4. Loans and Loans Held for Sale



in millions	September 30, 2017		December 31, 2016
Commercial and industrial ^(a)	$	41,147	$	39,768
Commercial real estate:
Commercial mortgage	14,929		15,111
Construction	1,954		2,345
Total commercial real estate loans	16,883		17,456
Commercial lease financing ^(b)	4,716		4,685
Total commercial loans	62,746		61,909
Residential — prime loans:
Real estate — residential mortgage	5,476		5,547
Home equity loans	12,238		12,674
Total residential — prime loans	17,714		18,221
Consumer direct loans	1,789		1,788
Credit cards	1,045		1,111
Consumer indirect loans	3,198		3,009
Total consumer loans	23,746		24,129
Total loans^{(c), (d)}	$	86,492	$	86,038


(a)	Loan balances include $118 million and $116 million of commercial credit card balances at September 30, 2017, and December 31, 2016, respectively.

(b)

Commercial lease financing includes receivables held as collateral for a secured borrowing of $31 million and $68 million at September 30, 2017, and December 31, 2016, respectively. Principal reductions are based on the cash payments received from these related receivables. Additional information pertaining to this secured borrowing is included in Note 19 (“Long-Term Debt”) beginning on page 191 of our 2016 Form 10-K.


(c)	At September 30, 2017, total loans include purchased loans of $16.7 billion of which $783 million were PCI loans. At December 31, 2016, total loans include purchased loans of $21 billion, of which $865 million were PCI loans.


(d)	Total loans exclude loans of $1.4 billion at September 30, 2017, and $1.6 billion at December 31, 2016, related to the discontinued operations of the education lending business. Additional information pertaining to these loans is provided in Note 12 (“Acquisition, Divestiture, and Discontinued Operations”).

Our loans held for sale are summarized as follows:



in millions	September 30, 2017		December 31, 2016
Commercial and industrial	$	34	$	19
Real estate — commercial mortgage	1,246		1,022
Real estate — construction	—		1
Commercial lease financing	1		—
Real estate — residential mortgage ^(a)	60		62
Total loans held for sale	$	1,341	$	1,104

(a)

Real estate — residential mortgage loans held for sale are held at fair value at September 30, 2017, and December 31, 2016. The fair value option was elected for real estate — residential mortgage loans held for sale during the third quarter of 2016 with the First Niagara acquisition. The contractual amount due on these loans totaled $60 million at September 30, 2017, and $62 million at December 31, 2016. Changes in fair value are recorded in “Consumer mortgage income” on the income statement. Additional information regarding residential mortgage loans held for sale fair value methodology is provided in Note 6 (“Fair Value Measurements”).

Our quarterly summary of changes in loans held for sale is provided below:



in millions	September 30, 2017			June 30, 2017			December 31, 2016
Balance at beginning of the period	$	1,743		$	1,384		$	1,137
New originations	2,855			2,876			2,846
Transfers from (to) held to maturity, net	(63		)	(7		)	11
Loan sales	(3,191		)	(2,507		)	(2,889		)
Loan draws (payments), net	(3		)	(3		)	(1		)
Balance at end of period ^(a)	$	1,341		$	1,743		$	1,104


(a)	Total loans held for sale include real estate — residential mortgage loans held for sale at fair value of $60 million at September 30, 2017, $63 million at June 30, 2017, and $62 million at December 31, 2016.