Annual report pursuant to Section 13 and 15(d)

Outstanding Loans and Leases

v3.10.0.1
Outstanding Loans and Leases
12 Months Ended
Dec. 31, 2018
Receivables [Abstract]  
Outstanding Loans and Leases Outstanding Loans and Leases
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 December 31, 2018 and 2017.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
(Dollars in millions)
December 31, 2018
Consumer real estate
 

 
 
 
 

 
 

 
 

 
 

 
 

 
 

Core portfolio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
$
1,188

 
$
249

 
$
793

 
$
2,230

 
$
191,465

 
 
 
 
 
$
193,695

Home equity
200

 
85

 
387

 
672

 
39,338

 
 
 
 
 
40,010

Non-core portfolio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
624

 
268

 
2,012

 
2,904

 
8,158

 
$
3,800

 
 
 
14,862

Home equity
119

 
60

 
287

 
466

 
6,965

 
845

 
 
 
8,276

Credit card and other consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. credit card
577

 
418

 
994

 
1,989

 
96,349

 
 
 
 
 
98,338

Direct/Indirect consumer (5)
317

 
90

 
40

 
447

 
90,719

 
 
 
 
 
91,166

Other consumer (6)

 

 

 

 
202

 
 
 
 
 
202

Total consumer
3,025

 
1,170

 
4,513

 
8,708

 
433,196

 
4,645

 
 
 
446,549

Consumer loans accounted for under the fair value option (7)
 

 
 

 
 

 
 

 
 

 
 

 
$
682

 
682

Total consumer loans and leases
3,025

 
1,170

 
4,513

 
8,708

 
433,196

 
4,645

 
682

 
447,231

Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. commercial
594

 
232

 
573

 
1,399

 
297,878

 
 
 
 
 
299,277

Non-U.S. commercial
1

 
49

 

 
50

 
98,726

 
 
 
 
 
98,776

Commercial real estate (8)
29

 
16

 
14

 
59

 
60,786

 
 
 
 
 
60,845

Commercial lease financing
124

 
114

 
37

 
275

 
22,259

 
 
 
 
 
22,534

U.S. small business commercial
83

 
54

 
96

 
233

 
14,332

 
 
 
 
 
14,565

Total commercial
831

 
465

 
720

 
2,016

 
493,981

 
 
 
 
 
495,997

Commercial loans accounted for under the fair value option (7)
 

 
 

 
 

 
 

 
 

 
 

 
3,667

 
3,667

Total commercial loans and leases
831

 
465

 
720

 
2,016

 
493,981

 
 
 
3,667

 
499,664

Total loans and leases (9)
$
3,856

 
$
1,635

 
$
5,233

 
$
10,724

 
$
927,177

 
$
4,645

 
$
4,349

 
$
946,895

Percentage of outstandings
0.41
%
 
0.17
%
 
0.55
%
 
1.13
%
 
97.92
%
 
0.49
%
 
0.46
%
 
100.00
%
(1) 
Consumer real estate loans 30-59 days past due includes fully-insured loans of $637 million and nonperforming loans of $217 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $269 million and nonperforming loans of $146 million.
(2) 
Consumer real estate includes fully-insured loans of $1.9 billion.
(3) 
Consumer real estate includes $1.8 billion and direct/indirect consumer includes $53 million of nonperforming loans.
(4) 
PCI loan amounts are shown gross of the valuation allowance.
(5) 
Total outstandings includes auto and specialty lending loans and leases of $50.1 billion, unsecured consumer lending loans of $383 million, U.S. securities-based lending loans of $37.0 billion, non-U.S. consumer loans of $2.9 billion and other consumer loans of $746 million.
(6) 
Substantially all of other consumer is consumer overdrafts.
(7) 
Consumer loans accounted for under the fair value option includes residential mortgage loans of $336 million and home equity loans of $346 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $2.5 billion and non-U.S. commercial loans of $1.1 billion. For additional information, see Note 20 – Fair Value Measurements and Note 21 – Fair Value Option.
(8) 
Total outstandings includes U.S. commercial real estate loans of $56.6 billion and non-U.S. commercial real estate loans of $4.2 billion.
(9) 
Total outstandings includes loans and leases pledged as collateral of $36.7 billion. The Corporation also pledged $166.1 billion of loans with no related outstanding borrowings to secure potential borrowing capacity with the Federal Reserve Bank and Federal Home Loan Bank (FHLB).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
(Dollars in millions)
December 31, 2017
Consumer real estate
 

 
 
 
 

 
 

 
 

 
 

 
 

 
 

Core portfolio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
$
1,242

 
$
321

 
$
1,040

 
$
2,603

 
$
174,015

 
 
 
 

 
$
176,618

Home equity
215

 
108

 
473

 
796

 
43,449

 
 
 
 

 
44,245

Non-core portfolio
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential mortgage
1,028

 
468

 
3,535

 
5,031

 
14,161

 
$
8,001

 
 

 
27,193

Home equity
224

 
121

 
572

 
917

 
9,866

 
2,716

 
 

 
13,499

Credit card and other consumer
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. credit card
542

 
405

 
900

 
1,847

 
94,438

 
 
 
 

 
96,285

Direct/Indirect consumer (5)
330

 
104

 
44

 
478

 
95,864

 
 
 
 

 
96,342

Other consumer (6)

 

 

 

 
166

 
 
 
 

 
166

Total consumer
3,581

 
1,527

 
6,564

 
11,672

 
431,959

 
10,717

 
 

454,348

Consumer loans accounted for under the fair value option (7)
 
 
 
 
 
 
 
 
 
 
 
 
$
928


928

Total consumer loans and leases
3,581

 
1,527

 
6,564

 
11,672

 
431,959

 
10,717

 
928

 
455,276

Commercial
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. commercial
547

 
244

 
425

 
1,216

 
283,620

 
 
 
 

 
284,836

Non-U.S. commercial
52

 
1

 
3

 
56

 
97,736

 
 
 
 

 
97,792

Commercial real estate (8)
48

 
10

 
29

 
87

 
58,211

 
 
 
 

 
58,298

Commercial lease financing
110

 
68

 
26

 
204

 
21,912

 
 
 
 

 
22,116

U.S. small business commercial
95

 
45

 
88

 
228

 
13,421

 
 
 
 

 
13,649

Total commercial
852

 
368

 
571

 
1,791

 
474,900

 
 
 
 

 
476,691

Commercial loans accounted for under the fair value option (7)
 
 
 
 
 
 
 
 
 
 
 
 
4,782

 
4,782

Total commercial loans and leases
852

 
368

 
571

 
1,791

 
474,900

 
 
 
4,782

 
481,473

Total loans and leases (9)
$
4,433

 
$
1,895

 
$
7,135

 
$
13,463

 
$
906,859

 
$
10,717

 
$
5,710

 
$
936,749

Percentage of outstandings
0.48
%
 
0.20
%
 
0.76
%
 
1.44
%
 
96.81
%
 
1.14
%
 
0.61
%
 
100.00
%

(1) 
Consumer real estate loans 30-59 days past due includes fully-insured loans of $850 million and nonperforming loans of $253 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $386 million and nonperforming loans of $195 million.
(2) 
Consumer real estate includes fully-insured loans of $3.2 billion.
(3) 
Consumer real estate includes $2.3 billion and direct/indirect consumer includes $43 million of nonperforming loans.
(4) 
PCI loan amounts are shown gross of the valuation allowance.
(5) 
Total outstandings includes auto and specialty lending loans and leases of $52.4 billion, unsecured consumer lending loans of $469 million, U.S. securities-based lending loans of $39.8 billion, non-U.S. consumer loans of $3.0 billion and other consumer loans of $684 million.
(6) 
Substantially all of other consumer is consumer overdrafts.
(7) 
Consumer loans accounted for under the fair value option includes residential mortgage loans of $567 million and home equity loans of $361 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $2.6 billion and non-U.S. commercial loans of $2.2 billion. For additional information, see Note 20 – Fair Value Measurements and Note 21 – Fair Value Option.
(8) 
Total outstandings includes U.S. commercial real estate loans of $54.8 billion and non-U.S. commercial real estate loans of $3.5 billion.
(9) 
Total outstandings includes loans and leases pledged as collateral of $40.1 billion. The Corporation also pledged $160.3 billion of loans with no related outstanding borrowings to secure potential borrowing capacity with the Federal Reserve Bank and FHLB.
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 (GSE) underwriting guidelines, or otherwise met the Corporation’s underwriting guidelines in place in 2015 are characterized as core loans. All other loans are generally characterized as non-core loans and represent runoff portfolios.
The Corporation has entered into long-term credit protection agreements with FNMA and FHLMC on loans totaling $6.1 billion and $6.3 billion at December 31, 2018 and 2017, 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.
During 2018, the Corporation sold $11.6 billion of consumer real estate loans compared to $4.0 billion in 2017. In addition to recurring loan sales, the 2018 amount includes sales of loans, primarily non-core, with a carrying value of $9.6 billion and related gains of $731 million recorded in other income in the Consolidated Statement of Income.
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 December 31, 2018 and 2017, $221 million and $330 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 December 31, 2018, nonperforming loans discharged in Chapter 7 bankruptcy with no change in repayment terms were $185 million of which $98 million were current on their contractual payments, while $70 million were 90 days or more past due. Of the contractually current nonperforming loans, 63 percent were discharged in Chapter 7 bankruptcy over 12 months ago, and 55 percent were discharged 24 months or more ago.
During 2018, the Corporation sold nonperforming and PCI consumer real estate loans with a carrying value of $5.3 billion, including $4.4 billion of PCI loans, compared to $1.3 billion, including $803 million of PCI loans, in 2017.
The table below presents the Corporation’s nonperforming loans and leases including nonperforming TDRs,
and loans accruing past due 90 days or more at December 31, 2018 and 2017. Nonperforming 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.
 
 
 
 
 
 
 
 
Credit Quality
 
 
 
 
 
 
 
 
 
 
 
Nonperforming Loans
and Leases
 
Accruing Past Due
90 Days or More
 
December 31
(Dollars in millions)
2018
 
2017
 
2018
 
2017
Consumer real estate
 

 
 

 
 

 
 

Core portfolio
 
 
 
 
 
 
 
Residential mortgage (1)
$
1,010

 
$
1,087

 
$
274

 
$
417

Home equity
955

 
1,079

 

 

Non-core portfolio
 

 
 

 
 

 
 
Residential mortgage (1)
883

 
1,389

 
1,610

 
2,813

Home equity
938

 
1,565

 

 

Credit card and other consumer
 

 
 

 
 
 
 
U.S. credit card
n/a

 
n/a

 
994

 
900

Direct/Indirect consumer
56

 
46

 
38

 
40

Total consumer
3,842

 
5,166

 
2,916

 
4,170

Commercial
 

 
 

 
 

 
 

U.S. commercial
794

 
814

 
197

 
144

Non-U.S. commercial
80

 
299

 

 
3

Commercial real estate
156

 
112

 
4

 
4

Commercial lease financing
18

 
24

 
29

 
19

U.S. small business commercial
54

 
55

 
84

 
75

Total commercial
1,102

 
1,304

 
314

 
245

Total loans and leases
$
4,944

 
$
6,470

 
$
3,230

 
$
4,415

(1) 
Residential mortgage loans in the core and non-core portfolios accruing past due 90 days or more are fully-insured loans. At December 31, 2018 and 2017, residential mortgage includes $1.4 billion and $2.2 billion of loans on which interest has been curtailed by the FHA and therefore are no longer accruing interest, although principal is still insured, and $498 million and $1.0 billion of loans on which interest is still accruing.
n/a = not applicableCredit 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. 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 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 December 31, 2018 and 2017.
 
 
 
 
 
 
 
 
 
 
 
 
Consumer Real Estate – Credit Quality Indicators (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Core Residential
Mortgage (2)
 
Non-core Residential
Mortgage
(2)
 
Residential Mortgage
PCI
 
Core Home Equity (2)
 
Non-core Home
Equity (2)
 
Home
Equity PCI
(Dollars in millions)
December 31, 2018
Refreshed LTV (3)
 

 
 

 
 

 
 

 
 
 
 
Less than or equal to 90 percent
$
173,911

 
$
6,861

 
$
3,411

 
$
39,246

 
$
5,870

 
$
608

Greater than 90 percent but less than or equal to 100 percent
2,349

 
340

 
193

 
354

 
603

 
112

Greater than 100 percent
817

 
349

 
196

 
410

 
958

 
125

Fully-insured loans (4)
16,618

 
3,512

 
 
 
 
 
 
 
 
Total consumer real estate
$
193,695

 
$
11,062

 
$
3,800

 
$
40,010

 
$
7,431

 
$
845

Refreshed FICO score
 
 
 
 
 
 
 
 
 
 
 
Less than 620
$
2,125

 
$
1,264

 
$
710

 
$
1,064

 
$
1,325

 
$
178

Greater than or equal to 620 and less than 680
4,538

 
1,068

 
651

 
2,008

 
1,575

 
145

Greater than or equal to 680 and less than 740
23,841

 
1,841

 
1,201

 
7,008

 
1,968

 
220

Greater than or equal to 740
146,573

 
3,377

 
1,238

 
29,930

 
2,563

 
302

Fully-insured loans (4)
16,618

 
3,512

 
 
 
 
 
 
 
 
Total consumer real estate
$
193,695

 
$
11,062

 
$
3,800

 
$
40,010

 
$
7,431

 
$
845

(1) 
Excludes $682 million of loans accounted for under the fair value option.
(2) 
Excludes PCI loans.
(3) 
Refreshed LTV percentages for PCI loans are calculated using the carrying value net of the related valuation allowance.
(4) 
Credit quality indicators are not reported for fully-insured loans as principal repayment is insured.
 
 
 
 
 
 
Credit Card and Other Consumer – Credit Quality Indicators
 
 
 
 
 
 
 
 
 
U.S. Credit
Card
 
Direct/Indirect
Consumer
 
Other Consumer
(Dollars in millions)
December 31, 2018
Refreshed FICO score
 

 
 

 
 
Less than 620
$
5,016

 
$
1,719

 
 
Greater than or equal to 620 and less than 680
12,415

 
3,124

 
 
Greater than or equal to 680 and less than 740
35,781

 
8,921

 
 
Greater than or equal to 740
45,126

 
36,709

 
 
Other internal credit metrics (1, 2)
 
 
40,693

 
$
202

Total credit card and other consumer
$
98,338

 
$
91,166

 
$
202

(1) 
Other internal credit metrics may include delinquency status, geography or other factors.
(2) 
Direct/indirect consumer includes $39.9 billion of securities-based lending which is overcollateralized and therefore has minimal credit risk.
 
 
 
 
 
 
 
 
 
 
Commercial – Credit Quality Indicators (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S.
Commercial
 
Non-U.S.
Commercial
 
Commercial
Real Estate
 
Commercial
Lease
Financing
 
U.S. Small
Business
Commercial (2)
(Dollars in millions)
December 31, 2018
Risk ratings
 

 
 

 
 

 
 

 
 

Pass rated
$
291,918

 
$
97,916

 
$
59,910

 
$
22,168

 
$
389

Reservable criticized
7,359

 
860

 
935

 
366

 
29

Refreshed FICO score (3)
 
 
 
 
 
 
 
 
 

Less than 620
 

 
 
 
 
 
 
 
264

Greater than or equal to 620 and less than 680
 
 
 
 
 
 
 
 
684

Greater than or equal to 680 and less than 740
 
 
 
 
 
 
 
 
2,072

Greater than or equal to 740
 
 
 
 
 
 
 
 
4,254

Other internal credit metrics (3, 4)
 
 
 
 
 
 
 
 
6,873

Total commercial
$
299,277

 
$
98,776

 
$
60,845

 
$
22,534

 
$
14,565

(1) 
Excludes $3.7 billion of loans accounted for under the fair value option.
(2) 
U.S. small business commercial includes $731 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, 2018, 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)
 
 
 
 
 
 
 
 
 
 
 
 
 
Core Residential
Mortgage (2)
 
Non-core Residential
Mortgage
(2)
 
Residential Mortgage
PCI
 
Core Home Equity (2)
 
Non-core Home
Equity
(2)
 
Home
Equity PCI
(Dollars in millions)
December 31, 2017
Refreshed LTV (3)
 

 
 

 
 

 
 

 
 
 
 
Less than or equal to 90 percent
$
153,669

 
$
12,135

 
$
6,872

 
$
43,048

 
$
7,944

 
$
1,781

Greater than 90 percent but less than or equal to 100 percent
3,082

 
850

 
559

 
549

 
1,053

 
412

Greater than 100 percent
1,322

 
1,011

 
570

 
648

 
1,786

 
523

Fully-insured loans (4)
18,545

 
5,196

 
 
 
 
 
 
 
 
Total consumer real estate
$
176,618

 
$
19,192

 
$
8,001

 
$
44,245

 
$
10,783

 
$
2,716

Refreshed FICO score
 

 
 

 
 

 
 

 
 

 
 

Less than 620
$
2,234

 
$
2,390

 
$
1,941

 
$
1,169

 
$
2,098

 
$
452

Greater than or equal to 620 and less than 680
4,531

 
2,086

 
1,657

 
2,371

 
2,393

 
466

Greater than or equal to 680 and less than 740
22,934

 
3,519

 
2,396

 
8,115

 
2,723

 
786

Greater than or equal to 740
128,374

 
6,001

 
2,007

 
32,590

 
3,569

 
1,012

Fully-insured loans (4)
18,545

 
5,196

 
 
 
 
 
 
 
 
Total consumer real estate
$
176,618

 
$
19,192

 
$
8,001

 
$
44,245

 
$
10,783

 
$
2,716

(1) 
Excludes $928 million of loans accounted for under the fair value option.
(2) 
Excludes PCI loans.
(3) 
Refreshed LTV percentages for PCI loans are calculated using the carrying value net of the related valuation allowance.
(4) 
Credit quality indicators are not reported for fully-insured loans as principal repayment is insured.
 
 
 
 
 
 
Credit Card and Other Consumer – Credit Quality Indicators
 
 
 
 
 
 
 
 
 
U.S. Credit
Card
 
Direct/Indirect
Consumer
 
Other Consumer
(Dollars in millions)
December 31, 2017
Refreshed FICO score
 

 
 

 
 
Less than 620
$
4,730

 
$
2,005

 
 
Greater than or equal to 620 and less than 680
12,422

 
4,064

 
 
Greater than or equal to 680 and less than 740
35,656

 
10,371

 
 
Greater than or equal to 740
43,477

 
36,445

 
 
Other internal credit metrics (1, 2)
 
 
43,457

 
$
166

Total credit card and other consumer
$
96,285

 
$
96,342

 
$
166

(1) 
Other internal credit metrics may include delinquency status, geography or other factors.
(2) 
Direct/indirect consumer includes $42.8 billion of securities-based lending which is overcollateralized and therefore has minimal credit risk.
 
 
 
 
 
 
 
 
 
 
Commercial – Credit Quality Indicators (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S.
Commercial
 
Non-U.S.
Commercial
 
Commercial
Real Estate
 
Commercial
Lease
Financing
 
U.S. Small
Business
Commercial (2)
(Dollars in millions)
December 31, 2017
Risk ratings
 

 
 

 
 

 
 

 
 

Pass rated
$
275,904

 
$
96,199

 
$
57,732

 
$
21,535

 
$
322

Reservable criticized
8,932

 
1,593

 
566

 
581

 
50

Refreshed FICO score (3)
 
 
 
 
 
 
 
 
 
Less than 620
 
 
 
 
 
 
 
 
223

Greater than or equal to 620 and less than 680
 
 
 
 
 
 
 
 
625

Greater than or equal to 680 and less than 740
 
 
 
 
 
 
 
 
1,875

Greater than or equal to 740
 
 
 
 
 
 
 
 
3,713

Other internal credit metrics (3, 4)
 
 
 
 
 
 
 
 
6,841

Total commercial
$
284,836

 
$
97,792

 
$
58,298

 
$
22,116

 
$
13,649

(1) 
Excludes $4.8 billion of loans accounted for under the fair value option.
(2) 
U.S. small business commercial includes $709 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, 2017, 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. For more information, see Note 1 – Summary of Significant Accounting Principles.
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. Modifications of consumer real estate loans are done in accordance with government programs or the Corporation’s proprietary programs. These modifications are considered to be TDRs if concessions have been granted to borrowers experiencing financial difficulties. Concessions may include reductions in interest rates, capitalization of past due amounts, principal and/or interest forbearance, payment extensions, principal and/or interest forgiveness, or combinations thereof.
Prior to permanently modifying a loan, the Corporation may enter into trial modifications with certain borrowers under both government and proprietary programs. Trial modifications generally represent a three- to four-month period during which the borrower makes monthly payments under the anticipated modified payment terms. Upon successful completion of the trial period, the Corporation and the borrower enter into a permanent modification. Binding trial modifications are classified as TDRs when the trial offer is made and continue to be classified as TDRs regardless of whether the borrower enters into a permanent modification.
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 $858 million were included in TDRs at December 31, 2018, of which $185 million were classified as nonperforming and $344 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.
Consumer real estate TDRs are measured primarily based on the net present value of the estimated cash flows discounted at the loan’s original effective interest rate. If the carrying value of a TDR exceeds this amount, a specific allowance is recorded as a component of the allowance for loan and lease losses.
Alternatively, consumer real estate TDRs that are considered to be dependent solely on the collateral for repayment (e.g., due to the lack of income verification) are measured based on the estimated fair value of the collateral and a charge-off is recorded if the carrying value exceeds the fair value of the collateral. Consumer real estate loans that reached 180 days past due prior to modification had been charged off to their net realizable value, less costs to sell, before they were modified as TDRs in accordance with established policy. Therefore, modifications of consumer real estate loans that are 180 or more days past due as TDRs do not have an impact on the allowance for loan and lease losses nor are additional charge-offs required at the time of modification. Subsequent declines in the fair value of the collateral after a loan has reached 180 days past due are recorded as charge-offs. Fully-insured loans are protected against principal loss, and therefore, the Corporation does not record an allowance for loan and lease losses on the outstanding principal balance, even after they have been modified in a TDR.
At December 31, 2018 and 2017, remaining commitments to lend additional funds to debtors whose terms have been modified in a consumer real estate TDR were not significant. Consumer real estate foreclosed properties totaled $244 million and $236 million at December 31, 2018 and 2017. The carrying value of consumer real estate loans, including fully-insured and PCI loans, for which formal foreclosure proceedings were in process at December 31, 2018 was $2.5 billion. During 2018 and 2017, the Corporation reclassified $670 million and $815 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 in the Consolidated Statement of Cash Flows.
The following table provides the unpaid principal balance, carrying value and related allowance at December 31, 2018 and 2017, and the average carrying value and interest income recognized in 2018, 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unpaid
Principal
Balance
 
Carrying
Value
 
Related
Allowance
 
Unpaid
Principal
Balance
 
Carrying
Value
 
Related
Allowance
(Dollars in millions)
December 31, 2018
 
December 31, 2017
With no recorded allowance
 

 
 

 
 

 
 

 
 

 
 
Residential mortgage
$
5,396

 
$
4,268

 
$

 
$
8,856

 
$
6,870

 
$

Home equity
2,948

 
1,599

 

 
3,622

 
1,956

 

With an allowance recorded
 
 
 
 
 

 
 
 
 
 
 
Residential mortgage
$
1,977

 
$
1,929

 
$
114

 
$
2,908

 
$
2,828

 
$
174

Home equity
812

 
760

 
144

 
972

 
900

 
174

Total (1)
 

 
 

 
 

 
 
 
 
 
 
Residential mortgage
$
7,373

 
$
6,197

 
$
114

 
$
11,764

 
$
9,698

 
$
174

Home equity
3,760

 
2,359

 
144

 
4,594

 
2,856

 
174

 
 
 
 
 
 
 
 
 
 
 
 
 
Average
Carrying
Value
 
Interest
Income
Recognized
(2)
 
Average
Carrying
Value
 
Interest
Income
Recognized
(2)
 
Average
Carrying
Value
 
Interest
Income
Recognized
(2)
 
2018
 
2017
 
2016
With no recorded allowance
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
$
5,424

 
$
207

 
$
7,737

 
$
311

 
$
10,178

 
$
360

Home equity
1,894

 
105

 
1,997

 
109

 
1,906

 
90

With an allowance recorded
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
$
2,409

 
$
91

 
$
3,414

 
$
123

 
$
5,067

 
$
167

Home equity
861

 
25

 
858

 
24

 
852

 
24

Total (1)
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
$
7,833

 
$
298

 
$
11,151

 
$
434

 
$
15,245

 
$
527

Home equity
2,755

 
130

 
2,855

 
133

 
2,758

 
114

(1) 
During 2018, previously impaired consumer real estate loans with a carrying value of $2.3 billion were sold.
(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 December 31, 2018, 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 2018, 2017 and 2016. 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 2018, 2017 and 2016
 
 
 
Unpaid Principal Balance
 
Carrying
Value
 
Pre-Modification Interest Rate
 
Post-Modification Interest Rate (1)
(Dollars in millions)
December 31, 2018
Residential mortgage
$
774

 
$
641

 
4.33
%
 
4.21
%
Home equity
489

 
358

 
4.46

 
3.74

Total
$
1,263

 
$
999

 
4.38

 
4.03

 
 
 
 
 
 
 
 
 
December 31, 2017
Residential mortgage
$
824

 
$
712

 
4.43
%
 
4.16
%
Home equity
764

 
590

 
4.22

 
3.49

Total
$
1,588

 
$
1,302

 
4.33

 
3.83

 
 
 
 
 
 
 
 
 
December 31, 2016
Residential mortgage
$
1,130

 
$
1,017

 
4.73
%
 
4.16
%
Home equity
849

 
649

 
3.95

 
2.72

Total
$
1,979

 
$
1,666

 
4.40

 
3.54

(1) 
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.

The table below presents the December 31, 2018, 2017 and 2016 carrying value for consumer real estate loans that were modified in a TDR during 2018, 2017 and 2016, by type of modification.
 
 
 
 
 
 
Consumer Real Estate – Modification Programs
 
 
 
 
 
 
 
 
 
 
 
 
TDRs Entered into During
(Dollars in millions)
2018
 
2017
 
2016
Modifications under government programs
 
 
 
 
 
Contractual interest rate reduction
$
19

 
$
59

 
$
151

Principal and/or interest forbearance

 
4

 
13

Other modifications (1)
42

 
22

 
23

Total modifications under government programs
61

 
85

 
187

Modifications under proprietary programs
 
 
 
 
 
Contractual interest rate reduction
209

 
281

 
235

Capitalization of past due amounts
96

 
63

 
40

Principal and/or interest forbearance
51

 
38

 
72

Other modifications (1)
167

 
55

 
75

Total modifications under proprietary programs
523

 
437

 
422

Trial modifications
285

 
569

 
831

Loans discharged in Chapter 7 bankruptcy (2)
130

 
211

 
226

Total modifications
$
999

 
$
1,302

 
$
1,666

(1) 
Includes other modifications such as term or payment extensions and repayment plans. During 2018, this included $198 million of modifications that met the definition of a TDR related to the 2017 hurricanes. These modifications had been written down to their net realizable value less costs to sell or were fully insured as of December 31, 2018.
(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 2018, 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.
 
 
 
 
 
 
Consumer Real Estate – TDRs Entering Payment Default that were Modified During the Preceding 12 Months
 
 
 
 
 
 
(Dollars in millions)
2018
 
2017
 
2016
Modifications under government programs
$
39

 
$
81

 
$
262

Modifications under proprietary programs
158

 
138

 
196

Loans discharged in Chapter 7 bankruptcy (1)
64

 
116

 
158

Trial modifications (2)
107

 
391

 
824

Total modifications
$
368

 
$
726

 
$
1,440

(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 and local laws and guidelines. Credit card and other consumer loan modifications generally involve reducing the interest rate on the account, placing the customer on a fixed payment plan not exceeding 60 months and canceling the customer’s available line of credit, all of which are considered TDRs. 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.
The table below provides the unpaid principal balance, carrying value and related allowance at December 31, 2018 and 2017, and the average carrying value for 2018, 2017 and 2016 on TDRs within the Credit Card and Other Consumer portfolio segment.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impaired Loans – Credit Card and Other Consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unpaid
Principal
Balance
 
Carrying
Value (1)
 
Related
Allowance
 
Unpaid
Principal
Balance
 
Carrying
Value (1)
 
Related
Allowance
 
Average Carrying Value (2)
(Dollars in millions)
December 31, 2018
 
December 31, 2017
 
2018
 
2017
 
2016
With no recorded allowance
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Direct/Indirect consumer
$
72

 
$
33

 
$

 
$
58

 
$
28

 
$

 
$
30

 
$
21

 
$
20

With an allowance recorded
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 

 
 
U.S. credit card
$
522

 
$
533

 
$
154

 
$
454

 
$
461

 
$
125

 
$
491

 
$
464

 
$
556

Non-U.S. credit card (3)
n/a

 
n/a

 
n/a

 
n/a

 
n/a

 
n/a

 
n/a

 
47

 
111

Direct/Indirect consumer

 

 

 
1

 
1

 

 
1

 
2

 
10

Total
 

 
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
U.S. credit card
$
522

 
$
533

 
$
154

 
$
454

 
$
461

 
$
125

 
$
491

 
$
464

 
$
556

Non-U.S. credit card (3)
n/a

 
n/a

 
n/a

 
n/a

 
n/a

 
n/a

 
n/a

 
47

 
111

Direct/Indirect consumer
72

 
33

 

 
59

 
29

 

 
31

 
23

 
30

(1) 
Includes accrued interest and fees.
(2) 
The related interest income recognized, which included 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 was considered collectible, was not significant in 2018, 2017 and 2016.
(3) 
In 2017, the Corporation sold its non-U.S. consumer credit card business.
n/a = not applicable
The table below provides information on the Corporation’s primary modification programs for the Credit Card and Other Consumer TDR portfolio at December 31, 2018 and 2017.
 
 
 
 
 
 
 
 
 
 
 
 
Credit Card and Other Consumer – TDRs by Program Type at December 31
 
 
 
 
 
 
 
U.S. Credit Card
 
Direct/Indirect Consumer
 
Total TDRs by Program Type
(Dollars in millions)
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Internal programs
$
259

 
$
203

 
$

 
$
1

 
$
259

 
$
204

External programs
273

 
257

 

 

 
273

 
257

Other
1

 
1

 
33

 
28

 
34

 
29

Total
$
533

 
$
461

 
$
33

 
$
29

 
$
566

 
$
490

Percent of balances current or less than 30 days past due
85
%
 
87
%
 
81
%
 
88
%
 
85
%
 
87
%

The table below provides information on the Corporation’s Credit Card and Other Consumer TDR portfolio including the December 31, 2018, 2017 and 2016 unpaid principal balance, carrying value, and average pre- and post-modification interest rates of loans that were modified in TDRs during 2018, 2017 and 2016.
 
 
 
 
 
 
 
 
Credit Card and Other Consumer – TDRs Entered into During 2018, 2017 and 2016
 
 
 
 
 
 
 
 
 
Unpaid Principal Balance
 
Carrying Value (1)
 
Pre-Modification Interest Rate
 
Post-Modification Interest Rate
(Dollars in millions)
December 31, 2018
U.S. credit card
$
278

 
$
292

 
19.49
%
 
5.24
%
Direct/Indirect consumer
42

 
23

 
5.10

 
4.95

Total
$
320

 
$
315

 
18.45

 
5.22

 
 
 
 
 
 
 
 
 
December 31, 2017
U.S. credit card
$
203

 
$
213

 
18.47
%
 
5.32
%
Direct/Indirect consumer
37

 
22

 
4.81

 
4.30

Total
$
240

 
$
235

 
17.17

 
5.22

 
 
 
 
 
 
 
 
 
December 31, 2016
U.S. credit card
$
163

 
$
172

 
17.54
%
 
5.47
%
Non-U.S. credit card
66

 
75

 
23.99

 
0.52

Direct/Indirect consumer
21

 
13

 
3.44

 
3.29

Total
$
250

 
$
260

 
18.73

 
3.93

(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 and 14 percent of new direct/indirect consumer TDRs may be in payment default within 12 months after modification.Commercial Loans
Impaired commercial loans include nonperforming loans and TDRs (both performing and nonperforming). Modifications of loans to commercial borrowers that are experiencing financial difficulty are designed to reduce the Corporation’s loss exposure while providing the borrower with an opportunity to work through financial difficulties, often to avoid foreclosure or bankruptcy. Each modification is unique and reflects the individual circumstances of the borrower. Modifications that result in a TDR may include extensions of maturity at a concessionary (below market) rate of interest, payment forbearances or other actions designed to benefit the customer while mitigating the Corporation’s risk exposure. Reductions in interest rates are rare. Instead, the interest rates are typically increased, although the increased rate may not represent a market rate of interest. Infrequently,
concessions may also include principal forgiveness in connection with foreclosure, short sale or other settlement agreements leading to termination or sale of the loan.
At the time of restructuring, the loans are remeasured to reflect the impact, if any, on projected cash flows resulting from the modified terms. If there was no forgiveness of principal and the interest rate was not decreased, the modification may have little or no impact on the allowance established for the loan. If a portion of the loan is deemed to be uncollectible, a charge-off may be recorded at the time of restructuring. Alternatively, a charge-off may have already been recorded in a previous period such that no charge-off is required at the time of modification. For more information on modifications for the U.S. small business commercial portfolio, see Credit Card and Other Consumer in this Note.
At December 31, 2018 and 2017, remaining commitments to lend additional funds to debtors whose terms have been modified in a commercial loan TDR were $297 million and $205 million.
The table below provides information on impaired loans in the Commercial loan portfolio segment including the unpaid principal balance, carrying value and related allowance at December 31, 2018 and 2017, and the average carrying value for 2018, 2017 and 2016. Certain impaired commercial loans do not have a related allowance because the valuation of these impaired loans exceeded the carrying value, which is net of previously recorded charge-offs.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impaired Loans – Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unpaid
Principal
Balance
 
Carrying
Value
 
Related
Allowance
 
Unpaid
Principal
Balance
 
Carrying
Value
 
Related
Allowance
 
Average Carrying Value (1)
(Dollars in millions)
December 31, 2018
 
December 31, 2017
 
2018
 
2017
 
2016
With no recorded allowance
 

 
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
U.S. commercial
$
638

 
$
616

 
$

 
$
576

 
$
571

 
$

 
$
655

 
$
772

 
$
787

Non-U.S. commercial
93

 
93

 

 
14

 
11

 

 
43

 
46

 
34

Commercial real estate

 

 

 
83

 
80

 

 
44

 
69

 
67

Commercial lease financing

 

 

 

 

 

 
3

 

 

With an allowance recorded
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
U.S. commercial
$
1,437

 
$
1,270

 
$
121

 
$
1,393

 
$
1,109

 
$
98

 
$
1,162

 
$
1,260

 
$
1,569

Non-U.S. commercial
155

 
149

 
30

 
528

 
507

 
58

 
327

 
463

 
409

Commercial real estate
247

 
162

 
16

 
133

 
41

 
4

 
46

 
73

 
92

Commercial lease financing
71

 
71

 

 
20

 
18

 
3

 
42

 
8

 
2

U.S. small business commercial (2)
83

 
72

 
29

 
84

 
70

 
27

 
73

 
73

 
87

Total
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
U.S. commercial
$
2,075

 
$
1,886

 
$
121

 
$
1,969

 
$
1,680

 
$
98

 
$
1,817

 
$
2,032

 
$
2,356

Non-U.S. commercial
248

 
242

 
30

 
542

 
518

 
58

 
370

 
509

 
443

Commercial real estate
247

 
162

 
16

 
216

 
121

 
4

 
90

 
142

 
159

Commercial lease financing
71

 
71

 

 
20

 
18

 
3

 
45

 
8

 
2

U.S. small business commercial (2)
83

 
72

 
29

 
84

 
70

 
27

 
73

 
73

 
87

(1) 
The related interest income recognized, which included 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 was considered collectible, was not significant in 2018, 2017 and 2016.
(2) 
Includes U.S. small business commercial renegotiated TDR loans and related allowance.
The table below presents the December 31, 2018, 2017 and 2016 unpaid principal balance and carrying value of commercial loans that were modified as TDRs during 2018, 2017 and 2016. 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 2018, 2017 and 2016
 
 
 
Unpaid Principal Balance
 
Carrying Value
(Dollars in millions)
December 31, 2018
U.S. commercial
$
1,154

 
$
1,098

Non-U.S. commercial
166

 
165

Commercial real estate
115

 
115

Commercial lease financing
68

 
68

U.S. small business commercial (1)
9

 
8

Total
$
1,512

 
$
1,454

 
 
 
 
 
December 31, 2017
U.S. commercial
$
1,033

 
$
922

Non-U.S. commercial
105

 
105

Commercial real estate
35

 
24

Commercial lease financing
20

 
17

U.S. small business commercial (1)
13

 
13

Total
$
1,206

 
$
1,081

 
 
 
 
 
December 31, 2016
U.S. commercial
$
1,556

 
$
1,482

Non-U.S. commercial
255

 
253

Commercial real estate
77

 
77

Commercial lease financing
6

 
4

U.S. small business commercial (1)
1

 
1

Total
$
1,895

 
$
1,817

(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 $150 million, $64 million and $140
million for U.S. commercial and $3 million, $19 million and $34 million for commercial real estate at December 31, 2018, 2017 and 2016, respectively.
Purchased Credit-impaired Loans
The table below shows activity for the accretable yield on PCI loans, which includes 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. The reclassifications from nonaccretable difference during 2018 and 2017 were primarily due to an increase in the expected principal and interest cash flows due to lower default estimates and the rising interest rate environment.
 
 
Rollforward of Accretable Yield
 
 
 
(Dollars in millions)
 
Accretable yield, January 1, 2017
$
3,805

Accretion
(601
)
Disposals/transfers
(634
)
Reclassifications from nonaccretable difference
219

Accretable yield, December 31, 2017
2,789

Accretion
(457
)
Disposals/transfers
(1,456
)
Reclassifications from nonaccretable difference
368

Accretable yield, December 31, 2018
$
1,244


During 2018 and 2017, the Corporation sold PCI loans with a carrying value of $4.4 billion and $803 million. For more information on PCI loans, see Note 1 – Summary of Significant Accounting Principles and for the carrying value and valuation allowance for PCI loans, see Note 6 – Allowance for Credit Losses.
Loans Held-for-sale
The Corporation had LHFS of $10.4 billion and $11.4 billion at December 31, 2018 and 2017. Cash and non-cash proceeds from sales and paydowns of loans originally classified as LHFS were $29.2 billion, $41.3 billion and $32.6 billion for 2018, 2017 and 2016, respectively. Cash used for originations and purchases of LHFS totaled $28.1 billion, $43.5 billion and $33.1 billion for 2018, 2017 and 2016, respectively.