Loans

Loans consisted of the following:



At December 31,	2012		2011
	(in millions)
Commercial loans:
Construction and other real estate	$	8,457	$	7,860
Business banking and middle market enterprises	12,608		10,225
Global banking⁽¹⁾	20,009		12,658
Other commercial	3,076		2,906
Total commercial	44,150		33,649
Consumer loans:
Home equity mortgages	2,324		2,563
Residential mortgages, excluding home equity mortgages	15,371		14,113
Credit cards	815		828
Other consumer	598		714
Total consumer	19,108		18,218
Total loans	$	63,258	$	51,867


⁽¹⁾	Represents large multinational firms including globally focused U.S. corporate and financial institutions and USD lending to select high quality Latin American and other multinational customers managed by HSBC on a global basis.

We have loans outstanding to certain executive officers and directors. The loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risk of collectibility. The aggregate amount of such loans did not exceed 5% of shareholders’ equity at either December 31, 2012 or 2011.

Net deferred origination costs totaled $30 million and $48 million at December 31, 2012 and 2011, respectively.

At December 31, 2012 and 2011, we had net unamortized premium on our loans of $25 million and $28 million, respectively. We amortized net premiums of $23 million, $35 million and $20 million on our loans in 2012, 2011 and 2010, respectively.

Age Analysis of Past Due Loans The following table summarizes the past due status of our loans at December 31, 2012 and 2011. The aging of past due amounts are determined based on the contractual delinquency status of payments under the loan. An account is generally considered to be contractually delinquent when payments have not been made in accordance with the loan terms. Delinquency status may be affected by customer account management policies and practices such as re-age or modification.



	Days Past Due
At December 31, 2012	1 - 29 days		30 - 89 days		90+ days		Total Past Due		Current		Total Loans
	(in millions)
Commercial loans:
Construction and other real estate	$	27	$	89	$	152	$	268	$	8,189	$	8,457
Business banking and middle market enterprises	558		73		70		701		11,907		12,608
Global banking	777		30		8		815		19,194		20,009
Other commercial	37		16		31		84		2,992		3,076
Total commercial	1,399		208		261		1,868		42,282		44,150
Consumer loans:
Home equity mortgages	348		40		82		470		1,854		2,324
Residential mortgages, excluding home equity mortgages	100		493		976		1,569		13,802		15,371
Credit cards	28		14		15		57		758		815
Other consumer	7		5		33		45		553		598
Total consumer	483		552		1,106		2,141		16,967		19,108
Total loans	$	1,882	$	760	$	1,367	$	4,009	$	59,249	63,258



	Days Past Due
At December 31, 2011	1 - 29 days		30 - 89 days		90+ days		Total Past Due		Current		Total Loans
	(in millions)
Commercial loans:
Construction and other real estate	$	72	$	31	$	231	$	334	$	7,526	$	7,860
Business banking and middle market enterprises	615		58		71		744		9,481		10,225
Global banking	898		34		74		1,006		11,652		12,658
Other commercial	350		84		21		455		2,451		2,906
Total commercial	1,935		207		397		2,539		31,110		33,649
Consumer loans:
Home equity mortgages	181		54		89		324		2,239		2,563
Residential mortgages, excluding home equity mortgages	109		526		815		1,450		12,663		14,113
Credit cards	37		20		20		77		751		828
Other consumer	11		6		35		52		662		714
Total consumer	338		606		959		1,903		16,315		18,218
Total loans	$	2,273	$	813	$	1,356	$	4,442	$	47,425	$	51,867

Contractual Maturities Contractual maturities of loans were as follows:



	At December 31,
	2013		2014		2015		2016		2017		Thereafter		Total
	(in millions)
Commercial Loans:
Construction and other real estate	$	3,564	$	869	$	768	$	993	$	1,041	$	1,222	$	8,457
Business banking and middle market enterprises	5,108		1,346		1,184		1,559		1,603		1,808		12,608
Global banking	10,025		1,670		1,514		1,743		2,070		2,987		20,009
Other commercial	1,251		327		288		379		390		441		3,076
Consumer Loans:
Home equity mortgages⁽¹⁾	870		432		265		166		107		484		2,324
Residential mortgages, excluding home equity mortgages	909		361		378		393		402		12,928		15,371
Credit card receivables⁽²⁾	—		815		—		—		—		—		815
Other consumer	549		28		13		6		2		—		598
Total	$	22,276	$	5,848	$	4,410	$	5,239	$	5,615	$	19,870	$	63,258


⁽¹⁾	Home equity mortgages maturities reflect estimates based on historical payment patterns.


⁽²⁾	As credit card receivables do not have stated maturities, the table reflects estimates based on historical payment patterns.

As a substantial portion of consumer loans, based on our experience, will be renewed or repaid prior to contractual maturity, the above maturity schedule should not be regarded as a forecast of future cash collections. The following table summarizes contractual maturities of loans due after one year by repricing characteristic:



	At December 31, 2012
	Over 1 But Within 5 Years		Over 5 Years
	(in millions)
Receivables at predetermined interest rates	$	2,921	$	6,371
Receivables at floating or adjustable rates	18,191		13,499
Total	$	21,112	$	19,870

Nonaccrual Loans Nonaccrual loans totaled $1.6 billion and $1.8 billion at December 31, 2012 and 2011, respectively. Interest income that would have been recorded if such nonaccrual loans had been current and in accordance with contractual terms was approximately $125 million in 2012 and $117 million in 2011. Interest income that was included in finance and other interest income on these loans was approximately $17 million in 2012 and $19 million in 2011. For an analysis of reserves for credit losses, see Note 9, “Allowance for Credit Losses.”

Nonaccrual loans and accruing receivables 90 days or more delinquent are summarized in the following table:



At December 31,	2012		2011
	(in millions)
Nonaccrual loans:
Commercial:
Real Estate:
Construction and land loans	$	104	$	103
Other real estate	281		512
Business banking and middle markets enterprises	47		58
Global banking	18		137
Other commercial	13		15
Total commercial	463		825
Consumer:
Residential mortgages, excluding home equity mortgages	1,038		815
Home equity mortgages	86		89
Total residential mortgages⁽¹⁾⁽²⁾	1,124		904
Other consumer loans	5		8
Total consumer loans	1,129		912
Nonaccrual loans held for sale	37		91
Total nonaccruing loans	1,629		1,828
Accruing loans contractually past due 90 days or more:
Commercial:
Real Estate:
Construction and land loans	—		—
Other real estate	8		1
Business banking and middle market enterprises	28		11
Other commercial	1		2
Total commercial	37		14
Consumer:
Credit card receivables	15		20
Other consumer	28		27
Total consumer loans	43		47
Total accruing loans contractually past due 90 days or more	80		61
Total nonperforming loans	$	1,709	$	1,889


⁽¹⁾	Nonaccrual residential mortgages includes all receivables which are 90 or more days contractually delinquent as well as second lien loans where the first lien loan that we own or service is 90 or more days contractually delinquent.


⁽²⁾	In 2012 we reclassified $66 million of residential mortgage loans discharged under Chapter 7 bankruptcy and not re-affirmed to nonaccrual, consistent with recently issued regulatory guidance. Interest income reversed on these loans was not material.

Impaired Loans A loan is considered to be impaired when it is deemed probable that not all principal and interest amounts due according to the contractual terms of the loan agreement will be collected. Probable losses from impaired loans are quantified and recorded as a component of the overall allowance for credit losses. Commercial and consumer loans for which we have modified the loan terms as part of a troubled debt restructuring are considered to be impaired loans. Additionally, commercial loans in nonaccrual status, or that have been partially charged-off or assigned a specific allowance for credit losses are also considered impaired loans.

Troubled debt restructurings Troubled debt restructurings represent loans for which the original contractual terms have been modified to provide for terms that are less than what we would be willing to accept for new loans with comparable risk because of deterioration in the borrower’s financial condition.

During the third quarter of 2011, we adopted a new Accounting Standards Update which provided additional guidance for determining whether a restructuring of a receivable meets the criteria to be reported as a TDR Loan. Under this new guidance, we have determined that substantially all consumer loans modified as a result of a financial difficulty, including all modifications with trial periods regardless of whether the modification was permanent or temporary, should be reported as TDR Loans. For residential mortgage loans purchased from HSBC Finance, we have determined that all re-ages, except first-time early stage delinquency re-ages where the customer has not been granted a prior re-age or modification since the first quarter of 2007, should be considered a TDR Loan. We believe that multiple or later stage delinquency re-ages or a need for a modification to any of the loan terms other than to provide a market rate of interest provides evidence that the borrower is experiencing financial difficulty. Exclusion of these first-time early stage delinquency re-ages from our reported TDR Loans was not material. As required, the new guidance was applied retrospectively to restructurings occurring on or after January 1, 2011 and resulted in the reporting of an additional $51 million of residential mortgage loans as TDR Loans at September 30, 2011 with credit loss reserves of $10 million associated with these loans. The incremental loan loss provision recorded for these loans during the third quarter using a discounted cash flow analysis was $7 million. For our HSBC Bank USA credit card portfolio, we reported an additional $1 million of credit card loans as TDR Loans at September 30, 2011 with credit loss reserves of less than $1 million associated with these loans. The incremental loan loss provision recorded for these loans during the third quarter using a discounted cash flow analysis was not material. The TDR Loan balances and related credit loss reserves for consumer loans reported as of December 31, 2010 use our previous definition of TDR Loans and, as such, are not comparable to balances in subsequent periods. The new guidance did not impact our reporting of TDR Loans for commercial loans.

Modifications for consumer and commercial loans may include changes to one or more terms of the loan, including, but not limited to, a change in interest rate, extension of the amortization period, reduction in payment amount and partial forgiveness or deferment of principal. A substantial amount of our modifications involve interest rate reductions which lower the amount of interest income we are contractually entitled to receive in future periods. Through lowering the interest rate and other loan term changes, we believe we are able to increase the amount of cash flow that will ultimately be collected from the loan, given the borrower’s financial condition. TDR Loans are reserved for either based on the present value of expected future cash flows discounted at the loans’ original effective interest rate which generally results in a higher reserve requirement for these loans or in the case of certain secured commercial loans, the estimated fair value of the underlying collateral. Once a consumer loan is classified as a TDR Loan, it continues to be reported as such until it is paid off or charged-off. For commercial loans, if subsequent performance is in accordance with the new terms and such terms reflect current market rates at the time of restructure, they will no longer be reported as a TDR loan beginning in the year after restructuring. During the last three years, approximately $11 million of commercial loans have met the criteria and have been removed from TDR classification.

The following table presents information about receivables which were modified during the twelve months ended December 31, 2012 and 2011 and as a result of this action became classified as TDR Loans.



Year Ended December 31,	2012		2011
	(in millions)
Commercial loans:
Construction and other real estate	$	78	$	70
Business banking and middle market enterprises	21		5
Total commercial	99		75
Consumer loans:
Residential mortgages	452		235
Credit cards	4		5
Total consumer	456		240
Total	$	555	$	315

The weighted-average contractual rate reduction for loans which became classified as TDR Loans during the twelve months ended December 31, 2012 and 2011 was 2.60 percent and 1.85 percent, respectively, for consumer loans. Weighted-average contractual rate reduction for commercial loans was not significant in both number of loans and rate.

The following tables present information about our TDR Loans and the related credit loss reserves for TDR Loans:



At December 31,	2012		2011
	(in millions)
TDR Loans⁽¹⁾⁽²⁾:
Commercial loans:
Construction and other real estate	$	343	$	342
Business banking and middle market enterprises	86		94
Other commercial	31		37
Total commercial	460		473
Consumer loans:
Residential mortgages⁽³⁾⁽⁴⁾	960		608
Credit cards	14		21
Total consumer	974		629
Total TDR Loans⁽⁵⁾	$	1,434	$	1,102



At December 31,	2012		2011
	(in millions)
Allowance for credit losses for TDR Loans⁽⁶⁾:
Commercial loans:
Construction and other real estate	$	23	$	17
Business banking and middle market enterprises	3		3
Other commercial	—		—
Total commercial	26		20
Consumer loans:
Residential mortgages	109		94
Credit cards	5		7
Total consumer	114		101
Total allowance for credit losses for TDR Loans	$	140	$	121


⁽¹⁾	TDR Loans are considered to be impaired loans. For consumer loans, all such loans are considered impaired loans regardless of accrual status. For commercial loans, impaired loans include other loans in addition to TDRs which totaled $237 million and $614 million at December 31, 2012 and 2011, respectively.


⁽²⁾	The TDR Loan balances included in the table above reflect the current carrying amount of TDR Loans and includes all basis adjustments on the loan, such as unearned income, unamortized deferred fees and costs on originated loans, partial charge-offs and premiums or discounts on purchased loans. The following table reflects the unpaid principal balance of TDR Loans:



At December 31,	2012		2011
	(in millions)
Commercial loans:
Construction and other real estate	$	398	$	393
Business banking and middle market enterprises	137		147
Other commercial	34		40
Total commercial	569		580
Consumer loans:
Residential mortgages	1,118		682
Credit cards	14		20
Total consumer	1,132		702
Total	$	1,701	$	1,282


⁽³⁾	Includes $608 million and $303 million at December 31, 2012 and 2011, respectively, of loans that are recorded at the lower of amortized cost or fair value of the collateral less cost to sell.


⁽⁴⁾	In 2012, we added $170 million of loans discharged under Chapter 7 bankruptcy and not re-affirmed to our residential mortgage TDR Loan balances, which were written down to the lower of amortized cost or fair value of the collateral less cost to sell consistent with new regulatory guidance issued in the third quarter of 2012.


⁽⁵⁾	Includes balances of $519 million and $331 million at December 31, 2012 and 2011, respectively, which are classified as nonaccrual loans.


⁽⁶⁾	Included in the allowance for credit losses.

Additional information relating to TDR Loans is presented in the table below.



Year Ended December 31,	2012		2011		2010
	(in millions)
Average balance of TDR Loans
Commercial loans:
Construction and other real estate	$	360	$	346	$	273
Business banking and middle market enterprises	91		89		71
Other commercial	33		44		51
Total commercial	484		479		395
Consumer loans:
Residential mortgages	738		532		305
Credit cards	16		23		23
Auto finance⁽¹⁾	—		—		28
Total consumer	754		555		356
Total average balance of TDR Loans	$	1,238	$	1,034	$	751
Interest income recognized on TDR Loans
Commercial loans:
Construction and other real estate	$	8	$	9	$	3
Business banking and middle market enterprises	—		—		—
Other commercial	4		5		5
Total commercial	12		14		8
Consumer loans:
Residential mortgages	33		20		12
Credit cards	1		1		2
Auto finance⁽¹⁾	—		—		2
Total consumer	34		21		16
Total interest income recognized on TDR Loans	$	46	$	35	$	24


⁽¹⁾	In August 2010, we sold auto finance loans with an outstanding principal balance of $1.2 billion at the date of sale, and other related assets to Santander Consumer USA (“SC USA”).

The following table presents loans which were classified as TDR Loans during the previous 12 months which for commercial loans became 90 days or greater contractually delinquent or for consumer loans became 60 days or greater contractually delinquent during the twelve months ended December 31, 2012 and 2011:



Year ended December 31.	2012		2011
	(in millions)
Commercial loans:
Construction and other real estate	$	27	$	42
Business banking and middle market enterprises	—		—
Other commercial	—		—
Total commercial	27		42
Consumer loans:
Residential mortgages	86		71
Credit cards	—		4
Total consumer	86		75
Total	$	113	$	117

Impaired commercial loans Impaired commercial loan statistics are summarized in the following table:



	Amount with Impairment Reserves		Amount without Impairment Reserves		Total Impaired Commercial Loans⁽¹⁾⁽²⁾		Impairment Reserve
	(in millions)
At December 31, 2012
Construction and other real estate	$	192	$	305	$	497	$	86
Business banking and middle market enterprises	57		49		106		10
Global banking	—		18		18		—
Other commercial	1		75		76		—
Total	$	250	$	447	$	697	$	96
At December 31, 2011
Construction and other real estate	$	391	$	342	$	733	$	114
Business banking and middle market enterprises	68		59		127		12
Global banking	137		—		137		90
Other commercial	1		89		90		—
Total	$	597	$	490	$	1,087	$	216


⁽¹⁾	Includes impaired commercial loans which are also considered TDR Loans as follows:



At December 31,	2012		2011
	(in millions)
Construction and other real estate	$	343	$	342
Business banking and middle market enterprises	86		94
Other commercial	31		37
Total	$	460	$	473


⁽²⁾	The impaired commercial loan balances included in the table above reflect the current carrying amount of the loan and includes all basis adjustments, such as unamortized deferred fees and costs on originated loans and any premiums or discounts. The unpaid principal balance of impaired commercial loans included in the table above are as follows:



At December 31,	2012		2011
	(in millions)
Construction and other real estate	$	552	$	784
Business banking and middle market enterprises	157		180
Global banking	18		137
Other commercial	79		93
Total	$	806	$	1,194

The following table presents information about average impaired commercial loan balances and interest income recognized on the impaired commercial loans:



Year Ended December 31,	2012		2011		2010
	(in millions)
Average balance of impaired commercial loans:
Construction and other real estate	$	602	$	744	$	638
Business banking and middle market enterprises	119		151		127
Global banking	86		107		149
Other commercial	86		111		155
Total average balance of impaired commercial loans	$	893	$	1,113	$	1,069
Interest income recognized on impaired commercial loans:
Construction and other real estate	$	11	$	9	$	4
Business banking and middle market enterprises	5		4		2
Global banking	—		1		5
Other commercial	3		3		—
Total interest income recognized on impaired commercial loans	$	19	$	17	$	11

Commercial Loan Credit Quality Indicators The following credit quality indicators are monitored for our commercial loan portfolio:

Criticized asset classifications These classifications are based on the risk rating standards of our primary regulator. Problem loans are assigned various criticized facility grades. We also assign obligor grades which are used under our allowance for credit losses methodology. Criticized assets for commercial loans are summarized in the following table:



	Special Mention		Substandard		Doubtful		Total
	(in millions)
At December 31, 2012
Construction and other real estate	$	627	$	677	$	105	$	1,409
Business banking and middle market enterprises	369		115		10		494
Global banking	93		50		—		143
Other commercial	36		74		2		112
Total	$	1,125	$	916	$	117	$	2,158
At December 31, 2011
Construction and other real estate	$	1,009	$	990	$	186	$	2,185
Business banking and middle market enterprises	445		241		12		698
Global banking	45		397		109		551
Other commercial	99		131		—		230
Total	$	1,598	$	1,759	$	307	$	3,664

Nonperforming The status of our commercial loan portfolio is summarized in the following table:



	Performing Loans		Nonaccrual Loans		Accruing Loans Contractually Past Due 90 days or More		Total
	(in millions)
At December 31, 2012
Commercial:
Construction and other real estate	$	8,064	$	385	$	8	$	8,457
Business banking and middle market enterprise	12,533		47		28		12,608
Global banking	19,991		18		—		20,009
Other commercial	3,062		13		1		3,076
Total commercial – continuing operations	$	43,650	$	463	$	37	$	44,150
At December 31, 2011
Commercial:
Construction and other real estate	$	7,244	$	615	$	1	$	7,860
Business banking and middle market enterprise	10,156		58		11		10,225
Global banking	12,521		137		—		12,658
Other commercial	2,889		15		2		2,906
Total commercial – continuing operations	$	32,810	$	825	$	14	$	33,649

Credit risk profile The following table shows the credit risk profile of our commercial loan portfolio:



	Investment Grade⁽¹⁾		Non-Investment Grade		Total
	(in millions)
At December 31, 2012
Construction and other real estate	$	4,727	$	3,730	$	8,457
Business banking and middle market enterprises	6,012		6,596		12,608
Global banking	16,206		3,803		20,009
Other commercial	1,253		1,823		3,076
Total commercial	$	28,198	$	15,952	$	44,150
At December 31, 2011
Construction and other real estate	$	3,133	$	4,727	$	7,860
Business banking and middle market enterprises	4,612		5,613		10,225
Global banking	9,712		2,946		12,658
Other commercial	843		2,063		2,906
Total commercial	$	18,300	$	15,349	$	33,649


⁽¹⁾	Investment grade includes commercial loans with credit ratings of at least BBB- or above or the equivalent based on our internal credit rating system.

Consumer Loan Credit Quality Indicators The following credit quality indicators are utilized for our consumer loan portfolio:

Delinquency The following table summarizes dollars of two-months-and-over contractual delinquency and as a percent of total loans and loans held for sale (“delinquency ratio”) for our consumer loan portfolio:



	December 31, 2012				December 31, 2011
	Dollars of Delinquency		Delinquency Ratio		Dollars of Delinquency		Delinquency Ratio
	(dollars are in millions)
Consumer:
Residential mortgage, excluding home equity mortgages⁽¹⁾	$	1,233	7.78	%	$	1,101	7.19	%
Home equity mortgages	75		3.23		99		2.89
Total residential mortgages	1,308		7.20		1,200		6.41
Credit card receivables	21		2.58		28		2.25
Other consumer	30		4.52		30		3.17
Total consumer	$	1,359	6.92	%	$	1,258	6.01	%


⁽¹⁾	At December 31, 2012 and 2011, residential mortgage loan delinquency includes $997 million and $803 million, respectively, of loans that are carried at the lower of amortized cost or fair value less cost to sell.

Nonperforming The status of our consumer loan portfolio for both continuing and discontinued operations is summarized in the following table:



	Performing Loans		Nonaccrual Loans		Accruing Loans Contractually Past Due 90 days or More		Total
	(in millions)
At December 31, 2012
Consumer:
Residential mortgage, excluding home equity mortgages	$	14,333	$	1,038	$	—	$	15,371
Home equity mortgages	2,238		86		—		2,324
Total residential mortgages⁽¹⁾	16,571		1,124		—		17,695
Credit card receivables	800		—		15		815
Other consumer	565		5		28		598
Total consumer	$	17,936	$	1,129	$	43	$	19,108
At December 31, 2011
Consumer:
Residential mortgage, excluding home equity mortgages	$	13,298	$	815	$	—	$	14,113
Home equity mortgages	2,474		89		—		2,563
Total residential mortgages	15,772		904		—		16,676
Credit card receivables	808		—		20		828
Other consumer	679		8		27		714
Total consumer	$	17,259	$	912	$	47	$	18,218


⁽¹⁾	In 2012, we reclassified $66 million of residential mortgage loans discharged under Chapter 7 bankruptcy and not re-affirmed to nonaccrual, consistent with recently issued regulatory guidance. Interest income reversed on these loans was not material.

Troubled debt restructurings See discussion of impaired loans above for further details on this credit quality indicator.

Concentration of Credit Risk A concentration of credit risk is defined as a significant credit exposure with an individual or group engaged in similar activities or affected similarly by economic conditions. We enter into a variety of transactions in the normal course of business that involve both on and off-balance sheet credit risk. Principal among these activities is lending to various commercial, institutional, governmental and individual customers. We participate in lending activity throughout the United States and internationally. In general, we manage the varying degrees of credit risk involved in on and off-balance sheet transactions through specific credit policies. These policies and procedures provide for a strict approval, monitoring and reporting process. It is our policy to require collateral when it is deemed appropriate. Varying degrees and types of collateral are secured depending upon management’s credit evaluation. As with any nonconforming and non-prime loan products, we utilize high underwriting standards and price these loans in a manner that is appropriate to compensate for higher risk.

Our loan portfolio includes the following types of loans:


•	High loan-to-value (“LTV”) loans – Certain residential mortgages on primary residences with LTV ratios equal to or exceeding 90 percent at the time of origination and no mortgage insurance, which could result in the potential inability to recover the entire investment in loans involving foreclosed or damaged properties.


•	Interest-only loans – A loan which allows a customer to pay the interest-only portion of the monthly payment for a period of time which results in lower payments during the initial loan period. However, subsequent events affecting a customer’s financial position could affect the ability of customers to repay the loan in the future when the principal payments are required.


•	Adjustable rate mortgage (“ARM”) loans – A loan which allows us to adjust pricing on the loan in line with market movements. A customer’s financial situation and the general interest rate environment at the time of the interest rate reset could affect the customer’s ability to repay or refinance the loan after the adjustment.

The following table summarizes the balances of high LTV, interest-only and ARM loans in our loan portfolios, including certain loans held for sale, at December 31, 2012 and 2011, respectively.



At December 31,	2012		2011
	(in billions)
Residential mortgage loans with high LTV and no mortgage insurance⁽¹⁾	$	.9	$	1.1
Interest-only residential mortgage loans	4.0		3.9
ARM loans⁽²⁾	10.4		9.9


⁽¹⁾	Residential mortgage loans with high LTV and no mortgage insurance includes both fixed rate and adjustable rate mortgages. Excludes $20 million and $68 million of subprime residential mortgage loans held for sale at December 31, 2012 and 2011, respectively.


⁽²⁾	ARM loan balances above exclude $19 million and $28 million of subprime residential mortgage loans held for sale at December 31, 2012 and 2011, respectively. In 2013 and 2014, approximately $313 million and $356 million, respectively, of the ARM loans will experience their first interest rate reset.

Concentrations of first and second liens within the outstanding residential mortgage loan portfolio are summarized in the following table. Amounts in the table exclude residential mortgage loans held for sale of $472 million and $2,058 million at December 31, 2012 and 2011, respectively.



At December 31,	2012		2011
	(in millions)
Closed end:
First lien	$	15,371	$	14,113
Second lien	186		237
Revolving:
Second lien	2,138		2,326
Total	$	17,695	$	16,676

Regional exposure at December 31, 2012 for certain loan portfolios is summarized in the following table.



	Commercial Construction and Other Real Estate Loans		Residential Mortgage Loans		Credit Card Receivables
New York State	42.9	%	34.5	%	56.9	%
North Central United States	4.6		6.6		3.7
North Eastern United States	9.8		9.3		12.3
Southern United States	19.9		16.0		13.9
Western United States	22.8		33.3		11.0
Others	—		0.3		2.2
Total	100.0	%	100.0	%	100.0	%