ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK

The ACL consists of the ALLL and the reserve for unfunded commitments. It is increased through a provision for credit losses that is charged to earnings, based on the Company’s quarterly evaluation of the loan and lease portfolio and related commitments, and is reduced by net charge-offs and the ALLL associated with sold loans. See Note 5 “Allowance for Credit Losses, Nonperforming Assets, and Concentrations of Credit Risk” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2017, for a detailed discussion of the ALLL reserve methodology and estimation techniques.

On a quarterly basis, the Company reviews and refines its estimate of the ACL, taking into consideration changes in portfolio size and composition, historical loss experience, internal risk ratings, current economic conditions, industry performance trends and other pertinent information. As of September 30, 2018, there were no material changes in assumptions or estimation techniques compared with prior periods that impacted the determination of the current period’s ALLL and the reserve for unfunded lending commitments. As of December 31, 2017, the Company enhanced the method for assessing various qualitative risks, factors and events that may not be measured in the modeled results. The new methodology includes a statistical analysis of prior charge-off rates on a historical basis combined with a qualitative assessment based on quantitative measures affecting the determination of incurred losses in the loan and lease portfolio, and provides better alignment of the qualitative ALLL to the commercial and retail loan portfolios. The impact of the change was an increase of approximately $50 million to the commercial ALLL with a corresponding decrease to the retail ALLL; there was not a significant impact on the total qualitative ALLL as of December 31, 2017.

A summary of changes in the ACL is presented below:



	Three Months Ended September 30, 2018									Nine Months Ended September 30, 2018
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$715			$538			$1,253			$685			$551			$1,236
Charge-offs	(18		)	(109		)	(127		)	(35		)	(328		)	(363		)
Recoveries	2			39			41			10			121			131
Net charge-offs	(16		)	(70		)	(86		)	(25		)	(207		)	(232		)
Provision charged to income	8			67			75			47			191			238
Allowance for loan and lease losses, end of period	707			535			1,242			707			535			1,242
Reserve for unfunded lending commitments, beginning of period	88			—			88			88			—			88
Provision for unfunded lending commitments	3			—			3			3			—			3
Reserve for unfunded lending commitments, end of period	91			—			91			91			—			91
Total allowance for credit losses, end of period		$798			$535			$1,333			$798			$535			$1,333



	Three Months Ended September 30, 2017									Nine Months Ended September 30, 2017
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$614			$605			$1,219			$663			$573			$1,236
Charge-offs	(12		)	(108		)	(120		)	(60		)	(321		)	(381		)
Recoveries	12			43			55			27			127			154
Net charge-offs	—			(65		)	(65		)	(33		)	(194		)	(227		)
Provision charged to income	24			46			70			8			207			215
Allowance for loan and lease losses, end of period	638			586			1,224			638			586			1,224
Reserve for unfunded lending commitments, beginning of period	93			—			93			72			—			72
Provision for unfunded lending commitments	2			—			2			23			—			23
Reserve for unfunded lending commitments, end of period	95			—			95			95			—			95
Total allowance for credit losses, end of period		$733			$586			$1,319			$733			$586			$1,319

The recorded investment in loans and leases based on the Company’s evaluation methodology is presented below:



	September 30, 2018						December 31, 2017
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$430		$735		$1,165		$370		$761		$1,131
Formula-based evaluation	54,975		58,580		113,555		51,661		57,825		109,486
Total loans and leases		$55,405		$59,315		$114,720		$52,031		$58,586		$110,617

A summary of the ACL by evaluation method is presented below:



	September 30, 2018						December 31, 2017
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$59		$27		$86		$47		$34		$81
Formula-based evaluation	739		508		1,247		726		517		1,243
Allowance for credit losses		$798		$535		$1,333		$773		$551		$1,324

For commercial loans and leases, the Company utilizes regulatory classification ratings to monitor credit quality. Loans with a “pass” rating are those that the Company believes will be fully repaid in accordance with the contractual loan terms. Commercial loans and leases that are “criticized” are those that have some weakness or potential weakness that indicate an increased probability of future loss. “Criticized” loans are grouped into three categories, “special mention,” “substandard” and “doubtful.” Special mention loans have potential weaknesses that, if left uncorrected, may result in deterioration of the Company’s credit position at some future date. Substandard loans are inadequately protected loans; these loans have well-defined weaknesses that could hinder normal repayment or collection of the debt. Doubtful loans have the same weaknesses as substandard, with the added characteristics that the possibility of loss is high and collection of the full amount of the loan is improbable. For retail loans, the Company primarily uses the loan’s payment and delinquency status to monitor credit quality. The further a loan is past due, the greater the likelihood of future credit loss. These credit quality indicators for both commercial and retail loans are continually updated and monitored.

The recorded investment in commercial loans and leases based on regulatory classification ratings is presented below:



	September 30, 2018
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$37,242		$1,441		$854		$233		$39,770
Commercial real estate	12,193		282		127		28		12,630
Leases	2,909		49		47		—		3,005
Total commercial loans and leases		$52,344		$1,772		$1,028		$261		$55,405



	December 31, 2017
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$35,430		$1,143		$785		$204		$37,562
Commercial real estate	10,706		500		74		28		11,308
Leases	3,069		73		19		—		3,161
Total commercial loans and leases		$49,205		$1,716		$878		$232		$52,031

The recorded investment in classes of retail loans, categorized by delinquency status is presented below:



	September 30, 2018
			Days Past Due
(in millions)	Current		1-29		30-59		60-89		90 or More		Total
Residential mortgages		$18,173		$136		$37		$13		$134		$18,493
Home equity loans	999		79		11		3		39		1,131
Home equity lines of credit	12,214		383		55		25		186		12,863
Home equity loans serviced by others	382		24		6		2		15		429
Home equity lines of credit serviced by others	87		17		2		1		7		114
Automobile	10,849		1,109		189		51		57		12,255
Education	8,514		151		24		13		10		8,712
Credit cards	1,814		57		14		9		17		1,911
Other retail	3,291		69		20		15		12		3,407
Total retail loans		$56,323		$2,025		$358		$132		$477		$59,315



	December 31, 2017
			Days Past Due
(in millions)	Current		1-29		30-59		60-89		90 or More		Total
Residential mortgages		$16,714		$147		$46		$18		$120		$17,045
Home equity loans	1,212		102		20		4		54		1,392
Home equity lines of credit	12,756		438		78		23		188		13,483
Home equity loans serviced by others	477		29		10		4		22		542
Home equity lines of credit serviced by others	116		21		4		1		7		149
Automobile	11,596		1,273		220		55		60		13,204
Education	7,898		160		23		12		41		8,134
Credit cards	1,747		63		12		9		17		1,848
Other retail	2,679		68		20		12		10		2,789
Total retail loans		$55,195		$2,301		$433		$138		$519		$58,586

Nonperforming Assets

The following table presents nonperforming loans and leases and loans accruing and 90 days or more past due:



	Nonperforming				Accruing and 90 days or more past due
(in millions)	September 30, 2018		December 31, 2017		September 30, 2018		December 31, 2017
Commercial		$228		$238		$—		$5
Commercial real estate	30		27		—		3
Leases	—		—		—		—
Total commercial loans and leases	258		265		—		8
Residential mortgages⁽¹⁾	136		128		16		16
Home equity loans	53		72		—		—
Home equity lines of credit	221		233		—		—
Home equity loans serviced by others	19		25		—		—
Home equity lines of credit serviced by others	16		18		—		—
Automobile	67		70		—		—
Education	38		38		3		3
Credit card	17		17		—		—
Other retail	7		5		6		5
Total retail loans	574		606		25		24
Total		$832		$871		$25		$32

⁽¹⁾ Nonperforming balances exclude first lien residential mortgage loans that are 100% guaranteed by the Federal Housing Administration. These loans, which are accruing and 90 days or more past due, totaled $13 million and $15 million as of September 30, 2018 and December 31, 2017, respectively. Nonperforming balances also exclude guaranteed residential mortgage loans sold to GNMA for which the Company has the right, but not the obligation, to repurchase. These loans totaled $116 million and $30 million as of September 30, 2018 and December 31, 2017, respectively. These loans are included in the Company’s Consolidated Balance Sheets.

Other nonperforming assets consisted primarily of other real estate owned and was presented in other assets on the Consolidated Balance Sheets. Other real estate owned, net of valuation allowance, was $31 million and $36 million as of September 30, 2018 and December 31, 2017, respectively.

A summary of nonperforming loan and lease key performance indicators is presented below:



	September 30, 2018		December 31, 2017
Nonperforming commercial loans and leases as a percentage of total loans and leases	0.23	%	0.24	%
Nonperforming retail loans as a percentage of total loans and leases	0.50		0.55
Total nonperforming loans and leases as a percentage of total loans and leases	0.73	%	0.79	%

Nonperforming commercial assets as a percentage of total assets	0.16	%	0.17	%
Nonperforming retail assets as a percentage of total assets	0.38	%	0.43	%
Total nonperforming assets as a percentage of total assets	0.54	%	0.60	%

The recorded investment in mortgage loans collateralized by residential real estate property for which formal foreclosure proceedings are in process was $174 million and $181 million as of September 30, 2018 and December 31, 2017, respectively.

An analysis of the age of both accruing and nonaccruing loan and lease past due amounts is presented below:



	September 30, 2018								December 31, 2017
	Days Past Due								Days Past Due
(in millions)	30-59		60-89		90 or More		Total		30-59		60-89		90 or More		Total
Commercial		$46		$3		$94		$143		$26		$4		$243		$273
Commercial real estate	46		7		27		80		38		20		30		88
Leases	—		—		—		—		4		1		—		5
Total commercial loans and leases	92		10		121		223		68		25		273		366
Residential mortgages	37		13		134		184		46		18		120		184
Home equity loans	11		3		39		53		20		4		54		78
Home equity lines of credit	55		25		186		266		78		23		188		289
Home equity loans serviced by others	6		2		15		23		10		4		22		36
Home equity lines of credit serviced by others	2		1		7		10		4		1		7		12
Automobile	189		51		57		297		220		55		60		335
Education	24		13		10		47		23		12		41		76
Credit cards	14		9		17		40		12		9		17		38
Other retail	20		15		12		47		20		12		10		42
Total retail loans	358		132		477		967		433		138		519		1,090
Total		$450		$142		$598		$1,190		$501		$163		$792		$1,456

Impaired Loans

Impaired loans include nonaccruing larger balance (greater than $3 million carrying value), non-homogeneous commercial and commercial real estate loans, and restructured loans that are deemed TDRs. A summary of impaired loans by class is presented below:



	September 30, 2018
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$237		$52		$133		$439		$370
Commercial real estate	31		7		29		78		60
Leases	—		—		—		—		—
Total commercial loans and leases	268		59		162		517		430
Residential mortgages	28		2		128		201		156
Home equity loans	34		3		72		145		106
Home equity lines of credit	18		1		190		253		208
Home equity loans serviced by others	23		2		20		57		43
Home equity lines of credit serviced by others	2		—		7		12		9
Automobile	2		—		23		31		25
Education	134		11		23		158		157
Credit cards	24		7		—		25		24
Other retail	4		1		3		8		7
Total retail loans	269		27		466		890		735
Total		$537		$86		$628		$1,407		$1,165



	December 31, 2017
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$183		$42		$159		$403		$342
Commercial real estate	25		5		3		40		28
Leases	—		—		—		—		—
Total commercial loans and leases	208		47		162		443		370
Residential mortgages	25		2		126		197		151
Home equity loans	41		4		80		162		121
Home equity lines of credit	16		1		181		241		197
Home equity loans serviced by others	29		2		22		67		51
Home equity lines of credit serviced by others	2		—		7		14		9
Automobile	2		—		21		30		23
Education	154		17		21		175		175
Credit cards	24		7		1		25		25
Other retail	5		1		4		10		9
Total retail loans	298		34		463		921		761
Total		$506		$81		$625		$1,364		$1,131

Additional information on impaired loans is presented below:



	Three Months Ended September 30,
	2018				2017
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$3		$334		$1		$391
Commercial real estate	—		34		—		33
Leases	—		—		—		—
Total commercial loans and leases	3		368		1		424
Residential mortgages	1		154		—		137
Home equity loans	1		107		1		125
Home equity lines of credit	2		202		2		192
Home equity loans serviced by others	1		43		—		51
Home equity lines of credit serviced by others	—		9		—		9
Automobile	—		23		—		21
Education	3		160		3		178
Credit cards	—		24		—		25
Other retail	—		7		—		10
Total retail loans	8		729		6		748
Total		$11		$1,097		$7		$1,172



	Nine Months Ended September 30,
	2018				2017
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$7		$318		$3		$402
Commercial real estate	—		33		—		39
Leases	—		—		—		—
Total commercial loans and leases	7		351		3		441
Residential mortgages	4		148		3		128
Home equity loans	4		107		4		124
Home equity lines of credit	6		189		5		178
Home equity loans serviced by others	2		44		2		51
Home equity lines of credit serviced by others	—		9		—		9
Automobile	—		21		—		18
Education	7		159		7		178
Credit cards	1		22		1		23
Other retail	—		7		—		10
Total retail loans	24		706		22		719
Total		$31		$1,057		$25		$1,160

Troubled Debt Restructurings

In situations where, for economic or legal reasons related to the borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider, the related loan is classified as a TDR. TDRs typically result from the Company’s loss mitigation efforts and are undertaken in order to improve the likelihood of recovery and continuity of the relationship. The Company’s loan modifications are handled on a case-by-case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet the borrower’s financial needs. Concessions granted in TDRs for all classes of loans may include lowering the interest rate, forgiving a portion of principal, extending the loan term, lowering scheduled payments for a specified period of time, waiving or delaying a scheduled payment of principal or interest for other than an insignificant time period, or capitalizing past due amounts. A rate increase can be a concession if the increased rate is lower than a market rate for debt with risk similar to that of the restructured loan. TDRs for commercial loans and leases may also involve creating a multiple note structure, accepting non-cash assets, accepting an equity interest, or receiving a performance-based fee. In some cases, a TDR may involve multiple concessions. The financial effects of TDRs for all loan classes may include lower income (either due to a lower interest rate or a delay in the timing of cash flows), larger loan loss provisions, and accelerated charge-offs if the modification renders the loan collateral-dependent. In some cases, interest income throughout the term of the loan may increase if, for example, the loan is extended or the interest rate is increased as a result of the restructuring.

Because TDRs are impaired loans, the Company measures impairment by comparing the present value of expected future cash flows, or when appropriate, the fair value of collateral less costs to sell, to the loan’s recorded investment. Any excess of recorded investment over the present value of expected future cash flows or collateral value is included in the ALLL. Any portion of the loan’s recorded investment the Company does not expect to collect as a result of the modification is charged off at the time of modification. For Retail TDR accounts where the expected value of cash flows is utilized, any recorded investment in excess of the present value of expected cash flows is recognized by creating or increasing the ALLL. For Retail TDR accounts assessed based on the fair value of collateral, any portion of the loan’s recorded investment in excess of the collateral value less costs to sell is charged off at the time of modification or at the time of subsequent and regularly recurring valuations.

The table below summarizes TDRs by class and total unfunded commitments:



(in millions)	September 30, 2018		December 31, 2017
Commercial		$253		$129
Retail	735		761
Unfunded commitments tied to TDRs	28		39

The table below summarizes how loans were modified during the three months ended September 30, 2018, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the three months ended September 30, 2018 and were paid off in full, charged off, or sold prior to September 30, 2018.



	Primary Modification Types
	Interest Rate Reduction ⁽¹⁾					Maturity Extension ⁽²⁾
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	1		$—		$—	13		$1		$1
Commercial real estate	—	—		—		—	—		—
Total commercial loans	1	—		—		13	1		1
Residential mortgages	9	1		1		17	2		2
Home equity loans	10	—		1		—	—		—
Home equity lines of credit	27	3		3		58	10		10
Home equity loans serviced by others	2	—		—		—	—		—
Home equity lines of credit serviced by others	1	—		—		—	—		—
Automobile	45	1		—		9	—		—
Education	—	—		—		—	—		—
Credit cards	623	4		4		—	—		—
Other retail	—	—		—		—	—		—
Total retail loans	717	9		9		84	12		12
Total	718		$9		$9	97		$13		$13



	Primary Modification Types
	Other ⁽³⁾
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	1		$—		$—		$—			$—
Commercial real estate	—	—		—		—			—
Total commercial loans	1	—		—		—			—
Residential mortgages	31	4		3		(1		)	—
Home equity loans	40	2		2		—			—
Home equity lines of credit	104	7		7		—			—
Home equity loans serviced by others	5	1		1		—			—
Home equity lines of credit serviced by others	8	—		—		—			—
Automobile	315	5		4		—			2
Education	45	1		1		1			—
Credit cards	—	—		—		1			—
Other retail	—	—		—		—			—
Total retail loans	548	20		18		1			2
Total	549		$20		$18		$1			$2

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The table below summarizes how loans were modified during the three months ended September 30, 2017, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the three months ended September 30, 2017 and were paid off in full, charged off, or sold prior to September 30, 2017.



	Primary Modification Types
	Interest Rate Reduction ⁽¹⁾					Maturity Extension ⁽²⁾
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	3		$1		$1	17		$8		$7
Commercial real estate	—	—		—		1	—		—
Total commercial loans	3	1		1		18	8		7
Residential mortgages	13	1		2		15	1		2
Home equity loans	25	2		1		—	—		—
Home equity lines of credit	11	1		1		86	11		11
Home equity loans serviced by others	3	—		—		—	—		—
Home equity lines of credit serviced by others	—	—		—		—	—		—
Automobile	28	1		1		8	—		—
Education	—	—		—		—	—		—
Credit cards	661	3		3		—	—		—
Other retail	—	—		—		—	—		—
Total retail loans	741	8		8		109	12		13
Total	744		$9		$9	127		$20		$20



	Primary Modification Types
	Other ⁽³⁾
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	7		$28		$30		$—			$—
Commercial real estate	1	—		—		—			—
Total commercial loans	8	28		30		—			—
Residential mortgages	38	3		3		(1		)	—
Home equity loans	49	3		3		—			—
Home equity lines of credit	110	6		7		—			1
Home equity loans serviced by others	11	1		—		—			—
Home equity lines of credit serviced by others	8	1		—		—			—
Automobile	392	7		6		—			1
Education	67	2		2		—			—
Credit cards	—	—		—		1			—
Other retail	2	—		—		—			—
Total retail loans	677	23		21		—			2
Total	685		$51		$51		$—			$2

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

The table below summarizes how loans were modified during the nine months ended September 30, 2018, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the nine months ended September 30, 2018 and were paid off in full, charged off, or sold prior to September 30, 2018.



	Primary Modification Types
	Interest Rate Reduction ⁽¹⁾					Maturity Extension ⁽²⁾
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	6		$1		$1	23		$2		$2
Commercial real estate	—	—		—		1	—		—
Total commercial loans	6	1		1		24	2		2
Residential mortgages	32	3		4		47	6		6
Home equity loans	32	2		3		1	—		—
Home equity lines of credit	55	5		5		147	21		21
Home equity loans serviced by others	3	—		—		—	—		—
Home equity lines of credit serviced by others	5	—		—		1	—		—
Automobile	122	3		2		42	1		1
Education	—	—		—		—	—		—
Credit cards	1,776	10		10		—	—		—
Other retail	1	—		—		—	—		—
Total retail loans	2,026	23		24		238	28		28
Total	2,032		$24		$25	262		$30		$30



	Primary Modification Types
	Other ⁽³⁾
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	40		$155		$156		$—			$—
Commercial real estate	2	31		31		—			—
Total commercial loans	42	186		187		—			—
Residential mortgages	117	14		14		(1		)	—
Home equity loans	106	5		5		—			—
Home equity lines of credit	310	22		21		—			—
Home equity loans serviced by others	20	1		1		—			—
Home equity lines of credit serviced by others	13	—		—		—			—
Automobile	893	15		13		—			3
Education	296	5		5		1			—
Credit cards	—	—		—		3			—
Other retail	4	—		—		—			—
Total retail loans	1,759	62		59		3			3
Total	1,801		$248		$246		$3			$3

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

The table below summarizes how loans were modified during the nine months ended September 30, 2017, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the nine months ended September 30, 2017 and were paid off in full, charged off, or sold prior to September 30, 2017.



	Primary Modification Types
	Interest Rate Reduction ⁽¹⁾					Maturity Extension ⁽²⁾
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	7		$2		$2	35		$22		$21
Commercial real estate	—	—		—		1	—		—
Total commercial loans	7	2		2		36	22		21
Residential mortgages	56	6		7		50	9		10
Home equity loans	68	4		4		1	—		—
Home equity lines of credit	41	2		2		204	26		26
Home equity loans serviced by others	14	1		1		—	—		—
Home equity lines of credit serviced by others	3	—		—		2	—		—
Automobile	93	2		2		23	—		—
Education	—	—		—		—	—		—
Credit cards	1,850	10		10		—	—		—
Other retail	1	—		—		—	—		—
Total retail loans	2,126	25		26		280	35		36
Total	2,133		$27		$28	316		$57		$57



	Primary Modification Types
	Other ⁽³⁾
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	12		$64		$65		$1			$—
Commercial real estate	1	—		—		—			—
Total commercial loans	13	64		65		1			—
Residential mortgages	122	13		13		(1		)	—
Home equity loans	192	11		11		—			—
Home equity lines of credit	295	20		20		—			1
Home equity loans serviced by others	41	2		1		—			—
Home equity lines of credit serviced by others	21	2		1		—			—
Automobile	1,017	18		16		—			3
Education	235	4		4		1			—
Credit cards	—	—		—		3			—
Other retail	5	—		—		(1		)	—
Total retail loans	1,928	70		66		2			4
Total	1,941		$134		$131		$3			$4

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

The table below summarizes TDRs that defaulted within 12 months of their modification date during the nine months ended September 30, 2018 and 2017, respectively. For purposes of this table, a payment default refers to a loan that becomes 90 days or more past due under the modified terms. Amounts represent the loan’s recorded investment at the time of payment default. If a TDR of any loan type becomes 90 days past due after being modified, the loan is written down to the fair value of collateral less cost to sell. The amount written off is charged to the ALLL.



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
(dollars in millions)	Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted
Commercial	9		$32	2		$4	15		$52	7		$5
Commercial real estate	—	—		—	—		1	—		1	4
Total commercial loans	9	32		2	4		16	52		8	9
Residential mortgages	33	4		35	5		103	12		121	15
Home equity loans	6	—		12	—		24	1		35	1
Home equity lines of credit	59	5		55	4		165	13		152	11
Home equity loans serviced by others	3	—		6	—		13	—		16	—
Home equity lines of credit serviced by others	2	—		4	—		3	—		8	—
Automobile	40	—		42	—		116	1		103	1
Education	1	—		5	1		13	1		41	1
Credit cards	106	1		116	—		327	2		344	2
Other retail	1	—		2	—		1	—		4	—
Total retail loans	251	10		277	10		765	30		824	31
Total	260		$42	279		$14	781		$82	832		$40

Concentrations of Credit Risk

Most of the Company’s lending activity is with customers located in the New England, Mid-Atlantic and Midwest regions. Generally, loans are collateralized by assets including real estate, inventory, accounts receivable, other personal property and investment securities. As of September 30, 2018 and December 31, 2017, the Company had a significant amount of loans collateralized by residential and commercial real estate. There were no significant concentration risks within the commercial loan or retail loan portfolios. Exposure to credit losses arising from lending transactions may fluctuate with fair values of collateral supporting loans, which may not perform according to contractual agreements. The Company’s policy is to collateralize loans to the extent necessary; however, unsecured loans are also granted on the basis of the financial strength of the applicant and the facts surrounding the transaction.

Certain loan products, including residential mortgages, home equity loans and lines of credit, and credit cards, have contractual features that may increase credit exposure to the Company in the event of an increase in interest rates or a decline in housing values. These products include loans that exceed 90% of the value of the underlying collateral (high LTV loans), interest-only and negative amortization residential mortgages, and loans with low introductory rates. Certain loans have more than one of these characteristics. The following tables present balances of loans with these characteristics:



	September 30, 2018
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Total
High loan-to-value		$339		$107		$174		$—		$620
Interest-only/negative amortization	1,786		—		—		—		1,786
Low introductory rate	—		—		—		211		211
Multiple characteristics and other	1		—		—		—		1
Total		$2,126		$107		$174		$211		$2,618



	December 31, 2017
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Education		Total
High loan-to-value		$366		$166		$264		$—		$—		$796
Interest-only/negative amortization	1,763		—		—		—		1		1,764
Low introductory rate	—		—		—		197		—		197
Multiple characteristics and other	1		—		—		—		—		1
Total		$2,130		$166		$264		$197		$1		$2,758