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Credit Quality And Allowance For Credit Losses
 12 Months Ended
Dec. 31, 2019
Credit Quality And Allowance For Credit Losses [Abstract]  
Credit Quality And Allowance For Credit Losses CREDIT QUALITY AND ALLOWANCE FOR CREDIT LOSSES
The following table presents an aging analysis of the recorded balance of loans.
 
Loans Past Due and Still Accruing
 
 
 
 
 
 
(in millions)
30-59
Days
 
60-89 
Days
 
90 Days
or More
 
Total
 
Nonaccrual
Loans
 
Current
Loans
 
Total 
Loans
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
Business loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
27

 
$
7

 
$
17

 
$
51

 
$
148

 
$
31,274

 
$
31,473

Real estate construction:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Real Estate business line (a)
6

 
—

 
—

 
6

 
—

 
3,038

 
3,044

Other business lines (b)
—

 
7

 
—

 
7

 
—

 
404

 
411

Total real estate construction
6

 
7

 
—

 
13

 
—

 
3,442

 
3,455

Commercial mortgage:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Real Estate business line (a)
9

 
—

 
—

 
9

 
2

 
2,165

 
2,176

Other business lines (b)
16

 
18

 
9

 
43

 
12

 
7,328

 
7,383

Total commercial mortgage
25

 
18

 
9

 
52

 
14

 
9,493

 
9,559

Lease financing
1

 
—

 
—

 
1

 
—

 
587

 
588

International
—

 
5

 
—

 
5

 
—

 
1,004

 
1,009

Total business loans
59

 
37

 
26

 
122

 
162

 
45,800

 
46,084

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
15

 
2

 
—

 
17

 
20

 
1,808

 
1,845

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity
4

 
5

 
—

 
9

 
17

 
1,685

 
1,711

Other consumer
2

 
3

 
—

 
5

 
—

 
724

 
729

Total consumer
6

 
8

 
—

 
14

 
17

 
2,409

 
2,440

Total retail loans
21

 
10

 
—

 
31

 
37

 
4,217

 
4,285

Total loans
$
80

 
$
47

 
$
26

 
$
153

 
$
199

 
$
50,017

 
$
50,369

December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Business loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
34

 
$
26

 
$
8

 
$
68

 
$
141

 
$
31,767

 
$
31,976

Real estate construction:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Real Estate business line (a)
6

 
—

 
—

 
6

 
—

 
2,681

 
2,687

Other business lines (b)
6

 
—

 
—

 
6

 
—

 
384

 
390

Total real estate construction
12

 
—

 
—

 
12

 
—

 
3,065

 
3,077

Commercial mortgage:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Real Estate business line (a)
4

 
—

 
—

 
4

 
2

 
1,737

 
1,743

Other business lines (b)
32

 
5

 
8

 
45

 
18

 
7,300

 
7,363

Total commercial mortgage
36

 
5

 
8

 
49

 
20

 
9,037

 
9,106

Lease financing
—

 
—

 
—

 
—

 
2

 
505

 
507

International
—

 
—

 
—

 
—

 
3

 
1,010

 
1,013

Total business loans
82

 
31

 
16

 
129

 
166

 
45,384

 
45,679

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
11

 
3

 
—

 
14

 
36

 
1,920

 
1,970

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity
4

 
1

 
—

 
5

 
19

 
1,741

 
1,765

Other consumer
1

 
—

 
—

 
1

 
—

 
748

 
749

Total consumer
5

 
1

 
—

 
6

 
19

 
2,489

 
2,514

Total retail loans
16

 
4

 
—

 
20

 
55

 
4,409

 
4,484

Total loans
$
98

 
$
35

 
$
16

 
$
149

 
$
221

 
$
49,793

 
$
50,163

(a)
Primarily loans to real estate developers.
(b)
Primarily loans secured by owner-occupied real estate.
The following table presents loans by credit quality indicator, based on internal risk ratings assigned to each business loan at the time of approval and subjected to subsequent reviews, generally at least annually, and to pools of retail loans with similar risk characteristics.
 
Internally Assigned Rating
 
 
(in millions)
Pass (a)
 
Special
Mention (b)
 
Substandard (c)
 
Nonaccrual (d)
 
Total
December 31, 2019
 
 
 
 
 
 
 
 
 
Business loans:
 
 
 
 
 
 
 
 
 
Commercial
$
29,785

 
$
841

 
$
699

 
$
148

 
$
31,473

Real estate construction:
 
 
 
 
 
 
 
 
 
Commercial Real Estate business line (e)
3,013

 
19

 
12

 
—

 
3,044

Other business lines (f)
411

 
—

 
—

 
—

 
411

Total real estate construction
3,424

 
19

 
12

 
—

 
3,455

Commercial mortgage:
 
 
 
 
 
 
 
 
 
Commercial Real Estate business line (e)
2,121

 
12

 
41

 
2

 
2,176

Other business lines (f)
7,141

 
147

 
83

 
12

 
7,383

Total commercial mortgage
9,262

 
159

 
124

 
14

 
9,559

Lease financing
579

 
7

 
2

 
—

 
588

International
972

 
29

 
8

 
—

 
1,009

Total business loans
44,022

 
1,055

 
845

 
162

 
46,084

 
 
 
 
 
 
 
 
 
 
Retail loans:
 
 
 
 
 
 
 
 
 
Residential mortgage
1,823

 
2

 
—

 
20

 
1,845

Consumer:
 
 
 
 
 
 
 
 
 
Home equity
1,682

 
1

 
11

 
17

 
1,711

Other consumer
722

 
6

 
1

 
—

 
729

Total consumer
2,404

 
7

 
12

 
17

 
2,440

Total retail loans
4,227

 
9

 
12

 
37

 
4,285

Total loans
$
48,249

 
$
1,064

 
$
857

 
$
199

 
$
50,369

December 31, 2018
 
 
 
 
 
 
 
 
 
Business loans:
 
 
 
 
 
 
 
 
 
Commercial
$
30,817

 
$
464

 
$
554

 
$
141

 
$
31,976

Real estate construction:
 
 
 
 
 
 
 
 
 
Commercial Real Estate business line (e)
2,664

 
23

 
—

 
—

 
2,687

Other business lines (f)
382

 
8

 
—

 
—

 
390

Total real estate construction
3,046

 
31

 
—

 
—

 
3,077

Commercial mortgage:
 
 
 
 
 
 
 
 
 
Commercial Real Estate business line (e)
1,682

 
14

 
45

 
2

 
1,743

Other business lines (f)
7,157

 
118

 
70

 
18

 
7,363

Total commercial mortgage
8,839

 
132

 
115

 
20

 
9,106

Lease financing
500

 
3

 
2

 
2

 
507

International
996

 
4

 
10

 
3

 
1,013

Total business loans
44,198

 
634

 
681

 
166

 
45,679

 
 
 
 
 
 
 
 
 
 
Retail loans:
 
 
 
 
 
 
 
 
 
Residential mortgage
1,931

 
3

 
—

 
36

 
1,970

Consumer:
 
 
 
 
 
 
 
 
 
Home equity
1,738

 
—

 
8

 
19

 
1,765

Other consumer
748

 
1

 
—

 
—

 
749

Total consumer
2,486

 
1

 
8

 
19

 
2,514

Total retail loans
4,417

 
4

 
8

 
55

 
4,484

Total loans
$
48,615

 
$
638

 
$
689

 
$
221

 
$
50,163

(a)
Includes all loans not included in the categories of special mention, substandard or nonaccrual.
(b)
Special mention loans are accruing loans that have potential credit weaknesses that deserve management’s close attention, such as loans to borrowers who may be experiencing financial difficulties that may result in deterioration of repayment prospects from the borrower at some future date. This category is generally consistent with the "special mention" category as defined by regulatory authorities.
(c)
Substandard loans are accruing loans that have a well-defined weakness, or weaknesses, such as loans to borrowers who may be experiencing losses from operations or inadequate liquidity of a degree and duration that jeopardizes the orderly repayment of the loan. Substandard loans also are distinguished by the distinct possibility of loss in the future if these weaknesses are not corrected. This category is generally consistent with the "substandard" category as defined by regulatory authorities.
(d)
Nonaccrual loans are loans for which the accrual of interest has been discontinued. For further information regarding nonaccrual loans, refer to the Nonperforming Assets subheading in Note 1 - Basis of Presentation and Accounting Policies. A significant majority of nonaccrual loans are generally consistent with the "substandard" category and the remainder are generally consistent with the "doubtful" category as defined by regulatory authorities.
(e)
Primarily loans to real estate developers.
(f)
Primarily loans secured by owner-occupied real estate.
The following table summarizes nonperforming assets.
(in millions)
December 31, 2019
 
December 31, 2018
Nonaccrual loans
$
199

 
$
221

Reduced-rate loans (a)
5

 
8

Total nonperforming loans
204

 
229

Foreclosed property
11

 
1

Total nonperforming assets
$
215

 
$
230

(a)
Comprised of reduced-rate retail loans.
There were no retail loans secured by residential real estate properties in process of foreclosure included in nonaccrual loans at December 31, 2019, compared to $1 million at December 31, 2018.
Allowance for Credit Losses
The following table details the changes in the allowance for loan losses and related loan amounts.
 
2019
 
2018
 
2017
(dollar amounts in millions)
Business Loans
Retail Loans
 
Total
 
Business Loans
Retail Loans
 
Total
 
Business Loans
Retail Loans
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Years Ended December 31
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$
627

$
44

 
$
671

 
$
661

$
51

 
$
712

 
$
682

$
48

 
$
730

Loan charge-offs
(147
)
(5
)
 
(152
)
 
(99
)
(4
)
 
(103
)
 
(143
)
(6
)
 
(149
)
Recoveries on loans previously charged-off
40

5

 
45

 
47

5

 
52

 
50

7

 
57

Net loan (charge-offs) recoveries
(107
)
—

 
(107
)
 
(52
)
1

 
(51
)
 
(93
)
1

 
(92
)
Provision for loan losses
81

(8
)
 
73

 
19

(8
)
 
11

 
71

2

 
73

Foreign currency translation adjustment
—

—

 
—

 
(1
)
—

 
(1
)
 
1

—

 
1

Balance at end of period
$
601

$
36

 
$
637

 
$
627

$
44

 
$
671

 
$
661

$
51

 
$
712

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As a percentage of total loans
1.30
%
0.84
%
 
1.27
%
 
1.37
%
0.97
%
 
1.34
%
 
1.48
%
1.12
%
 
1.45
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
31

$
—

 
$
31

 
$
27

$
—

 
$
27

 
$
67

$
—

 
$
67

Collectively evaluated for impairment
570

36

 
606

 
600

44

 
644

 
594

51

 
645

Total allowance for loan losses
$
601

$
36

 
$
637

 
$
627

$
44

 
$
671

 
$
661

$
51

 
$
712

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
199

$
16

 
$
215

 
$
240

$
36

 
$
276

 
$
443

$
34

 
$
477

Collectively evaluated for impairment
45,885

4,269

 
50,154

 
45,439

4,448

 
49,887

 
44,188

4,508

 
48,696

Total loans evaluated for impairment
$
46,084

$
4,285

 
$
50,369

 
$
45,679

$
4,484

 
$
50,163

 
$
44,631

$
4,542

 
$
49,173



Changes in the allowance for credit losses on lending-related commitments, included in accrued expenses and other liabilities on the Consolidated Balance Sheets, are summarized in the following table.
(in millions)
 
 
 
 
 
Years Ended December 31
2019
 
2018
 
2017
Balance at beginning of period
$
30

 
$
42

 
$
41

Provision for credit losses on lending-related commitments
1

 
(12
)
 
1

Balance at end of period
$
31

 
$
30

 
$
42



Individually Evaluated Impaired Loans
The following table presents additional information regarding individually evaluated impaired loans.
 
Recorded Investment In:
 
 
 
 
(in millions)
Impaired
Loans with
No Related
Allowance
 
Impaired
Loans with
Related
Allowance
 
Total
Impaired
Loans
 
Unpaid
Principal
Balance
 
Related
Allowance
for Loan
Losses
December 31, 2019
 
 
 
 
 
 
 
 
 
Business loans:
 
 
 
 
 
 
 
 
 
Commercial
$
30

 
$
120

 
$
150

 
$
251

 
$
30

Commercial mortgage:
 
 
 
 
 
 
 
 
 
Commercial Real Estate business line (a)
39

 
—

 
39

 
49

 
—

Other business lines (b)
1

 
9

 
10

 
15

 
1

Total commercial mortgage
40

 
9

 
49

 
64

 
1

Total business loans
70

 
129

 
199

 
315

 
31

 
 
 
 
 
 
 
 
 
 
Retail loans:
 
 
 
 
 
 
 
 
 
Residential mortgage
8

 
—

 
8

 
8

 
—

Consumer:
 
 
 
 
 
 
 
 
 
Home equity
8

 
—

 
8

 
10

 
—

Total retail loans (c)
16

 
—

 
16

 
18

 
—

Total individually evaluated impaired loans
$
86

 
$
129

 
$
215

 
$
333

 
$
31

December 31, 2018
 
 
 
 
 
 
 
 
 
Business loans:
 
 
 
 
 
 
 
 
 
Commercial
$
50

 
$
130

 
$
180

 
$
227

 
$
24

Commercial mortgage:
 
 
 
 
 
 
 
 
 
Commercial Real Estate business line (a)
39

 
—

 
39

 
49

 
—

Other business lines (b)
2

 
16

 
18

 
23

 
3

Total commercial mortgage
41

 
16

 
57

 
72

 
3

International
2

 
1

 
3

 
8

 
—

Total business loans
93

 
147

 
240

 
307

 
27

 
 
 
 
 
 
 
 
 
 
Retail loans:
 
 
 
 
 
 
 
 
 
Residential mortgage
16

 
8

 
24

 
25

 
—

Consumer:
 
 
 
 
 
 
 
 
 
Home equity
11

 
—

 
11

 
13

 
—

Other consumer
1

 
—

 
1

 
1

 
—

Total consumer
12

 
—

 
12

 
14

 
—

Total retail loans (c)
28

 
8

 
36

 
39

 
—

Total individually evaluated impaired loans
$
121

 
$
155

 
$
276

 
$
346

 
$
27

(a)
Primarily loans to real estate developers.
(b)
Primarily loans secured by owner-occupied real estate.
(c)
Individually evaluated retail loans generally have no related allowance for loan losses, primarily due to policy which results in direct write-downs of most restructured retail loans.
The following table presents information regarding average individually evaluated impaired loans and the related interest recognized. Interest income recognized for the period primarily related to performing restructured loans.
 
Individually Evaluated Impaired Loans
 
2019
 
2018
 
2017
(in millions)
Average Balance for the Period
 
Interest Income Recognized for the Period
 
Average Balance for the Period
 
Interest Income Recognized for the Period
 
Average Balance for the Period
 
Interest Income Recognized for the Period
Years Ended December 31
 
 
 
 
 
 
 
 
 
 
 
Business loans:
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
156

 
$
2

 
$
262

 
$
5

 
$
451

 
$
8

Commercial mortgage:
 
 
 
 
 
 
 
 
 
 
 
Commercial Real Estate business line (a)
39

 
3

 
40

 
4

 
21

 
2

Other business lines (b)
14

 
1

 
23

 
—

 
31

 
—

Total commercial mortgage
53

 
4

 
63

 
4

 
52

 
2

Lease financing
1

 
—

 
—

 
—

 
—

 
—

International
2

 
—

 
4

 
—

 
8

 
—

Total business loans
212

 
6

 
329

 
9

 
511

 
10

 
 
 
 
 
 
 
 
 
 
 
 
Retail loans:
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
21

 
1

 
21

 
—

 
24

 
—

Consumer:
 
 
 
 
 
 
 
 
 
 
 
Home equity
9

 
—

 
11

 
—

 
13

 
—

Other consumer
—

 
—

 
1

 
—

 
3

 
—

Total consumer
9

 
—

 
12

 
—

 
16

 
—

Total retail loans
30

 
1

 
33

 
—

 
40

 
—

Total individually evaluated impaired loans
$
242

 
$
7

 
$
362

 
$
9

 
$
551

 
$
10

(a)
Primarily loans to real estate developers.
(b)
Primarily loans secured by owner-occupied real estate.
Troubled Debt Restructurings
The following tables detail the recorded balance at December 31, 2019 and 2018 of loans considered to be TDRs that were restructured during the years ended December 31, 2019 and 2018, by type of modification. In cases of loans with more than one type of modification, the loans were categorized based on the most significant modification.
 
2019
 
2018
 
Type of Modification
 
 
Type of Modification
 
(in millions)
Principal Deferrals (a)
Interest Rate Reductions
Total Modifications
 
Principal Deferrals (a)
Interest Rate Reductions
Total Modifications
Years Ended December 31
 
 
 
 
 
 
 
 
 
Business loans:
 
 
 
 
 
 
 
 
 
Commercial
$
28

 
$
—

$
28

 
$
27

 
$
—

$
27

Commercial mortgage:
 
 
 
 
 
 
 
 
 
Other business lines (b)
—

 
—

—

 
2

 
—

2

International
—

 
—

—

 
1

 
—

1

Total business loans
28

 
—

28

 
30

 
—

30

 
 
 
 
 
 
 
 
 
 
Retail loans:
 
 
 
 
 
 
 
 
 
Consumer:
 
 
 
 
 
 
 
 
 
Home equity (c)
—

 
1

1

 
—

 
3

3

Total loans
$
28

 
$
1

$
29

 
$
30

 
$
3

$
33

(a)
Primarily represents loan balances where terms were extended 90 days or more at or above contractual interest rates. Also includes
commercial loans restructured in bankruptcy.
(b)
Primarily loans secured by owner-occupied real estate.
(c)
Includes bankruptcy loans for which the court has discharged the borrower's obligation and the borrower has not reaffirmed the debt.
The Corporation charges interest on principal balances outstanding during deferral periods. Additionally, none of the modifications involved forgiveness of principal.
At December 31, 2019 and 2018, commitments to lend additional funds to borrowers whose terms have been modified in TDRs totaled $3 million and $20 million, respectively. On an ongoing basis, the Corporation monitors the performance of modified loans to their restructured terms. The allowance for loan losses continues to be reassessed on the basis of an individual evaluation for each loan.
For principal deferrals, incremental deterioration in the credit quality of the loan, represented by a downgrade in the risk rating of the loan, for example, due to missed interest payments or a reduction of collateral value, is considered a subsequent default. For interest rate reductions, a subsequent payment default is defined in terms of delinquency, when a principal or interest payment is 90 days past due. Subsequent defaults of principal deferrals totaled $12 million in commercial loans for the year ended December 31, 2019, compared to none in the comparable period in 2018. There were no subsequent defaults of interest rate reductions during either of the years ended December 31, 2019 and 2018.