Loans and Allowance for Loan Losses

The following table provides the outstanding balances of loans at March 31, 2016 and December 31, 2015:



(Dollars in millions)	March 31, 2016			December 31, 2015
Loans held for investment:
Commercial and industrial	$	30,212		$	29,730
Commercial mortgage	14,920			13,904
Construction	2,251			2,297
Lease financing	732			737
Total commercial portfolio	48,115			46,668
Residential mortgage	27,495			27,344
Home equity and other consumer loans	3,385			3,251
Total consumer portfolio	30,880			30,595
Total loans held for investment, before purchased credit-impaired loans	78,995			77,263
Purchased credit-impaired loans⁽¹⁾	304			336
Total loans held for investment⁽²⁾	79,299			77,599
Allowance for loan losses	(879		)	(721		)
Loans held for investment, net	$	78,420		$	76,878


(1)	Includes $16 million and $19 million as of March 31, 2016 and December 31, 2015, respectively, of loans for which the Company will be reimbursed a portion of any future losses under the terms of the FDIC loss share agreements.


(2)	Includes $109 million and $100 million at March 31, 2016 and December 31, 2015, respectively, for net unamortized (discounts) and premiums and deferred (fees) and costs.

Allowance for Loan Losses

The following tables provide a reconciliation of changes in the allowance for loan losses by portfolio segment:



	For the Three Months Ended March 31, 2016
(Dollars in millions)	Commercial			Consumer			Purchased Credit- Impaired			Unallocated			Total
Allowance for loan losses, beginning of period	$	651		$	49		$	1		$	20		$	721
(Reversal of) provision for loan losses	171			8			(1		)	(20		)	158
Other	4			—			—			—			4
Loans charged-off	(8		)	(1		)	—			—			(9		)
Recoveries of loans previously charged-off	4			1			—			—			5
Allowance for loan losses, end of period	$	822		$	57		$	—		$	—		$	879



	For the Three Months Ended March 31, 2015
(Dollars in millions)	Commercial			Consumer			Purchased Credit- Impaired		Unallocated		Total
Allowance for loan losses, beginning of period	$	465		$	49		$	3	$	20	$	537
(Reversal of) provision for loan losses	(5		)	2			—		—		(3		)
Other	(1		)	—			—		—		(1		)
Loans charged-off	(4		)	(3		)	—		—		(7		)
Recoveries of loans previously charged-off	4			—			—		—		4
Allowance for loan losses, end of period	$	459		$	48		$	3	$	20	$	530

The following tables show the allowance for loan losses and related loan balances by portfolio segment as of March 31, 2016 and December 31, 2015:



	March 31, 2016
(Dollars in millions)	Commercial		Consumer		Purchased Credit- Impaired		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	265	$	13	$	—	$	—	$	278
Collectively evaluated for impairment	557		44		—		—		601
Total allowance for loan losses	$	822	$	57	$	—	$	—	$	879

Loans held for investment:
Individually evaluated for impairment	$	752	$	301	$	1	$	—	$	1,054
Collectively evaluated for impairment	47,363		30,579		—		—		77,942
Purchased credit-impaired loans	—		—		303		—		303
Total loans held for investment	$	48,115	$	30,880	$	304	$	—	$	79,299



	December 31, 2015
(Dollars in millions)	Commercial		Consumer		Purchased Credit- Impaired		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	101	$	13	$	—	$	—	$	114
Collectively evaluated for impairment	550		36		—		20		606
Purchased credit-impaired loans	—		—		1		—		1
Total allowance for loan losses	$	651	$	49	$	1	$	20	$	721

Loans held for investment:
Individually evaluated for impairment	$	525	$	307	$	1	$	—	$	833
Collectively evaluated for impairment	46,143		30,288		—		—		76,431
Purchased credit-impaired loans	—		—		335		—		335
Total loans held for investment	$	46,668	$	30,595	$	336	$	—	$	77,599

Nonaccrual and Past Due Loans

The following table presents nonaccrual loans as of March 31, 2016 and December 31, 2015:



(Dollars in millions)	March 31, 2016		December 31, 2015
Commercial and industrial	$	702	$	284
Commercial mortgage	30		37
Total commercial portfolio	732		321
Residential mortgage	186		190
Home equity and other consumer loans	32		35
Total consumer portfolio	218		225
Total nonaccrual loans, before purchased credit-impaired loans	950		546
Purchased credit-impaired loans	6		6
Total nonaccrual loans	$	956	$	552
Troubled debt restructured loans that continue to accrue interest	$	229	$	413
Troubled debt restructured nonaccrual loans (included in the total nonaccrual loans above)	$	598	$	409

The following tables show an aging of the balance of loans held for investment, excluding purchased credit-impaired loans, by class as of March 31, 2016 and December 31, 2015:



	March 31, 2016
	Aging Analysis of Loans
(Dollars in millions)	Current		30 to 89 Days Past Due		90 Days or More Past Due		Total Past Due		Total
Commercial and industrial	$	30,869	$	64	$	11	$	75	$	30,944
Commercial mortgage	14,886		26		8		34		14,920
Construction	2,251		—		—		—		2,251
Total commercial portfolio	48,006		90		19		109		48,115
Residential mortgage	27,357		90		48		138		27,495
Home equity and other consumer loans	3,363		13		9		22		3,385
Total consumer portfolio	30,720		103		57		160		30,880
Total loans held for investment, excluding purchased credit-impaired loans	$	78,726	$	193	$	76	$	269	$	78,995



	December 31, 2015
	Aging Analysis of Loans
(Dollars in millions)	Current		30 to 89 Days Past Due		90 Days or More Past Due		Total Past Due		Total
Commercial and industrial	$	30,446	$	15	$	6	$	21	$	30,467
Commercial mortgage	13,880		17		7		24		13,904
Construction	2,292		5		—		5		2,297
Total commercial portfolio	46,618		37		13		50		46,668
Residential mortgage	27,206		92		46		138		27,344
Home equity and other consumer loans	3,225		14		12		26		3,251
Total consumer portfolio	30,431		106		58		164		30,595
Total loans held for investment, excluding purchased credit-impaired loans	$	77,049	$	143	$	71	$	214	$	77,263

Loans 90 days or more past due and still accruing totaled $6 million and $2 million at March 31, 2016 and December 31, 2015, respectively. Purchased credit-impaired loans that were 90 days or more past due and still accruing totaled $28 million and $16 million at March 31, 2016 and December 31, 2015, respectively.

Credit Quality Indicators

Management analyzes the Company’s loan portfolios by applying specific monitoring policies and procedures that vary according to the relative risk profile and other characteristics within the various loan portfolios. For further information related to the credit quality indicators the Company uses to monitor the portfolio, see Note 3 to the Consolidated Financial Statements in Part II, Item 8. “Financial Statements and Supplementary Data” in our 2015 Form 10-K.

The following tables summarize the loans in the commercial portfolio segment and commercial loans outstanding within the purchased credit-impaired loans segment monitored for credit quality based on internal ratings. The amounts presented reflect unpaid principal balances less charge-offs.



	March 31, 2016
			Criticized
(Dollars in millions)	Pass		Special Mention		Classified		Total
Commercial and industrial	$	28,143	$	852	$	1,843	$	30,838
Commercial mortgage	14,472		141		171		14,784
Construction	2,193		59		—		2,252
Total commercial portfolio	44,808		1,052		2,014		47,874
Purchased credit-impaired loans	33		8		57		98
Total	$	44,841	$	1,060	$	2,071	$	47,972



	December 31, 2015
			Criticized
(Dollars in millions)	Pass		Special Mention		Classified		Total
Commercial and industrial	$	28,228	$	844	$	1,265	$	30,337
Commercial mortgage	13,470		139		149		13,758
Construction	2,240		57		—		2,297
Total commercial portfolio	43,938		1,040		1,414		46,392
Purchased credit-impaired loans	40		12		61		113
Total	$	43,978	$	1,052	$	1,475	$	46,505

At March 31, 2016 and December 31, 2015, the commercial portfolio included $1.7 billion and $1.2 billion, respectively, in criticized loans within the oil and gas industry sector of the portfolio. Criticized loans include both special mention and classified loans.

The Company monitors the credit quality of its consumer portfolio segment and consumer loans within the purchased credit-impaired loans segment based primarily on payment status. The following tables summarize the loans in the consumer portfolio segment and purchased credit-impaired loans segment, which excludes $15 million and $18 million of loans covered by FDIC loss share agreements, at March 31, 2016 and December 31, 2015, respectively:



	March 31, 2016
(Dollars in millions)	Accrual		Nonaccrual		Total
Residential mortgage	$	27,309	$	186	$	27,495
Home equity and other consumer loans	3,353		32		3,385
Total consumer portfolio	30,662		218		30,880
Purchased credit-impaired loans	139		—		139
Total	$	30,801	$	218	$	31,019



	December 31, 2015
(Dollars in millions)	Accrual		Nonaccrual		Total
Residential mortgage	$	27,154	$	190	$	27,344
Home equity and other consumer loans	3,216		35		3,251
Total consumer portfolio	30,370		225		30,595
Purchased credit-impaired loans	148		—		148
Total	$	30,518	$	225	$	30,743

The Company also monitors the credit quality for substantially all of its consumer portfolio segment using credit scores provided by FICO and refreshed LTV ratios. FICO credit scores are refreshed at least quarterly to monitor the quality of the portfolio. Refreshed LTV measures the principal balance of the loan as a percentage of the estimated current value of the property securing the loan. Home equity loans are evaluated using combined LTV, which measures the principal balance of the combined loans that have liens against the property (including unused credit lines for home equity products) as a percentage of the estimated current value of the property securing the loans. The LTV ratios are refreshed on a quarterly basis, using the most recent home pricing index data available for the property location.

The following tables summarize the loans in the consumer portfolio segment and consumer loans within the purchased credit-impaired loans segment monitored for credit quality based on refreshed FICO scores and refreshed LTV ratios at March 31, 2016 and December 31, 2015. These tables exclude loans covered by FDIC loss share agreements, as discussed above. The amounts presented reflect unpaid principal balances less partial charge-offs.



	March 31, 2016
	FICO scores
(Dollars in millions)	720 and above			Below 720			No FICO Available⁽¹⁾			Total
Residential mortgage	$	21,311		$	5,482		$	467		$	27,260
Home equity and other consumer loans	2,345			896			83			3,324
Total consumer portfolio	23,656			6,378			550			30,584
Purchased credit-impaired loans	57			71			11			139
Total	$	23,713		$	6,449		$	561		$	30,723
Percentage of total	77		%	21		%	2		%	100		%


(1)	Represents loans for which management was not able to obtain an updated FICO score (e.g., due to recent profile changes).



	December 31, 2015
	FICO scores
(Dollars in millions)	720 and above			Below 720			No FICO Available⁽¹⁾			Total
Residential mortgage	$	21,209		$	5,412		$	488		$	27,109
Home equity and other consumer loans	2,276			818			85			3,179
Total consumer portfolio	23,485			6,230			573			30,288
Purchased credit-impaired loans	60			76			12			148
Total	$	23,545		$	6,306		$	585		$	30,436
Percentage of total	77		%	21		%	2		%	100		%


(1)	Represents loans for which management was not able to obtain an updated FICO score (e.g., due to recent profile changes).



	March 31, 2016
	LTV ratios
(Dollars in millions)	Less than or Equal to 80 Percent			Greater than 80 and Less than 100 Percent			Greater than or Equal to 100 Percent			No LTV Available⁽¹⁾			Total
Residential mortgage	$	26,396		$	764		$	48		$	52		$	27,260
Home equity loans	2,117			210			79			100			2,506
Total consumer portfolio	28,513			974			127			152			29,766
Purchased credit-impaired loans	101			27			9			1			138
Total	$	28,614		$	1,001		$	136		$	153		$	29,904
Percentage of total	96		%	3		%	—		%	1		%	100		%


(1)	Represents loans for which management was not able to obtain refreshed property values.



	December 31, 2015
	LTV ratios
(Dollars in millions)	Less than or Equal to 80 Percent			Greater than 80 and Less than 100 Percent			Greater than or Equal to 100 Percent			No LTV Available⁽¹⁾			Total
Residential mortgage	$	26,143		$	804		$	52		$	110		$	27,109
Home equity loans	2,190			217			83			55			2,545
Total consumer portfolio	28,333			1,021			135			165			29,654
Purchased credit-impaired loans	106			32			9			—			147
Total	$	28,439		$	1,053		$	144		$	165		$	29,801
Percentage of total	95		%	4		%	—		%	1		%	100		%


(1)	Represents loans for which management was not able to obtain refreshed property values.

Troubled Debt Restructurings

The following table provides a summary of the Company’s recorded investment in TDRs as of March 31, 2016 and December 31, 2015. The summary includes those TDRs that are on nonaccrual status and those that continue to accrue interest. The Company had $29 million and $98 million in commitments to lend additional funds to borrowers with loan modifications classified as TDRs as of March 31, 2016 and December 31, 2015, respectively.



(Dollars in millions)	March 31, 2016		December 31, 2015
Commercial and industrial	$	509	$	499
Commercial mortgage	17		16
Total commercial portfolio	526		515
Residential mortgage	270		276
Home equity and other consumer loans	31		31
Total consumer portfolio	301		307
Total restructured loans, excluding purchased credit-impaired loans	$	827	$	822

For the first quarter of 2016, TDR modifications in the commercial portfolio segment were primarily composed of interest rate changes, maturity extensions, covenant waivers, conversions from revolving lines of credit to term loans, or some combination thereof. In the consumer portfolio segment, primarily all of the modifications were composed of interest rate reductions and maturity extensions. Charge-offs related to TDR modifications for the three months ended March 31, 2016 and March 31, 2015 were de minimis. For the commercial and consumer portfolio segments, the allowance for loan losses for TDRs is measured on an individual loan basis or in pools with similar risk characteristics.

The following table provides the pre- and post-modification outstanding recorded investment amounts of TDRs as of the date of the restructuring that occurred during the three months ended March 31, 2016 and 2015:



	For the Three Months Ended March 31, 2016				For the Three Months Ended March 31, 2015
(Dollars in millions)	Pre-Modification Outstanding Recorded Investment⁽¹⁾		Post-Modification Outstanding Recorded Investment⁽²⁾		Pre-Modification Outstanding Recorded Investment⁽¹⁾		Post-Modification Outstanding Recorded Investment⁽²⁾
Commercial and industrial	$	50	$	50	$	72	$	72
Commercial mortgage	5		5		2		2
Total commercial portfolio	55		55		74		74
Residential mortgage	4		4		4		4
Home equity and other consumer loans	1		1		1		1
Total consumer portfolio	5		5		5		5
Total	$	60	$	60	$	79	$	79


(1)	Represents the recorded investment in the loan immediately prior to the restructuring event.


(2)	Represents the recorded investment in the loan immediately following the restructuring event. It includes the effect of paydowns that were required as part of the restructuring terms.

The following table provides the recorded investment amounts of TDRs at the date of default, for which there was a payment default during the three months ended March 31, 2016 and 2015, and where the default occurred within the first twelve months after modification into a TDR. A payment default is defined as the loan being 60 days or more past due.



(Dollars in millions)	For the Three Months Ended March 31, 2016		For the Three Months Ended March 31, 2015
Commercial and industrial	$	1	$	4
Commercial mortgage	—		1
Total commercial portfolio	1		5
Residential mortgage	2		—
Total consumer portfolio	2		—
Total	$	3	$	5

For loans in the consumer portfolio in which impairment is measured using the present value of expected future cash flows discounted at the loan’s effective interest rate, historical payment defaults and the propensity to redefault are some of the factors considered when determining the allowance for loan losses.

Loan Impairment

Loans that are individually evaluated for impairment include larger nonaccruing loans within the commercial and industrial, construction, and commercial mortgage loan portfolios and loans modified in a TDR. The Company records an impairment allowance when the value of an impaired loan is less than the recorded investment in the loan.

The following tables show information about impaired loans by class as of March 31, 2016 and December 31, 2015:



	March 31, 2016
	Recorded Investment								Unpaid Principal Balance
(Dollars in millions)	With an Allowance		Without an Allowance		Total		Allowance for Impaired Loans		With an Allowance		Without an Allowance
Commercial and industrial	$	704	$	32	$	736	$	264	$	732	$	34
Commercial mortgage	14		2		16		1		14		2
Total commercial portfolio	718		34		752		265		746		36
Residential mortgage	179		91		270		12		194		107
Home equity and other consumer loans	9		22		31		1		10		33
Total consumer portfolio	188		113		301		13		204		140
Total, excluding purchased credit-impaired loans	906		147		1,053		278		950		176
Purchased credit-impaired loans	1		—		1		—		1		—
Total	$	907	$	147	$	1,054	$	278	$	951	$	176



	December 31, 2015
	Recorded Investment								Unpaid Principal Balance
(Dollars in millions)	With an Allowance		Without an Allowance		Total		Allowance for Impaired Loans		With an Allowance		Without an Allowance
Commercial and industrial	$	363	$	142	$	505	$	100	$	377	$	144
Commercial mortgage	14		6		20		1		15		9
Total commercial portfolio	377		148		525		101		392		153
Residential mortgage	183		93		276		13		199		109
Home equity and other consumer loans	9		22		31		—		10		35
Total consumer portfolio	192		115		307		13		209		144
Total, excluding purchased credit-impaired loans	569		263		832		114		601		297
Purchased credit-impaired loans	1		—		1		—		1		—
Total	$	570	$	263	$	833	$	114	$	602	$	297

The following table presents the average recorded investment in impaired loans and the amount of interest income recognized for impaired loans during the three months ended March 31, 2016 and 2015 for the commercial, consumer and purchased credit-impaired loans portfolio segments.



	For the Three Months Ended March 31,
	2016				2015
(Dollars in millions)	Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
Commercial and industrial	$	623	$	2	$	149	$	2
Commercial mortgage	18		—		35		—
Construction	—		—		—		—
Total commercial portfolio	641		2		184		2
Residential mortgage	273		2		306		3
Home equity and other consumer loans	31		1		30		1
Total consumer portfolio	304		3		336		4
Total, excluding purchased credit-impaired loans	945		5		520		6
Purchased credit-impaired loans	1		—		1		—
Total	$	946	$	5	$	521	$	6

The Company transferred a net $81 million of commercial loans from loans held for sale to held for investment during the three months ended March 31, 2016 and a net $80 million of commercial loans from held for investment to held for sale during the three months ended March 31, 2015. Proceeds from the sale of commercial loans were $34 million and $36 million during the three months ended March 31, 2016 and March 31, 2015, respectively. No consumer loans were sold or transferred from held for investment to held for sale during the three months ended March 31, 2016 or March 31, 2015.