Loans and Allowance for Loan Losses

The following table provides the outstanding balances of loans at June 30, 2016 and December 31, 2015:



(Dollars in millions)	June 30, 2016			December 31, 2015
Loans held for investment:
Commercial and industrial	$	29,291		$	29,730
Commercial mortgage	15,144			13,904
Construction	2,255			2,297
Lease financing	723			737
Total commercial portfolio	47,413			46,668
Residential mortgage	28,244			27,344
Home equity and other consumer loans	3,459			3,251
Total consumer portfolio	31,703			30,595
Total loans held for investment, before purchased credit-impaired loans	79,116			77,263
Purchased credit-impaired loans⁽¹⁾	276			336
Total loans held for investment⁽²⁾	79,392			77,599
Allowance for loan losses	(747		)	(721		)
Loans held for investment, net	$	78,645		$	76,878


(1)	Includes $14 million and $19 million as of June 30, 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 $121 million and $100 million at June 30, 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 June 30, 2016
(Dollars in millions)	Commercial			Consumer			Purchased Credit- Impaired		Unallocated		Total
Allowance for loan losses, beginning of period	$	822		$	57		$	—	$	—	$	879
(Reversal of) provision for loan losses	(44		)	10			—		—		(34		)
Loans charged-off	(97		)	(2		)	—		—		(99		)
Recoveries of loans previously charged-off	1			—			—		—		1
Allowance for loan losses, end of period	$	682		$	65		$	—	$	—	$	747



	For the Three Months Ended June 30, 2015
(Dollars in millions)	Commercial			Consumer			Purchased Credit- Impaired			Unallocated		Total
Allowance for loan losses, beginning of period	$	459		$	48		$	3		$	20	$	530
(Reversal of) provision for loan losses	12			5			9			—		26
Loans charged-off	(13		)	(3		)	(8		)	—		(24		)
Recoveries of loans previously charged-off	3			1			—			—		4
Allowance for loan losses, end of period	$	461		$	51		$	4		$	20	$	536




	For the Six Months Ended June 30, 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	127			18			(1		)	(20		)	124
Other	4			—			—			—			4
Loans charged-off	(105		)	(3		)	—			—			(108		)
Recoveries of loans previously charged-off	5			1			—			—			6
Allowance for loan losses, end of period	$	682		$	65		$	—		$	—		$	747




	For the Six Months Ended June 30, 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	7			7			9			—		23
Other	(1		)	—			—			—		(1		)
Loans charged-off	(17		)	(6		)	(8		)	—		(31		)
Recoveries of loans previously charged-off	7			1			—			—		8
Allowance for loan losses, end of period	$	461		$	51		$	4		$	20	$	536

The following tables show the allowance for loan losses and related loan balances by portfolio segment as of June 30, 2016 and December 31, 2015:



	June 30, 2016
(Dollars in millions)	Commercial		Consumer		Purchased Credit- Impaired		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	186	$	18	$	—	$	—	$	204
Collectively evaluated for impairment	496		47		—		—		543
Total allowance for loan losses	$	682	$	65	$	—	$	—	$	747

Loans held for investment:
Individually evaluated for impairment	$	467	$	287	$	1	$	—	$	755
Collectively evaluated for impairment	46,946		31,416		—		—		78,362
Purchased credit-impaired loans	—		—		275		—		275
Total loans held for investment	$	47,413	$	31,703	$	276	$	—	$	79,392



	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 June 30, 2016 and December 31, 2015:



(Dollars in millions)	June 30, 2016		December 31, 2015
Commercial and industrial	$	396	$	284
Commercial mortgage	26		37
Total commercial portfolio	422		321
Residential mortgage	177		190
Home equity and other consumer loans	28		35
Total consumer portfolio	205		225
Total nonaccrual loans, before purchased credit-impaired loans	627		546
Purchased credit-impaired loans	5		6
Total nonaccrual loans	$	632	$	552
Troubled debt restructured loans that continue to accrue interest	$	245	$	413
Troubled debt restructured nonaccrual loans (included in total nonaccrual loans above)	$	390	$	409

The following tables show an aging of the balance of loans held for investment, excluding PCI loans, by class as of June 30, 2016 and December 31, 2015:



	June 30, 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	$	29,944	$	22	$	48	$	70	$	30,014
Commercial mortgage	15,125		12		7		19		15,144
Construction	2,250		5		—		5		2,255
Total commercial portfolio	47,319		39		55		94		47,413
Residential mortgage	28,104		94		46		140		28,244
Home equity and other consumer loans	3,433		15		11		26		3,459
Total consumer portfolio	31,537		109		57		166		31,703
Total loans held for investment, excluding purchased credit-impaired loans	$	78,856	$	148	$	112	$	260	$	79,116



	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 $2 million at June 30, 2016 and December 31, 2015. PCI loans that were 90 days or more past due and still accruing totaled $16 million at June 30, 2016 and December 31, 2015.

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 PCI loans segment monitored for credit quality based on internal ratings. The amounts presented reflect unpaid principal balances less charge-offs.



	June 30, 2016
			Criticized
(Dollars in millions)	Pass		Special Mention		Classified		Total
Commercial and industrial	$	27,378	$	783	$	1,725	$	29,886
Commercial mortgage	14,723		135		161		15,019
Construction	2,200		55		—		2,255
Total commercial portfolio	44,301		973		1,886		47,160
Purchased credit-impaired loans	31		6		50		87
Total	$	44,332	$	979	$	1,936	$	47,247



	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 June 30, 2016 and December 31, 2015, the commercial portfolio included $1.6 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 PCI loans segment based primarily on payment status. The following tables summarize the loans in the consumer portfolio segment and PCI loans segment, which excludes $13 million and $18 million of loans covered by FDIC loss share agreements, at June 30, 2016 and December 31, 2015, respectively:



	June 30, 2016
(Dollars in millions)	Accrual		Nonaccrual		Total
Residential mortgage	$	28,067	$	177	$	28,244
Home equity and other consumer loans	3,431		28		3,459
Total consumer portfolio	31,498		205		31,703
Purchased credit-impaired loans	126		—		126
Total	$	31,624	$	205	$	31,829



	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 PCI loans segment monitored for credit quality based on refreshed FICO scores and refreshed LTV ratios at June 30, 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.



	June 30, 2016
	FICO scores
(Dollars in millions)	720 and above			Below 720			No FICO Available⁽¹⁾			Total
Residential mortgage	$	22,078		$	5,409		$	513		$	28,000
Home equity and other consumer loans	2,443			878			80			3,401
Total consumer portfolio	24,521			6,287			593			31,401
Purchased credit-impaired loans	50			66			11			127
Total	$	24,571		$	6,353		$	604		$	31,528
Percentage of total	78		%	20		%	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).



	June 30, 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	$	27,171		$	706		$	40		$	83		$	28,000
Home equity loans	2,155			216			75			46			2,492
Total consumer portfolio	29,326			922			115			129			30,492
Purchased credit-impaired loans	94			24			6			1			125
Total	$	29,420		$	946		$	121		$	130		$	30,617
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 June 30, 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 $57 million and $98 million in commitments to lend additional funds to borrowers with loan modifications classified as TDRs as of June 30, 2016 and December 31, 2015, respectively.



(Dollars in millions)	June 30, 2016		December 31, 2015
Commercial and industrial	$	333	$	499
Commercial mortgage	15		16
Total commercial portfolio	348		515
Residential mortgage	256		276
Home equity and other consumer loans	31		31
Total consumer portfolio	287		307
Total restructured loans, excluding purchased credit-impaired loans	$	635	$	822

For the second 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 six months ended June 30, 2016 and June 30, 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 and six months ended June 30, 2016 and 2015:



	For the Three Months Ended June 30, 2016				For the Six Months Ended June 30, 2016
(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	$	126	$	125	$	176	$	175
Commercial mortgage	3		3		8		8
Total commercial portfolio	129		128		184		183
Residential mortgage	2		2		6		6
Home equity and other consumer loans	2		2		3		3
Total consumer portfolio	4		4		9		9
Total	$	133	$	132	$	193	$	192


(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.




	For the Three Months Ended June 30, 2015				For the Six Months Ended June 30, 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	$	34	$	34	$	106	$	106
Commercial mortgage	6		6		8		8
Total commercial portfolio	40		40		114		114
Residential mortgage	6		6		10		10
Home equity and other consumer loans	1		1		2		2
Total consumer portfolio	7		7		12		12
Total	$	47	$	47	$	126	$	126


(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 and six months ended June 30, 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 June 30, 2016		For the Six Months Ended June 30, 2016
Commercial and industrial	$	10	$	11
Total commercial portfolio	10		11
Residential mortgage	1		3
Home equity and other consumer loans	1		1
Total consumer portfolio	2		4
Total	$	12	$	15




(Dollars in millions)	For the Three Months Ended June 30, 2015		For the Six Months Ended June 30, 2015
Commercial and industrial	$	21	$	25
Commercial mortgage	2		3
Total commercial portfolio	23		28
Total	$	23	$	28

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 June 30, 2016 and December 31, 2015:



	June 30, 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	$	444	$	10	$	454	$	185	$	498	$	10
Commercial mortgage	13		—		13		1		14		—
Total commercial portfolio	457		10		467		186		512		10
Residential mortgage	172		84		256		18		187		99
Home equity and other consumer loans	10		21		31		—		11		32
Total consumer portfolio	182		105		287		18		198		131
Total, excluding purchased credit-impaired loans	639		115		754		204		710		141
Purchased credit-impaired loans	1		—		1		—		1		—
Total	$	640	$	115	$	755	$	204	$	711	$	141



	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 and six months ended June 30, 2016 and 2015 for the commercial, consumer and PCI loans portfolio segments.



	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2016				2015				2016				2015
(Dollars in millions)	Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
Commercial and industrial	$	138	$	—	$	183	$	1	$	73	$	2	$	164	$	3
Commercial mortgage	15		—		29		1		14		—		32		1
Total commercial portfolio	153		—		212		2		87		2		196		4
Residential mortgage	263		2		298		2		267		4		301		5
Home equity and other consumer loans	31		—		30		—		31		1		30		1
Total consumer portfolio	294		2		328		2		298		5		331		6
Total, excluding purchased credit-impaired loans	447		2		540		4		385		7		527		10
Purchased credit-impaired loans	1		—		2		—		1		—		2		—
Total	$	448	$	2	$	542	$	4	$	386	$	7	$	529	$	10

The Company transferred a net $179 million of commercial loans from held for investment to held for sale during the six months ended June 30, 2016 and a net $207 million of commercial loans from held for investment to held for sale during the six months ended June 30, 2015. Proceeds from the sale of commercial loans were $112 million and $198 million during the six months ended June 30, 2016 and June 30, 2015, respectively. No consumer loans were sold or transferred from held for investment to held for sale during the six months ended June 30, 2016 or June 30, 2015.