| | $ | 1,506 |
| | $ | 2,040 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | 2019 | | 2018 | | 2019 | | 2018 | (Dollars in millions) | | Average Recorded Investment | | Interest Income Recognized | | Average Recorded Investment | | Interest Income Recognized | | Average Recorded Investment | | Interest Income Recognized | | Average Recorded Investment | | Interest Income Recognized | Credit Card: | | | | | | | | | | | | | | | | | Domestic credit card | | $ | 628 |
| | $ | 14 |
| | $ | 659 |
| | $ | 15 |
| | $ | 645 |
| | $ | 43 |
| | $ | 653 |
| | $ | 47 |
| International card businesses | | 192 |
| | 4 |
| | 186 |
| | 3 |
| | 193 |
| | 11 |
| | 182 |
| | 9 |
| Total credit card(1) | | 820 |
| | 18 |
| | 845 |
| | 18 |
| | 838 |
| | 54 |
| | 835 |
| | 56 |
| Consumer Banking: | | | | | | | | | | | | | | | | | Auto(2) | | 334 |
| | 10 |
| | 366 |
| | 11 |
| | 338 |
| | 29 |
| | 411 |
| | 35 |
| Home loan | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 114 |
| | 1 |
| Retail banking | | 52 |
| | 0 |
| | 59 |
| | 0 |
| | 53 |
| | 1 |
| | 60 |
| | 1 |
| Total consumer banking | | 386 |
| | 10 |
| | 425 |
| | 11 |
| | 391 |
| | 30 |
| | 585 |
| | 37 |
| Commercial Banking: | | | | | | | | | | | | | | | | | Commercial and multifamily real estate | | 74 |
| | 0 |
| | 67 |
| | 1 |
| | 94 |
| | 1 |
| | 86 |
| | 2 |
| Commercial and industrial | | 605 |
| | 3 |
| | 583 |
| | 6 |
| | 562 |
| | 11 |
| | 658 |
| | 16 |
| Total commercial lending | | 679 |
| | 3 |
| | 650 |
| | 7 |
| | 656 |
| | 12 |
| | 744 |
| | 18 |
| Small-ticket commercial real estate | | 3 |
| | 0 |
| | 5 |
| | 0 |
| | 5 |
| | 0 |
| | 6 |
| | 0 |
| Total commercial banking | | 682 |
| | 3 |
| | 655 |
| | 7 |
| | 661 |
| | 12 |
| | 750 |
| | 18 |
| Total | | $ | 1,888 |
| | $ | 31 |
| | $ | 1,925 |
| | $ | 36 |
| | $ | 1,890 |
| | $ | 96 |
| | $ | 2,170 |
| | $ | 111 |
|
__________ | | (1) | The period-end and average recorded investments of credit card loans include finance charges and fees. |
(2) 2018 amounts include certain TDRs that were recorded as other assets on our consolidated balance sheets. Troubled Debt Restructurings Total recorded TDRs were $1.6 billion as of both September 30, 2019 and December 31, 2018. TDRs classified as performing in our credit card and consumer banking loan portfolios totaled $1.1 billion and $1.2 billion as of September 30, 2019 and December 31, 2018, respectively. TDRs classified as performing in our commercial banking loan portfolio totaled $276 million and $282 million as of September 30, 2019 and December 31, 2018, respectively. Commitments to lend additional funds on loans modified in TDRs totaled $220 million and $256 million as of September 30, 2019 and December 31, 2018, respectively. Loans Modified in TDRs As part of our loan modification programs to borrowers experiencing financial difficulty, we may provide multiple concessions to minimize our economic loss and improve long-term loan performance and collectability. The following tables present the major modification types, recorded investment amounts and financial effects of loans modified in TDRs during the three and nine months ended September 30, 2019 and 2018. Table 4.9: Troubled Debt Restructurings | | | | | | | | | | | | | | | | | | | | | | | | | | Total Loans Modified(1) | | Three Months Ended September 30, 2019 | | | Reduced Interest Rate | | Term Extension | | Balance Reduction | (Dollars in millions) | | % of TDR Activity(2) | | Average Rate Reduction | | % of TDR Activity(2) | | Average Term Extension (Months) | | % of TDR Activity(2) | | Gross Balance Reduction | Credit Card: | | | | | | | | | | | | | | | Domestic credit card | | $ | 85 |
| | 100 | % | | 16.76 | % | | 0 | % | | 0 | | 0 | % | | $ | 0 |
| International card businesses | | 43 |
| | 100 |
| | 27.08 |
| | 0 |
| | 0 | | 0 |
| | 0 |
| Total credit card | | 128 |
| | 100 |
| | 20.19 |
| | 0 |
| | 0 | | 0 |
| | 0 |
| Consumer Banking: | | | | | | | | | | | | | | | Auto | | 66 |
| | 42 |
| | 3.51 |
| | 89 |
| | 8 | | 1 |
| | 1 |
| Retail banking | | 1 |
| | 9 |
| | 9.30 |
| | 0 |
| | 0 | | 0 |
| | 0 |
| Total consumer banking | | 67 |
| | 42 |
| | 3.53 |
| | 88 |
| | 8 | | 1 |
| | 1 |
| Commercial Banking: | | | | | | | | | | | | | | | Commercial and industrial | | 51 |
| | 9 |
| | 1.00 |
| | 15 |
| | 14 | | 0 |
| | 0 |
| Total commercial banking | | 51 |
| | 9 |
| | 1.00 |
| | 15 |
| | 14 | | 0 |
| | 0 |
| Total | | $ | 246 |
| | 65 |
| | 16.70 |
| | 27 |
| | 9 | | 0 |
| | $ | 1 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | Total Loans Modified(1) | | Nine Months Ended September 30, 2019 | | | Reduced Interest Rate | | Term Extension | | Balance Reduction | (Dollars in millions) | | % of TDR Activity(2) | | Average Rate Reduction | | % of TDR Activity(2) | | Average Term Extension (Months) | | % of TDR Activity(2) | | Gross Balance Reduction | Credit Card: | | | | | | | | | | | | | | | Domestic credit card | | $ | 257 |
| | 100 | % | | 16.58 | % | | 0 | % | | 0 | | 0 | % | | $ | 0 |
| International card businesses | | 130 |
| | 100 |
| | 27.25 |
| | 0 |
| | 0 | | 0 |
| | 0 |
| Total credit card | | 387 |
| | 100 |
| | 20.18 |
| | 0 |
| | 0 | | 0 |
| | 0 |
| Consumer Banking: | | | | | | | | | | | | | | | Auto | | 190 |
| | 41 |
| | 3.70 |
| | 90 |
| | 8 | | 1 |
| | 1 |
| Retail banking | | 7 |
| | 10 |
| | 10.73 |
| | 54 |
| | 3 | | 34 |
| | 0 |
| Total consumer banking | | 197 |
| | 40 |
| | 3.76 |
| | 89 |
| | 7 | | 2 |
| | 1 |
| Commercial Banking: | | | | | | | | | | | | | | | Commercial and multifamily real estate | | 34 |
| | 100 |
| | 0.00 |
| | 0 |
| | 0 | | 0 |
| | 0 |
| Commercial and industrial | | 86 |
| | 5 |
| | 0.60 |
| | 25 |
| | 9 | | 0 |
| | 0 |
| Total commercial lending | | 120 |
| | 32 |
| | 0.07 |
| | 18 |
| | 9 | | 0 |
| | 0 |
| Small-ticket commercial real estate | | 1 |
| | 0 |
| | 0.00 |
| | 0 |
| | 0 | | 0 |
| | 0 |
| Total commercial banking | | 121 |
| | 32 |
| | 0.07 |
| | 18 |
| | 9 | | 0 |
| | 0 |
| Total | | $ | 705 |
| | 72 |
| | 16.08 |
| | 28 |
| | 8 | | 1 |
| | $ | 1 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | Total Loans Modified(1) | | Three Months Ended September 30, 2018 | | | Reduced Interest Rate | | Term Extension | | Balance Reduction | (Dollars in millions) | | % of TDR Activity(2) | | Average Rate Reduction | | % of TDR Activity(2) | | Average Term Extension (Months) | | % of TDR Activity(2) | | Gross Balance Reduction | Credit Card: | | | | | | | | | | | | | | | Domestic credit card | | $ | 105 |
| | 100 | % | | 16.01 | % | | 0 | % | | 0 | | 0 | % | | $ | 0 |
| International card businesses | | 46 |
| | 100 |
| | 26.95 |
| | 0 |
| | 0 | | 0 |
| | 0 |
| Total credit card | | 151 |
| | 100 |
| | 19.35 |
| | 0 |
| | 0 | | 0 |
| | 0 |
| Consumer Banking: | | | | | | | | | | | | | | | Auto(3) | | 47 |
| | 51 |
| | 3.88 |
| | 85 |
| | 9 | | 1 |
| | 0 |
| Retail banking | | 0 |
| | 100 |
| | 10.45 |
| | 5 |
| | 12 | | 0 |
| | 0 |
| Total consumer banking | | 47 |
| | 52 |
| | 3.93 |
| | 85 |
| | 9 | | 1 |
| | 0 |
| Commercial Banking: | | | | | | | | | | | | | | | Commercial and multifamily real estate | | 22 |
| | 0 |
| | 0.00 |
| | 61 |
| | 3 | | 0 |
| | 0 |
| Commercial and industrial | | 50 |
| | 0 |
| | 0.00 |
| | 13 |
| | 8 | | 0 |
| | 0 |
| Total commercial lending | | 72 |
| | 0 |
| | 0.00 |
| | 28 |
| | 5 | | 0 |
| | 0 |
| Small-ticket commercial real estate | | 1 |
| | 0 |
| | 0.00 |
| | 0 |
| | 0 | | 0 |
| | 0 |
| Total commercial banking | | 73 |
| | 0 |
| | 0.00 |
| | 28 |
| | 5 | | 0 |
| | 0 |
| Total | | $ | 271 |
| | 65 |
| | 17.26 |
| | 22 |
| | 8 | | 0 |
| | $ | 0 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | Total Loans Modified(1) | | Nine Months Ended September 30, 2018 | | Reduced Interest Rate | | Term Extension | | Balance Reduction | (Dollars in millions) | % of TDR Activity(2) | | Average Rate Reduction | | % of TDR Activity(2) | | Average Term Extension (Months) | | % of TDR Activity(2) | | Gross Balance Reduction | Credit Card: | | | | | | | | | | | | | | | Domestic credit card | | $ | 314 |
| | 100 | % | | 15.88 | % | | 0 | % | | 0 | | 0 | % | | $ | 0 |
| International card businesses | | 139 |
| | 100 |
| | 26.87 |
| | 0 |
| | 0 | | 0 |
| | 0 |
| Total credit card | | 453 |
| | 100 |
| | 19.25 |
| | 0 |
| | 0 | | 0 |
| | 0 |
| Consumer Banking: | | | | | | | | | | | | | | | Auto(3) | | 153 |
| | 55 |
| | 3.91 |
| | 87 |
| | 8 | | 1 |
| | 1 |
| Home loan | | 6 |
| | 28 |
| | 1.78 |
| | 83 |
| | 214 | | 0 |
| | 0 |
| Retail banking | | 6 |
| | 14 |
| | 11.09 |
| | 48 |
| | 6 | | 0 |
| | 0 |
| Total consumer banking | | 165 |
| | 53 |
| | 3.94 |
| | 86 |
| | 15 | | 1 |
| | 1 |
| Commercial Banking: | | | | | | | | | | | | | | | Commercial and multifamily real estate | | 41 |
| | 0 |
| | 0.00 |
| | 79 |
| | 5 | | 0 |
| | 0 |
| Commercial and industrial | | 147 |
| | 0 |
| | 1.19 |
| | 47 |
| | 14 | | 0 |
| | 0 |
| Total commercial lending | | 188 |
| | 0 |
| | 1.19 |
| | 54 |
| | 11 | | 0 |
| | 0 |
| Small-ticket commercial real estate | | 3 |
| | 0 |
| | 0.00 |
| | 0 |
| | 0 | | 0 |
| | 0 |
| Total commercial banking | | 191 |
| | 0 |
| | 1.19 |
| | 53 |
| | 11 | | 0 |
| | 0 |
| Total | | $ | 809 |
| | 67 |
| | 16.79 |
| | 30 |
| | 14 | | 0 |
| | $ | 1 |
|
__________ | | (1) | Represents the recorded investment of total loans modified in TDRs at the end of the quarter in which they were modified. As not every modification type is included in the table above, the total percentage of TDR activity may not add up to 100%. Some loans may receive more than one type of concession as part of the modification. |
| | (2) | Due to multiple concessions granted to some troubled borrowers, percentages may total more than 100% for certain loan types. |
| | (3) | Includes certain TDRs that are recorded as other assets on our consolidated balance sheets. |
Subsequent Defaults of Completed TDR Modifications The following table presents the type, number and recorded investment of loans modified in TDRs that experienced a default during the period and had completed a modification event in the twelve months prior to the default. A default occurs if the loan is either 90 days or more delinquent, has been charged off as of the end of the period presented or has been reclassified from accrual to nonaccrual status. Table 4.10: TDRs—Subsequent Defaults | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | 2019 | | 2018 | | 2019 | | 2018 | (Dollars in millions) | | Number of Contracts | | Amount | | Number of Contracts | | Amount | | Number of Contracts | | Amount | | Number of Contracts | | Amount | Credit Card: | | | | | | | | | | | | | | | | | Domestic credit card | | 10,619 |
| | $ | 22 |
| | 13,983 |
| | $ | 29 |
| | 36,227 |
| | $ | 77 |
| | 44,528 |
| | $ | 93 |
| International card businesses | | 17,104 |
| | 26 |
| | 15,104 |
| | 25 |
| | 51,995 |
| | 82 |
| | 44,397 |
| | 78 |
| Total credit card | | 27,723 |
| | 48 |
| | 29,087 |
| | 54 |
| | 88,222 |
| | 159 |
| | 88,925 |
| | 171 |
| Consumer Banking: | | | | | | | | | | | | | | | | | Auto | | 1,446 |
| | 18 |
| | 1,907 |
| | 20 |
| | 3,863 |
| | 47 |
| | 5,507 |
| | 62 |
| Home loan | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 3 |
| | 1 |
| Retail banking | | 6 |
| | 0 |
| | 12 |
| | 2 |
| | 18 |
| | 1 |
| | 21 |
| | 2 |
| Total consumer banking | | 1,452 |
| | 18 |
| | 1,919 |
| | 22 |
| | 3,881 |
| | 48 |
| | 5,531 |
| | 65 |
| Commercial Banking: | | | | | | | | | | | | | | | | | Commercial and multifamily real estate | | 0 |
| | 0 |
| | 1 |
| | 3 |
| | 0 |
| | 0 |
| | 1 |
| | 3 |
| Commercial and industrial | | 0 |
| | 0 |
| | 5 |
| | 34 |
| | 0 |
| | 0 |
| | 18 |
| | 79 |
| Total commercial lending | | 0 |
| | 0 |
| | 6 |
| | 37 |
| | 0 |
| | 0 |
| | 19 |
| | 82 |
| Total commercial banking | | 0 |
| | 0 |
| | 6 |
| | 37 |
| | 0 |
| | 0 |
| | 19 |
| | 82 |
| Total | | 29,175 |
| | $ | 66 |
| | 31,012 |
| | $ | 113 |
| | 92,103 |
| | $ | 207 |
| | 94,475 |
| | $ | 318 |
|
|