LOANS AND LEASES

A summary of the loans and leases portfolio follows:



	December 31,
(in millions)	2014		2013
Commercial		$31,431		$28,667
Commercial real estate	7,809		6,948
Leases	3,986		3,780
Total commercial	43,226		39,395
Residential mortgages	11,832		9,726
Home equity loans	3,424		4,301
Home equity lines of credit	15,423		15,667
Home equity loans serviced by others ⁽¹⁾	1,228		1,492
Home equity lines of credit serviced by others ⁽¹⁾	550		679
Automobile	12,706		9,397
Student	2,256		2,208
Credit cards	1,693		1,691
Other retail	1,072		1,303
Total retail	50,184		46,464
Total loans and leases ^{(2) (3)}		$93,410		$85,859

⁽¹⁾ The Company's SBO portfolio consists of home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽²⁾ Excluded from the table above are loans held for sale totaling $281 million as of December 31, 2014 and $1.3 billion as of December 31, 2013. The December 31, 2013 loans held for sale balance primarily related to the Chicago Divestiture. For further discussion, see Note 17 “Divestitures and Branch Assets and Liabilities Held for Sale.”

⁽³⁾Mortgage loans serviced for others by the Company's subsidiaries are not included above, and amounted to $17.9 billion and $18.7 billion at December 31, 2014 and 2013, respectively.

Loans held for sale totaled $256 million and $176 million at December 31, 2014 and 2013, respectively, and consisted primarily of residential mortgages originated for sale. Other loans held for sale totaled $25 million and $1.1 billion at December 31, 2014 and 2013, respectively. The other loans held for sale balance at December 31, 2013 primarily related to the Company's sale of certain assets and liabilities associated with its Chicago-area retail branches (the “Chicago Divestiture”). See Note 17 “Divestitures and Branch Assets and Liabilities Held for Sale.”

Loans pledged as collateral for FHLB borrowed funds totaled $22.0 billion and $19.0 billion at December 31, 2014 and 2013, respectively. This collateral consists primarily of residential mortgages and home equity loans. Loans pledged as collateral to support the contingent ability to borrow at the FRB discount window, if necessary, totaled $11.8 billion and $13.9 billion at December 31, 2014 and 2013, respectively.

During the year ended December 31, 2014, the Company purchased a portfolio of residential loans with an outstanding principal balance of $1.9 billion, a portfolio of auto loans with an outstanding principal balance of $1.7 billion, a portfolio of student loans with an outstanding principal balance of $59 million. Additionally, the Company purchased a portfolio of performing commercial loans to customers in the oil and gas industry from RBS with an outstanding principal balance of $417 million. During the year ended December 31, 2013, the Company purchased a portfolio of residential loans with an outstanding principal balance of $912 million.

In addition to the $1.0 billion loans sold as part of the Chicago Divestiture, the Company sold portfolios of residential mortgage loans with outstanding principal balances of $126 million and student loans of $357 million as well as commercial loans with an outstanding principal balance of $301 million during the year ended December 31, 2014. The Company had no sale transactions during the year ended December 31, 2013.

In December 2014, the Company committed to purchasing pools of performing student loans with principal balances outstanding of approximately $260 million. The specific loans to be purchased were identified in January 2015 and the transactions were settled in January and February 2015.

The Company is engaged in the leasing of equipment for commercial use, with primary lease concentrations to Fortune 1000 companies for large capital equipment acquisitions. A lessee is evaluated from a credit perspective using the same underwriting standards and procedures as for a loan borrower. A lessee is expected to make rental payments based on its cash flows and the viability of its balance sheet. Leases are usually not evaluated as collateral-based transactions, and therefore the lessee’s overall financial strength is the most important credit evaluation factor.

A summary of the investment in leases, before the allowance for lease losses, is as follows:



	December 31,
(in millions)	2014		2013
Direct financing leases		$3,873		$3,668
Leveraged leases	113		112
Total leases		$3,986		$3,780

The components of the investment in leases, before the allowance for lease losses, are as follows:



	December 31,
(in millions)	2014			2013
Total future minimum lease rentals		$3,324			$3,252
Estimated residual value of leased equipment (non-guaranteed)	1,059			968
Initial direct costs	22			20
Unearned income on minimum lease rentals and estimated residual value of leased equipment	(419		)	(460		)
Total leases		$3,986			$3,780

At December 31, 2014, the future minimum lease rentals on direct financing and leveraged leases are as follows:



Year Ended December 31,	(in millions)
2015		$699
2016	615
2017	497
2018	444
2019	347
Thereafter	722
Total		$3,324

Pre-tax income on leveraged leases was $2 million for the year ended December 31, 2014 and $3 million for the years ended December 31, 2013 and 2012. The income tax expense on this income was $1 million for the years ended December 31, 2014, 2013 and 2012. There was no investment credit recognized in income during these years.