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

Quarterly report pursuant to Section 13 or 15(d)

Outstanding Loans and Leases

Outstanding Loans and Leases

6 Months Ended

Jun. 30, 2018

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 June 30, 2018 and December 31, 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)	June 30, 2018
Consumer real estate
Core portfolio
Residential mortgage	$	1,064		$	259		$	886		$	2,209		$	182,453								$	184,662
Home equity	205			102			457			764			40,761									41,525
Non-core portfolio
Residential mortgage ⁽⁵⁾	840			361			2,672			3,873			11,822			$	7,207					22,902
Home equity	186			96			488			770			8,914			2,378						12,062
Credit card and other consumer
U.S. credit card	501			329			865			1,695			93,095									94,790
Direct/Indirect consumer ⁽⁶⁾	282			77			37			396			92,225									92,621
Other consumer ⁽⁷⁾	—			—			—			—			167									167
Total consumer	3,078			1,224			5,405			9,707			429,437			9,585						448,729
Consumer loans accounted for under the fair value option ⁽⁸⁾																			$	848		848
Total consumer loans and leases	3,078			1,224			5,405			9,707			429,437			9,585			848			449,577
Commercial
U.S. commercial	441			213			685			1,339			288,402									289,741
Non-U.S. commercial	43			389			—			432			94,018									94,450
Commercial real estate ⁽⁹⁾	59			—			76			135			60,938									61,073
Commercial lease financing	46			59			30			135			21,264									21,399
U.S. small business commercial	61			40			84			185			14,020									14,205
Total commercial	650			701			875			2,226			478,642									480,868
Commercial loans accounted for under the fair value option ⁽⁸⁾																			5,379			5,379
Total commercial loans and leases	650			701			875			2,226			478,642						5,379			486,247
Total loans and leases ⁽¹⁰⁾	$	3,728		$	1,925		$	6,280		$	11,933		$	908,079		$	9,585		$	6,227		$	935,824
Percentage of outstandings	0.40		%	0.21		%	0.67		%	1.28		%	97.03		%	1.02		%	0.67		%	100.00		%


⁽¹⁾	Consumer real estate loans 30-59 days past due includes fully-insured loans of $665 million and nonperforming loans of $242 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $307 million and nonperforming loans of $195 million.


⁽²⁾	Consumer real estate includes fully-insured loans of $2.5 billion.


⁽³⁾	Consumer real estate includes $2.1 billion and direct/indirect consumer includes $44 million of nonperforming loans.


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


⁽⁵⁾	Total outstandings includes pay option loans of $1.2 billion. The Corporation no longer originates this product.


⁽⁶⁾	Total outstandings includes auto and specialty lending loans and leases of $50.2 billion, unsecured consumer lending loans of $410 million, U.S. securities-based lending loans of $38.4 billion, non-U.S. consumer loans of $2.8 billion and other consumer loans of $769 million.


⁽⁷⁾	Substantially all of other consumer is consumer overdrafts.


⁽⁸⁾	Consumer loans accounted for under the fair value option includes residential mortgage loans of $489 million and home equity loans of $359 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $3.5 billion and non-U.S. commercial loans of $1.9 billion. For more information, see Note 14 – Fair Value Measurements and Note 15 – Fair Value Option.


⁽⁹⁾	Total outstandings includes U.S. commercial real estate loans of $57.1 billion and non-U.S. commercial real estate loans of $4.0 billion.


⁽¹⁰⁾	Total outstandings Includes loans and leases pledged as collateral of $55.0 billion. The Corporation also pledged $150.1 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 ⁽⁵⁾	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 ⁽⁶⁾	330			104			44			478			95,864									96,342
Other consumer ⁽⁷⁾	—			—			—			—			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 ⁽⁸⁾																			$	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 ⁽⁹⁾	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 ⁽⁸⁾																			4,782			4,782
Total commercial loans and leases	852			368			571			1,791			474,900						4,782			481,473
Total loans and leases ⁽¹⁰⁾	$	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 pay option loans of $1.4 billion. The Corporation no longer originates this product.


⁽⁶⁾	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.


⁽⁷⁾	Substantially all of other consumer is consumer overdrafts.


⁽⁸⁾	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 more information, see Note 14 – Fair Value Measurements and Note 15 – Fair Value Option.


⁽⁹⁾	Total outstandings includes U.S. commercial real estate loans of $54.8 billion and non-U.S. commercial real estate loans of $3.5 billion.


⁽¹⁰⁾	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 run-off portfolios.

The Corporation has entered into long-term credit protection agreements with FNMA and FHLMC on loans totaling $6.0 billion and $6.3 billion at June 30, 2018 and December 31, 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.

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 June 30, 2018 and December 31, 2017, $266 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 troubled debt restructurings (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 June 30, 2018, nonperforming loans discharged in Chapter 7 bankruptcy with no change in repayment terms were $263 million of which $139 million were current on their contractual payments, while $102 million were 90 days or more past due. Of the contractually current nonperforming loans, 57 percent were discharged in Chapter 7 bankruptcy over 12 months ago, and 50 percent were discharged 24 months or more ago.

During the three and six months ended June 30, 2018, the Corporation sold nonperforming and other delinquent consumer real estate loans with a carrying value of $168 million and $546 million, including $51 million and $160 million of PCI loans, compared to $323 million and $465 million, including $204 million of PCI loans for both periods, for the same periods in 2017. The Corporation recorded net recoveries of $7 million and $27 million related to these sales for the three and six months ended June 30, 2018 compared to net recoveries of $3 million and $14 million for the same periods in 2017. Gains related to these sales of $10 million and $26 million were recorded in other income in the Consolidated Statement of Income for the three and six months ended June 30, 2018 compared to gains of $6 million and $12 million for the same periods in 2017. During the six months ended June 30, 2018 and 2017, the Corporation transferred consumer nonperforming loans with a net carrying value of $2 million and $198 million to held for sale.

The table below presents the Corporation’s nonperforming loans and leases including nonperforming TDRs, and loans accruing past due 90 days or more at June 30, 2018 and December 31, 2017. Nonperforming loans held-for-sale (LHFS) are excluded from nonperforming loans and leases as they are recorded at either fair value or the lower of cost or fair value. For more information on the criteria for classification as nonperforming, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2017 Annual Report on Form 10-K.




Credit Quality

	Nonperforming Loans and Leases				Accruing Past Due 90 Days or More
(Dollars in millions)	June 30 2018		December 31 2017		June 30 2018		December 31 2017
Consumer real estate
Core portfolio
Residential mortgage ⁽¹⁾	$	1,052	$	1,087	$	344	$	417
Home equity	1,077		1,079		—		—
Non-core portfolio
Residential mortgage⁽¹⁾	1,088		1,389		2,139		2,813
Home equity	1,375		1,565		—		—
Credit card and other consumer
U.S. credit card	n/a		n/a		865		900
Direct/Indirect consumer	47		46		35		40
Other consumer	—		—		—		—
Total consumer	4,639		5,166		3,383		4,170
Commercial
U.S. commercial	881		814		221		144
Non-U.S. commercial	170		299		—		3
Commercial real estate	117		112		—		4
Commercial lease financing	34		24		12		19
U.S. small business commercial	56		55		73		75
Total commercial	1,258		1,304		306		245
Total loans and leases	$	5,897	$	6,470	$	3,689	$	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 June 30, 2018 and December 31, 2017, residential mortgage includes $1.7 billion and $2.2 billion of loans on which interest has been curtailed by the Federal Housing Administration (FHA), and therefore are no longer accruing interest, although principal is still insured, and $742 million and $1.0 billion of loans on which interest is still accruing.

n/a = not applicable

Credit Quality Indicators

The Corporation monitors credit quality within its Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments based on primary credit quality indicators. For more information on the portfolio segments and their related credit quality indicators, see Significant Accounting Principles – Loans and Leases in Note 1 – Summary of Significant Accounting Principles and Credit Quality Indicators in Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements of the Corporation’s 2017 Annual Report on Form 10-K.

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 June 30, 2018 and December 31, 2017.




Consumer Real Estate – Credit Quality Indicators ⁽¹⁾

	Core Residential Mortgage ⁽²⁾		Non-core Residential Mortgage ⁽²⁾		Residential Mortgage PCI ⁽³⁾		Core Home Equity ⁽²⁾		Non-core Home Equity ⁽²⁾		Home Equity PCI
(Dollars in millions)	June 30, 2018
Refreshed LTV⁽⁴⁾
Less than or equal to 90 percent	$	163,729	$	9,975	$	6,289	$	40,505	$	7,395	$	1,618
Greater than 90 percent but less than or equal to 100 percent	2,676		664		452		476		880		338
Greater than 100 percent	992		777		466		544		1,409		422
Fully-insured loans ⁽⁵⁾	17,265		4,279		—		—		—		—
Total consumer real estate	$	184,662	$	15,695	$	7,207	$	41,525	$	9,684	$	2,378
Refreshed FICO score
Less than 620	$	2,128	$	1,890	$	1,673	$	1,112	$	1,858	$	393
Greater than or equal to 620 and less than 680	4,236		1,690		1,431		2,152		2,090		390
Greater than or equal to 680 and less than 740	22,803		2,759		2,129		7,318		2,484		666
Greater than or equal to 740	138,230		5,077		1,974		30,943		3,252		929
Fully-insured loans ⁽⁵⁾	17,265		4,279		—		—		—		—
Total consumer real estate	$	184,662	$	15,695	$	7,207	$	41,525	$	9,684	$	2,378


⁽¹⁾	Excludes $848 million of loans accounted for under the fair value option.


⁽²⁾	Excludes PCI loans.


⁽³⁾	Includes $1.1 billion of pay option loans. The Corporation no longer originates this product.


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


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




Credit Card and Other Consumer – Credit Quality Indicators

	U.S. Credit Card		Direct/Indirect Consumer		Other Consumer
(Dollars in millions)	June 30, 2018
Refreshed FICO score
Less than 620	$	4,504	$	1,588	$	—
Greater than or equal to 620 and less than 680	11,810		1,854		—
Greater than or equal to 680 and less than 740	34,852		11,193		—
Greater than or equal to 740	43,624		35,949		—
Other internal credit metrics ^{(1, 2)}	—		42,037		167
Total credit card and other consumer	$	94,790	$	92,621	$	167


⁽¹⁾	Other internal credit metrics may include delinquency status, geography or other factors.


⁽²⁾	Direct/indirect consumer includes $41.3 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)	June 30, 2018
Risk ratings
Pass rated	$	281,622	$	92,676	$	60,622	$	20,978	$	282
Reservable criticized	8,119		1,774		451		421		36
Refreshed FICO score ⁽³⁾
Less than 620									235
Greater than or equal to 620 and less than 680									639
Greater than or equal to 680 and less than 740									1,982
Greater than or equal to 740									4,134
Other internal credit metrics ^{(3, 4)}									6,897
Total commercial	$	289,741	$	94,450	$	61,073	$	21,399	$	14,205


⁽¹⁾	Excludes $5.4 billion of loans accounted for under the fair value option.


⁽²⁾	U.S. small business commercial includes $725 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 June 30, 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 ⁽³⁾		Core Home Equity ⁽²⁾		Non-core Home Equity ⁽²⁾		Home Equity PCI
(Dollars in millions)	December 31, 2017
Refreshed LTV ⁽⁴⁾
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 ⁽⁵⁾	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 ⁽⁵⁾	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⁾	Includes $1.2 billion of pay option loans. The Corporation no longer originates this product.


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


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




Credit Card and Other Consumer – Credit Quality Indicators

	U.S. Credit Card		Direct/Indirect Consumer		Other Consumer
(Dollars in millions)	December 31, 2017
Refreshed FICO score
Less than 620	$	4,730	$	1,680	$	—
Greater than or equal to 620 and less than 680	12,422		2,143		—
Greater than or equal to 680 and less than 740	35,656		12,304		—
Greater than or equal to 740	43,477		36,759		—
Other internal credit metrics ^{(1, 2)}	—		43,456		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 additional information on impaired loans, see Note 1 – Summary of Significant Accounting Principles and Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements of the Corporation’s 2017 Annual Report on Form 10-K.

Consumer Real Estate

Impaired consumer real estate loans within the Consumer Real Estate portfolio segment consist entirely of TDRs. Excluding PCI loans, most modifications of consumer real estate loans meet the definition of TDRs when a binding offer is extended to a borrower. For more information on impaired consumer real estate loans, see Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements of the Corporation’s 2017 Annual Report on Form 10-K.

Consumer real estate loans that have been discharged in Chapter 7 bankruptcy with no change in repayment terms and not reaffirmed by the borrower of $1.0 billion were included in TDRs at June 30, 2018, of which $263 million were classified as nonperforming and $382 million were loans fully-insured by the FHA. For more information on loans discharged in Chapter 7 bankruptcy, see Nonperforming Loans and Leases in this Note.

At June 30, 2018 and December 31, 2017, remaining commitments to lend additional funds to debtors whose terms have been modified in a consumer real estate TDR were immaterial. Consumer real estate foreclosed properties totaled $263 million and $236 million at June 30, 2018 and December 31, 2017. The carrying value of consumer real estate loans, including fully-insured and PCI loans, for which formal foreclosure proceedings were in process at June 30, 2018 was $3.0 billion. During the three and six months ended June 30, 2018, the Corporation reclassified $151 million and $319 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. This compared to reclassifications of $226 million and $426 million for the same periods in 2017. The reclassifications represent non-cash investing activities and, accordingly, are not reflected in the Consolidated Statement of Cash Flows.

The table below provides the unpaid principal balance, carrying value and related allowance at June 30, 2018 and December 31, 2017, and the average carrying value and interest income recognized for the three and six months ended June 30, 2018 and 2017 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)					June 30, 2018						December 31, 2017
With no recorded allowance
Residential mortgage					$	6,544	$	5,223	$	—	$	8,856	$	6,870	$	—
Home equity					3,545		1,932		—		3,622		1,956		—
With an allowance recorded
Residential mortgage					$	2,482	$	2,421	$	149	$	2,908	$	2,828	$	174
Home equity					962		894		178		972		900		174
Total
Residential mortgage⁽¹⁾					$	9,026	$	7,644	$	149	$	11,764	$	9,698	$	174
Home equity					4,507		2,826		178		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⁾		Average Carrying Value		Interest Income Recognized ⁽²⁾
	Three Months Ended June 30								Six Months Ended June 30
	2018				2017				2018				2017
With no recorded allowance
Residential mortgage	$	5,362	$	50	$	7,886	$	81	$	5,978	$	115	$	8,192	$	160
Home equity	1,944		25		1,999		28		1,953		52		2,000		55
With an allowance recorded
Residential mortgage	$	2,482	$	24	$	3,647	$	33	$	2,597	$	49	$	3,723	$	68
Home equity	891		6		868		7		889		12		842		12
Total
Residential mortgage⁽¹⁾	$	7,844	$	74	$	11,533	$	114	$	8,575	$	164	$	11,915	$	228
Home equity	2,835		31		2,867		35		2,842		64		2,842		67


⁽¹⁾	During the three months ended June 30, 2018, previously impaired residential mortgage loans with a carrying value of $1.2 billion were sold, resulting in a gain of $572 million recorded in other income.


⁽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 June 30, 2018 and 2017 unpaid principal balance, carrying value, and average pre- and post-modification interest rates on consumer real estate loans that were modified in TDRs during the three and six months ended June 30, 2018 and 2017. The following Consumer Real Estate portfolio segment tables include loans that were initially classified as TDRs during the period and also loans that had previously been classified as TDRs and were modified again during the period.




Consumer Real Estate – TDRs Entered into During the Three and Six Months Ended June 30, 2018 and 2017

	Unpaid Principal Balance		Carrying Value		Pre-Modification Interest Rate		Post-Modification Interest Rate ⁽¹⁾		Unpaid Principal Balance		Carrying Value		Pre-Modification Interest Rate		Post-Modification Interest Rate ⁽¹⁾
(Dollars in millions)	Three Months Ended June 30, 2018								Six Months Ended June 30, 2018
Residential mortgage	$	276	$	237	4.24	%	3.94	%	$	628	$	542	4.17	%	3.93	%
Home equity	194		152		4.43		4.42		392		297		4.38		4.06
Total ⁽²⁾	$	470	$	389	4.32		4.14		$	1,020	$	839	4.25		3.98

	Three Months Ended June 30, 2017								Six Months Ended June 30, 2017
Residential mortgage	$	346	$	313	4.50	%	4.37	%	$	646	$	581	4.51	%	4.34	%
Home equity	250		201		4.11		3.94		469		365		4.20		3.75
Total ⁽²⁾	$	596	$	514	4.33		4.19		$	1,115	$	946	4.38		4.09


⁽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.


⁽²⁾	Net charge-offs, which include amounts recorded on loans modified during the period that are no longer held by the Corporation at June 30, 2018 and 2017 due to sales and other dispositions, were $15 million and $24 million for the three and six months ended June 30, 2018 compared to $12 million and $20 million for the same periods in 2017.

The table below presents the June 30, 2018 and 2017 carrying value for consumer real estate loans that were modified in a TDR during the three and six months ended June 30, 2018 and 2017, by type of modification.




Consumer Real Estate – Modification Programs

	TDRs Entered into During the
	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2018		2017		2018		2017
Modifications under government programs
Contractual interest rate reduction	$	9	$	11	$	17	$	38
Principal and/or interest forbearance	—		1		—		3
Other modifications ⁽¹⁾	8		3		18		8
Total modifications under government programs	17		15		35		49
Modifications under proprietary programs
Contractual interest rate reduction	13		20		67		72
Capitalization of past due amounts	19		9		43		21
Principal and/or interest forbearance	5		3		16		9
Other modifications⁽¹⁾	55		16		205		44
Total modifications under proprietary programs	92		48		331		146
Trial modifications	242		387		379		622
Loans discharged in Chapter 7 bankruptcy ⁽²⁾	38		64		94		129
Total modifications	$	389	$	514	$	839	$	946


⁽¹⁾	Includes other modifications such as term or payment extensions and repayment plans. During the three and six months ended June 30, 2018, this included $38 million and $196 million of modifications related to the 2017 hurricanes that met the definition of a TDR. These modifications had been written down to their net realizable value less costs to sell or were fully insured as of June 30, 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 the three and six months ended June 30, 2018 and 2017 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

	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2018		2017		2018		2017
Modifications under government programs	$	11	$	20	$	24	$	46
Modifications under proprietary programs	56		33		87		67
Loans discharged in Chapter 7 bankruptcy ⁽¹⁾	16		15		39		77
Trial modifications ⁽²⁾	22		46		67		258
Total modifications	$	105	$	114	$	217	$	448


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


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

Credit Card and Other Consumer

Impaired loans within the Credit Card and Other Consumer portfolio segment consist entirely of loans that have been modified in TDRs. The Corporation seeks to assist customers that are experiencing financial difficulty by modifying loans while ensuring compliance with federal, local and international laws and guidelines. Credit card and other consumer loan modifications generally involve reducing the interest rate on the account, 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.




Impaired Loans – Credit Card and Other Consumer

					Unpaid Principal Balance		Carrying Value ⁽¹⁾		Related Allowance		Unpaid Principal Balance		Carrying Value ⁽¹⁾		Related Allowance
(Dollars in millions)					June 30, 2018						December 31, 2017
With no recorded allowance
Direct/Indirect consumer					$	63	$	30	$	—	$	58	$	28	$	—
With an allowance recorded
U.S. credit card					$	478	$	486	$	143	$	454	$	461	$	125
Direct/Indirect consumer					1		1		—		1		1		—
Total
U.S. credit card					$	478	$	486	$	143	$	454	$	461	$	125
Direct/Indirect consumer					64		31		—		59		29		—

	Average Carrying Value		Interest Income Recognized ⁽²⁾		Average Carrying Value		Interest Income Recognized ⁽²⁾		Average Carrying Value		Interest Income Recognized ⁽²⁾		Average Carrying Value		Interest Income Recognized ⁽²⁾
	Three Months Ended June 30								Six Months Ended June 30
	2018				2017				2018				2017
With no recorded allowance
Direct/Indirect consumer	$	29	$	1	$	18	$	—	$	29	$	1	$	18	$	—
With an allowance recorded
U.S. credit card	$	480	$	6	$	463	$	6	$	473	$	12	$	470	$	12
Non-U.S. credit card ⁽³⁾	—		—		78		—		—		—		88		1
Direct/Indirect consumer	1		—		2		—		1		—		3		—
Total
U.S. credit card	$	480	$	6	$	463	$	6	$	473	$	12	$	470	$	12
Non-U.S. credit card ⁽³⁾	—		—		78		—		—		—		88		1
Direct/Indirect consumer	30		1		20		—		30		1		21		—


⁽¹⁾	Includes accrued interest and fees.


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


⁽³⁾	In the second quarter of 2017, the Corporation sold its non-U.S. consumer credit card business.

The table below provides information on the Corporation’s primary modification programs for the Credit Card and Other Consumer TDR portfolio at June 30, 2018 and December 31, 2017.




Credit Card and Other Consumer – TDRs by Program Type

	U.S. Credit Card						Direct/Indirect Consumer						Total TDRs by Program Type
(Dollars in millions)	June 30 2018			December 31 2017			June 30 2018			December 31 2017			June 30 2018			December 31 2017
Internal programs	$	223		$	203		$	1		$	1		$	224		$	204
External programs	262			257			—			—			262			257
Other	1			1			30			28			31			29
Total	$	486		$	461		$	31		$	29		$	517		$	490
Percent of balances current or less than 30 days past due	86.42		%	86.92		%	89.63		%	88.16		%	86.60		%	87.00		%

The table below provides information on the Corporation’s Credit Card and Other Consumer TDR portfolio including the June 30, 2018 and 2017 unpaid principal balance, carrying value, and average pre- and post-modification interest rates of loans that were modified in TDRs during the three and six months ended June 30, 2018 and 2017.




Credit Card and Other Consumer – TDRs Entered into During the Three and Six Months Ended June 30, 2018 and 2017

	Unpaid Principal Balance		Carrying Value ⁽¹⁾		Pre-Modification Interest Rate		Post-Modification Interest Rate		Unpaid Principal Balance		Carrying Value ⁽¹⁾		Pre-Modification Interest Rate		Post-Modification Interest Rate
(Dollars in millions)	Three Months Ended June 30, 2018								Six Months Ended June 30, 2018
U.S. credit card	$	72	$	78	19.18	%	5.29	%	$	140	$	149	19.06	%	5.26	%
Direct/Indirect consumer	19		11		4.43		4.43		28		16		4.73		4.56
Total ⁽²⁾	$	91	$	89	17.29		5.18		$	168	$	165	17.63		5.19

	Three Months Ended June 30, 2017								Six Months Ended June 30, 2017
U.S. credit card	$	52	$	57	18.31	%	5.30	%	$	100	$	106	18.19	%	5.32	%
Direct/Indirect consumer	7		4		4.14		4.08		11		6		4.12		4.04
Total⁽²⁾	$	59	$	61	17.31		5.21		$	111	$	112	17.39		5.24


⁽¹⁾	Includes accrued interest and fees.


⁽²⁾	Net charge-offs were $14 million and $22 million for the three and six months ended June 30, 2018 compared to $13 million and $19 million for the same periods in 2017, including net charge-offs related to the non-U.S. credit card loan portfolio sold during the second quarter of 2017.

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 21 percent of new direct/indirect consumer TDRs may be in payment default within 12 months after modification. Loans that entered into payment default during the three and six months ended June 30, 2018 that had been modified in a TDR during the preceding 12 months were $8 million and $16 million for U.S. credit card and $2 million and $5 million for direct/indirect consumer. During the three and six months ended June 30, 2017, loans that entered into payment default that had been modified in a TDR during the preceding 12 months were $5 million

and $12 million for U.S. credit card and $1 million and $2 million for direct/indirect consumer.

Commercial Loans

Impaired commercial loans include nonperforming loans and TDRs (both performing and nonperforming). For more information on impaired commercial loans, see Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements of the Corporation’s 2017 Annual Report on Form 10-K.

At June 30, 2018 and December 31, 2017, remaining commitments to lend additional funds to debtors whose terms have been modified in a commercial loan TDR were $317 million and $205 million.

Commercial foreclosed properties totaled $21 million and $52 million at June 30, 2018 and December 31, 2017.

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 June 30, 2018 and December 31, 2017, and the average carrying value and interest income recognized for the three and six months ended June 30, 2018 and 2017. 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
(Dollars in millions)					June 30, 2018						December 31, 2017
With no recorded allowance
U.S. commercial					$	599	$	596	$	—	$	576	$	571	$	—
Non-U.S. commercial					8		8		—		14		11		—
Commercial real estate					112		104		—		83		80		—
Commercial lease financing					3		3		—		—		—		—
With an allowance recorded
U.S. commercial					$	1,529	$	1,246	$	140	$	1,393	$	1,109	$	98
Non-U.S. commercial					426		395		41		528		507		58
Commercial real estate					100		20		3		133		41		4
Commercial lease financing					45		44		—		20		18		3
U.S. small business commercial ⁽¹⁾					86		73		28		84		70		27
Total
U.S. commercial					$	2,128	$	1,842	$	140	$	1,969	$	1,680	$	98
Non-U.S. commercial					434		403		41		542		518		58
Commercial real estate					212		124		3		216		121		4
Commercial lease financing					48		47		—		20		18		3
U.S. small business commercial ⁽¹⁾					86		73		28		84		70		27

	Average Carrying Value		Interest Income Recognized ⁽²⁾		Average Carrying Value		Interest Income Recognized ⁽²⁾		Average Carrying Value		Interest Income Recognized ⁽²⁾		Average Carrying Value		Interest Income Recognized ⁽²⁾
	Three Months Ended June 30								Six Months Ended June 30
	2018				2017				2018				2017
With no recorded allowance
U.S. commercial	$	684	$	4	$	857	$	3	$	678	$	8	$	870	$	6
Non-U.S. commercial	61		—		43		—		61		2		75		—
Commercial real estate	81		1		48		—		75		1		54		—
Commercial lease financing	7		—		—		—		6		—		—		—
With an allowance recorded
U.S. commercial	$	1,221	$	10	$	1,264	$	7	$	1,163	$	21	$	1,376	$	16
Non-U.S. commercial	386		4		482		3		416		6		469		6
Commercial real estate	8		—		106		1		22		—		91		2
Commercial lease financing	25		—		4		—		18		—		4		—
U.S. small business commercial⁽¹⁾	73		—		77		—		74		—		75		—
Total
U.S. commercial	$	1,905	$	14	$	2,121	$	10	$	1,841	$	29	$	2,246	$	22
Non-U.S. commercial	447		4		525		3		477		8		544		6
Commercial real estate	89		1		154		1		97		1		145		2
Commercial lease financing	32		—		4		—		24		—		4		—
U.S. small business commercial⁽¹⁾	73		—		77		—		74		—		75		—


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


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

The table below presents the June 30, 2018 and 2017 unpaid principal balance and carrying value of commercial loans that were modified as TDRs during the three and six months ended June 30, 2018 and 2017. The table below includes loans that were initially classified as TDRs during the period and also loans that had previously been classified as TDRs and were modified again during the period.




Commercial – TDRs Entered into During the Three and Six Months Ended June 30, 2018 and 2017

	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
(Dollars in millions)	Three Months Ended June 30, 2018				Six Months Ended June 30, 2018
U.S. commercial	$	743	$	733	$	1,040	$	962
Non-U.S. commercial	8		8		257		247
Commercial real estate	5		5		5		5
Commercial lease financing	45		45		45		45
U.S. small business commercial ⁽¹⁾	3		3		5		5
Total ⁽²⁾	$	804	$	794	$	1,352	$	1,264

	Three Months Ended June 30, 2017				Six Months Ended June 30, 2017
U.S. commercial	$	405	$	393	$	687	$	648
Commercial real estate	44		37		59		46
U.S. small business commercial ⁽¹⁾	7		7		9		10
Total⁽²⁾	$	456	$	437	$	755	$	704


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


⁽²⁾	Net charge-offs were $9 million and $26 million for the three and six months ended June 30, 2018 compared to $21 million and $62 million for the same periods in 2017.

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 $178 million and $78 million for U.S. commercial, $17 million and $32 million for commercial real estate and $2 million and $0 for commercial lease financing at June 30, 2018 and 2017.

Purchased Credit-impaired Loans

The table below shows activity for the accretable yield on PCI loans. The reclassifications from nonaccretable difference during the three and six months ended June 30, 2018 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)	Three Months Ended June 30, 2018			Six Months Ended June 30, 2018
Accretable yield, beginning of period	$	2,730		$	2,789
Accretion	(124		)	(254		)
Disposals/transfers	(105		)	(212		)
Reclassifications from nonaccretable difference	57			235
Accretable yield, June 30, 2018	$	2,558		$	2,558

During the three and six months ended June 30, 2018, the Corporation sold PCI loans with a carrying value of $51 million and $160 million. During the three and six months ended June 30, 2017, the Corporation sold PCI loans with a carrying value of $204 million. For more information on PCI loans, see Note 1 – Summary of Significant Accounting Principles and Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements of the Corporation’s 2017 Annual Report on Form 10-K, and for the carrying value and valuation allowance for PCI loans, see Note 6 – Allowance for Credit Losses herein.

Loans Held-for-sale

The Corporation had LHFS of $6.5 billion and $11.4 billion at June 30, 2018 and December 31, 2017. Cash and non-cash proceeds from sales and paydowns of loans originally classified as LHFS were $17.3 billion and $21.1 billion for the six months ended June 30, 2018 and 2017. Cash used for originations and purchases of LHFS totaled $11.7 billion and $18.1 billion for the six months ended June 30, 2018 and 2017.