Bank of America Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Outstanding Loans and Leases

Outstanding Loans and Leases

3 Months Ended

Mar. 31, 2017

The following tables present total outstanding loans and leases and an aging analysis for the Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments, by class of financing receivables, at March 31, 2017 and December 31, 2016.

In connection with an agreement to sell the Corporation's non-U.S. consumer credit card business, this business, which includes $9.5 billion and $9.2 billion of non-U.S. credit card loans and related allowance for loan and lease losses of $242 million and $243 million, was reclassified to assets of business held for sale on the Consolidated Balance Sheet as of March 31, 2017 and December 31, 2016. In this Note, all applicable amounts include these balances, unless otherwise noted. For additional information, see Note 1 – Summary of Significant Accounting Principles.




	March 31, 2017
(Dollars in millions)	30-59 Days Past Due ⁽¹⁾			60-89 Days Past Due ⁽¹⁾			90 Days or More Past Due ⁽²⁾			Total Past Due 30 Days or More			Total Current or Less Than 30 Days Past Due ⁽³⁾			Purchased Credit-impaired ⁽⁴⁾			Loans Accounted for Under the Fair Value Option			Total Outstandings
Consumer real estate
Core portfolio
Residential mortgage	$	1,013		$	313		$	1,125		$	2,451		$	157,908								$	160,359
Home equity	220			109			411			740			46,990									47,730
Non-core portfolio
Residential mortgage ⁽⁵⁾	1,077			553			4,683			6,313			17,340			$	9,831					33,484
Home equity	251			126			763			1,140			11,649			3,396						16,185
Credit card and other consumer
U.S. credit card	459			320			801			1,580			86,972									88,552
Non-U.S. credit card	38			28			71			137			9,368									9,505
Direct/Indirect consumer ⁽⁶⁾	218			64			32			314			92,480									92,794
Other consumer ⁽⁷⁾	17			6			5			28			2,511									2,539
Total consumer	3,293			1,519			7,891			12,703			425,218			13,227						451,148
Consumer loans accounted for under the fair value option ⁽⁸⁾																			$	1,032		1,032
Total consumer loans and leases	3,293			1,519			7,891			12,703			425,218			13,227			1,032			452,180
Commercial
U.S. commercial	650			639			363			1,652			273,216									274,868
Commercial real estate ⁽⁹⁾	25			—			48			73			57,776									57,849
Commercial lease financing	157			29			10			196			21,677									21,873
Non-U.S. commercial	189			127			45			361			88,818									89,179
U.S. small business commercial	72			39			78			189			13,113									13,302
Total commercial	1,093			834			544			2,471			454,600									457,071
Commercial loans accounted for under the fair value option ⁽⁸⁾																			6,496			6,496
Total commercial loans and leases	1,093			834			544			2,471			454,600						6,496			463,567
Total consumer and commercial loans and leases⁽¹⁰⁾	$	4,386		$	2,353		$	8,435		$	15,174		$	879,818		$	13,227		$	7,528		$	915,747
Less: Loans of business held for sale⁽¹⁰⁾																						(9,505		)
Total loans and leases ⁽¹¹⁾																						$	906,242
Percentage of outstandings ⁽¹⁰⁾	0.48		%	0.26		%	0.92		%	1.66		%	96.08		%	1.44		%	0.82		%	100.00		%


⁽¹⁾	Consumer real estate loans 30-59 days past due includes fully-insured loans of $845 million and nonperforming loans of $259 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $460 million and nonperforming loans of $210 million.


⁽²⁾	Consumer real estate includes fully-insured loans of $4.2 billion.


⁽³⁾	Consumer real estate includes $2.3 billion and direct/indirect consumer includes $18 million of nonperforming loans.


⁽⁴⁾	Purchased credit-impaired (PCI) loan amounts are shown gross of the valuation allowance.


⁽⁵⁾	Total outstandings includes pay option loans of $1.8 billion. The Corporation no longer originates this product.


⁽⁶⁾	Total outstandings includes auto and specialty lending loans of $48.7 billion, unsecured consumer lending loans of $530 million, U.S. securities-based lending loans of $39.5 billion, non-U.S. consumer loans of $2.9 billion, student loans of $479 million and other consumer loans of $644 million.


⁽⁷⁾	Total outstandings includes consumer finance loans of $441 million, consumer leases of $2.0 billion and consumer overdrafts of $124 million.


⁽⁸⁾	Consumer loans accounted for under the fair value option were residential mortgage loans of $694 million and home equity loans of $338 million. Commercial loans accounted for under the fair value option were U.S. commercial loans of $3.5 billion and non-U.S. commercial loans of $3.0 billion. For additional information, see Note 14 – Fair Value Measurements and Note 15 – Fair Value Option.


⁽⁹⁾	Total outstandings includes U.S. commercial real estate loans of $54.7 billion and non-U.S. commercial real estate loans of $3.1 billion.


⁽¹⁰⁾	Includes non-U.S. credit card loans, which are included in assets of business held for sale on the Consolidated Balance Sheet.


⁽¹¹⁾	The Corporation pledged $144.4 billion of loans to secure potential borrowing capacity with the Federal Reserve Bank and Federal Home Loan Bank (FHLB). This amount is not included in the parenthetical disclosure of loans and leases pledged as collateral on the Consolidated Balance Sheet as there were no related outstanding borrowings.




	December 31, 2016
(Dollars in millions)	30-59 Days Past Due ⁽¹⁾			60-89 Days Past Due ⁽¹⁾			90 Days or More Past Due ⁽²⁾			Total Past Due 30 Days or More			Total Current or Less Than 30 Days Past Due ⁽³⁾			Purchased Credit-impaired ⁽⁴⁾			Loans Accounted for Under the Fair Value Option			Total Outstandings
Consumer real estate
Core portfolio
Residential mortgage	$	1,340		$	425		$	1,213		$	2,978		$	153,519								$	156,497
Home equity	239			105			451			795			48,578									49,373
Non-core portfolio
Residential mortgage ⁽⁵⁾	1,338			674			5,343			7,355			17,818			$	10,127					35,300
Home equity	260			136			832			1,228			12,231			3,611						17,070
Credit card and other consumer
U.S. credit card	472			341			782			1,595			90,683									92,278
Non-U.S. credit card	37			27			66			130			9,084									9,214
Direct/Indirect consumer ⁽⁶⁾	272			79			34			385			93,704									94,089
Other consumer ⁽⁷⁾	26			8			6			40			2,459									2,499
Total consumer	3,984			1,795			8,727			14,506			428,076			13,738						456,320
Consumer loans accounted for under the fair value option ⁽⁸⁾																			$	1,051		1,051
Total consumer loans and leases	3,984			1,795			8,727			14,506			428,076			13,738			1,051			457,371
Commercial
U.S. commercial	952			263			400			1,615			268,757									270,372
Commercial real estate ⁽⁹⁾	20			10			56			86			57,269									57,355
Commercial lease financing	167			21			27			215			22,160									22,375
Non-U.S. commercial	348			4			5			357			89,040									89,397
U.S. small business commercial	96			49			84			229			12,764									12,993
Total commercial	1,583			347			572			2,502			449,990									452,492
Commercial loans accounted for under the fair value option ⁽⁸⁾																			6,034			6,034
Total commercial loans and leases	1,583			347			572			2,502			449,990						6,034			458,526
Total consumer and commercial loans and leases⁽¹⁰⁾	$	5,567		$	2,142		$	9,299		$	17,008		$	878,066		$	13,738		$	7,085		$	915,897
Less: Loans of business held for sale⁽¹⁰⁾																						(9,214		)
Total loans and leases ⁽¹¹⁾																						$	906,683
Percentage of outstandings ⁽¹⁰⁾	0.61		%	0.23		%	1.02		%	1.86		%	95.87		%	1.50		%	0.77		%	100.00		%


⁽¹⁾	Consumer real estate loans 30-59 days past due includes fully-insured loans of $1.1 billion and nonperforming loans of $266 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $547 million and nonperforming loans of $216 million.


⁽²⁾	Consumer real estate includes fully-insured loans of $4.8 billion.


⁽³⁾	Consumer real estate includes $2.5 billion and direct/indirect consumer includes $27 million of nonperforming loans.


⁽⁴⁾	PCI loan amounts are shown gross of the valuation allowance.


⁽⁵⁾	Total outstandings includes pay option loans of $1.8 billion. The Corporation no longer originates this product.


⁽⁶⁾	Total outstandings includes auto and specialty lending loans of $48.9 billion, unsecured consumer lending loans of $585 million, U.S. securities-based lending loans of $40.1 billion, non-U.S. consumer loans of $3.0 billion, student loans of $497 million and other consumer loans of $1.1 billion.


⁽⁷⁾	Total outstandings includes consumer finance loans of $465 million, consumer leases of $1.9 billion and consumer overdrafts of $157 million.


⁽⁸⁾	Consumer loans accounted for under the fair value option were residential mortgage loans of $710 million and home equity loans of $341 million. Commercial loans accounted for under the fair value option were U.S. commercial loans of $2.9 billion and non-U.S. commercial loans of $3.1 billion. For more information, see Note 14 – Fair Value Measurements and Note 15 – Fair Value Option.


⁽⁹⁾	Total outstandings includes U.S. commercial real estate loans of $54.3 billion and non-U.S. commercial real estate loans of $3.1 billion.


⁽¹⁰⁾	Includes non-U.S. credit card loans, which are included in assets of business held for sale on the Consolidated Balance Sheet.


⁽¹¹⁾	The Corporation pledged $143.1 billion of loans to secure potential borrowing capacity with the Federal Reserve Bank and FHLB. This amount is not included in the parenthetical disclosure of loans and leases pledged as collateral on the Consolidated Balance Sheet as there were no related outstanding borrowings.

The Corporation categorizes consumer real estate loans as core and non-core based on loan and customer characteristics such as origination date, product type, LTV, FICO score and delinquency status consistent with its current consumer and mortgage servicing strategy. Generally, loans that were originated after January 1, 2010, qualified under government-sponsored enterprise underwriting guidelines, or otherwise met the Corporation's underwriting guidelines in place in 2015 are characterized as core loans. Loans held in legacy private-label securitizations, government-insured loans originated prior to 2010, loan products no longer originated, and loans originated prior to 2010 and classified as nonperforming or modified in a troubled debt restructuring (TDR) prior to 2016 are generally characterized as non-core loans, and are principally run-off portfolios.

The Corporation has entered into long-term credit protection agreements with FNMA and FHLMC on loans totaling $6.6 billion and $6.4 billion at March 31, 2017 and December 31, 2016, providing full credit protection on residential mortgage loans that become severely delinquent. All of these loans are individually insured and therefore the Corporation does not record an allowance for credit losses related to these loans.

Nonperforming Loans and Leases

The Corporation classifies junior-lien home equity loans as nonperforming when the first-lien loan becomes 90 days past due even if the junior-lien loan is performing. At March 31, 2017 and December 31, 2016, $412 million and $428 million of such junior-lien home equity loans were included in nonperforming loans.

The Corporation classifies consumer real estate loans that have been discharged in Chapter 7 bankruptcy and not reaffirmed by the borrower as TDRs, irrespective of payment history or delinquency status, even if the repayment terms for the loan have not been otherwise modified. The Corporation continues to have a lien on the underlying collateral. At March 31, 2017, nonperforming loans discharged in Chapter 7 bankruptcy with no change in repayment terms were $517 million of which $320 million were current on their contractual payments, while $166 million were 90 days or more past due. Of the contractually current nonperforming loans, approximately 83 percent were discharged in Chapter 7 bankruptcy over 12 months ago, and approximately 73 percent were discharged 24 months or more ago.

During the three months ended March 31, 2017 and 2016, the Corporation sold nonperforming and other delinquent consumer real estate loans with a carrying value of $142 million and $1.0 billion, including $0 and $174 million of PCI loans. The Corporation recorded net recoveries of $11 million and net charge-offs of $40 million related to these sales for the three months ended March 31, 2017 and 2016. Gains related to these sales of $6 million and $31 million were recorded in other income in the Consolidated Statement of Income for the three months ended March 31, 2017 and 2016. During the three months ended March 31, 2017, the Corporation transferred nonperforming loans with a net carrying value of $221 million to held-for-sale. There were no transfers of nonperforming loans to held-for-sale for the same period in 2016.

The table below presents the Corporation’s nonperforming loans and leases including nonperforming TDRs, and loans accruing past due 90 days or more at March 31, 2017 and December 31, 2016. Nonperforming loans held-for-sale (LHFS) are excluded from nonperforming loans and leases as they are recorded at either fair value or the lower of cost or fair value. For more information on the criteria for classification as nonperforming, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K.




Credit Quality

	Nonperforming Loans and Leases				Accruing Past Due 90 Days or More
(Dollars in millions)	March 31 2017		December 31 2016		March 31 2017		December 31 2016
Consumer real estate
Core portfolio
Residential mortgage ⁽¹⁾	$	1,099	$	1,274	$	443	$	486
Home equity	939		969		—		—
Non-core portfolio
Residential mortgage⁽¹⁾	1,630		1,782		3,783		4,307
Home equity	1,857		1,949		—		—
Credit card and other consumer
U.S. credit card	n/a		n/a		801		782
Non-U.S. credit card	n/a		n/a		71		66
Direct/Indirect consumer	19		28		31		34
Other consumer	2		2		4		4
Total consumer	5,546		6,004		5,133		5,679
Commercial
U.S. commercial	1,246		1,256		112		106
Commercial real estate	74		72		—		7
Commercial lease financing	37		36		9		19
Non-U.S. commercial	311		279		45		5
U.S. small business commercial	60		60		69		71
Total commercial	1,728		1,703		235		208
Total loans and leases	$	7,274	$	7,707	$	5,368	$	5,887

⁽¹⁾

Residential mortgage loans in the core and non-core portfolios accruing past due 90 days or more are fully-insured loans. At March 31, 2017 and December 31, 2016, residential mortgage includes $2.7 billion and $3.0 billion of loans on which interest has been curtailed by the Federal Housing Administration (FHA), and therefore are no longer accruing interest, although principal is still insured, and $1.5 billion and $1.8 billion of loans on which interest is still accruing.

n/a = not applicable

Credit Quality Indicators

The Corporation monitors credit quality within its Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments based on primary credit quality indicators. For more information on the portfolio segments, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K. Within the Consumer Real Estate portfolio segment, the primary credit quality indicators are refreshed LTV and refreshed FICO score. Refreshed LTV measures the carrying value of the loan as a percentage of the value of the property securing the loan, refreshed quarterly. Home equity loans are evaluated using combined loan-to-value (CLTV) which measures the carrying value of the Corporation’s loan and available line of credit combined with any outstanding senior liens against the property as a percentage of the value of the property securing the loan, refreshed quarterly. FICO score measures the creditworthiness of the borrower based on the financial obligations of the borrower and the borrower’s credit history. FICO scores are typically refreshed quarterly or more frequently. Certain borrowers (e.g., borrowers that have had debts discharged in a bankruptcy proceeding) may not have their FICO scores updated. FICO scores are also a primary credit quality indicator for the Credit Card and Other Consumer portfolio segment and the business card portfolio within U.S. small business commercial. Within the Commercial portfolio segment, loans are evaluated using the internal classifications of pass rated or reservable criticized as the primary credit quality indicators. The term reservable criticized refers to those commercial loans that are internally classified or listed by the Corporation as Special Mention, Substandard or Doubtful, 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 considered reservable criticized. In addition to these primary credit quality indicators, the Corporation uses other credit quality indicators for certain types of loans.

The following tables present certain credit quality indicators for the Corporation’s Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments, by class of financing receivables, at March 31, 2017 and December 31, 2016.




Consumer Real Estate – Credit Quality Indicators ⁽¹⁾
	March 31, 2017
(Dollars in millions)	Core Portfolio Residential Mortgage ⁽²⁾		Non-core Residential Mortgage ⁽²⁾		Residential Mortgage PCI ⁽³⁾		Core Portfolio Home Equity ⁽²⁾		Non-core Home Equity ⁽²⁾		Home Equity PCI
Refreshed LTV⁽⁴⁾
Less than or equal to 90 percent	$	134,410	$	13,745	$	7,762	$	45,750	$	8,358	$	1,884
Greater than 90 percent but less than or equal to 100 percent	3,509		1,318		944		912		1,541		582
Greater than 100 percent	1,741		1,728		1,125		1,068		2,890		930
Fully-insured loans ⁽⁵⁾	20,699		6,862		—		—		—		—
Total consumer real estate	$	160,359	$	23,653	$	9,831	$	47,730	$	12,789	$	3,396
Refreshed FICO score
Less than 620	$	2,403	$	2,987	$	2,643	$	1,214	$	2,566	$	533
Greater than or equal to 620 and less than 680	5,039		2,620		2,118		2,738		2,908		597
Greater than or equal to 680 and less than 740	22,530		4,293		2,834		9,495		3,068		998
Greater than or equal to 740	109,688		6,891		2,236		34,283		4,247		1,268
Fully-insured loans ⁽⁵⁾	20,699		6,862		—		—		—		—
Total consumer real estate	$	160,359	$	23,653	$	9,831	$	47,730	$	12,789	$	3,396


⁽¹⁾	Excludes $1.0 billion of loans accounted for under the fair value option.


⁽²⁾	Excludes PCI loans.


⁽³⁾	Includes $1.5 billion of pay option loans. The Corporation no longer originates this product.


⁽⁴⁾	Refreshed LTV percentages for PCI loans are calculated using the carrying value net of the related valuation allowance.


⁽⁵⁾	Credit quality indicators are not reported for fully-insured loans as principal repayment is insured.




Credit Card and Other Consumer – Credit Quality Indicators

	March 31, 2017
(Dollars in millions)	U.S. Credit Card		Non-U.S. Credit Card		Direct/Indirect Consumer		Other Consumer ⁽¹⁾
Refreshed FICO score
Less than 620	$	4,432	$	—	$	1,572	$	182
Greater than or equal to 620 and less than 680	12,033		—		2,112		220
Greater than or equal to 680 and less than 740	33,708		—		12,479		414
Greater than or equal to 740	38,379		—		33,051		1,595
Other internal credit metrics ^{(2, 3, 4)}	—		9,505		43,580		128
Total credit card and other consumer	$	88,552	$	9,505	$	92,794	$	2,539


⁽¹⁾	At March 31, 2017, 17 percent of the other consumer portfolio is associated with portfolios from certain consumer finance businesses that the Corporation previously exited.


⁽²⁾	Other internal credit metrics may include delinquency status, geography or other factors.


⁽³⁾	Direct/indirect consumer includes $42.5 billion of securities-based lending which is overcollateralized and therefore has minimal credit risk and $481 million of loans the Corporation no longer originates, primarily student loans.


⁽⁴⁾	Non-U.S. credit card represents the U.K. credit card portfolio which is evaluated using internal credit metrics, including delinquency status. At March 31, 2017, 98 percent of this portfolio was current or less than 30 days past due, one percent was 30-89 days past due and one percent was 90 days or more past due.




Commercial – Credit Quality Indicators ⁽¹⁾

	March 31, 2017
(Dollars in millions)	U.S. Commercial		Commercial Real Estate		Commercial Lease Financing		Non-U.S. Commercial		U.S. Small Business Commercial ⁽²⁾
Risk ratings
Pass rated	$	265,602	$	57,464	$	21,045	$	85,761	$	398
Reservable criticized	9,266		385		828		3,418		64
Refreshed FICO score ⁽³⁾
Less than 620									217
Greater than or equal to 620 and less than 680									609
Greater than or equal to 680 and less than 740									1,802
Greater than or equal to 740									3,402
Other internal credit metrics ^{(3, 4)}									6,810
Total commercial	$	274,868	$	57,849	$	21,873	$	89,179	$	13,302


⁽¹⁾	Excludes $6.5 billion of loans accounted for under the fair value option.


⁽²⁾	U.S. small business commercial includes $784 million of criticized business card and small business loans which are evaluated using refreshed FICO scores or internal credit metrics, including delinquency status, rather than risk ratings. At March 31, 2017, 99 percent of the balances where internal credit metrics are used was current or less than 30 days past due.


⁽³⁾	Refreshed FICO score and other internal credit metrics are applicable only to the U.S. small business commercial portfolio.


⁽⁴⁾	Other internal credit metrics may include delinquency status, application scores, geography or other factors.




Consumer Real Estate – Credit Quality Indicators ⁽¹⁾

	December 31, 2016
(Dollars in millions)	Core Portfolio Residential Mortgage ⁽²⁾		Non-core Residential Mortgage ⁽²⁾		Residential Mortgage PCI ⁽³⁾		Core Portfolio Home Equity ⁽²⁾		Non-core Home Equity ⁽²⁾		Home Equity PCI
Refreshed LTV ⁽⁴⁾
Less than or equal to 90 percent	$	129,737	$	14,280	$	7,811	$	47,171	$	8,480	$	1,942
Greater than 90 percent but less than or equal to 100 percent	3,634		1,446		1,021		1,006		1,668		630
Greater than 100 percent	1,872		1,972		1,295		1,196		3,311		1,039
Fully-insured loans ⁽⁵⁾	21,254		7,475		—		—		—		—
Total consumer real estate	$	156,497	$	25,173	$	10,127	$	49,373	$	13,459	$	3,611
Refreshed FICO score
Less than 620	$	2,479	$	3,198	$	2,741	$	1,254	$	2,692	$	559
Greater than or equal to 620 and less than 680	5,094		2,807		2,241		2,853		3,094		636
Greater than or equal to 680 and less than 740	22,629		4,512		2,916		10,069		3,176		1,069
Greater than or equal to 740	105,041		7,181		2,229		35,197		4,497		1,347
Fully-insured loans ⁽⁵⁾	21,254		7,475		—		—		—		—
Total consumer real estate	$	156,497	$	25,173	$	10,127	$	49,373	$	13,459	$	3,611


⁽¹⁾	Excludes $1.1 billion of loans accounted for under the fair value option.


⁽²⁾	Excludes PCI loans.


⁽³⁾	Includes $1.6 billion of pay option loans. The Corporation no longer originates this product.


⁽⁴⁾	Refreshed LTV percentages for PCI loans are calculated using the carrying value net of the related valuation allowance.


⁽⁵⁾	Credit quality indicators are not reported for fully-insured loans as principal repayment is insured.




Credit Card and Other Consumer – Credit Quality Indicators

	December 31, 2016
(Dollars in millions)	U.S. Credit Card		Non-U.S. Credit Card		Direct/Indirect Consumer		Other Consumer ⁽¹⁾
Refreshed FICO score
Less than 620	$	4,431	$	—	$	1,478	$	187
Greater than or equal to 620 and less than 680	12,364		—		2,070		222
Greater than or equal to 680 and less than 740	34,828		—		12,491		404
Greater than or equal to 740	40,655		—		33,420		1,525
Other internal credit metrics ^{(2, 3, 4)}	—		9,214		44,630		161
Total credit card and other consumer	$	92,278	$	9,214	$	94,089	$	2,499


⁽¹⁾	At December 31, 2016, 19 percent of the other consumer portfolio is associated with portfolios from certain consumer finance businesses that the Corporation previously exited.


⁽²⁾	Other internal credit metrics may include delinquency status, geography or other factors.


⁽³⁾	Direct/indirect consumer includes $43.1 billion of securities-based lending which is overcollateralized and therefore has minimal credit risk and $499 million of loans the Corporation no longer originates, primarily student loans.


⁽⁴⁾	Non-U.S. credit card represents the U.K. credit card portfolio which is evaluated using internal credit metrics, including delinquency status. At December 31, 2016, 98 percent of this portfolio was current or less than 30 days past due, one percent was 30-89 days past due and one percent was 90 days or more past due.




Commercial – Credit Quality Indicators ⁽¹⁾

	December 31, 2016
(Dollars in millions)	U.S. Commercial		Commercial Real Estate		Commercial Lease Financing		Non-U.S. Commercial		U.S. Small Business Commercial ⁽²⁾
Risk ratings
Pass rated	$	261,214	$	56,957	$	21,565	$	85,689	$	453
Reservable criticized	9,158		398		810		3,708		71
Refreshed FICO score ⁽³⁾
Less than 620									200
Greater than or equal to 620 and less than 680									591
Greater than or equal to 680 and less than 740									1,741
Greater than or equal to 740									3,264
Other internal credit metrics ^{(3, 4)}									6,673
Total commercial	$	270,372	$	57,355	$	22,375	$	89,397	$	12,993


⁽¹⁾	Excludes $6.0 billion of loans accounted for under the fair value option.


⁽²⁾	U.S. small business commercial includes $755 million of criticized business card and small business loans which are evaluated using refreshed FICO scores or internal credit metrics, including delinquency status, rather than risk ratings. At December 31, 2016, 98 percent of the balances where internal credit metrics are used was current or less than 30 days past due.


⁽³⁾	Refreshed FICO score and other internal credit metrics are applicable only to the U.S. small business commercial portfolio.


⁽⁴⁾	Other internal credit metrics may include delinquency status, application scores, geography or other factors.

Impaired Loans and Troubled Debt Restructurings

A loan is considered impaired when, based on current information, it is probable that the Corporation will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans and all consumer and commercial TDRs. Impaired loans exclude nonperforming consumer loans and nonperforming commercial leases unless they are classified as TDRs. Loans accounted for under the fair value option are also excluded. PCI loans are excluded and reported separately on page 93. For additional information, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K.

Consumer Real Estate

Impaired consumer real estate loans within the Consumer Real Estate portfolio segment consist entirely of TDRs. Excluding PCI loans, most modifications of consumer real estate loans meet the definition of TDRs when a binding offer is extended to a borrower. For more information on impaired consumer real estate loans, see Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K.

Consumer real estate loans that have been discharged in Chapter 7 bankruptcy with no change in repayment terms and not reaffirmed by the borrower of $1.4 billion were included in TDRs at March 31, 2017, of which $517 million were classified as nonperforming and $501 million were loans fully-insured by the FHA. For more information on loans discharged in Chapter 7 bankruptcy, see Nonperforming Loans and Leases in this Note.

At March 31, 2017 and December 31, 2016, remaining commitments to lend additional funds to debtors whose terms have been modified in a consumer real estate TDR were immaterial. Consumer real estate foreclosed properties totaled $328 million and $363 million at March 31, 2017 and December 31, 2016. The carrying value of consumer real estate loans, including fully-insured and PCI loans, for which formal foreclosure proceedings were in process as of March 31, 2017 was $4.3 billion. During the three months ended March 31, 2017 and 2016, the Corporation reclassified $200 million and $416 million of consumer real estate loans to foreclosed properties or, for properties acquired upon foreclosure of certain government-guaranteed loans (principally FHA-insured loans), to other assets. The reclassifications represent non-cash investing activities and, accordingly, are not reflected on the Consolidated Statement of Cash Flows.

The table below provides the unpaid principal balance, carrying value and related allowance at March 31, 2017 and December 31, 2016, and the average carrying value and interest income recognized for the three months ended March 31, 2017 and 2016 for impaired loans in the Corporation’s Consumer Real Estate portfolio segment. Certain impaired consumer real estate loans do not have a related allowance as the current valuation of these impaired loans exceeded the carrying value, which is net of previously recorded charge-offs.




Impaired Loans – Consumer Real Estate

	March 31, 2017						December 31, 2016
(Dollars in millions)	Unpaid Principal Balance		Carrying Value		Related Allowance		Unpaid Principal Balance		Carrying Value		Related Allowance
With no recorded allowance
Residential mortgage	$	10,367	$	8,024	$	—	$	11,151	$	8,695	$	—
Home equity	3,701		1,962		—		3,704		1,953		—
With an allowance recorded
Residential mortgage	$	3,975	$	3,856	$	241	$	4,041	$	3,936	$	219
Home equity	971		880		169		910		824		137
Total
Residential mortgage	$	14,342	$	11,880	$	241	$	15,192	$	12,631	$	219
Home equity	4,672		2,842		169		4,614		2,777		137

	Three Months Ended March 31
	2017				2016
	Average Carrying Value		Interest Income Recognized ⁽¹⁾		Average Carrying Value		Interest Income Recognized ⁽¹⁾
With no recorded allowance
Residential mortgage	$	8,456	$	79	$	11,418	$	94
Home equity	1,991		27		1,808		13
With an allowance recorded
Residential mortgage	$	3,832	$	35	$	6,072	$	51
Home equity	825		5		898		6
Total
Residential mortgage	$	12,288	$	114	$	17,490	$	145
Home equity	2,816		32		2,706		19


⁽¹⁾	Interest income recognized includes interest accrued and collected on the outstanding balances of accruing impaired loans as well as interest cash collections on nonaccruing impaired loans for which the principal is considered collectible.

The table below presents the March 31, 2017 and 2016 unpaid principal balance, carrying value, and average pre- and post-modification interest rates on consumer real estate loans that were modified in TDRs during the three months ended March 31, 2017 and 2016, and net charge-offs recorded during the period in which the modification occurred. The following Consumer Real Estate portfolio segment tables include loans that were initially classified as TDRs during the period and also loans that had previously been classified as TDRs and were modified again during the period.




Consumer Real Estate – TDRs Entered into During the Three Months Ended March 31, 2017 and 2016 ⁽¹⁾

	March 31, 2017								Three Months Ended March 31, 2017
(Dollars in millions)	Unpaid Principal Balance		Carrying Value		Pre-Modification Interest Rate		Post-Modification Interest Rate ⁽²⁾		Net Charge-offs ⁽³⁾
Residential mortgage	$	382	$	344	4.68	%	4.44	%	$	2
Home equity	248		189		4.90		3.80		6
Total	$	630	$	533	4.77		4.19		$	8

	March 31, 2016								Three Months Ended March 31, 2016
Residential mortgage	$	526	$	488	4.72	%	4.61	%	$	2
Home equity	231		181		3.50		3.39		10
Total	$	757	$	669	4.35		4.24		$	12


⁽¹⁾	During the three months ended March 31, 2017 and 2016, the Corporation forgave principal of $0 and $10 million related to residential mortgage loans in connection with TDRs.


⁽²⁾	The post-modification interest rate reflects the interest rate applicable only to permanently completed modifications, which exclude loans that are in a trial modification period.


⁽³⁾	Net charge-offs include amounts recorded on loans modified during the period that are no longer held by the Corporation at March 31, 2017 and 2016 due to sales and other dispositions.

The table below presents the March 31, 2017 and 2016 carrying value for consumer real estate loans that were modified in a TDR during the three months ended March 31, 2017 and 2016 by type of modification.




Consumer Real Estate – Modification Programs

	TDRs Entered into During the Three Months Ended March 31
	2017				2016
(Dollars in millions)	Residential Mortgage		Home Equity		Residential Mortgage		Home Equity
Modifications under government programs
Contractual interest rate reduction	$	28	$	4	$	22	$	5
Principal and/or interest forbearance	1		—		—		2
Other modifications ⁽¹⁾	2		—		9		—
Total modifications under government programs	31		4		31		7
Modifications under proprietary programs
Contractual interest rate reduction	13		1		12		1
Capitalization of past due amounts	5		—		7		1
Principal and/or interest forbearance	2		1		3		—
Other modifications⁽¹⁾	1		29		1		1
Total modifications under proprietary programs	21		31		23		3
Trial modifications	237		135		368		149
Loans discharged in Chapter 7 bankruptcy ⁽²⁾	55		19		66		22
Total modifications	$	344	$	189	$	488	$	181


⁽¹⁾	Includes other modifications such as term or payment extensions and repayment plans.


⁽²⁾	Includes loans discharged in Chapter 7 bankruptcy with no change in repayment terms that are classified as TDRs.

The table below presents the carrying value of consumer real estate loans that entered into payment default during the three months ended March 31, 2017 and 2016 that were modified in a TDR during the 12 months preceding payment default. A payment default for consumer real estate TDRs is recognized when a borrower has missed three monthly payments (not necessarily consecutively) since modification. Payment defaults on a trial modification where the borrower has not yet met the terms of the agreement are included in the table below if the borrower is 90 days or more past due three months after the offer to modify is made.




Consumer Real Estate – TDRs Entering Payment Default That Were Modified During the Preceding 12 Months

	Three Months Ended March 31
	2017				2016
(Dollars in millions)	Residential Mortgage		Home Equity		Residential Mortgage		Home Equity
Modifications under government programs	$	25	$	1	$	93	$	—
Modifications under proprietary programs	16		18		43		22
Loans discharged in Chapter 7 bankruptcy ⁽¹⁾	58		4		40		5
Trial modifications ⁽²⁾	195		17		237		37
Total modifications	$	294	$	40	$	413	$	64


⁽¹⁾	Includes loans discharged in Chapter 7 bankruptcy with no change in repayment terms that are classified as TDRs.


⁽²⁾	Includes trial modification offers to which the customer did not respond.

Credit Card and Other Consumer

Impaired loans within the Credit Card and Other Consumer portfolio segment consist entirely of loans that have been modified in TDRs. The Corporation seeks to assist customers that are experiencing financial difficulty by modifying loans while ensuring compliance with federal, local and international laws and guidelines. Credit card and other consumer loan modifications generally involve reducing the interest rate on the account and placing the customer on a fixed payment plan not exceeding 60 months, all of which are considered TDRs. In addition, the accounts of non-U.S. credit card customers who do not qualify for a fixed payment plan may have their interest rates reduced, as required by certain local jurisdictions. These modifications, which are also TDRs, tend to experience higher payment default rates given that the borrowers may lack the ability to repay even with the interest rate reduction. In substantially all cases, the customer’s available line of credit is canceled. The Corporation makes loan modifications directly with borrowers for debt held only by the Corporation (internal programs). Additionally, the Corporation makes loan modifications for borrowers working with third-party renegotiation agencies that provide solutions to customers’ entire unsecured debt structures (external programs). The Corporation classifies other secured consumer loans that have been discharged in Chapter 7 bankruptcy as TDRs which are written down to collateral value and placed on nonaccrual status no later than the time of discharge. For more information on the regulatory guidance on loans discharged in Chapter 7 bankruptcy, see Nonperforming Loans and Leases in this Note.




Impaired Loans – Credit Card and Other Consumer

	March 31, 2017						December 31, 2016
(Dollars in millions)	Unpaid Principal Balance		Carrying Value ⁽¹⁾		Related Allowance		Unpaid Principal Balance		Carrying Value ⁽¹⁾		Related Allowance
With no recorded allowance
Direct/Indirect consumer	$	43	$	18	$	—	$	49	$	22	$	—
With an allowance recorded
U.S. credit card	$	464	$	470	$	130	$	479	$	485	$	128
Non-U.S. credit card	90		104		65		88		100		61
Direct/Indirect consumer	2		2		—		3		3		—
Total
U.S. credit card	$	464	$	470	$	130	$	479	$	485	$	128
Non-U.S. credit card	90		104		65		88		100		61
Direct/Indirect consumer	45		20		—		52		25		—

	Three Months Ended March 31
	2017				2016
	Average Carrying Value		Interest Income Recognized ⁽²⁾		Average Carrying Value		Interest Income Recognized ⁽²⁾
With no recorded allowance
Direct/Indirect consumer	$	19	$	—	$	21	$	—
With an allowance recorded
U.S. credit card	$	477	$	6	$	606	$	9
Non-U.S. credit card	102		1		122		1
Direct/Indirect consumer	3		—		18		—
Total
U.S. credit card	$	477	$	6	$	606	$	9
Non-U.S. credit card	102		1		122		1
Direct/Indirect consumer	22		—		39		—


⁽¹⁾	Includes accrued interest and fees.


⁽²⁾	Interest income recognized includes interest accrued and collected on the outstanding balances of accruing impaired loans as well as interest cash collections on nonaccruing impaired loans for which the principal is considered collectible.

The table below provides information on the Corporation’s primary modification programs for the Credit Card and Other Consumer TDR portfolio at March 31, 2017 and December 31, 2016.




Credit Card and Other Consumer – TDRs by Program Type

	Internal Programs				External Programs				Other ⁽¹⁾				Total				Percent of Balances Current or Less Than 30 Days Past Due
(Dollars in millions)	March 31 2017		December 31 2016		March 31 2017		December 31 2016		March 31 2017		December 31 2016		March 31 2017		December 31 2016		March 31 2017		December 31 2016
U.S. credit card	$	210	$	220	$	259	$	264	$	1	$	1	$	470	$	485	88.55	%	88.99	%
Non-U.S. credit card	10		11		7		7		87		82		104		100		37.88		38.47
Direct/Indirect consumer	1		2		1		1		18		22		20		25		91.60		90.49
Total TDRs by program type	$	221	$	233	$	267	$	272	$	106	$	105	$	594	$	610	79.80		80.79


⁽¹⁾	Other TDRs for non-U.S. credit card include modifications of accounts that are ineligible for a fixed payment plan.

The table below provides information on the Corporation’s Credit Card and Other Consumer TDR portfolio including the March 31, 2017 and 2016 unpaid principal balance, carrying value, and average pre- and post-modification interest rates of loans that were modified in TDRs during three months ended March 31, 2017 and 2016, and net charge-offs recorded during the period in which the modification occurred.




Credit Card and Other Consumer – TDRs Entered into During the Three Months Ended March 31, 2017 and 2016

	March 31, 2017								Three Months Ended March 31, 2017
(Dollars in millions)	Unpaid Principal Balance		Carrying Value ⁽¹⁾		Pre-Modification Interest Rate		Post-Modification Interest Rate		Net Charge-offs
U.S. credit card	$	52	$	55	18.01	%	5.30	%	$	1
Non-U.S. credit card	34		40		23.89		0.34		1
Direct/Indirect consumer	10		6		4.08		4.04		4
Total	$	96	$	101	19.51		3.28		$	6

	March 31, 2016								Three Months Ended March 31, 2016
U.S. credit card	$	46	$	50	17.44	%	5.51	%	$	1
Non-U.S. credit card	32		38		24.23		0.36		1
Direct/Indirect consumer	7		4		4.27		4.08		2
Total	$	85	$	92	19.59		3.34		$	4


⁽¹⁾	Includes accrued interest and fees.

Credit card and other consumer loans are deemed to be in payment default during the quarter in which a borrower misses the second of two consecutive payments. Payment defaults are one of the factors considered when projecting future cash flows in the calculation of the allowance for loan and lease losses for impaired credit card and other consumer loans. Based on historical experience, the Corporation estimates that 13 percent of new U.S. credit card TDRs, 90 percent of new non-U.S. credit card TDRs and 13 percent of new direct/indirect consumer TDRs may be in payment default within 12 months after modification. Loans that entered into payment default during the three months ended March 31, 2017 and 2016 that had been modified in a TDR during the preceding 12 months were $7 million and $9 million for U.S. credit card, $32 million and $34 million for non-U.S. credit card, and $1 million for direct/indirect consumer for both periods.

Commercial Loans

Impaired commercial loans include nonperforming loans and TDRs (both performing and nonperforming). For more information on impaired commercial loans, see Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K.

At March 31, 2017 and December 31, 2016, remaining commitments to lend additional funds to debtors whose terms have been modified in a commercial loan TDR were $425 million and $461 million.

Commercial foreclosed properties totaled $35 million and $14 million at March 31, 2017 and December 31, 2016.

The table below provides the unpaid principal balance, carrying value and related allowance at March 31, 2017 and December 31, 2016, and the average carrying value and interest income recognized for the three months ended March 31, 2017 and 2016 for impaired loans in the Corporation’s Commercial loan portfolio segment. Certain impaired commercial loans do not have a related allowance as the valuation of these impaired loans exceeded the carrying value, which is net of previously recorded charge-offs.




Impaired Loans – Commercial

	March 31, 2017						December 31, 2016
(Dollars in millions)	Unpaid Principal Balance		Carrying Value		Related Allowance		Unpaid Principal Balance		Carrying Value		Related Allowance
With no recorded allowance
U.S. commercial	$	983	$	937	$	—	$	860	$	827	$	—
Commercial real estate	54		48		—		77		71		—
Non-U.S. commercial	85		85		—		130		130		—
With an allowance recorded
U.S. commercial	$	1,676	$	1,330	$	131	$	2,018	$	1,569	$	132
Commercial real estate	201		65		12		243		96		10
Commercial lease financing	5		2		—		6		4		—
Non-U.S. commercial	568		476		103		545		432		104
U.S. small business commercial ⁽¹⁾	87		73		28		85		73		27
Total
U.S. commercial	$	2,659	$	2,267	$	131	$	2,878	$	2,396	$	132
Commercial real estate	255		113		12		320		167		10
Commercial lease financing	5		2		—		6		4		—
Non-U.S. commercial	653		561		103		675		562		104
U.S. small business commercial ⁽¹⁾	87		73		28		85		73		27

	Three Months Ended March 31
	2017				2016
	Average Carrying Value		Interest Income Recognized ⁽²⁾		Average Carrying Value		Interest Income Recognized ⁽²⁾
With no recorded allowance
U.S. commercial	$	882	$	3	$	583	$	2
Commercial real estate	60		—		77		—
Non-U.S. commercial	108		—		5		—
With an allowance recorded
U.S. commercial	$	1,487	$	9	$	1,439	$	14
Commercial real estate	76		1		104		1
Commercial lease financing	3		—		—		—
Non-U.S. commercial	453		3		368		3
U.S. small business commercial ⁽¹⁾	74		—		102		—
Total
U.S. commercial	$	2,369	$	12	$	2,022	$	16
Commercial real estate	136		1		181		1
Commercial lease financing	3		—		—		—
Non-U.S. commercial	561		3		373		3
U.S. small business commercial ⁽¹⁾	74		—		102		—


⁽¹⁾	Includes U.S. small business commercial renegotiated TDR loans and related allowance.


⁽²⁾	Interest income recognized includes interest accrued and collected on the outstanding balances of accruing impaired loans as well as interest cash collections on nonaccruing impaired loans for which the principal is considered collectible.

The table below presents the March 31, 2017 and 2016 unpaid principal balance and carrying value of commercial loans that were modified as TDRs during the three months ended March 31, 2017 and 2016, and net charge-offs that were recorded during the period in which the modification occurred. The table below includes loans that were initially classified as TDRs during the period and also loans that had previously been classified as TDRs and were modified again during the period.




Commercial – TDRs Entered into During the Three Months Ended March 31, 2017 and 2016

	March 31, 2017				Three Months Ended March 31, 2017
(Dollars in millions)	Unpaid Principal Balance		Carrying Value		Net Charge-offs
U.S. commercial	$	468	$	440	$	41
Commercial real estate	15		9		—
Commercial lease financing	—		—		—
Non-U.S. commercial	—		—		—
U.S. small business commercial ⁽¹⁾	2		2		—
Total	$	485	$	451	$	41

	March 31, 2016				Three Months Ended March 31, 2016
U.S. commercial	$	642	$	625	$	5
Commercial real estate	13		12		1
Non-U.S. commercial	199		163		36
U.S. small business commercial ⁽¹⁾	3		4		—
Total	$	857	$	804	$	42


⁽¹⁾	U.S. small business commercial TDRs are comprised of renegotiated small business card loans.

A commercial TDR is generally deemed to be in payment default when the loan is 90 days or more past due, including delinquencies that were not resolved as part of the modification. U.S. small business commercial TDRs are deemed to be in payment default during the quarter in which a borrower misses the second of two consecutive payments. Payment defaults are one of the factors considered when projecting future cash flows, along with observable market prices or fair value of collateral when measuring the allowance for loan and lease losses. TDRs that were in payment default had a carrying value of $111 million for U.S. commercial for both periods and $33 million and $17 million for commercial real estate at March 31, 2017 and 2016.

Purchased Credit-impaired Loans

The table below shows activity for the accretable yield on PCI loans, which include the Countrywide Financial Corporation (Countrywide) portfolio and loans repurchased in connection with the 2013 settlement with FNMA. The amount of accretable yield is affected by changes in credit outlooks, including metrics such as default rates and loss severities, prepayment speeds, which can change the amount and period of time over which interest payments are expected to be received, and the interest rates on variable rate loans.




Rollforward of Accretable Yield

(Dollars in millions)	Three Months Ended March 31, 2017
Accretable yield, January 1, 2017	$	3,805
Accretion	(163		)
Disposals/transfers	(91		)
Reclassifications to nonaccretable difference	(1		)
Accretable yield, March 31, 2017	$	3,550

During the three months ended March 31, 2016, the Corporation sold PCI loans with a carrying value of $174 million, which excludes the related allowance of $20 million. There were no sales in the three months ended March 31, 2017. For more information on PCI loans, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K, and for the carrying value and valuation allowance for PCI loans, see Note 5 – Allowance for Credit Losses.

Loans Held-for-sale

The Corporation had LHFS of $14.8 billion and $9.1 billion at March 31, 2017 and December 31, 2016. Cash and non-cash proceeds from sales and paydowns of loans originally classified as LHFS were $7.7 billion and $7.3 billion for the three months ended March 31, 2017 and 2016. Cash used for originations and purchases of LHFS totaled $13.3 billion and $5.7 billion for the three months ended March 31, 2017 and 2016.