Outstanding Loans and Leases |
Outstanding Loans and Leases
The following tables present total outstanding loans and leases and an aging analysis for the Corporation’s Home Loans, Credit Card and Other Consumer, and Commercial portfolio segments, by class of financing receivables, at December 31, 2012 and 2011.
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December 31, 2012 |
(Dollars in millions) |
30-59 Days Past Due (1)
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60-89 Days Past Due (1)
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90 Days or More
Past Due (2)
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Total Past Due 30 Days
or More
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Total Current or Less Than 30 Days Past Due (3)
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Purchased Credit-impaired (4)
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Loans Accounted for Under the Fair Value Option |
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Total
Outstandings
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Home loans |
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Core portfolio |
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Residential mortgage (5)
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$ |
2,274 |
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$ |
806 |
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$ |
6,227 |
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$ |
9,307 |
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$ |
160,809 |
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$ |
170,116 |
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Home equity |
273 |
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|
146 |
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|
591 |
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|
1,010 |
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59,841 |
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60,851 |
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Legacy Assets & Servicing portfolio |
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Residential mortgage |
2,891 |
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|
1,696 |
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|
26,494 |
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31,081 |
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|
33,247 |
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$ |
8,737 |
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|
73,065 |
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Home equity |
607 |
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|
356 |
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|
1,444 |
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|
2,407 |
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|
36,191 |
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|
8,547 |
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47,145 |
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Discontinued real estate (6)
|
48 |
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19 |
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234 |
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|
301 |
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|
757 |
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8,834 |
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9,892 |
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Credit card and other consumer |
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U.S. credit card |
729 |
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|
582 |
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1,437 |
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2,748 |
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92,087 |
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94,835 |
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Non-U.S. credit card |
106 |
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|
85 |
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|
212 |
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|
403 |
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11,294 |
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11,697 |
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Direct/Indirect consumer (7)
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569 |
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|
239 |
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573 |
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1,381 |
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81,824 |
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83,205 |
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Other consumer (8)
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48 |
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19 |
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4 |
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71 |
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1,557 |
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1,628 |
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Total consumer loans |
7,545 |
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3,948 |
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37,216 |
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48,709 |
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477,607 |
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26,118 |
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552,434 |
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Consumer loans accounted for under the fair value option (9)
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$ |
1,005 |
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|
1,005 |
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Total consumer |
7,545 |
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3,948 |
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37,216 |
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48,709 |
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477,607 |
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26,118 |
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1,005 |
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553,439 |
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Commercial |
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U.S. commercial |
323 |
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133 |
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639 |
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1,095 |
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196,031 |
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197,126 |
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Commercial real estate (10)
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79 |
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|
144 |
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|
983 |
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1,206 |
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37,431 |
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38,637 |
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Commercial lease financing |
84 |
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|
79 |
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|
30 |
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|
193 |
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23,650 |
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23,843 |
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Non-U.S. commercial |
2 |
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— |
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— |
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2 |
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74,182 |
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74,184 |
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U.S. small business commercial |
101 |
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75 |
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168 |
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|
344 |
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12,249 |
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12,593 |
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Total commercial loans |
589 |
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|
431 |
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|
1,820 |
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|
2,840 |
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343,543 |
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346,383 |
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Commercial loans accounted for under the fair value option (9)
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7,997 |
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7,997 |
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Total commercial |
589 |
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|
431 |
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1,820 |
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|
2,840 |
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343,543 |
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7,997 |
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|
354,380 |
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Total loans and leases |
$ |
8,134 |
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$ |
4,379 |
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$ |
39,036 |
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$ |
51,549 |
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$ |
821,150 |
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$ |
26,118 |
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$ |
9,002 |
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$ |
907,819 |
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Percentage of outstandings |
0.90 |
% |
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0.48 |
% |
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4.30 |
% |
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5.68 |
% |
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90.45 |
% |
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2.88 |
% |
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0.99 |
% |
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(1) |
Home loans 30-59 days past due includes $2.3 billion of fully-insured loans and $702 million of nonperforming loans. Home loans 60-89 days past due includes $1.3 billion of fully-insured loans and $558 million of nonperforming loans.
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(2) |
Home loans includes $22.2 billion of fully-insured loans.
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(3) |
Home loans includes $5.5 billion and direct/indirect consumer includes $63 million of nonperforming loans.
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(4) |
PCI loan amounts are shown gross of the valuation allowance. |
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(5) |
Total outstandings includes non-U.S. residential mortgage loans of $93 million.
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(6) |
Total outstandings includes $8.8 billion of pay option loans and $1.1 billion of subprime loans. The Corporation no longer originates these products.
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(7) |
Total outstandings includes dealer financial services loans of $35.9 billion, consumer lending loans of $4.7 billion, U.S. securities-based lending margin loans of $28.3 billion, student loans of $4.8 billion, non-U.S. consumer loans of $8.3 billion and other consumer loans of $1.2 billion.
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(8) |
Total outstandings includes consumer finance loans of $1.4 billion, other non-U.S. consumer loans of $5 million and consumer overdrafts of $177 million.
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(9) |
Consumer loans accounted for under the fair value option were residential mortgage loans of $147 million and discontinued real estate loans of $858 million. Commercial loans accounted for under the fair value option were U.S. commercial loans of $2.3 billion and non-U.S. commercial loans of $5.7 billion. For additional information, see Note 21 – Fair Value Measurements and Note 22 – Fair Value Option.
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(10) |
Total outstandings includes U.S. commercial real estate loans of $37.2 billion and non-U.S. commercial real estate loans of $1.5 billion.
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December 31, 2011 |
(Dollars in millions) |
30-59 Days Past Due (1)
|
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60-89 Days Past Due (1)
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90 Days or More Past Due (2)
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Total Past Due 30 Days or More |
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Total Current or Less Than 30 Days Past Due (3)
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Purchased Credit-impaired (4)
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Loans Accounted for Under the Fair Value Option |
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Total Outstandings |
Home loans |
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Core portfolio |
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Residential mortgage (5)
|
$ |
2,151 |
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|
$ |
751 |
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|
$ |
3,017 |
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$ |
5,919 |
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$ |
172,418 |
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|
|
|
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$ |
178,337 |
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Home equity |
260 |
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|
155 |
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|
429 |
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|
844 |
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|
66,211 |
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|
|
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|
67,055 |
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Legacy Assets & Servicing portfolio |
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Residential mortgage |
3,195 |
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|
2,174 |
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|
32,167 |
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|
37,536 |
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|
36,451 |
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$ |
9,966 |
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|
|
|
|
83,953 |
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Home equity |
845 |
|
|
508 |
|
|
1,735 |
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|
3,088 |
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|
42,578 |
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|
11,978 |
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|
|
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|
57,644 |
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Discontinued real estate (6)
|
65 |
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|
24 |
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|
351 |
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|
440 |
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|
798 |
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|
9,857 |
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|
11,095 |
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Credit card and other consumer |
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|
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|
|
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|
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U.S. credit card |
981 |
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|
772 |
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|
2,070 |
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|
3,823 |
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|
98,468 |
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|
|
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|
102,291 |
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Non-U.S. credit card |
148 |
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|
120 |
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|
342 |
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|
610 |
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|
13,808 |
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|
|
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|
14,418 |
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Direct/Indirect consumer (7)
|
805 |
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|
338 |
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|
779 |
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|
1,922 |
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|
87,791 |
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|
|
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|
89,713 |
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Other consumer (8)
|
55 |
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|
21 |
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|
17 |
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|
93 |
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|
2,595 |
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|
|
|
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|
2,688 |
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Total consumer loans |
8,505 |
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|
4,863 |
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|
40,907 |
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|
54,275 |
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|
521,118 |
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|
31,801 |
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|
|
|
607,194 |
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Consumer loans accounted for under the fair value option (9)
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|
|
|
|
|
|
|
|
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$ |
2,190 |
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|
2,190 |
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Total consumer |
8,505 |
|
|
4,863 |
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|
40,907 |
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|
54,275 |
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|
521,118 |
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|
31,801 |
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|
2,190 |
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|
609,384 |
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Commercial |
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U.S. commercial |
352 |
|
|
166 |
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|
866 |
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|
1,384 |
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|
178,564 |
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|
|
|
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|
179,948 |
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Commercial real estate (10)
|
288 |
|
|
118 |
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|
1,860 |
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|
2,266 |
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|
37,330 |
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|
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|
39,596 |
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Commercial lease financing |
78 |
|
|
15 |
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|
22 |
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|
115 |
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|
21,874 |
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|
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|
21,989 |
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Non-U.S. commercial |
24 |
|
|
— |
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— |
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|
24 |
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|
55,394 |
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|
55,418 |
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U.S. small business commercial |
150 |
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|
106 |
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|
272 |
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|
528 |
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|
12,723 |
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|
13,251 |
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Total commercial loans |
892 |
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|
405 |
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|
3,020 |
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|
4,317 |
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|
305,885 |
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|
310,202 |
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Commercial loans accounted for under the fair value option (9)
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|
6,614 |
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|
6,614 |
|
Total commercial |
892 |
|
|
405 |
|
|
3,020 |
|
|
4,317 |
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|
305,885 |
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|
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|
6,614 |
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|
316,816 |
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Total loans and leases |
$ |
9,397 |
|
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$ |
5,268 |
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$ |
43,927 |
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$ |
58,592 |
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$ |
827,003 |
|
|
$ |
31,801 |
|
|
$ |
8,804 |
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$ |
926,200 |
|
Percentage of outstandings |
1.02 |
% |
|
0.57 |
% |
|
4.74 |
% |
|
6.33 |
% |
|
89.29 |
% |
|
3.43 |
% |
|
0.95 |
% |
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(1) |
Home loans 30-59 days past due includes $2.2 billion of fully-insured loans and $372 million of nonperforming loans. Home loans 60-89 days past due includes $1.4 billion of fully-insured loans and $398 million of nonperforming loans.
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(2) |
Home loans includes $21.2 billion of fully-insured loans.
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(3) |
Home loans includes $1.8 billion and direct/indirect consumer includes $7 million of nonperforming loans.
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(4) |
PCI loan amounts are shown gross of the valuation allowance. |
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(5) |
Total outstandings includes non-U.S. residential mortgage loans of $85 million.
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(6) |
Total outstandings includes $9.9 billion of pay option loans and $1.2 billion of subprime loans. The Corporation no longer originates these products.
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(7) |
Total outstandings includes dealer financial services loans of $43.0 billion, consumer lending loans of $8.0 billion, U.S. securities-based lending margin loans of $23.6 billion, student loans of $6.0 billion, non-U.S. consumer loans of $7.6 billion and other consumer loans of $1.5 billion.
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(8) |
Total outstandings includes consumer finance loans of $1.7 billion, other non-U.S. consumer loans of $929 million and consumer overdrafts of $103 million.
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(9) |
Consumer loans accounted for under the fair value option were residential mortgage loans of $906 million and discontinued real estate loans of $1.3 billion. Commercial loans accounted for under the fair value option were U.S. commercial loans of $2.2 billion and non-U.S. commercial loans of $4.4 billion. For additional information, see Note 21 – Fair Value Measurements and Note 22 – Fair Value Option.
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(10) |
Total outstandings includes U.S. commercial real estate loans of $37.8 billion and non-U.S. commercial real estate loans of $1.8 billion.
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The Corporation mitigates a portion of its credit risk on the residential mortgage portfolio through the use of synthetic securitization vehicles. These vehicles issue long-term notes to investors, the proceeds of which are held as cash collateral. The Corporation pays a premium to the vehicles to purchase mezzanine loss protection on a portfolio of residential mortgage loans owned by the Corporation. Cash held in the vehicles is used to reimburse the Corporation in the event that losses on the mortgage portfolio exceed 10 basis points (bps) of the original pool balance, up to the remaining amount of purchased loss protection of $500 million and $783 million at December 31, 2012 and 2011. The vehicles from which the Corporation purchases credit protection are VIEs. The Corporation does not have a variable interest in these vehicles, and accordingly, these vehicles are not consolidated by the Corporation. Amounts due from the vehicles are recorded in other income (loss) when the Corporation recognizes a reimbursable loss, as described above. Amounts are collected when reimbursable losses are realized through the sale of the underlying collateral. At December 31, 2012 and 2011, the Corporation had a receivable of $305 million and $359 million from these vehicles for reimbursement of losses, and principal of $17.6 billion and $23.9 billion of residential mortgage loans was referenced under these agreements. The Corporation records an allowance for credit losses on these loans without regard to the existence of the purchased loss protection as the protection does not represent a guarantee of individual loans.
In addition, the Corporation has entered into long-term credit protection agreements with FNMA and FHLMC on loans totaling $24.3 billion and $24.4 billion at December 31, 2012 and 2011, providing full 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. For additional information, see Note 8 – Representations and Warranties Obligations and Corporate Guarantees.
Nonperforming Loans and Leases
In 2012, the bank regulatory agencies jointly issued interagency supervisory guidance on nonaccrual status for junior-lien consumer real estate loans. In accordance with this regulatory interagency guidance, 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, and as a result, an incremental $1.5 billion was included in nonperforming loans at December 31, 2012. The regulatory interagency guidance had no impact on the Corporation’s allowance for loan and lease losses or provision for credit losses as the delinquency status of the underlying first-lien loans was already considered in the Corporation’s reserving process.
In 2012, new regulatory guidance was issued addressing certain consumer real estate loans that have been discharged in Chapter 7 bankruptcy. In accordance with this new guidance, the Corporation classifies consumer real estate and other secured consumer 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. Previously, such loans were classified as TDRs only if there had been a change in contractual payment terms that represented a concession to the borrower. The net impact upon implementation to the consumer loan portfolio of adopting this new regulatory guidance was $1.2 billion in net new nonperforming loans, and $1.1 billion of such loans were included in nonperforming loans at December 31, 2012. Of the $1.1 billion, $1.0 billion, or 92 percent, were current on their contractual payments. Of these contractually current nonperforming loans, more than 70 percent were discharged in Chapter 7 bankruptcy more than 12 months ago, and more than 40 percent were discharged 24 months or more ago. As subsequent cash payments are received, the interest component of the payments is generally recorded as interest income on a cash basis and the principal component is generally recorded as a reduction in the carrying value of the loan.
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, 2012 and 2011. 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. See Note 1 – Summary of Significant Accounting Principles for further information on the criteria for classification as nonperforming.
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Credit Quality |
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December 31 |
|
Nonperforming Loans and Leases (1)
|
|
Accruing Past Due
90 Days or More
|
(Dollars in millions) |
2012 |
|
2011 |
|
2012 |
|
2011 |
Home loans |
|
|
|
|
|
|
|
|
|
|
|
Core portfolio |
|
|
|
|
|
|
|
Residential mortgage (2)
|
$ |
3,190 |
|
|
$ |
2,414 |
|
|
$ |
3,984 |
|
|
$ |
883 |
|
Home equity |
1,265 |
|
|
439 |
|
|
— |
|
|
— |
|
Legacy Assets & Servicing portfolio |
|
|
|
|
|
|
|
|
|
|
Residential mortgage (2)
|
11,618 |
|
|
13,556 |
|
|
18,173 |
|
|
20,281 |
|
Home equity |
3,016 |
|
|
2,014 |
|
|
— |
|
|
— |
|
Discontinued real estate |
248 |
|
|
290 |
|
|
— |
|
|
— |
|
Credit card and other consumer |
|
|
|
|
|
|
|
|
|
U.S. credit card |
n/a |
|
|
n/a |
|
|
1,437 |
|
|
2,070 |
|
Non-U.S. credit card |
n/a |
|
|
n/a |
|
|
212 |
|
|
342 |
|
Direct/Indirect consumer |
92 |
|
|
40 |
|
|
545 |
|
|
746 |
|
Other consumer |
2 |
|
|
15 |
|
|
2 |
|
|
2 |
|
Total consumer |
19,431 |
|
|
18,768 |
|
|
24,353 |
|
|
24,324 |
|
Commercial |
|
|
|
|
|
|
|
|
|
|
|
U.S. commercial |
1,484 |
|
|
2,174 |
|
|
65 |
|
|
75 |
|
Commercial real estate |
1,513 |
|
|
3,880 |
|
|
29 |
|
|
7 |
|
Commercial lease financing |
44 |
|
|
26 |
|
|
15 |
|
|
14 |
|
Non-U.S. commercial |
68 |
|
|
143 |
|
|
— |
|
|
— |
|
U.S. small business commercial |
115 |
|
|
114 |
|
|
120 |
|
|
216 |
|
Total commercial |
3,224 |
|
|
6,337 |
|
|
229 |
|
|
312 |
|
Total consumer and commercial |
$ |
22,655 |
|
|
$ |
25,105 |
|
|
$ |
24,582 |
|
|
$ |
24,636 |
|
|
|
(1) |
Nonperforming loan balances do not include nonaccruing TDRs removed from the PCI portfolio prior to January 1, 2010 of $521 million and $477 million at December 31, 2012 and 2011.
|
|
|
(2) |
Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At December 31, 2012 and 2011, residential mortgage includes $17.8 billion and $17.0 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 $4.4 billion and $4.2 billion of loans on which interest is still accruing.
|
n/a = not applicable
Credit Quality Indicators
The Corporation monitors credit quality within its Home Loans, 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 Home Loans 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 property securing the loan, refreshed quarterly. Home equity loans are evaluated using CLTV which measures the carrying value of the combined loans that have liens against the property and the available line of credit as a percentage of the appraised 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. At a minimum, FICO scores are refreshed quarterly, and in many cases, more frequently. 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 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 Home Loans, Credit Card and Other Consumer, and Commercial portfolio segments, by class of financing receivables, at December 31, 2012 and 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Loans – Credit Quality Indicators (1)
|
|
|
|
December 31, 2012 |
(Dollars in millions) |
Core Portfolio Residential
Mortgage (2)
|
|
Legacy Assets & Servicing Residential Mortgage (2)
|
|
Countrywide Residential Mortgage PCI |
|
Core Portfolio Home Equity (2)
|
|
Legacy Assets & Servicing Home Equity (2)
|
|
Countrywide Home Equity PCI |
|
Legacy Assets & Servicing Discontinued Real Estate (2)
|
|
Countrywide Discontinued Real Estate
PCI
|
Refreshed LTV (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 90 percent |
$ |
80,585 |
|
|
$ |
19,904 |
|
|
$ |
3,516 |
|
|
$ |
44,971 |
|
|
$ |
15,907 |
|
|
$ |
2,050 |
|
|
$ |
719 |
|
|
$ |
5,093 |
|
Greater than 90 percent but less than 100 percent |
8,891 |
|
|
5,000 |
|
|
1,312 |
|
|
5,825 |
|
|
4,507 |
|
|
788 |
|
|
102 |
|
|
1,067 |
|
Greater than 100 percent |
12,984 |
|
|
16,226 |
|
|
3,909 |
|
|
10,055 |
|
|
18,184 |
|
|
5,709 |
|
|
237 |
|
|
2,674 |
|
Fully-insured loans (4)
|
67,656 |
|
|
23,198 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total home loans |
$ |
170,116 |
|
|
$ |
64,328 |
|
|
$ |
8,737 |
|
|
$ |
60,851 |
|
|
$ |
38,598 |
|
|
$ |
8,547 |
|
|
$ |
1,058 |
|
|
$ |
8,834 |
|
Refreshed FICO score |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 620 |
$ |
6,366 |
|
|
$ |
13,900 |
|
|
$ |
3,249 |
|
|
$ |
2,586 |
|
|
$ |
5,408 |
|
|
$ |
1,930 |
|
|
$ |
429 |
|
|
$ |
5,471 |
|
Greater than or equal to 620 and less than 680 |
8,561 |
|
|
6,006 |
|
|
1,381 |
|
|
4,500 |
|
|
5,885 |
|
|
1,500 |
|
|
160 |
|
|
1,359 |
|
Greater than or equal to 680 and less than 740 |
25,141 |
|
|
8,411 |
|
|
1,886 |
|
|
12,625 |
|
|
10,387 |
|
|
2,278 |
|
|
206 |
|
|
1,106 |
|
Greater than or equal to 740 |
62,392 |
|
|
12,813 |
|
|
2,221 |
|
|
41,140 |
|
|
16,918 |
|
|
2,839 |
|
|
263 |
|
|
898 |
|
Fully-insured loans (4)
|
67,656 |
|
|
23,198 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total home loans |
$ |
170,116 |
|
|
$ |
64,328 |
|
|
$ |
8,737 |
|
|
$ |
60,851 |
|
|
$ |
38,598 |
|
|
$ |
8,547 |
|
|
$ |
1,058 |
|
|
$ |
8,834 |
|
|
|
(1) |
Excludes $1.0 billion of loans accounted for under the fair value option.
|
|
|
(2) |
Excludes Countrywide 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 |
|
|
|
December 31, 2012 |
(Dollars in millions) |
U.S. Credit
Card
|
|
Non-U.S.
Credit Card
|
|
Direct/Indirect
Consumer
|
|
Other
Consumer (1)
|
Refreshed FICO score |
|
|
|
|
|
|
|
|
|
|
|
Less than 620 |
$ |
6,188 |
|
|
$ |
— |
|
|
$ |
1,896 |
|
|
$ |
668 |
|
Greater than or equal to 620 and less than 680 |
13,947 |
|
|
— |
|
|
3,367 |
|
|
301 |
|
Greater than or equal to 680 and less than 740 |
37,167 |
|
|
— |
|
|
9,592 |
|
|
232 |
|
Greater than or equal to 740 |
37,533 |
|
|
— |
|
|
25,164 |
|
|
212 |
|
Other internal credit metrics (2, 3, 4)
|
— |
|
|
11,697 |
|
|
43,186 |
|
|
215 |
|
Total credit card and other consumer |
$ |
94,835 |
|
|
$ |
11,697 |
|
|
$ |
83,205 |
|
|
$ |
1,628 |
|
|
|
(1) |
87 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 $36.5 billion of securities-based lending which is overcollateralized and therefore has minimal credit risk and $4.8 billion of loans the Corporation no longer originates.
|
|
|
(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, 2012, 97 percent of this portfolio was current or less than 30 days past due, one percent was 30-89 days past due and two percent was 90 days or more past due.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial – Credit Quality Indicators (1)
|
|
|
|
December 31, 2012 |
(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 |
$ |
189,602 |
|
|
$ |
34,968 |
|
|
$ |
22,874 |
|
|
$ |
72,688 |
|
|
$ |
1,690 |
|
Reservable criticized |
7,524 |
|
|
3,669 |
|
|
969 |
|
|
1,496 |
|
|
573 |
|
Refreshed FICO score (3)
|
|
|
|
|
|
|
|
|
|
|
Less than 620 |
|
|
|
|
|
|
|
|
|
|
|
|
400 |
|
Greater than or equal to 620 and less than 680 |
|
|
|
|
|
|
|
|
580 |
|
Greater than or equal to 680 and less than 740 |
|
|
|
|
|
|
|
|
1,553 |
|
Greater than or equal to 740 |
|
|
|
|
|
|
|
|
2,496 |
|
Other internal credit metrics (3, 4)
|
|
|
|
|
|
|
|
|
5,301 |
|
Total commercial |
$ |
197,126 |
|
|
$ |
38,637 |
|
|
$ |
23,843 |
|
|
$ |
74,184 |
|
|
$ |
12,593 |
|
|
|
(1) |
Excludes $8.0 billion of loans accounted for under the fair value option.
|
|
|
(2) |
U.S. small business commercial includes $366 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, 2012, 98 percent of the balances where internal credit metrics are used were 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Loans – Credit Quality Indicators (1)
|
|
|
|
December 31, 2011 |
(Dollars in millions) |
Core Portfolio Residential
Mortgage (2)
|
|
Legacy Assets & Servicing Residential Mortgage (2)
|
|
Countrywide Residential Mortgage PCI |
|
Core Portfolio Home Equity (2)
|
|
Legacy Assets & Servicing Home Equity (2)
|
|
Countrywide Hone Equity PCI |
|
Legacy Assets & Servicing Discontinued Real Estate (2)
|
|
Countrywide Discontinued Real Estate
PCI
|
Refreshed LTV (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 90 percent |
$ |
80,032 |
|
|
$ |
20,450 |
|
|
$ |
3,821 |
|
|
$ |
46,646 |
|
|
$ |
17,354 |
|
|
$ |
2,253 |
|
|
$ |
895 |
|
|
$ |
5,953 |
|
Greater than 90 percent but less than 100 percent |
11,838 |
|
|
5,847 |
|
|
1,468 |
|
|
6,988 |
|
|
4,995 |
|
|
1,077 |
|
|
122 |
|
|
1,191 |
|
Greater than 100 percent |
17,673 |
|
|
22,630 |
|
|
4,677 |
|
|
13,421 |
|
|
23,317 |
|
|
8,648 |
|
|
221 |
|
|
2,713 |
|
Fully-insured loans (4)
|
68,794 |
|
|
25,060 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total home loans |
$ |
178,337 |
|
|
$ |
73,987 |
|
|
$ |
9,966 |
|
|
$ |
67,055 |
|
|
$ |
45,666 |
|
|
$ |
11,978 |
|
|
$ |
1,238 |
|
|
$ |
9,857 |
|
Refreshed FICO score (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 620 |
$ |
7,020 |
|
|
$ |
17,337 |
|
|
$ |
3,924 |
|
|
$ |
2,843 |
|
|
$ |
7,293 |
|
|
$ |
4,140 |
|
|
$ |
548 |
|
|
$ |
6,275 |
|
Greater than or equal to 620 and less than 680 |
9,331 |
|
|
6,537 |
|
|
1,381 |
|
|
4,704 |
|
|
6,866 |
|
|
1,969 |
|
|
175 |
|
|
1,279 |
|
Greater than or equal to 680 and less than 740 |
26,569 |
|
|
9,439 |
|
|
2,036 |
|
|
13,561 |
|
|
11,798 |
|
|
2,538 |
|
|
228 |
|
|
1,223 |
|
Greater than or equal to 740 |
66,623 |
|
|
15,614 |
|
|
2,625 |
|
|
45,947 |
|
|
19,709 |
|
|
3,331 |
|
|
287 |
|
|
1,080 |
|
Fully-insured loans (4)
|
68,794 |
|
|
25,060 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total home loans |
$ |
178,337 |
|
|
$ |
73,987 |
|
|
$ |
9,966 |
|
|
$ |
67,055 |
|
|
$ |
45,666 |
|
|
$ |
11,978 |
|
|
$ |
1,238 |
|
|
$ |
9,857 |
|
|
|
(1) |
Excludes $2.2 billion of loans accounted for under the fair value option.
|
|
|
(2) |
Excludes Countrywide 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. |
|
|
(5) |
During 2012, refreshed home equity FICO metrics reflected an updated scoring model that is more representative of the credit risk of the Corporation’s borrowers. Prior period amounts were adjusted to reflect these updates. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Card and Other Consumer – Credit Quality Indicators |
|
|
|
December 31, 2011 |
(Dollars in millions) |
U.S. Credit
Card
|
|
Non-U.S.
Credit Card
|
|
Direct/Indirect
Consumer
|
|
Other
Consumer (1)
|
Refreshed FICO score |
|
|
|
|
|
|
|
|
|
|
|
Less than 620 |
$ |
8,172 |
|
|
$ |
— |
|
|
$ |
3,325 |
|
|
$ |
802 |
|
Greater than or equal to 620 and less than 680 |
15,474 |
|
|
— |
|
|
4,665 |
|
|
348 |
|
Greater than or equal to 680 and less than 740 |
39,525 |
|
|
— |
|
|
12,351 |
|
|
262 |
|
Greater than or equal to 740 |
39,120 |
|
|
— |
|
|
29,965 |
|
|
244 |
|
Other internal credit metrics (2, 3, 4)
|
— |
|
|
14,418 |
|
|
39,407 |
|
|
1,032 |
|
Total credit card and other consumer |
$ |
102,291 |
|
|
$ |
14,418 |
|
|
$ |
89,713 |
|
|
$ |
2,688 |
|
|
|
(1) |
96 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 $31.1 billion of securities-based lending which is overcollateralized and therefore has minimal credit risk and $6.0 billion of loans the Corporation no longer originates.
|
|
|
(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, 2011, 96 percent of this portfolio was current or less than 30 days past due, two percent was 30-89 days past due and two percent was 90 days or more past due.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial – Credit Quality Indicators (1)
|
|
|
|
December 31, 2011 |
(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 |
$ |
169,599 |
|
|
$ |
28,602 |
|
|
$ |
20,850 |
|
|
$ |
53,945 |
|
|
$ |
2,392 |
|
Reservable criticized |
10,349 |
|
|
10,994 |
|
|
1,139 |
|
|
1,473 |
|
|
836 |
|
Refreshed FICO score (3)
|
|
|
|
|
|
|
|
|
|
Less than 620 |
|
|
|
|
|
|
|
|
562 |
|
Greater than or equal to 620 and less than 680 |
|
|
|
|
|
|
|
|
624 |
|
Greater than or equal to 680 and less than 740 |
|
|
|
|
|
|
|
|
1,612 |
|
Greater than or equal to 740 |
|
|
|
|
|
|
|
|
2,438 |
|
Other internal credit metrics (3, 4)
|
|
|
|
|
|
|
|
|
4,787 |
|
Total commercial |
$ |
179,948 |
|
|
$ |
39,596 |
|
|
$ |
21,989 |
|
|
$ |
55,418 |
|
|
$ |
13,251 |
|
|
|
(1) |
Excludes $6.6 billion of loans accounted for under the fair value option.
|
|
|
(2) |
U.S. small business commercial includes $491 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, 2011, 97 percent of the balances where internal credit metrics are used were current or less than 30 days past due.
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(3) |
Refreshed FICO score and other internal credit metrics are applicable only to the U.S. small business commercial portfolio. |
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(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 201.
Home Loans
Impaired home loans within the Home Loans portfolio segment consist entirely of TDRs. Excluding PCI loans, most modifications of home loans meet the definition of TDRs when a binding offer is extended to a borrower. Modifications of home loans are done in accordance with the government’s Making Home Affordable Program (modifications under government programs) or the Corporation’s proprietary programs (modifications under 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. In 2012, the Corporation implemented a borrower assistance program that provides forgiveness of principal balances in connection with the settlement agreement among the Corporation and certain of its affiliates and subsidiaries, together with the U.S. Department of Justice (DOJ), the U.S. Department of Housing and Urban Development (HUD) and other federal agencies, and 49 state Attorneys General concerning the terms of a global settlement resolving investigations into certain origination, servicing and foreclosure practices (National Mortgage Settlement).
Prior to permanently modifying a loan, the Corporation may enter into trial modifications with certain borrowers under both government and proprietary programs, including the borrower assistance program pursuant to the National Mortgage Settlement. 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.
In 2012, new regulatory guidance was issued addressing certain home loans that have been discharged in Chapter 7 bankruptcy, and as a result, an additional $3.5 billion of home loans were included in TDRs at December 31, 2012, of which $1.2 billion were current or less than 60 days past due. Of the $3.5 billion of home loan TDRs, approximately 27 percent, 42 percent and 31 percent had been discharged in Chapter 7 bankruptcy in 2012, 2011 and prior years, respectively. For more information on the new regulatory guidance on loans discharged in Chapter 7 bankruptcy, see Nonperforming Loans and Leases in this Note.
In accordance with applicable accounting guidance, a home loan, excluding PCI loans which are reported separately, is not classified as impaired unless it is a TDR. Once such a loan has been designated as a TDR, it is then individually assessed for impairment. Home loan TDRs are measured primarily based on the net present value of the estimated cash flows discounted at the loan’s original effective interest rate, as discussed in the paragraph below. 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, home loan TDRs that are considered to be dependent solely on the collateral for repayment (e.g., due to the lack of income verification or as a result of being discharged in Chapter 7 bankruptcy) 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. Home loans that reached 180 days past due prior to modification had been charged off to their net realizable value before they were modified as TDRs in accordance with established policy. Therefore, modifications of home loans that are 180 days or more 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.
The net present value of the estimated cash flows is based on model-driven estimates of projected payments, prepayments, defaults and loss-given-default (LGD). Using statistical modeling methodologies, the Corporation estimates the probability that a loan will default prior to maturity based on the attributes of each loan. The factors that are most relevant to the probability of default are the refreshed LTV, or in the case of a subordinated lien, refreshed CLTV, borrower credit score, months since origination (i.e., vintage) and geography. Each of these factors is further broken down by present collection status (whether the loan is current, delinquent, in default or in bankruptcy). Severity (or LGD) is estimated based on the refreshed LTV for first mortgages or CLTV for subordinated liens. The estimates are based on the Corporation’s historical experience, but are adjusted to reflect an assessment of environmental factors that may not be reflected in the historical data, such as changes in real estate values, local and national economies, underwriting standards and the regulatory environment. The probability of default models also incorporate recent experience with modification programs, a loan’s default history prior to modification and the change in borrower payments post-modification.
At December 31, 2012 and 2011, remaining commitments to lend additional funds to debtors whose terms have been modified in a home loan TDR were immaterial. Home loan foreclosed properties totaled $650 million and $2.0 billion at December 31, 2012 and 2011.
The table below presents impaired loans in the Corporation’s Home Loans portfolio segment at and for the years ended December 31, 2012 and 2011 and includes primarily loans managed by Legacy Assets & Servicing. Certain impaired home loans do not have a related allowance as the current valuation of these impaired loans exceeded the carrying value.
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Impaired Loans – Home Loans |
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|
December 31, 2012 |
|
2012 |
(Dollars in millions) |
Unpaid Principal
Balance
|
|
Carrying
Value
|
|
Related
Allowance
|
|
Average Carrying
Value
|
|
Interest Income
Recognized (1)
|
With no recorded allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
19,758 |
|
|
$ |
14,707 |
|
|
n/a |
|
|
$ |
10,697 |
|
|
$ |
358 |
|
Home equity |
2,624 |
|
|
1,103 |
|
|
n/a |
|
|
734 |
|
|
49 |
|
Discontinued real estate |
468 |
|
|
260 |
|
|
n/a |
|
|
240 |
|
|
8 |
|
With an allowance recorded |
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|
|
|
|
|
|
|
|
Residential mortgage |
14,080 |
|
|
13,051 |
|
|
$ |
1,233 |
|
|
11,439 |
|
|
417 |
|
Home equity |
1,256 |
|
|
1,022 |
|
|
448 |
|
|
1,145 |
|
|
44 |
|
Discontinued real estate |
143 |
|
|
107 |
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|
19 |
|
|
136 |
|
|
6 |
|
Total |
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Residential mortgage |
$ |
33,838 |
|
|
$ |
27,758 |
|
|
$ |
1,233 |
|
|
$ |
22,136 |
|
|
$ |
775 |
|
Home equity |
3,880 |
|
|
2,125 |
|
|
448 |
|
|
1,879 |
|
|
93 |
|
Discontinued real estate |
611 |
|
|
367 |
|
|
19 |
|
|
376 |
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011 |
|
2011 |
With no recorded allowance |
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
10,907 |
|
|
$ |
8,168 |
|
|
n/a |
|
|
$ |
6,285 |
|
|
$ |
233 |
|
Home equity |
1,747 |
|
|
479 |
|
|
n/a |
|
|
442 |
|
|
23 |
|
Discontinued real estate |
421 |
|
|
240 |
|
|
n/a |
|
|
222 |
|
|
8 |
|
With an allowance recorded |
|
|
|
|
|
|
|
|
|
Residential mortgage |
12,296 |
|
|
11,119 |
|
|
$ |
1,295 |
|
|
9,379 |
|
|
319 |
|
Home equity |
1,551 |
|
|
1,297 |
|
|
622 |
|
|
1,357 |
|
|
34 |
|
Discontinued real estate |
213 |
|
|
159 |
|
|
29 |
|
|
173 |
|
|
6 |
|
Total |
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Residential mortgage |
$ |
23,203 |
|
|
$ |
19,287 |
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|
$ |
1,295 |
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|
$ |
15,664 |
|
|
$ |
552 |
|
Home equity |
3,298 |
|
|
1,776 |
|
|
622 |
|
|
1,799 |
|
|
57 |
|
Discontinued real estate |
634 |
|
|
399 |
|
|
29 |
|
|
395 |
|
|
14 |
|
|
|
(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. |
n/a = not applicable
The table below presents the December 31, 2012 and 2011 unpaid principal balance, carrying value, and average pre- and post-modification interest rates of home loans that were modified in TDRs during 2012 and 2011, and net charge-offs that were recorded during the period in which the modification occurred. The following Home Loans 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. These TDRs are managed by Legacy Assets & Servicing.
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Home Loans – TDRs Entered into During 2012 and 2011 (1)
|
|
|
|
December 31, 2012 |
|
2012 |
(Dollars in millions) |
Unpaid Principal Balance |
|
Carrying Value |
|
Pre-modification Interest Rate |
|
Post-modification Interest Rate |
|
Net Charge-offs |
Residential mortgage |
$ |
14,929 |
|
|
$ |
12,143 |
|
|
5.52 |
% |
|
4.70 |
% |
|
$ |
507 |
|
Home equity |
1,721 |
|
|
858 |
|
|
5.22 |
|
|
4.39 |
|
|
716 |
|
Discontinued real estate |
159 |
|
|
85 |
|
|
5.21 |
|
|
4.35 |
|
|
16 |
|
Total |
$ |
16,809 |
|
|
$ |
13,086 |
|
|
5.49 |
|
|
4.66 |
|
|
$ |
1,239 |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011 |
|
2011 |
Residential mortgage |
$ |
11,623 |
|
|
$ |
9,903 |
|
|
5.94 |
% |
|
5.16 |
% |
|
$ |
299 |
|
Home equity |
1,112 |
|
|
556 |
|
|
6.58 |
|
|
5.25 |
|
|
239 |
|
Discontinued real estate |
141 |
|
|
88 |
|
|
6.68 |
|
|
5.08 |
|
|
9 |
|
Total |
$ |
12,876 |
|
|
$ |
10,547 |
|
|
6.01 |
|
|
5.17 |
|
|
$ |
547 |
|
|
|
(1) |
TDRs entered into during 2012 include principal forgiveness as follows: residential mortgage modifications of $755 million, home equity modifications of $9 million and discontinued real estate modifications of $23 million. Prior to 2012, the principal forgiveness amount was not significant.
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The table below presents the December 31, 2012 and 2011 carrying value for home loans that were modified in TDRs during 2012 and 2011 by type of modification.
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Home Loans – Modification Programs |
|
|
|
TDRs Entered into During 2012 |
(Dollars in millions) |
Residential Mortgage |
|
Home Equity |
|
Discontinued Real Estate |
|
Total Carrying Value |
Modifications under government programs |
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| |