Outstanding Loans and Leases |
|
|
NOTE 5 – 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 March 31, 2013 and December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2013 |
(Dollars in millions) |
30-59 Days Past Due (1)
|
60-89 Days Past Due (1)
|
90 Days or More Past Due (2)
|
Total
Past Due
30 Days or More
|
Total Current or Less Than 30 Days Past Due (3)
|
Purchased Credit - impaired (4)
|
Loans Accounted for Under the Fair Value Option |
Total Outstandings |
Home loans |
|
|
|
|
|
|
|
|
Core portfolio |
|
|
|
|
|
|
|
|
Residential mortgage (5)
|
$ |
2,160 |
|
$ |
666 |
|
$ |
6,611 |
|
$ |
9,437 |
|
$ |
160,996 |
|
|
|
$ |
170,433 |
|
Home equity |
256 |
|
137 |
|
606 |
|
999 |
|
57,959 |
|
|
|
58,958 |
|
Legacy Assets & Servicing portfolio |
|
|
|
|
|
|
|
|
Residential mortgage (6)
|
2,827 |
|
1,410 |
|
24,912 |
|
29,149 |
|
35,338 |
|
$ |
22,004 |
|
|
86,491 |
|
Home equity |
538 |
|
295 |
|
1,351 |
|
2,184 |
|
34,416 |
|
7,660 |
|
|
44,260 |
|
Credit card and other consumer |
|
|
|
|
|
|
|
|
U.S. credit card |
663 |
|
487 |
|
1,360 |
|
2,510 |
|
87,537 |
|
|
|
90,047 |
|
Non-U.S. credit card |
89 |
|
67 |
|
181 |
|
337 |
|
10,283 |
|
|
|
10,620 |
|
Direct/Indirect consumer (7)
|
473 |
|
198 |
|
520 |
|
1,191 |
|
80,327 |
|
|
|
81,518 |
|
Other consumer (8)
|
42 |
|
16 |
|
2 |
|
60 |
|
1,636 |
|
|
|
1,696 |
|
Total consumer loans |
7,048 |
|
3,276 |
|
35,543 |
|
45,867 |
|
468,492 |
|
29,664 |
|
|
544,023 |
|
Consumer loans accounted for under the fair value option (9)
|
|
|
|
|
|
|
$ |
1,041 |
|
1,041 |
|
Total consumer |
7,048 |
|
3,276 |
|
35,543 |
|
45,867 |
|
468,492 |
|
29,664 |
|
1,041 |
|
545,064 |
|
Commercial |
|
|
|
|
|
|
|
|
U.S. commercial |
406 |
|
101 |
|
522 |
|
1,029 |
|
200,331 |
|
|
|
201,360 |
|
Commercial real estate (10)
|
154 |
|
74 |
|
768 |
|
996 |
|
38,064 |
|
|
|
39,060 |
|
Commercial lease financing |
182 |
|
9 |
|
16 |
|
207 |
|
23,260 |
|
|
|
23,467 |
|
Non-U.S. commercial |
14 |
|
1 |
|
— |
|
15 |
|
82,445 |
|
|
|
82,460 |
|
U.S. small business commercial |
94 |
|
69 |
|
166 |
|
329 |
|
12,073 |
|
|
|
12,402 |
|
Total commercial loans |
850 |
|
254 |
|
1,472 |
|
2,576 |
|
356,173 |
|
|
|
358,749 |
|
Commercial loans accounted for under the fair value option (9)
|
|
|
|
|
|
|
7,779 |
|
7,779 |
|
Total commercial |
850 |
|
254 |
|
1,472 |
|
2,576 |
|
356,173 |
|
|
7,779 |
|
366,528 |
|
Total loans and leases |
$ |
7,898 |
|
$ |
3,530 |
|
$ |
37,015 |
|
$ |
48,443 |
|
$ |
824,665 |
|
$ |
29,664 |
|
$ |
8,820 |
|
$ |
911,592 |
|
Percentage of outstandings |
0.87 |
% |
0.39 |
% |
4.06 |
% |
5.32 |
% |
90.46 |
% |
3.25 |
% |
0.97 |
% |
|
|
|
(1) |
Home loans 30-59 days past due includes fully-insured loans of $2.2 billion and nonperforming loans of $735 million. Home loans 60-89 days past due includes fully-insured loans of $961 million and nonperforming loans of $503 million.
|
|
|
(2) |
Home loans includes fully-insured loans of $21.6 billion.
|
|
|
(3) |
Home loans includes $6.4 billion and direct/indirect consumer includes $52 million of nonperforming loans.
|
|
|
(4) |
PCI loan amounts are shown gross of the valuation allowance. |
|
|
(5) |
Total outstandings includes non-U.S. residential mortgage loans of $86 million.
|
|
|
(6) |
Total outstandings includes pay option loans of $6.5 billion and subprime loans of $533 million. The Corporation no longer originates these products.
|
|
|
(7) |
Total outstandings includes dealer financial services loans of $36.1 billion, consumer lending loans of $4.1 billion, U.S. securities-based lending margin loans of $28.2 billion, student loans of $4.6 billion, non-U.S. consumer loans of $7.4 billion and other consumer loans of $1.1 billion.
|
|
|
(8) |
Total outstandings includes consumer finance loans of $1.4 billion, other non-U.S. consumer loans of $5 million and consumer overdrafts of $115 million.
|
|
|
(9) |
Consumer loans accounted for under the fair value option were residential mortgage loans of $1.0 billion. Commercial loans accounted for under the fair value option were U.S. commercial loans of $2.1 billion and non-U.S. commercial loans of $5.7 billion. For addition information, see Note 16 – Fair Value Measurements and Note 17 – Fair Value Option.
|
|
|
(10) |
Total outstandings includes U.S. commercial real estate loans of $37.6 billion and non-U.S. commercial real estate loans of $1.4 billion.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012 |
(Dollars in millions) |
30-59 Days Past Due (1)
|
60-89 Days Past Due (1)
|
90 Days or More Past Due (2)
|
Total
Past Due
30 Days or More
|
Total Current or Less Than 30 Days Past Due (3)
|
Purchased Credit - impaired (4)
|
Loans Accounted for Under the Fair Value Option |
Total Outstandings |
Home loans |
|
|
|
|
|
|
|
|
Core portfolio |
|
|
|
|
|
|
|
|
Residential mortgage (5)
|
$ |
2,274 |
|
$ |
806 |
|
$ |
6,227 |
|
$ |
9,307 |
|
$ |
160,809 |
|
|
|
$ |
170,116 |
|
Home equity |
273 |
|
146 |
|
591 |
|
1,010 |
|
59,841 |
|
|
|
60,851 |
|
Legacy Assets & Servicing portfolio |
|
|
|
|
|
|
|
|
Residential mortgage (6)
|
2,939 |
|
1,715 |
|
26,728 |
|
31,382 |
|
34,004 |
|
$ |
17,571 |
|
|
82,957 |
|
Home equity |
607 |
|
356 |
|
1,444 |
|
2,407 |
|
36,191 |
|
8,547 |
|
|
47,145 |
|
Credit card and other consumer |
|
|
|
|
|
|
|
|
U.S. credit card |
729 |
|
582 |
|
1,437 |
|
2,748 |
|
92,087 |
|
|
|
94,835 |
|
Non-U.S. credit card |
106 |
|
85 |
|
212 |
|
403 |
|
11,294 |
|
|
|
11,697 |
|
Direct/Indirect consumer (7)
|
569 |
|
239 |
|
573 |
|
1,381 |
|
81,824 |
|
|
|
83,205 |
|
Other consumer (8)
|
48 |
|
19 |
|
4 |
|
71 |
|
1,557 |
|
|
|
1,628 |
|
Total consumer loans |
7,545 |
|
3,948 |
|
37,216 |
|
48,709 |
|
477,607 |
|
26,118 |
|
|
552,434 |
|
Consumer loans accounted for under the fair value option (9)
|
|
|
|
|
|
|
$ |
1,005 |
|
1,005 |
|
Total consumer |
7,545 |
|
3,948 |
|
37,216 |
|
48,709 |
|
477,607 |
|
26,118 |
|
1,005 |
|
553,439 |
|
Commercial |
|
|
|
|
|
|
|
|
U.S. commercial |
323 |
|
133 |
|
639 |
|
1,095 |
|
196,031 |
|
|
|
197,126 |
|
Commercial real estate (10)
|
79 |
|
144 |
|
983 |
|
1,206 |
|
37,431 |
|
|
|
38,637 |
|
Commercial lease financing |
84 |
|
79 |
|
30 |
|
193 |
|
23,650 |
|
|
|
23,843 |
|
Non-U.S. commercial |
2 |
|
— |
|
— |
|
2 |
|
74,182 |
|
|
|
74,184 |
|
U.S. small business commercial |
101 |
|
75 |
|
168 |
|
344 |
|
12,249 |
|
|
|
12,593 |
|
Total commercial loans |
589 |
|
431 |
|
1,820 |
|
2,840 |
|
343,543 |
|
|
|
346,383 |
|
Commercial loans accounted for under the fair value option (9)
|
|
|
|
|
|
|
7,997 |
|
7,997 |
|
Total commercial |
589 |
|
431 |
|
1,820 |
|
2,840 |
|
343,543 |
|
|
7,997 |
|
354,380 |
|
Total loans and leases |
$ |
8,134 |
|
$ |
4,379 |
|
$ |
39,036 |
|
$ |
51,549 |
|
$ |
821,150 |
|
$ |
26,118 |
|
$ |
9,002 |
|
$ |
907,819 |
|
Percentage of outstandings |
0.90 |
% |
0.48 |
% |
4.30 |
% |
5.68 |
% |
90.45 |
% |
2.88 |
% |
0.99 |
% |
|
|
|
(1) |
Home loans 30-59 days past due includes fully-insured loans of $2.3 billion and nonperforming loans of $702 million. Home loans 60-89 days past due includes fully-insured loans of $1.3 billion and nonperforming loans of $558 million.
|
|
|
(2) |
Home loans includes fully-insured loans of $22.2 billion.
|
|
|
(3) |
Home loans includes $5.5 billion and direct/indirect consumer includes $63 million of nonperforming loans.
|
|
|
(4) |
PCI loan amounts are shown gross of the valuation allowance. |
|
|
(5) |
Total outstandings includes non-U.S. residential mortgage loans of $93 million.
|
|
|
(6) |
Total outstandings includes pay option loans of $6.7 billion and subprime loans of $509 million. The Corporation no longer originates these products.
|
|
|
(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.
|
|
|
(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.
|
|
|
(9) |
Consumer loans accounted for under the fair value option were residential mortgage loans of $1.0 billion. 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 16 – Fair Value Measurements and Note 17 – Fair Value Option.
|
|
|
(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.
|
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 $449 million and $500 million at March 31, 2013 and December 31, 2012. 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 loss in the Consolidated Statement of Income 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 March 31, 2013 and December 31, 2012, the Corporation had a receivable of $269 million and $305 million from these vehicles for reimbursement of losses, and principal of $16.3 billion and $17.6 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 $24.4 billion and $24.3 billion at March 31, 2013 and December 31, 2012, 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 accordance with bank 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. At March 31, 2013 and December 31, 2012, $1.4 billion and $1.5 billion of such loans were included in nonperforming loans.
In accordance with regulatory guidance, 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 March 31, 2013, nonperforming loans discharged in Chapter 7 bankruptcy with no change in repayment terms at the time of discharge were $2.0 billion of which $961 million were current on their contractual payments while $917 million were 90 days or more past due. Of the contractually current nonperforming loans, more than 70 percent were discharged in Chapter 7 bankruptcy more than 12 months ago, and nearly 45 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 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 March 31, 2013 and December 31, 2012. 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. See Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation's 2012 Annual Report on Form 10-K for further information on the criteria for classification as nonperforming.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality |
|
|
|
|
|
|
|
|
Nonperforming Loans and Leases (1)
|
|
Accruing Past Due 90 Days or More |
(Dollars in millions) |
March 31 2013 |
|
December 31 2012 |
|
March 31 2013 |
|
December 31 2012 |
Home loans |
|
|
|
|
|
|
|
Core portfolio |
|
|
|
|
|
|
|
Residential mortgage (2)
|
$ |
3,407 |
|
|
$ |
3,190 |
|
|
$ |
4,391 |
|
|
$ |
3,984 |
|
Home equity |
1,302 |
|
|
1,265 |
|
|
— |
|
|
— |
|
Legacy Assets & Servicing portfolio |
|
|
|
|
|
|
|
Residential mortgage (2)
|
11,595 |
|
|
11,866 |
|
|
17,226 |
|
|
18,173 |
|
Home equity |
2,893 |
|
|
3,016 |
|
|
— |
|
|
— |
|
Credit card and other consumer |
|
|
|
|
|
|
|
U.S. credit card |
n/a |
|
|
n/a |
|
|
1,360 |
|
|
1,437 |
|
Non-U.S. credit card |
n/a |
|
|
n/a |
|
|
181 |
|
|
212 |
|
Direct/Indirect consumer |
84 |
|
|
92 |
|
|
494 |
|
|
545 |
|
Other consumer |
1 |
|
|
2 |
|
|
1 |
|
|
2 |
|
Total consumer |
19,282 |
|
|
19,431 |
|
|
23,653 |
|
|
24,353 |
|
Commercial |
|
|
|
|
|
|
|
U.S. commercial |
1,354 |
|
|
1,484 |
|
|
23 |
|
|
65 |
|
Commercial real estate |
1,139 |
|
|
1,513 |
|
|
11 |
|
|
29 |
|
Commercial lease financing |
19 |
|
|
44 |
|
|
10 |
|
|
15 |
|
Non-U.S. commercial |
112 |
|
|
68 |
|
|
— |
|
|
— |
|
U.S. small business commercial |
110 |
|
|
115 |
|
|
116 |
|
|
120 |
|
Total commercial |
2,734 |
|
|
3,224 |
|
|
160 |
|
|
229 |
|
Total loans and leases |
$ |
22,016 |
|
|
$ |
22,655 |
|
|
$ |
23,813 |
|
|
$ |
24,582 |
|
|
|
(1) |
Nonperforming loan balances do not include nonaccruing TDRs removed from the PCI loan portfolio prior to January 1, 2010 of $512 million and $521 million at March 31, 2013 and December 31, 2012.
|
|
|
(2) |
Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At March 31, 2013 and December 31, 2012, residential mortgage includes $17.0 billion and $17.8 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 $4.6 billion and $4.4 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 to the Consolidated Financial Statements of the Corporation's 2012 Annual Report on Form 10-K. 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 combined loan-to-value (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 March 31, 2013 and December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Loans – Credit Quality Indicators (1)
|
|
|
|
|
|
|
|
March 31, 2013 |
(Dollars in millions) |
Core Portfolio Residential Mortgage (2)
|
Legacy Assets & Servicing Residential Mortgage (2)
|
Residential Mortgage PCI (3)
|
Core Portfolio Home Equity (2)
|
Legacy Assets & Servicing Home Equity (2)
|
Home
Equity PCI
|
Refreshed LTV (4)
|
|
|
|
|
|
|
Less than 90 percent |
$ |
84,300 |
|
$ |
22,125 |
|
$ |
11,877 |
|
$ |
44,202 |
|
$ |
15,541 |
|
$ |
1,980 |
|
Greater than 90 percent but less than 100 percent |
8,368 |
|
5,013 |
|
3,142 |
|
5,606 |
|
4,357 |
|
736 |
|
Greater than 100 percent |
10,182 |
|
13,979 |
|
6,985 |
|
9,150 |
|
16,702 |
|
4,944 |
|
Fully-insured loans (5)
|
67,583 |
|
23,370 |
|
— |
|
— |
|
— |
|
— |
|
Total home loans |
$ |
170,433 |
|
$ |
64,487 |
|
$ |
22,004 |
|
$ |
58,958 |
|
$ |
36,600 |
|
$ |
7,660 |
|
|
|
|
|
|
|
|
Refreshed FICO score |
|
|
|
|
|
|
Less than 620 |
$ |
6,350 |
|
$ |
13,567 |
|
$ |
12,421 |
|
$ |
2,555 |
|
$ |
5,035 |
|
$ |
1,388 |
|
Greater than or equal to 620 and less than 680 |
8,620 |
|
6,526 |
|
3,490 |
|
4,416 |
|
5,600 |
|
1,342 |
|
Greater than or equal to 680 and less than 740 |
24,639 |
|
8,587 |
|
3,192 |
|
12,360 |
|
9,978 |
|
2,181 |
|
Greater than or equal to 740 |
63,241 |
|
12,437 |
|
2,901 |
|
39,627 |
|
15,987 |
|
2,749 |
|
Fully-insured loans (5)
|
67,583 |
|
23,370 |
|
— |
|
— |
|
— |
|
— |
|
Total home loans |
$ |
170,433 |
|
$ |
64,487 |
|
$ |
22,004 |
|
$ |
58,958 |
|
$ |
36,600 |
|
$ |
7,660 |
|
|
|
(1) |
Excludes loans accounted for under the fair value option of $1.0 billion.
|
|
|
(3) |
Includes $5.9 billion of pay option loans and $340 million of subprime loans. The Corporation no longer originates these products.
|
|
|
(4) |
Refreshed LTV percentages for PCI loans are calculated using the carrying value net of the related valuation allowance. |
|
|
(5) |
Credit quality indicators are not reported for fully-insured loans as principal repayment is insured. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Card and Other Consumer – Credit Quality Indicators |
|
March 31, 2013 |
(Dollars in millions) |
U.S. Credit Card |
|
Non-U.S. Credit Card |
|
Direct/Indirect Consumer |
|
Other Consumer (1)
|
Refreshed FICO score |
|
|
|
|
|
|
|
Less than 620 |
$ |
5,788 |
|
|
$ |
— |
|
|
$ |
1,680 |
|
|
$ |
636 |
|
Greater than or equal to 620 and less than 680 |
13,467 |
|
|
— |
|
|
3,272 |
|
|
292 |
|
Greater than or equal to 680 and less than 740 |
35,881 |
|
|
— |
|
|
9,555 |
|
|
222 |
|
Greater than or equal to 740 |
34,911 |
|
|
— |
|
|
25,073 |
|
|
206 |
|
Other internal credit metrics (2, 3, 4)
|
— |
|
|
10,620 |
|
|
41,938 |
|
|
340 |
|
Total credit card and other consumer |
$ |
90,047 |
|
|
$ |
10,620 |
|
|
$ |
81,518 |
|
|
$ |
1,696 |
|
|
|
(1) |
80 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 $35.6 billion of securities-based lending which is overcollateralized and therefore has minimal credit risk and $4.6 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 March 31, 2013, 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)
|
|
March 31, 2013 |
(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 |
$ |
193,755 |
|
|
$ |
36,116 |
|
|
$ |
22,510 |
|
|
$ |
81,089 |
|
|
$ |
1,516 |
|
Reservable criticized |
7,605 |
|
|
2,944 |
|
|
957 |
|
|
1,371 |
|
|
542 |
|
Refreshed FICO score (3)
|
|
|
|
|
|
|
|
|
|
Less than 620 |
|
|
|
|
|
|
|
|
375 |
|
Greater than or equal to 620 and less than 680 |
|
|
|
|
|
|
|
|
569 |
|
Greater than or equal to 680 and less than 740 |
|
|
|
|
|
|
|
|
1,553 |
|
Greater than or equal to 740 |
|
|
|
|
|
|
|
|
2,504 |
|
Other internal credit metrics (3, 4)
|
|
|
|
|
|
|
|
|
5,343 |
|
Total commercial |
$ |
201,360 |
|
|
$ |
39,060 |
|
|
$ |
23,467 |
|
|
$ |
82,460 |
|
|
$ |
12,402 |
|
|
|
(1) |
Excludes loans accounted for under the fair value option of $7.8 billion.
|
|
|
(2) |
U.S. small business commercial includes $361 million of criticized business card and small business loans which are evaluated using refreshed FICO scores or internal credit metrics, including delinquency status, rather than risk ratings. At March 31, 2013, 99 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, 2012 |
(Dollars in millions) |
Core Portfolio Residential Mortgage (2)
|
Legacy Assets & Servicing Residential Mortgage (2)
|
Residential Mortgage PCI (3)
|
Core Portfolio Home Equity (2)
|
Legacy Assets & Servicing Home Equity (2)
|
Home
Equity PCI
|
Refreshed LTV (4)
|
|
|
|
|
|
|
Less than 90 percent |
$ |
80,585 |
|
$ |
20,622 |
|
$ |
8,604 |
|
$ |
44,971 |
|
$ |
15,907 |
|
$ |
2,050 |
|
Greater than 90 percent but less than 100 percent |
8,891 |
|
5,103 |
|
2,384 |
|
5,825 |
|
4,507 |
|
788 |
|
Greater than 100 percent |
12,984 |
|
16,463 |
|
6,583 |
|
10,055 |
|
18,184 |
|
5,709 |
|
Fully-insured loans (5)
|
67,656 |
|
23,198 |
|
— |
|
— |
|
— |
|
— |
|
Total home loans |
$ |
170,116 |
|
$ |
65,386 |
|
$ |
17,571 |
|
$ |
60,851 |
|
$ |
38,598 |
|
$ |
8,547 |
|
|
|
|
|
|
|
|
Refreshed FICO score |
|
|
|
|
|
|
Less than 620 |
$ |
6,366 |
|
$ |
14,325 |
|
$ |
8,711 |
|
$ |
2,586 |
|
$ |
5,408 |
|
$ |
1,930 |
|
Greater than or equal to 620 and less than 680 |
8,561 |
|
6,165 |
|
2,740 |
|
4,500 |
|
5,885 |
|
1,500 |
|
Greater than or equal to 680 and less than 740 |
25,141 |
|
8,618 |
|
2,995 |
|
12,625 |
|
10,387 |
|
2,278 |
|
Greater than or equal to 740 |
62,392 |
|
13,080 |
|
3,125 |
|
41,140 |
|
16,918 |
|
2,839 |
|
Fully-insured loans (5)
|
67,656 |
|
23,198 |
|
— |
|
— |
|
— |
|
— |
|
Total home loans |
$ |
170,116 |
|
$ |
65,386 |
|
$ |
17,571 |
|
$ |
60,851 |
|
$ |
38,598 |
|
$ |
8,547 |
|
|
|
(1) |
Excludes loans accounted for under the fair value option of $1.0 billion.
|
|
|
(3) |
Includes $6.1 billion of pay option loans and $348 million of subprime loans. The Corporation no longer originates these products.
|
|
|
(4) |
Refreshed LTV percentages for PCI loans are calculated using the carrying value net of the related valuation allowance. |
|
|
(5) |
Credit quality indicators are not reported for fully-insured loans as principal repayment is insured. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Card and Other Consumer – Credit Quality Indicators |
|
December 31, 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 loans accounted for under the fair value option of $8.0 billion.
|
|
|
(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. |
|
|
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. For more information, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation's 2012 Annual Report on Form 10-K. 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. Purchased credit-impaired (PCI) loans are excluded and reported separately on page 171.
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. During 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, 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). In addition, the Corporation also provides interest rate modifications to qualified borrowers pursuant to the National Mortgage Settlement and these interest rate modifications are not considered to be TDRs.
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 accordance with regulatory guidance addressing certain home loans that have been discharged in Chapter 7 bankruptcy, $4.1 billion of home loans that have been discharged in Chapter 7 bankruptcy with no change in repayment terms at the time of discharge were included in TDRs at March 31, 2013, of which $2.0 billion were classified as nonperforming and $2.1 billion were loans fully-insured by the Federal Housing Administration (FHA). Of the $4.1 billion of home loan TDRs, approximately six percent, 38 percent and 56 percent had been discharged in Chapter 7 bankruptcy in the first quarter of 2013, in the year ended December 31, 2012 and in years prior to 2012, respectively. For more information on the 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 or more days past due as TDRs do not have an impact on the allowance for loan and lease losses nor are additional charge-offs required at the time of modification. Subsequent declines in the fair value of the collateral after a loan has reached 180 days past due are recorded as charge-offs. Fully-insured loans are protected against principal loss, and therefore, the Corporation does not record an allowance for loan and lease losses on the outstanding principal balance, even after they have been modified in a TDR.
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 including redefaults subsequent to modification, a loan's default history prior to modification and the change in borrower payments post-modification.
At March 31, 2013 and December 31, 2012, 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 $620 million and $650 million at March 31, 2013 and December 31, 2012.
The table below presents impaired loans in the Corporation's Home Loans portfolio segment at March 31, 2013 and December 31, 2012, and for the three months ended March 31, 2013 and 2012 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Loans – Home Loans |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
March 31, 2013 |
|
2013 |
|
2012 |
(Dollars in millions) |
Unpaid Principal Balance |
|
Carrying Value |
|
Related Allowance |
|
Average Carrying Value |
|
Interest Income Recognized (1)
|
|
Average Carrying Value |
|
Interest Income Recognized (1)
|
With no recorded allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
22,130 |
|
|
$ |
16,821 |
|
|
n/a |
|
|
$ |
15,894 |
|
|
$ |
144 |
|
|
$ |
8,704 |
|
|
$ |
75 |
|
Home equity |
2,796 |
|
|
1,164 |
|
|
n/a |
|
|
1,134 |
|
|
17 |
|
|
506 |
|
|
9 |
|
With an allowance recorded |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
15,698 |
|
|
$ |
14,641 |
|
|
$ |
1,425 |
|
|
$ |
13,900 |
|
|
$ |
154 |
|
|
$ |
11,174 |
|
|
$ |
100 |
|
Home equity |
1,168 |
|
|
955 |
|
|
370 |
|
|
988 |
|
|
11 |
|
|
1,255 |
|
|
9 |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
37,828 |
|
|
$ |
31,462 |
|
|
$ |
1,425 |
|
|
$ |
29,794 |
|
|
$ |
298 |
|
|
$ |
19,878 |
|
|
$ |
175 |
|
Home equity |
3,964 |
|
|
2,119 |
|
|
370 |
|
|
2,122 |
|
|
28 |
|
|
1,761 |
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012 |
|
|
|
|
|
|
|
|
With no recorded allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
20,226 |
|
|
$ |
14,967 |
|
|
n/a |
|
|
|
|
|
|
|
|
|
Home equity |
2,624 |
|
|
1,103 |
|
|
n/a |
|
|
|
|
|
|
|
|
|
With an allowance recorded |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
14,223 |
|
|
$ |
13,158 |
|
|
$ |
1,252 |
|
|
|
|
|
|
|
|
|
Home equity |
1,256 |
|
|
1,022 |
|
|
448 |
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
34,449 |
|
|
$ |
28,125 |
|
|
$ |
1,252 |
|
|
|
|
|
|
|
|
|
Home equity |
3,880 |
|
|
2,125 |
|
|
448 |
|
|
|
|
|
|
|
|
|
|
|
(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 March 31, 2013 and 2012 unpaid principal balance, carrying value, and average pre- and post-modification interest rates of home loans that were modified in TDRs during the three months ended March 31, 2013 and 2012, 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Loans – TDRs Entered into During the Three Months Ended March 31, 2013 (1)
|
|
March 31, 2013 |
|
Three Months Ended March 31, 2013 |
(Dollars in millions) |
Unpaid Principal Balance |
|
Carrying Value |
|
Pre-Modification Interest Rate |
|
Post-Modification Interest Rate |
|
Net Charge-offs |
Residential mortgage |
$ |
5,439 |
|
|
$ |
4,843 |
|
|
5.45 |
% |
|
4.65 |
% |
|
$ |
39 |
|
Home equity |
265 |
|
|
154 |
|
|
5.90 |
|
|
4.58 |
|
|
64 |
|
Total |
$ |
5,704 |
|
|
$ |
4,997 |
|
|
5.47 |
|
|
4.65 |
|
|
$ |
103 |
|
|
|
|
|
|
|
|
|
|
|
Home Loans – TDRs Entered into During the Three Months Ended March 31, 2012 (1)
|
|
March 31, 2012 |
|
Three Months Ended March 31, 2012 |
Residential mortgage |
$ |
1,578 |
|
|
$ |
1,382 |
|
|
5.69 |
% |
|
4.73 |
% |
|
$ |
56 |
|
Home equity |
196 |
|
|
110 |
|
|
5.39 |
|
|
3.90 |
|
|
43 |
|
Total |
$ |
1,774 |
|
|
$ |
1,492 |
|
|
5.66 |
|
|
4.64 |
|
|
$ |
99 |
|
|
|
(1) |
TDRs entered into during the three months ended March 31, 2013 include residential mortgage modifications with principal forgiveness of $219 million. For the three months ended March 31, 2012, the principal forgiveness amount was not significant.
|
The table below presents the March 31, 2013 and 2012 carrying value for home loans that were modified in a TDR during the three months ended March 31, 2013 and 2012 by type of modification.
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Loans – Modification Programs |
|
TDRs Entered into During the
Three Months Ended March 31, 2013
|
(Dollars in millions) |
Residential Mortgage |
|
Home
Equity
|
|
Total Carrying Value |
Modifications under government programs |
|
|
|
|
|
Contractual interest rate reduction |
$ |
626 |
|
|
$ |
12 |
|
|
$ |
638 |
|
Principal and/or interest forbearance |
4 |
|
|
9 |
|
|
13 |
|
Other modifications (1)
|
46 |
|
|
— |
|
|
46 |
|
Total modifications under government programs |
676 |
|
|
21 |
|
|
697 |
|
|
|
|
|
|
|
Modifications under proprietary programs |
|
|
|
|
|
Contractual interest rate reduction |
1,326 |
|
|
24 |
|
|
1,350 |
|
Capitalization of past due amounts |
27 |
|
|
— |
|
|
27 |
|
Principal and/or interest forbearance |
81 |
|
|
3 |
|
|
84 |
|
Other modifications (1)
|
28 |
|
|
— |
|
|
28 |
|
Total modifications under proprietary programs |
1,462 |
|
|
27 |
|
|
1,489 |
|
Trial modifications |
2,103 |
|
|
31 |
|
|
2,134 |
|
Loans discharged in Chapter 7 bankruptcy (2)
|
602 |
|
|
75 |
|
|
677 |
|
Total modifications |
$ |
4,843 |
|
|
$ |
154 |
|
|
$ |
4,997 |
|
|
|
|
|
|
|
|
TDRs Entered into During the
Three Months Ended March 31, 2012
|
Modifications under government programs |
|
|
|
|
|
Contractual interest rate reduction |
$ |
39 |
|
|
$ |
31 |
|
|
$ |
70 |
|
Principal and/or interest forbearance |
1 |
|
|
10 |
|
|
11 |
|
Other modifications (1)
|
16 |
|
|
— |
|
|
16 |
|
Total modifications under government programs |
56 |
|
|
41 |
|
|
97 |
|
|
|
|
|
|
|
Modifications under proprietary programs |
|
|
|
|
|
Contractual interest rate reduction |
376 |
|
|
16 |
|
|
392 |
|
Capitalization of past due amounts |
12 |
|
|
— |
|
|
12 |
|
Principal and/or interest forbearance |
93 |
|
|
7 |
|
|
100 |
|
Other modifications (1)
|
53 |
|
|
2 |
|
|
55 |
|
Total modifications under proprietary programs |
534 |
|
|
25 |
|
|
559 |
|
Trial modifications |
792 |
|
|
44 |
|
|
836 |
|
Total modifications |
$ |
1,382 |
|
|
$ |
110 |
|
|
$ |
1,492 |
|
|
|
(1) |
Includes other modifications such as term or payment extensions and repayment plans. |
|
|
(2) |
Includes loans discharged in Chapter 7 bankruptcy with no change in repayment terms that are classified as TDRs in accordance with regulatory guidance issued in the third quarter of 2012. For the three months ended March 31, 2013, residential mortgage loans of $371 million, or 55 percent of loans discharged in Chapter 7 bankruptcy were current or less than 60 days past due.
|
The table below presents the carrying value of loans that entered into payment default during the three months ended March 31, 2013 and 2012 and that were modified in a TDR during the 12 months preceding payment default. A payment default for home loan TDRs is recognized when a borrower has missed three monthly payments (not necessarily consecutively) since modification. Payment default on trial modification where the borrower has not yet met the terms of the agreement are included in the table below if the borrower is 90 days or more past due three months after the offer to modify is made.
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Loans – TDRs Entering Payment Default That Were Modified During the Preceding 12 Months |
|
Three Months Ended March 31, 2013 |
(Dollars in millions) |
Residential Mortgage |
|
Home Equity |
|
Total Carrying Value |
Modifications under government programs |
$ |
91 |
|
|
$ |
2 |
|
|
$ |
93 |
|
Modifications under proprietary programs |
282 |
|
|
3 |
|
|
285 |
|
Loans discharged in Chapter 7 bankruptcy (1)
|
440 |
|
|
19 |
|
|
459 |
|
Trial modifications |
552 |
|
|
3 |
|
|
555 |
|
Total modifications |
$ |
1,365 |
|
|
$ |
27 |
|
|
$ |
1,392 |
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2012 |
Modifications under government programs |
$ |
75 |
|
|
$ |
2 |
|
|
$ |
77 |
|
Modifications under proprietary programs |
376 |
|
|
4 |
|
|
380 |
|
Trial modifications |
125 |
|
|
5 |
|
|
130 |
|
Total modifications |
$ |
576 |
|
|
$ |
11 |
|
|
$ |
587 |
|
|
|
(1) |
Includes loans discharged in Chapter 7 bankruptcy with no change in repayment terms that are classified as TDRs in accordance with regulatory guidance issued in the third quarter of 2012. |
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 renegotiated credit card and other consumer TDR portfolio collectively referred to as the renegotiated TDR portfolio). The Corporation seeks to assist customers that are experiencing financial difficulty by modifying loans while ensuring compliance with federal laws and guidelines. Credit card and other consumer loan modifications generally involve reducing the interest rate on the account and placing the customer on a fixed payment plan not exceeding 60 months, all of which are considered TDRs. In addition, non-U.S. credit card modifications may involve reducing the interest rate on the account without placing the customer on a fixed payment plan, and are also considered TDRs. In all cases, the customer's available line of credit is canceled. The Corporation makes loan modifications directly with borrowers for debt held only by the Corporation (internal programs). Additionally, the Corporation makes loan modifications for borrowers working with third-party renegotiation agencies that provide solutions to customers' entire unsecured debt structures (external programs).
In 2012, regulatory guidance was issued addressing certain consumer real estate loans that have been discharged in Chapter 7 bankruptcy. The Corporation applies this guidance to other secured consumer loans that have been discharged in Chapter 7 bankruptcy, and such loans are classified as TDRs, 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.
All credit card and substantially all other consumer loans that have been modified in TDRs remain on accrual status until the loan is either paid in full or charged off, which occurs no later than the end of the month in which the loan becomes 180 days past due or generally at 120 days past due for a loan that was placed on a fixed payment plan after July 1, 2012.
The allowance for impaired credit card and other consumer loans is based on the present value of projected cash flows, which incorporates the Corporation's historical payment default and loss experience on modified loans, discounted using the portfolio's average contractual interest rate, excluding promotionally priced loans, in effect prior to restructuring. Prior to modification, credit card and other consumer loans are included in homogeneous pools which are collectively evaluated for impairment. For these portfolios, loss forecast models are utilized that consider a variety of factors including, but not limited to, historical loss experience, delinquency status, economic trends and credit scores.
The table below provides information on the Corporation's renegotiated TDR portfolio in the Credit Card and Other Consumer portfolio segment at March 31, 2013 and December 31, 2012, and for the three months ended March 31, 2013 and 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Loans – Credit Card and Other Consumer – Renegotiated TDRs |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
March 31, 2013 |
|
2013 |
|
2012 |
(Dollars in millions) |
Unpaid Principal Balance |
|
Carrying Value (1)
|
|
Related Allowance |
|
Average Carrying Value |
|
Interest Income Recognized (2)
|
|
Average Carrying Value |
|
Interest Income Recognized (2)
|
With an allowance recorded |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. credit card |
$ |
2,403 |
|
|
$ |
2,416 |
|
|
$ |
558 |
|
|
$ |
2,725 |
|
|
$ |
42 |
|
|
$ |
5,019 |
|
|
$ |
77 |
|
Non-U.S. credit card |
276 |
|
|
281 |
|
|
177 |
|
|
295 |
|
|
2 |
|
|
572 |
|
|
2 |
|
Direct/Indirect consumer |
524 |
|
|
527 |
|
|
168 |
|
|
598 |
|
|
8 |
|
|
1,146 |
|
|
16 |
|
Without an allowance recorded |
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct/Indirect consumer |
95 |
|
|
48 |
|
|
— |
|
|
52 |
|
|
— |
|
|
— |
|
|
— |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. credit card |
$ |
2,403 |
|
|
$ |
2,416 |
|
|
$ |
558 |
|
|
$ |
2,725 |
|
|
$ |
42 |
|
|
$ |
5,019 |
|
|
$ |
77 |
|
Non-U.S. credit card |
276 |
|
|
281 |
|
|
177 |
|
|
295 |
|
|
2 |
|
|
572 |
|
|
2 |
|
Direct/Indirect consumer |
619 |
|
|
575 |
|
|
168 |
|
|
650 |
|
|
8 |
|
|
1,146 |
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012 |
|
|
|
|
|
|
|
|
With an allowance recorded |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. credit card |
$ |
2,856 |
|
|
$ |
2,871 |
|
|
$ |
719 |
|
|
|
|
|
|
|
|
|
Non-U.S. credit card |
311 |
|
|
316 |
|
|
198 |
|
|
|
|
|
|
|
|
|
Direct/Indirect consumer |
633 |
|
|
636 |
|
|
210 |
|
|
|
|
|
|
|
|
|
Without an allowance recorded |
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct/Indirect consumer |
105 |
|
|
58 |
|
|
— |
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. credit card |
$ |
2,856 |
|
|
$ |
2,871 |
|
|
$ |
719 |
|
|
|
|
|
|
|
|
|
Non-U.S. credit card |
311 |
|
|
316 |
|
|
198 |
|
|
|
|
|
|
|
|
|
Direct/Indirect consumer |
738 |
|
|
694 |
|
|
210 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes accrued interest and fees. |
|
|
(2) |
Interest income recognized includes interest accrued and collected on the outstanding balances of accruing impaired loans as well as interest cash collections on nonaccruing impaired loans for which the principal is considered collectible. |
The table below provides information on the Corporation's primary modification programs for the renegotiated TDR portfolio at March 31, 2013 and December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Card and Other Consumer – Renegotiated TDRs by Program Type |
|
Internal Programs |
|
External Programs |
|
Other |
|
Total |
|
Percent of Balances Current or Less Than 30 Days Past Due |
(Dollars in millions) |
March 31 2013 |
December 31 2012 |
|
March 31 2013 |
December 31 2012 |
|
March 31 2013 |
December 31 2012 |
|
March 31 2013 |
December 31 2012 |
|
March 31 2013 |
December 31 2012 |
U.S. credit card |
$ |
1,541 |
|
$ |
1,887 |
|
|
$ |
848 |
|
$ |
953 |
|
|
$ |
27 |
|
$ |
31 |
|
|
$ |
2,416 |
|
$ |
2,871 |
|
|
82.03 |
% |
81.48 |
% |
Non-U.S. credit card |
87 |
|
99 |
|
|
33 |
|
38 |
|
|
161 |
|
179 |
|
|
281 |
|
316 |
|
|
45.57 |
|
43.71 |
|
Direct/Indirect consumer |
332 |
|
405 |
|
|
190 |
|
225 |
|
|
53 |
|
64 |
|
|
575 |
|
694 |
|
|
84.07 |
|
83.11 |
|
Total renegotiated TDRs |
$ |
1,960 |
|
$ |
2,391 |
|
|
$ |
1,071 |
|
$ |
1,216 |
|
|
$ |
241 |
|
$ |
274 |
|
|
$ |
3,272 |
|
$ |
3,881 |
|
|
79.26 |
|
78.69 |
|
At March 31, 2013 and December 31, 2012, the Corporation had a renegotiated TDR portfolio of $3.3 billion and $3.9 billion of which $2.6 billion was current or less than 30 days past due under the modified terms at March 31, 2013.
The table below provides information on the Corporation's renegotiated TDR portfolio including the unpaid principal balance, carrying value and average pre- and post-modification interest rates of loans that were modified in TDRs during the three months ended March 31, 2013 and 2012, and net charge-offs that were recorded during the period in which the modification occurred.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Card and Other Consumer – Renegotiated TDRs Entered into During the Three Months March 31, 2013 |
|
March 31, 2013 |
|
Three Months Ended March 31, 2013 |
(Dollars in millions) |
Unpaid Principal Balance |
|
Carrying Value (1)
|
|
Pre-Modification Interest Rate |
|
Post-Modification Interest Rate |
|
Net Charge-offs |
U.S. credit card |
$ |
84 |
|
|
$ |
85 |
|
|
17.00 |
| |