NOTE 4—LOANS

Loan Portfolio Composition

Our loan portfolio consists of loans held for investment, including restricted loans underlying our consolidated securitization trusts, and loans held for sale, and is divided into three portfolio segments: credit card, consumer banking and commercial banking loans. Credit card loans consist of domestic and international credit card loans. Consumer banking loans consist of auto, home and retail banking loans. Commercial banking loans consist of commercial and multifamily real estate, commercial and industrial, and small-ticket commercial real estate loans.

Our portfolio of loans held for investment also includes loans acquired in the ING Direct, CCB and 2012 U.S. card acquisitions. See “MD&A—Glossary and Acronyms” for the definition of ING Direct, CCB and 2012 U.S. card acquisitions. These loans were recorded at fair value at the date of each acquisition and are referred to as Acquired Loans. The substantial majority of the loans purchased in the 2012 U.S. card acquisition had existing revolving privileges; therefore, they were excluded from Acquired Loans and accounted for based on contractual cash flows at acquisition. See “Note 1—Summary of Significant Accounting Policies” in our 2014 Form 10-K for additional information on accounting guidance for these loans.

Credit Quality

We closely monitor economic conditions and loan performance trends to manage and evaluate our exposure to credit risk. Trends in delinquency ratios are an indicator, among other considerations, of credit risk within our loan portfolio. The level of nonperforming loans represents another indicator of the potential for future credit losses. Accordingly, key metrics we track and use in evaluating the credit quality of our loan portfolio include delinquency and nonperforming loan rates, as well as net charge-off rates and our internal risk ratings of larger balance commercial loans. The table below presents the composition and an aging analysis of our loans held for investment portfolio, which includes restricted loans for securitization investors, as of September 30, 2015 and December 31, 2014. The delinquency aging includes all past due loans, both performing and nonperforming.

Table 4.1: Loan Portfolio Composition and Aging Analysis



	September 30, 2015
(Dollars in millions)	Current		30-59 Days		60-89 Days		> 90 Days		Total Delinquent Loans			Acquired Loans		Total Loans
Credit Card:
Domestic credit card⁽¹⁾	$	79,481	$	894	$	607	$	1,196	$	2,697		$	0	$	82,178
International credit card	7,687		107		65		98		270			0		7,957
Total credit card	87,168		1,001		672		1,294		2,967			0		90,135
Consumer Banking:
Auto	38,348		1,712		791		201		2,704			0		41,052
Home loan	6,516		48		22		178		248			19,576		26,340
Retail banking	3,519		20		5		18		43			36		3,598
Total consumer banking	48,383		1,780		818		397		2,995			19,612		70,990
Commercial Banking:
Commercial and multifamily real estate	23,487		31		29		4		64			34		23,585
Commercial and industrial	27,525		82		24		145		251			97		27,873
Total commercial lending	51,012		113		53		149		315			131		51,458
Small-ticket commercial real estate	648		2		2		2		6			0		654
Total commercial banking	51,660		115		55		151		321			131		52,112
Other loans	81		3		1		7		11			0		92
Total loans⁽²⁾	$	187,292	$	2,899	$	1,546	$	1,849	$	6,294		$	19,743	$	213,329
% of Total loans	87.79%		1.36%		0.72%		0.87%		2.95		%	9.26%		100.00		%



	December 31, 2014
(Dollars in millions)	Current		30-59 Days		60-89 Days		> 90 Days		Total Delinquent Loans			Acquired Loans		Total Loans
Credit Card:
Domestic credit card⁽¹⁾	$	75,143	$	790	$	567	$	1,181	$	2,538		$	23	$	77,704
International credit card	7,878		114		69		111		294			0		8,172
Total credit card	83,021		904		636		1,292		2,832			23		85,876
Consumer Banking:
Auto	35,142		1,751		734		197		2,682			0		37,824
Home loan	6,492		57		27		218		302			23,241		30,035
Retail banking	3,496		17		7		16		40			44		3,580
Total consumer banking	45,130		1,825		768		431		3,024			23,285		71,439
Commercial Banking:
Commercial and multifamily real estate	22,974		74		7		36		117			46		23,137
Commercial and industrial	26,753		29		10		34		73			146		26,972
Total commercial lending	49,727		103		17		70		190			192		50,109
Small-ticket commercial real estate	771		6		1		3		10			0		781
Total commercial banking	50,498		109		18		73		200			192		50,890
Other loans	97		3		2		9		14			0		111
Total loans⁽²⁾	$	178,746	$	2,841	$	1,424	$	1,805	$	6,070		$	23,500	$	208,316
% of Total loans	85.81%		1.36%		0.68%		0.87%		2.91		%	11.28%		100.00		%

__________


⁽¹⁾	Includes installment loans of $97 million and $144 million as of September 30, 2015 and December 31, 2014, respectively.


⁽²⁾	Loans as presented are net of unearned income, unamortized premiums and discounts, and unamortized deferred fees and costs totaling $901 million and $1.1 billion as of September 30, 2015 and December 31, 2014, respectively.

We had total loans held for sale of $566 million and $626 million as of September 30, 2015 and December 31, 2014, respectively.

Table 4.2 presents the outstanding balance of loans 90 days or more past due that continue to accrue interest and loans classified as nonperforming as of September 30, 2015 and December 31, 2014.

Table 4.2: 90+ Day Delinquent Loans Accruing Interest and Nonperforming Loans⁽¹⁾



	September 30, 2015				December 31, 2014
(Dollars in millions)	> 90 Days and Accruing		Nonperforming Loans		> 90 Days and Accruing		Nonperforming Loans
Credit Card:
Domestic credit card	$	1,196	$	0	$	1,181	$	0
International credit card	65		61		73		70
Total credit card	1,261		61		1,254		70
Consumer Banking:
Auto	0		201		0		197
Home loan	0		310		0		330
Retail banking	0		27		1		22
Total consumer banking	0		538		1		549
Commercial Banking:
Commercial and multifamily real estate	0		8		7		62
Commercial and industrial	1		441		1		106
Total commercial lending	1		449		8		168



	September 30, 2015				December 31, 2014
(Dollars in millions)	> 90 Days and Accruing		Nonperforming Loans		> 90 Days and Accruing		Nonperforming Loans
Small-ticket commercial real estate	0		4		0		7
Total commercial banking	1		453		8		175
Other loans	0		11		0		15
Total	$	1,262	$	1,063	$	1,263	$	809
% of Total loans	0.59%		0.50%		0.61%		0.39%

__________


⁽¹⁾	Nonperforming loans generally include loans that have been placed on nonaccrual status. Acquired Loans are excluded from loans reported as 90 days and accruing interest as well as nonperforming loans.

Credit Card

Our credit card loan portfolio is highly diversified across millions of accounts and numerous geographies without significant individual exposure. We therefore generally manage credit risk on a portfolio basis. The risk in our credit card portfolio correlates to broad economic trends, such as unemployment rates, gross domestic product (“GDP”), home values, as well as customer liquidity, all of which can have a material effect on credit performance. The primary factors we assess in monitoring the credit quality and risk of our credit card portfolio are delinquency and charge-off trends, including an analysis of the migration of loans between delinquency categories over time.

The table below displays the geographic profile of our credit card loan portfolio as of September 30, 2015 and December 31, 2014. We also present net charge-offs for the three and nine months ended September 30, 2015 and 2014.

Table 4.3: Credit Card: Risk Profile by Geographic Region and Delinquency Status



	September 30, 2015			December 31, 2014
(Dollars in millions)	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾
Domestic credit card:
California	$	9,310	10.3%	$	8,574	10.0%
New York	6,042		6.7	5,610		6.5
Texas	5,901		6.5	5,382		6.3
Florida	5,260		5.8	4,794		5.6
Illinois	3,870		4.3	3,747		4.4
Pennsylvania	3,521		3.9	3,581		4.2
Ohio	3,136		3.5	3,075		3.6
New Jersey	3,004		3.3	2,868		3.3
Michigan	2,754		3.1	2,681		3.1
Other	39,380		43.8	37,392		43.5
Total domestic credit card	82,178		91.2	77,704		90.5
International credit card:
Canada	4,698		5.2	4,747		5.5
United Kingdom	3,259		3.6	3,425		4.0
Total international credit card	7,957		8.8	8,172		9.5
Total credit card	$	90,135	100.0%	$	85,876	100.0	%

__________


⁽¹⁾	Percentages by geographic region within the domestic and international credit card portfolios are calculated based on the total held for investment credit card loans as of the end of the reported period.

Table 4.4: Credit Card: Net Charge-offs



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
(Dollars in millions)	Amount		Rate	Amount		Rate	Amount		Rate	Amount		Rate
Net charge-offs:⁽¹⁾
Domestic credit card	$	619	3.08%	$	508	2.83%	$	1,933	3.35%	$	1,818	3.45%
International credit card	36		1.80	64		3.32	144		2.41	219		3.81
Total credit card	$	655	2.96	$	572	2.88	$	2,077	3.26	$	2,037	3.48

__________


⁽¹⁾	The net charge-off rate is calculated for each loan category by dividing annualized net charge-offs for the period by average loans held for investment during the period. Net charge-offs and the net-charge off rate are impacted periodically by fluctuations in recoveries, including impacts of debt sales.

Consumer Banking

Our consumer banking loan portfolio consists of auto, home loan and retail banking loans. Similar to our credit card loan portfolio, the risk in our consumer banking loan portfolio correlates to broad economic trends, such as unemployment rates, GDP, and home values, as well as customer liquidity, all of which can have a material effect on credit performance. Delinquency, nonperforming loans and charge-off trends are key factors we assess in monitoring the credit quality and risk of our consumer banking loan portfolio.

The table below displays the geographic profile of our consumer banking loan portfolio, including Acquired Loans. We also present the delinquency and nonperforming loan rates of our consumer banking loan portfolio as of September 30, 2015 and December 31, 2014, and net charge-offs for the three and nine months ended September 30, 2015 and 2014.

Table 4.5: Consumer Banking: Risk Profile by Geographic Region, Delinquency Status and Performing Status



	September 30, 2015			December 31, 2014
(Dollars in millions)	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾
Auto:
Texas	$	5,449	7.7%	$	5,248	7.4%
California	4,502		6.3	4,081		5.7
Florida	3,216		4.5	2,737		3.8
Georgia	2,230		3.1	2,066		2.9
Louisiana	1,889		2.7	1,773		2.5
Illinois	1,839		2.6	1,676		2.4
Ohio	1,711		2.4	1,566		2.2
Other	20,216		28.5	18,677		26.1
Total auto	41,052		57.8	37,824		53.0
Home loan:
California	6,044		8.5	6,943		9.7
New York	2,243		3.2	2,452		3.4
Illinois	1,598		2.3	1,873		2.6
Maryland	1,580		2.2	1,720		2.4
Virginia	1,403		2.0	1,538		2.2
New Jersey	1,367		1.9	1,529		2.1
Florida	1,213		1.7	1,375		1.9
Other	10,892		15.3	12,605		17.7
Total home loan	26,340		37.1	30,035		42.0



	September 30, 2015			December 31, 2014
(Dollars in millions)	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾
Retail banking:
Louisiana	1,097		1.5	1,120		1.5
New York	901		1.3	881		1.2
Texas	763		1.1	756		1.1
New Jersey	250		0.4	265		0.4
Maryland	175		0.2	167		0.2
Virginia	146		0.2	132		0.2
Other	266		0.4	259		0.4
Total retail banking	3,598		5.1	3,580		5.0
Total consumer banking	$	70,990	100.0%	$	71,439	100.0%



	September 30, 2015										December 31, 2014
	30+ day Delinquencies			90+ day Delinquencies				Nonperforming Loans			30+ day Delinquencies			90+ day Delinquencies			Nonperforming Loans
(Dollars in millions)	Amount		Rate	Amount		Rate		Amount		Rate	Amount		Rate	Amount		Rate	Amount		Rate
Auto	$	2,704	6.59%	$	201	0.49	%	$	201	0.49%	$	2,682	7.09%	$	197	0.52%	$	197	0.52	%
Home Loan⁽²⁾	248		0.94	178		0.67		310		1.18	302		1.01	218		0.73	330		1.10
Retail Banking	43		1.20	18		0.51		27		0.74	40		1.11	16		0.44	22		0.61
Total Consumer Banking⁽²⁾	$	2,995	4.22	$	397	0.56		$	538	0.76	$	3,024	4.23	$	431	0.60	$	549	0.77

__________


⁽¹⁾	Percentages by geographic region are calculated based on the total held for investment consumer banking loans as of the end of the reported period.

⁽²⁾

Excluding the impact of Acquired Loans, the 30+ day delinquency rates, 90+ day delinquency rates, and the nonperforming loans rates for our home loan portfolio were 3.66%, 2.62% and 4.59% as of September 30, 2015; and 4.45%, 3.21% and 4.86% as of December 31, 2014; and for the total consumer banking loan portfolio were 5.83%, 0.77% and 1.05% as of September 30, 2015; and 6.28%, 0.89% and 1.14% as of December 31, 2014.

Table 4.6: Consumer Banking: Net Charge-offs



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
(Dollars in millions)	Amount		Rate⁽¹⁾	Amount		Rate⁽¹⁾	Amount		Rate⁽¹⁾	Amount		Rate⁽¹⁾
Net charge-offs:
Auto	$	188	1.85%	$	176	1.98%	$	457	1.54%	$	421	1.65%
Home loan	1		0.01	2		0.02	6		0.03	12		0.05
Retail banking	14		1.53	12		1.36	35		1.30	27		1.00
Total consumer banking	$	203	1.14	$	190	1.07	$	498	0.93	$	460	0.87

__________

⁽¹⁾

Calculated for each loan category by dividing annualized net charge-offs for the period by average loans held for investment during the period. Excluding the impact of Acquired Loans, the net charge-off rates for our home loan portfolio and the total consumer banking loan portfolio were 0.05% and 1.58%, respectively, for the three months ended September 30, 2015, compared to 0.11% and 1.65%, respectively, for the three months ended September 30, 2014; and 0.11% and 1.33%, respectively, for the nine months ended September 30, 2015, compared to 0.22% and 1.37%, respectively, for the nine months ended September 30, 2014.

Home Loan

Our home loan portfolio consists of both first-lien and second-lien residential mortgage loans. In evaluating the credit quality and risk of our home loan portfolio, we continually monitor a variety of mortgage loan characteristics that may affect the default experience on our overall home loan portfolio, such as vintage, geographic concentrations, lien priority and product type. Certain loan concentrations have experienced higher delinquency rates as a result of the significant decline in home prices after the peak in 2006 and subsequent rise in unemployment. These loan concentrations include loans originated between 2006 and 2008 in an environment of decreasing home sales, broadly declining home prices and more relaxed underwriting standards.

The following table presents the distribution of our home loan portfolio as of September 30, 2015 and December 31, 2014, based on selected key risk characteristics.

Table 4.7: Home Loan: Risk Profile by Vintage, Geography, Lien Priority and Interest Rate Type



	September 30, 2015
	Loans			Acquired Loans			Total Home Loans
(Dollars in millions)	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾
Origination year:⁽²⁾
< = 2006	$	2,418	9.2%	$	5,014	19.0%	$	7,432	28.2%
2007	281		1.0	4,282		16.3	4,563		17.3
2008	165		0.6	3,033		11.5	3,198		12.1
2009	103		0.4	1,600		6.1	1,703		6.5
2010	102		0.4	2,392		9.1	2,494		9.5
2011	185		0.7	2,696		10.2	2,881		10.9
2012	1,355		5.2	426		1.6	1,781		6.8
2013	578		2.2	73		0.3	651		2.5
2014	698		2.7	32		0.1	730		2.8
2015	879		3.3	28		0.1	907		3.4
Total	$	6,764	25.7%	$	19,576	74.3%	$	26,340	100.0%
Geographic concentration:⁽³⁾
California	$	906	3.4%	$	5,138	19.5%	$	6,044	22.9%
New York	1,306		5.0	937		3.6	2,243		8.6
Illinois	90		0.4	1,508		5.7	1,598		6.1
Maryland	495		1.9	1,085		4.1	1,580		6.0
Virginia	423		1.6	980		3.7	1,403		5.3
New Jersey	348		1.3	1,019		3.9	1,367		5.2
Florida	158		0.6	1,055		4.0	1,213		4.6
Arizona	83		0.3	1,057		4.0	1,140		4.3
Louisiana	1,102		4.2	29		0.1	1,131		4.3
Washington	114		0.4	844		3.2	958		3.6
Other	1,739		6.6	5,924		22.5	7,663		29.1
Total	$	6,764	25.7%	$	19,576	74.3%	$	26,340	100.0	%
Lien type:
1^st lien	$	5,764	21.9%	$	19,246	73.1%	$	25,010	95.0%
2^nd lien	1,000		3.8	330		1.2	1,330		5.0
Total	$	6,764	25.7%	$	19,576	74.3%	$	26,340	100.0%
Interest rate type:
Fixed rate	$	2,708	10.3%	$	2,294	8.7%	$	5,002	19.0%
Adjustable rate	4,056		15.4	17,282		65.6	21,338		81.0
Total	$	6,764	25.7%	$	19,576	74.3%	$	26,340	100.0%



	December 31, 2014
	Loans				Acquired Loans				Total Home Loans
(Dollars in millions)	Amount		% of Total⁽¹⁾		Amount		% of Total⁽¹⁾		Amount		% of Total⁽¹⁾
Origination year:⁽²⁾
< = 2006	$	2,827	9.4%		$	5,715	19.1	%	$	8,542	28.5	%
2007	320		1.1		4,766		15.8		5,086		16.9
2008	187		0.6		3,494		11.7		3,681		12.3
2009	107		0.4		1,999		6.6		2,106		7.0
2010	120		0.4		3,108		10.3		3,228		10.7
2011	221		0.7		3,507		11.7		3,728		12.4
2012	1,620		5.4		533		1.8		2,153		7.2
2013	661		2.2		85		0.3		746		2.5
2014	731		2.4		34		0.1		765		2.5
Total	$	6,794	22.6	%	$	23,241	77.4%		$	30,035	100.0%
Geographic concentration:⁽³⁾
California	$	924	3.1%		$	6,019	20.0%		$	6,943	23.1%
New York	1,379		4.6		1,073		3.6		2,452		8.2
Illinois	86		0.3		1,787		5.9		1,873		6.2
Maryland	457		1.5		1,263		4.2		1,720		5.7
Virginia	385		1.3		1,153		3.8		1,538		5.1
New Jersey	341		1.1		1,188		4.0		1,529		5.1
Florida	161		0.5		1,214		4.1		1,375		4.6
Arizona	89		0.3		1,215		4.1		1,304		4.4
Louisiana	1,205		4.0		38		0.1		1,243		4.1
Washington	109		0.4		1,038		3.4		1,147		3.8
Other	1,658		5.5		7,253		24.2		8,911		29.7
Total	$	6,794	22.6%		$	23,241	77.4%		$	30,035	100.0%
Lien type:
1^st lien	$	5,756	19.2%		$	22,883	76.2%		$	28,639	95.4%
2^nd lien	1,038		3.4		358		1.2		1,396		4.6
Total	$	6,794	22.6	%	$	23,241	77.4	%	$	30,035	100.0	%
Interest rate type:
Fixed rate	$	2,446	8.1%		$	2,840	9.5%		$	5,286	17.6%
Adjustable rate	4,348		14.5		20,401		67.9		24,749		82.4
Total	$	6,794	22.6	%	$	23,241	77.4%		$	30,035	100.0%

__________


⁽¹⁾	Percentages within each risk category are calculated based on total home loans held for investment.


⁽²⁾	The Acquired Loans balances with an originate date in the years subsequent to 2012 are related to refinancing of previously acquired home loans.


⁽³⁾	States listed represents the ten states in which we have the highest concentration of home loans.

Our recorded investment in home loans for properties that are in process of foreclosure was $577 million as of September 30, 2015. We commence the foreclosure process on home loans when a borrower becomes at least 120 days delinquent in accordance with Consumer Financial Protection Bureau regulations. Foreclosure procedures and time lines vary according to state law. As of September 30, 2015 and December 31, 2014, the carrying value of the foreclosed residential real estate properties which we hold and report as other assets on our consolidated balance sheet totaled $118 million and $131 million, respectively.

Commercial Banking

We evaluate the credit risk of commercial loans individually and use a risk-rating system to determine the credit quality of our commercial loans. We assign internal risk ratings to loans based on relevant information about the ability of borrowers to service their debt. In determining the risk rating of a particular loan, among the factors considered are the borrower’s current financial condition, historical credit performance, projected future credit performance, prospects for support from financially responsible guarantors, the estimated realizable value of any collateral and current economic trends. The ratings scale based on our internal risk-rating system is as follows:


•	Noncriticized: Loans that have not been designated as criticized, frequently referred to as “pass” loans.


•	Criticized performing: Loans in which the financial condition of the obligor is stressed, affecting earnings, cash flows or collateral values. The borrower currently has adequate capacity to meet near-term obligations; however, the stress, left unabated, may result in deterioration of the repayment prospects at some future date.

•

Criticized nonperforming: Loans that are not adequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Loans classified as criticized nonperforming have a well-defined weakness, or weaknesses, which jeopardize the repayment of the debt. These loans are characterized by the distinct possibility that we will sustain a credit loss if the deficiencies are not corrected and are generally placed on nonaccrual status.

We use our internal risk-rating system for regulatory reporting, determining the frequency of credit exposure reviews, and evaluating and determining the allowance for loan and lease losses for commercial loans. Loans of $1 million or more designated as criticized performing and criticized nonperforming are reviewed quarterly by management for further deterioration or improvement to determine if they are appropriately classified/rated and whether impairment exists. Noncriticized loans greater than $1 million are specifically reviewed, at least annually, to determine the appropriate loan rating. In addition, we evaluate the risk rating during the renewal process of any loan or if a loan becomes past due.

The following table presents the geographic distribution and internal risk ratings of our commercial loan portfolio as of September 30, 2015 and December 31, 2014.

Table 4.8: Commercial Banking: Risk Profile by Geographic Region and Internal Risk Rating



	September 30, 2015
(Dollars in millions)	Commercial and Multifamily Real Estate		% of Total⁽¹⁾	Commercial and Industrial		% of Total⁽¹⁾		Small-ticket Commercial Real Estate		% of Total⁽¹⁾	Total Commercial Banking		% of Total⁽¹⁾
Geographic concentration:⁽²⁾
Northeast	$	14,670	62.2%	$	6,784	24.3%		$	401	61.3%	$	21,855	41.9%
Mid-Atlantic	2,743		11.6	2,246		8.1		25		3.9	5,014		9.6
South	3,718		15.8	11,491		41.2		42		6.4	15,251		29.3
Other	2,454		10.4	7,352		26.4		186		28.4	9,992		19.2
Total	$	23,585	100.0%	$	27,873	100.0%		$	654	100.0%	$	52,112	100.0%
Internal risk rating:⁽³⁾
Noncriticized	$	23,191	98.3%	$	26,096	93.6%		$	647	98.9%	$	49,934	95.8%
Criticized performing	386		1.6	1,336		4.8		3		0.5	1,725		3.3
Criticized nonperforming	8		0.1	441		1.6		4		0.6	453		0.9
Total	$	23,585	100.0%	$	27,873	100.0	%	$	654	100.0%	$	52,112	100.0%



	December 31, 2014
(Dollars in millions)	Commercial and Multifamily Real Estate		% of Total⁽¹⁾	Commercial and Industrial		% of Total⁽¹⁾	Small-ticket Commercial Real Estate		% of Total⁽¹⁾	Total Commercial Banking		% of Total⁽¹⁾
Geographic concentration:⁽²⁾
Northeast	$	15,135	65.4%	$	6,384	23.7%	$	478	61.2%	$	21,997	43.2%
Mid-Atlantic	2,491		10.8	2,121		7.9	30		3.8	4,642		9.1
South	3,070		13.3	12,310		45.6	48		6.2	15,428		30.3
Other	2,441		10.5	6,157		22.8	225		28.8	8,823		17.4
Total	$	23,137	100.0%	$	26,972	100.0%	$	781	100.0%	$	50,890	100.0%
Internal risk rating:⁽³⁾
Noncriticized	$	22,535	97.4%	$	25,982	96.3%	$	767	98.2%	$	49,284	96.9%
Criticized performing	540		2.3	884		3.3	7		0.9	1,431		2.8
Criticized nonperforming	62		0.3	106		0.4	7		0.9	175		0.3
Total	$	23,137	100.0%	$	26,972	100.0%	$	781	100.0%	$	50,890	100.0%

__________


⁽¹⁾	Percentages calculated based on total held for investment commercial loans in each respective loan category as of the end of the reported period.


⁽²⁾	Northeast consists of CT, ME, MA, NH, NJ, NY, PA and VT. Mid-Atlantic consists of DE, DC, MD, VA and WV. South consists of AL, AR, FL, GA, KY, LA, MS, MO, NC, SC, TN and TX.


⁽³⁾	Criticized exposures correspond to the “Special Mention,” “Substandard” and “Doubtful” asset categories defined by banking regulatory authorities.

Impaired Loans

The following table presents information about our impaired loans, excluding the impact of Acquired Loans, which is reported separately as of September 30, 2015 and December 31, 2014, and for the three and nine months ended September 30, 2015 and 2014:

Table 4.9: Impaired Loans⁽¹⁾



	September 30, 2015
(Dollars in millions)	With an Allowance		Without an Allowance		Total Recorded Investment		Related Allowance		Net Recorded Investment		Unpaid Principal Balance
Credit Card:
Domestic credit card	$	538	$	0	$	538	$	145	$	393	$	522
International credit card	128		0		128		63		65		124
Total credit card⁽²⁾	666		0		666		208		458		646
Consumer Banking:
Auto⁽³⁾	264		211		475		22		453		752
Home loan	223		134		357		16		341		450
Retail banking	52		7		59		12		47		60
Total consumer banking	539		352		891		50		841		1,262
Commercial Banking:
Commercial and multifamily real estate	86		4		90		13		77		93
Commercial and industrial	306		240		546		28		518		608
Total commercial lending	392		244		636		41		595		701
Small-ticket commercial real estate	5		0		5		0		5		6
Total commercial banking	397		244		641		41		600		707
Total	$	1,602	$	596	$	2,198	$	299	$	1,899	$	2,615



	Three Months Ended				Nine Months Ended
	September 30, 2015				September 30, 2015
(Dollars in millions)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Credit Card:
Domestic credit card	$	535	$	15	$	538	$	43
International credit card	133		2		137		7
Total credit card⁽²⁾	668		17		675		50
Consumer Banking:
Auto⁽³⁾	468		20		456		61
Home loan	360		2		363		4
Retail banking	55		0		55		1
Total consumer banking	883		22		874		66
Commercial Banking:
Commercial and multifamily real estate	112		0		115		2
Commercial and industrial	388		0		385		2
Total commercial lending	500		0		500		4
Small-ticket commercial real estate	8		0		7		0
Total commercial banking	508		0		507		4
Total	$	2,059	$	39	$	2,056	$	120



	December 31, 2014
(Dollars in millions)	With an Allowance		Without an Allowance		Total Recorded Investment		Related Allowance		Net Recorded Investment		Unpaid Principal Balance
Credit Card:
Domestic credit card	$	546	$	0	$	546	$	145	$	401	$	531
International credit card	146		0		146		74		72		141
Total credit card⁽²⁾	692		0		692		219		473		672
Consumer Banking:
Auto⁽³⁾	230		205		435		19		416		694
Home loan	218		149		367		17		350		472
Retail banking	45		5		50		6		44		52
Total consumer banking	493		359		852		42		810		1,218
Commercial Banking:
Commercial and multifamily real estate	120		26		146		23		123		163
Commercial and industrial	161		55		216		16		200		233
Total commercial lending	281		81		362		39		323		396
Small-ticket commercial real estate	3		5		8		0		8		10
Total commercial banking	284		86		370		39		331		406
Total	$	1,469	$	445	$	1,914	$	300	$	1,614	$	2,296



	Three Months Ended				Nine Months Ended
	September 30, 2014				September 30, 2014
(Dollars in millions)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Credit Card:
Domestic credit card	$	558	$	14	$	577	$	44
International credit card	159		3		164		9
Total credit card⁽²⁾	717		17		741		53
Consumer Banking:
Auto⁽³⁾	387		18		375		52
Home loan	382		1		392		4
Retail banking	60		1		74		2
Total consumer banking	829		20		841		58
Commercial Banking:
Commercial and multifamily real estate	196		2		183		5
Commercial and industrial	175		1		177		3
Total commercial lending	371		3		360		8
Small-ticket commercial real estate	9		0		8		0
Total commercial banking	380		3		368		8
Total	$	1,926	$	40	$	1,950	$	119

__________

⁽¹⁾

Impaired loans include loans modified in Troubled Debt Restructurings (“TDRs”), all nonperforming commercial loans and nonperforming home loans with a specific impairment. Impaired loans without an allowance generally represent loans that have been charged down to the fair value of the underlying collateral for which we believe no additional losses have been incurred, or where the fair value of the underlying collateral meets or exceeds the loan’s amortized cost.


⁽²⁾	Credit card loans include finance charges and fees.


⁽³⁾	Although auto loans from loan recovery inventory are not reported in our loans held for investment, they are included as impaired loans above since they are reported as TDRs.

Loans modified in TDRs accounted for $1.6 billion and $1.7 billion of the impaired loans presented above as of September 30, 2015 and December 31, 2014, respectively. Consumer TDRs classified as performing totaled $1.0 billion as of both September 30, 2015 and December 31, 2014. Commercial TDRs classified as performing totaled $187 million and $194 million as of September 30, 2015 and December 31, 2014, respectively.

As part of our loan modifications to borrowers experiencing financial difficulty, we may provide multiple concessions to minimize our economic loss and improve long-term loan performance and collectability. The following tables present the major modification types, recorded investment amounts and financial effects of loans modified in TDRs during the three and nine months ended September 30, 2015 and 2014:

Table 4.10: Troubled Debt Restructurings



	Total Loans Modified⁽¹⁾⁽²⁾		Three Months Ended September 30, 2015
			Reduced Interest Rate			Term Extension			Balance Reduction
(Dollars in millions)			% of TDR Activity⁽³⁾⁽⁴⁾	Average Rate Reduction⁽⁵⁾		% of TDR Activity⁽⁴⁾⁽⁶⁾		Average Term Extension (Months)⁽⁷⁾	% of TDR Activity⁽⁴⁾⁽⁸⁾		Gross Balance Reduction⁽⁹⁾
Credit Card:
Domestic credit card	$	77	100%	12.30	%	0	%	0	0	%	$	0
International credit card	29		100	25.89		0		0	0		0
Total credit card	106		100	16.01		0		0	0		0
Consumer Banking:
Auto	88		42	4.14		68		7	31		24
Home loan	17		70	2.63		87		232	6		0
Retail banking	10		6	6.15		94		6	0		0
Total consumer banking	115		43	3.81		73		46	25		24
Commercial Banking:
Commercial and multifamily real estate	9		0	0.00		83		8	0		0
Commercial and industrial	21		0	0.00		21		9	0		0
Total commercial lending	30		0	0.00		40		9	0		0
Small-ticket commercial real estate	0		0	0.00		0		0	0		0
Total commercial banking	30		0	0.00		40		9	0		0
Total	$	251	62	12.13		38		42	11		$	24



	Total Loans Modified⁽¹⁾⁽²⁾		Nine Months Ended September 30, 2015
			Reduced Interest Rate		Term Extension		Balance Reduction
(Dollars in millions)			% of TDR Activity⁽³⁾⁽⁴⁾	Average Rate Reduction⁽⁵⁾	% of TDR Activity⁽⁴⁾⁽⁶⁾	Average Term Extension (Months)⁽⁷⁾	% of TDR Activity⁽⁴⁾⁽⁸⁾		Gross Balance Reduction⁽⁹⁾
Credit Card:
Domestic credit card	$	217	100%	12.16%	0%	0	0	%	$	0
International credit card	91		100	25.87	0	0	0		0
Total credit card	308		100	16.21	0	0	0		0
Consumer Banking:
Auto	257		41	3.28	69	8	30		69
Home loan	34		60	2.78	74	209	9		0
Retail banking	20		19	7.19	88	6	0		0
Total consumer banking	311		42	3.31	71	31	26		69
Commercial Banking:
Commercial and multifamily real estate	12		0	0.00	86	14	18		1
Commercial and industrial	72		0	1.06	48	6	0		0
Total commercial lending	84		0	1.06	53	8	2		1
Small-ticket commercial real estate	1		0	0.00	0	0	0		0
Total commercial banking	85		0	1.06	53	8	2		1
Total	$	704	62	12.40	38	27	12		$	70



	Total Loans Modified⁽¹⁾⁽²⁾		Three Months Ended September 30, 2014
			Reduced Interest Rate		Term Extension		Balance Reduction
(Dollars in millions)			% of TDR Activity⁽³⁾⁽⁴⁾	Average Rate Reduction⁽⁵⁾	% of TDR Activity⁽⁴⁾⁽⁶⁾	Average Term Extension (Months)⁽⁷⁾	% of TDR Activity⁽⁴⁾⁽⁸⁾	Gross Balance Reduction⁽⁹⁾
Credit Card:
Domestic credit card	$	68	100%	11.52%	0%	0	0%	$	0
International credit card	35		100	25.41	0	0	0	0
Total credit card	103		100	16.12	0	0	0	0
Consumer Banking:
Auto	88		40	1.70	64	9	35	28
Home loan	10		41	3.33	52	150	2	0
Retail banking	1		17	6.42	88	3	0	0
Total consumer banking	99		40	1.88	63	21	31	28
Commercial Banking:
Commercial and multifamily real estate	1		0	0.00	0	0	0	0
Commercial and industrial	3		96	0.85	100	7	11	0
Total commercial lending	4		71	0.85	74	7	8	0
Small-ticket commercial real estate	0		0	0.00	0	0	0	0
Total commercial banking	4		71	0.85	74	7	8	0
Total	$	206	70	11.94	32	20	15	$	28



	Total Loans Modified⁽¹⁾⁽²⁾		Nine Months Ended September 30, 2014
			Reduced Interest Rate		Term Extension			Balance Reduction
(Dollars in millions)			% of TDR Activity⁽³⁾⁽⁴⁾	Average Rate Reduction⁽⁵⁾	% of TDR Activity⁽⁴⁾⁽⁶⁾		Average Term Extension (Months)⁽⁷⁾	% of TDR Activity⁽⁴⁾⁽⁸⁾	Gross Balance Reduction⁽⁹⁾
Credit Card:
Domestic credit card	$	199	100%	11.52%	0	%	0	0%	$	0
International credit card	116		100	25.35	0		0	0	0
Total credit card	315		100	16.60	0		0	0	0
Consumer Banking:
Auto	234		37	1.24	63		9	36	75
Home loan	29		34	2.64	39		154	6	1
Retail banking	9		8	5.17	72		7	0	0
Total consumer banking	272		36	1.41	61		19	31	76
Commercial Banking:
Commercial and multifamily real estate	67		31	1.26	92		7	6	2
Commercial and industrial	16		20	0.18	67		10	2	0
Total commercial lending	83		29	1.11	87		8	5	2
Small-ticket commercial real estate	1		0	0.00	0		0	0	0
Total commercial banking	84		28	1.11	86		8	5	2
Total	$	671	65	12.34	36		16	13	$	78

__________


⁽¹⁾	Represents total loans modified and accounted for as TDRs during the period. Paydowns, net charge-offs and any other changes in the loan carrying value subsequent to the loan entering TDR status are not reflected.


⁽²⁾	We present the modification types utilized most prevalently across our loan portfolios. As not every modification type is included in the table above, the total % of TDR activity may not add up to 100%.


⁽³⁾	Represents percentage of loans modified and accounted for as TDRs during the period that were granted a reduced interest rate.


⁽⁴⁾	Due to multiple concessions granted to some troubled borrowers, percentages may total more than 100% for certain loan types.


⁽⁵⁾	Represents weighted average interest rate reduction for those loans that received an interest rate concession.


⁽⁶⁾	Represents percentage of loans modified and accounted for as TDRs during the period that were granted a maturity date extension.


⁽⁷⁾	Represents weighted average change in maturity date for those loans that received a maturity date extension.


⁽⁸⁾	Represents percentage of loans modified and accounted for as TDRs during the period that were granted forgiveness or forbearance of a portion of their balance.


⁽⁹⁾	Total amount represents the gross balance forgiven. For loans modified in bankruptcy, the gross balance reduction represents collateral value write downs associated with the discharge of the borrower’s obligations.

TDR—Subsequent Defaults of Completed TDR Modifications

The following table presents the type, number and recorded investment amount of loans modified in TDRs that experienced a default during the period and had completed a modification event in the twelve months prior to the default. A default occurs if the loan is either 90 days or more delinquent, has been charged-off as of the end of the period presented, or has been reclassified from accrual to nonaccrual status.

Table 4.11: TDR - Subsequent Defaults



	Three Months Ended			Nine Months Ended
	September 30, 2015			September 30, 2015
(Dollars in millions)	Number of Contracts	Amount		Number of Contracts	Amount
Credit Card:
Domestic credit card	10,487	$	18	29,815	$	50
International credit card⁽¹⁾	8,294	19		25,466	62
Total credit card	18,781	37		55,281	112
Consumer Banking:
Auto	2,297	27		6,172	71
Home loan	4	1		11	1
Retail banking	6	0		20	1
Total consumer banking	2,307	28		6,203	73
Commercial Banking:
Commercial and multifamily real estate	0	0		0	0
Commercial and industrial	3	2		6	19
Total commercial lending	3	2		6	19
Small-ticket commercial real estate	3	0		3	0
Total commercial banking	6	2		9	19
Total	21,094	$	67	61,493	$	204



	Three Months Ended			Nine Months Ended
	September 30, 2014			September 30, 2014
(Dollars in millions)	Number of Contracts	Total Loans		Number of Contracts	Total Loans
Credit Card:
Domestic credit card	9,882	$	16	30,502	$	47
International credit card⁽¹⁾	9,109	24		29,513	84
Total credit card	18,991	40		60,015	131
Consumer Banking:
Auto	1,674	18		4,672	49
Home loan	2	1		12	3
Retail banking	13	0		53	9
Total consumer banking	1,689	19		4,737	61
Commercial Banking:
Commercial and multifamily real estate	0	0		4	6
Commercial and industrial	0	0		2	1
Total commercial lending	0	0		6	7
Small-ticket commercial real estate	18	0		26	3
Total commercial banking	18	0		32	10
Total	20,698	$	59	64,784	$	202

_______________


⁽¹⁾	The regulatory regime in the U.K. require the U.K. credit card businesses to accept payment plan proposals even when the proposed payments are less than the contractual minimum amount. As a result, loans entering long-term TDR payment programs in the U.K. typically continue to age and ultimately charge-off even when fully in compliance with the TDR program terms.

Acquired Loans Accounted for Based on Expected Cash Flows

Outstanding Balance and Carrying Value of Acquired Loans

The table below presents the outstanding balance and the carrying value of acquired loans that are accounted for based on expected cash flows as of September 30, 2015 and December 31, 2014. The table separately displays loans considered credit-impaired at acquisition and loans not considered credit-impaired at acquisition.

Table 4.12: Acquired Loans Accounted for Based on Expected Cash Flows



	September 30, 2015						December 31, 2014
(Dollars in millions)	Total		Impaired Loans		Non-Impaired Loans		Total		Impaired Loans		Non-Impaired Loans
Outstanding balance	$	21,328	$	3,879	$	17,449	$	25,201	$	4,279	$	20,922
Carrying value⁽¹⁾	19,753		2,645		17,108		23,519		2,882		20,637

__________


⁽¹⁾	Includes $28 million and $27 million of allowance for loan and lease losses for these loans as of September 30, 2015 and December 31, 2014, respectively. We recorded a $1 million provision and a $15 million release of the allowance for credit losses for the nine months ended September 30, 2015 and 2014, respectively, for Acquired Loans.

Changes in Accretable Yield

The following table presents changes in the accretable yield on the Acquired Loans:

Table 4.13: Changes in Accretable Yield on Acquired Loans



	Three Months Ended September 30, 2015									Nine Months Ended September 30, 2015
(Dollars in millions)	Total Loans			Impaired Loans			Non-Impaired Loans			Total Loans			Impaired Loans			Non-Impaired Loans
Accretable yield, beginning of period	$	3,997		$	1,412		$	2,585		$	4,653		$	1,485		$	3,168
Accretion recognized in earnings	(192		)	(65		)	(127		)	(637		)	(222		)	(415		)
Reclassifications from (to) nonaccretable difference for loans with changing cash flows⁽¹⁾	2			1			1			36			46			(10		)
Changes in accretable yield for non-credit related changes in expected cash flows⁽²⁾	(136		)	(22		)	(114		)	(381		)	17			(398		)
Accretable yield, end of period	$	3,671		$	1,326		$	2,345		$	3,671		$	1,326		$	2,345

__________


⁽¹⁾	Represents changes in accretable yield for those loans in pools that are driven primarily by credit performance.


⁽²⁾	Represents changes in accretable yield for those loans in pools that are driven primarily by changes in actual and estimated prepayments.

Unfunded Lending Commitments

We manage the potential risk of unfunded lending commitments by limiting the total amount of arrangements, both by individual customer and in total, by monitoring the size and maturity structure of these portfolios and by applying the same credit standards for all of our credit activities. Unused credit card lines available to our customers totaled $305.9 billion and $292.9 billion as of September 30, 2015 and December 31, 2014, respectively. While these amounts represented the total available unused credit card lines, we have not experienced and do not anticipate that all of our customers will access their entire available line at any given point in time.

In addition to available unused credit card lines, we enter into commitments to extend credit that are legally binding conditional agreements having fixed expirations or termination dates and specified interest rates and purposes. These commitments generally require customers to maintain certain credit standards. Collateral requirements and loan-to-value (“LTV”) ratios are the same as those for funded transactions and are established based on management’s credit assessment of the customer. These commitments may expire without being drawn upon; therefore, the total commitment amount does not necessarily represent future funding requirements. The outstanding unfunded commitments to extend credit, other than credit card lines, were approximately $26.4 billion and $24.5 billion, which included $1.1 billion and $924 million advised lines of credit as of September 30, 2015 and December 31, 2014, respectively. Advised lines of credit are not considered legally binding commitments as funding is subject to our satisfactory evaluation of the customer at the time credit is requested.