NOTE 5—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 certain of our consumer and commercial loans acquired through business acquisitions that were recorded at fair value at acquisition and subsequently accounted for based on expected cash flows to be collected, which were referred to as “Acquired Loans.” See “Note 1—Summary of Significant Accounting Policies” 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 December 31, 2015 and 2014. The delinquency aging includes all past due loans, both performing and nonperforming.

Table 5.1: Loan Portfolio Composition and Aging Analysis



	December 31, 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⁾	$	84,954	$	906	$	658	$	1,421	$	2,985		$	0	$	87,939
International credit card	7,903		110		67		106		283			0		8,186
Total credit card	92,857		1,016		725		1,527		3,268			0		96,125
Consumer Banking:
Auto	38,549		1,901		880		219		3,000			0		41,549
Home loan	6,465		41		18		176		235			18,527		25,227
Retail banking	3,514		21		8		20		49			33		3,596
Total consumer banking	48,528		1,963		906		415		3,284			18,560		70,372
Commercial Banking⁽²⁾:
Commercial and multifamily real estate	25,449		34		0		4		38			31		25,518
Commercial and industrial	35,920		51		34		203		288			927		37,135
Total commercial lending	61,369		85		34		207		326			958		62,653
Small-ticket commercial real estate	607		3		1		2		6			0		613
Total commercial banking	61,976		88		35		209		332			958		63,266
Other loans	77		2		2		7		11			0		88
Total loans⁽³⁾	$	203,438	$	3,069	$	1,668	$	2,158	$	6,895		$	19,518	$	229,851
% of Total loans	88.51%		1.33%		0.73%		0.94%		3.00		%	8.49%		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⁽³⁾	$	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 $16 million and $144 million as of December 31, 2015 and 2014, respectively.


⁽²⁾	Includes loans acquired in the GE Healthcare acquisition. At acquisition date of December 1, 2015, we recorded $8.2 billion of loans held for investment, of which $7.4 billion accounted for based on amortized cost and $847 million accounted for based on expected cash flows to be collected. See “Note 2—Business Developments” for additional information about the GE Healthcare acquisition.


⁽³⁾	Loans, as presented, are net of unearned income, unamortized premiums and discounts, and unamortized deferred fees and costs totaling $989 million and $1.1 billion as of December 31, 2015 and 2014, respectively.

Table 5.2 presents the outstanding balance of loans 90 days or more past due that continue to accrue interest and loans classified as nonperforming as of December 31, 2015 and 2014.

Table 5.2: 90+ Day Delinquent Loans Accruing Interest and Nonperforming Loans⁽¹⁾



	December 31, 2015				December 31, 2014
(Dollars in millions)	> 90 Days and Accruing		Nonperforming Loans		> 90 Days and Accruing		Nonperforming Loans
Credit Card:
Domestic credit card	$	1,421	$	0	$	1,181	$	0
International credit card	79		53		73		70
Total credit card	1,500		53		1,254		70
Consumer Banking:
Auto	0		219		0		197
Home loan	0		311		0		330
Retail banking	0		28		1		22
Total consumer banking	0		558		1		549



	December 31, 2015				December 31, 2014
(Dollars in millions)	> 90 Days and Accruing		Nonperforming Loans		> 90 Days and Accruing		Nonperforming Loans
Commercial Banking:
Commercial and multifamily real estate	0		7		7		62
Commercial and industrial	5		538		1		106
Total commercial lending	5		545		8		168
Small-ticket commercial real estate	0		5		0		7
Total commercial banking	5		550		8		175
Other loans	0		9		0		15
Total	$	1,505	$	1,170	$	1,263	$	809
% of Total loans	0.65%		0.51%		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. See “Note 1—Summary of Significant Accounting Policies” for additional information on our policies for non-performing loans classification.

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 December 31, 2015 and 2014. We also present net charge-offs for the years ended December 31, 2015 and 2014.

Table 5.3: Credit Card: Risk Profile by Geographic Region



	December 31, 2015			December 31, 2014
(Dollars in millions)	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾
Domestic credit card:
California	$	10,029	10.5%	$	8,574	10.0%
New York	6,446		6.7	5,610		6.5
Texas	6,344		6.6	5,382		6.3
Florida	5,712		5.9	4,794		5.6
Illinois	4,121		4.3	3,747		4.4
Pennsylvania	3,764		3.9	3,581		4.2
Ohio	3,371		3.5	3,075		3.6
New Jersey	3,210		3.3	2,868		3.3
Michigan	2,922		3.0	2,681		3.1
Other	42,020		43.8	37,392		43.5
Total domestic credit card	87,939		91.5	77,704		90.5
International credit card:
Canada	4,889		5.1	4,747		5.5
United Kingdom	3,297		3.4	3,425		4.0
Total international credit card	8,186		8.5	8,172		9.5
Total credit card	$	96,125	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 5.4: Credit Card: Net Charge-offs



	Year Ended December 31,
	2015			2014
(Dollars in millions)	Amount		Rate	Amount		Rate
Net charge-offs:⁽¹⁾
Domestic credit card	$	2,718	3.45%	$	2,445	3.43%
International credit card	200		2.50	283		3.69
Total credit card	$	2,918	3.36	$	2,728	3.46

__________

⁽¹⁾

Net charge-offs consist of the unpaid principal balance of loans held for investment that we determine to be uncollectible, net of recovered amounts. The net charge-off rate is calculated for each loan category by dividing 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 December 31, 2015 and 2014, and net charge-offs for the years ended December 31, 2015 and 2014.

Table 5.5: Consumer Banking: Risk Profile by Geographic Region



	December 31, 2015			December 31, 2014
(Dollars in millions)	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾
Auto:
Texas	$	5,463	7.8%	$	5,248	7.4%
California	4,611		6.5	4,081		5.7
Florida	3,315		4.7	2,737		3.8
Georgia	2,245		3.2	2,066		2.9
Louisiana	1,882		2.7	1,773		2.5
Illinois	1,859		2.6	1,676		2.4
Ohio	1,738		2.5	1,566		2.2
Other	20,436		29.0	18,677		26.1
Total auto	41,549		59.0	37,824		53.0
Home loan:
California	5,884		8.4	6,943		9.7
New York	2,171		3.1	2,452		3.4
Maryland	1,539		2.2	1,720		2.4
Illinois	1,490		2.1	1,873		2.6
Virginia	1,354		1.9	1,538		2.2
New Jersey	1,293		1.8	1,529		2.1
Florida	1,146		1.6	1,375		1.9
Other	10,350		14.8	12,605		17.7
Total home loan	25,227		35.9	30,035		42.0



	December 31, 2015			December 31, 2014
(Dollars in millions)	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾
Retail banking:
Louisiana	1,071		1.5	1,120		1.5
New York	921		1.3	881		1.2
Texas	757		1.1	756		1.1
New Jersey	259		0.4	265		0.4
Maryland	180		0.3	167		0.2
Virginia	151		0.2	132		0.2
Other	257		0.3	259		0.4
Total retail banking	3,596		5.1	3,580		5.0
Total consumer banking	$	70,372	100.0%	$	71,439	100.0%

__________


⁽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.

Table 5.6: Consumer Banking: Net Charge-offs and Nonperforming Loans



	Year Ended December 31,
	2015			2014
(Dollars in millions)	Amount		Rate	Amount		Rate
Net charge-offs:⁽¹⁾
Auto	$	674	1.69%	$	619	1.78%
Home loan⁽²⁾	9		0.03	17		0.05
Retail banking	48		1.33	39		1.07
Total consumer banking⁽²⁾	$	731	1.03	$	675	0.95



	December 31, 2015			December 31, 2014
(Dollars in millions)	Amount		Rate	Amount		Rate
Nonperforming Loans:⁽³⁾
Auto	$	219	0.53%	$	197	0.52	%
Home loan⁽⁴⁾	311		1.23	330		1.10
Retail banking	28		0.77	22		0.61
Total consumer banking⁽⁴⁾	$	558	0.79	$	549	0.77

__________


⁽¹⁾	Calculated for each loan category by dividing net charge-offs for the period by average loans held for investment during the period.


⁽²⁾	Excluding the impact of Acquired Loans, the net charge-off rate for our home loan and total consumer banking portfolios were 0.13% and 1.45%, respectively, for the year ended December 31, 2015, compared to 0.24% and 1.49%, respectively, for the year ended December 31, 2014.


⁽³⁾	Calculated for each loan category by dividing nonperforming loans for the period by period end loans held for investment during the period.


⁽⁴⁾	Excluding the impact of Acquired Loans, the nonperforming loan rates for our home loan and total consumer banking portfolios were 4.68% and 1.08%, respectively, as of December 31, 2015, compared to 4.86% and 1.14%, respectively, as of December 31, 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 December 31, 2015 and 2014, based on selected key risk characteristics.

Table 5.7: Home Loan: Risk Profile by Vintage, Geography, Lien Priority and Interest Rate Type



	December 31, 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	$	2,290	9.0%	$	4,783	19.0%	$	7,073	28.0%
2007	269		1.1	4,173		16.5	4,442		17.6
2008	157		0.6	2,866		11.4	3,023		12.0
2009	97		0.4	1,498		5.9	1,595		6.3
2010	97		0.4	2,208		8.8	2,305		9.2
2011	176		0.7	2,476		9.8	2,652		10.5
2012	1,276		5.1	389		1.5	1,665		6.6
2013	557		2.2	71		0.3	628		2.5
2014	680		2.7	31		0.1	711		2.8
2015	1,101		4.4	32		0.1	1,133		4.5
Total	$	6,700	26.6%	$	18,527	73.4%	$	25,227	100.0%
Geographic concentration:⁽³⁾
California	$	871	3.5%	$	5,013	19.9%	$	5,884	23.4%
New York	1,295		5.1	876		3.5	2,171		8.6
Maryland	511		2.0	1,028		4.1	1,539		6.1
Illinois	89		0.4	1,401		5.5	1,490		5.9
Virginia	428		1.7	926		3.7	1,354		5.4
New Jersey	353		1.4	940		3.7	1,293		5.1
Florida	157		0.6	989		3.9	1,146		4.5
Louisiana	1,069		4.2	27		0.1	1,096		4.3
Arizona	81		0.4	995		3.9	1,076		4.3
Washington	113		0.4	806		3.2	919		3.6
Other	1,733		6.9	5,526		21.9	7,259		28.8
Total	$	6,700	26.6%	$	18,527	73.4%	$	25,227	100.0	%
Lien type:
1^st lien	$	5,705	22.6%	$	18,207	72.2%	$	23,912	94.8%
2^nd lien	995		4.0	320		1.2	1,315		5.2
Total	$	6,700	26.6%	$	18,527	73.4%	$	25,227	100.0%
Interest rate type:
Fixed rate	$	2,751	10.9%	$	2,264	9.0%	$	5,015	19.9%
Adjustable rate	3,949		15.7	16,263		64.4	20,212		80.1
Total	$	6,700	26.6%	$	18,527	73.4%	$	25,227	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 origination 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 $474 million as of December 31, 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 December 31, 2015 and 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 $123 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, some of 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 full 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 December 31, 2015 and 2014.

Table 5.8: Commercial Banking: Risk Profile by Geographic Region and Internal Risk Rating



	December 31, 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	$	15,949	62.5%	$	8,074	21.8%		$	376	61.3%	$	24,399	38.6%
Mid-Atlantic	2,797		11.0	3,010		8.1		25		4.1	5,832		9.2
South	4,070		15.9	15,240		41.0		40		6.5	19,350		30.6
Other	2,702		10.6	10,811		29.1		172		28.1	13,685		21.6
Total	$	25,518	100.0%	$	37,135	100.0%		$	613	100.0%	$	63,266	100.0%
Internal risk rating:⁽³⁾
Noncriticized	$	25,130	98.5%	$	34,008	91.6%		$	605	98.7%	$	59,743	94.4%
Criticized performing	350		1.4	1,662		4.5		3		0.5	2,015		3.2
Criticized nonperforming	7		0.0	538		1.4		5		0.8	550		0.9
Acquired Loans⁽⁴⁾	31		0.1	927		2.5		0		0.0	958		1.5
Total	$	25,518	100.0%	$	37,135	100.0	%	$	613	100.0%	$	63,266	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	$	22,489	97.2%	$	25,836	95.8%	$	767	98.2%	$	49,092	96.5%
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
Acquired Loans⁽⁴⁾	46		0.2	146		0.5	0		0.0	192		0.4
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, MA, ME, NH, NJ, NY, PA and VT. Mid-Atlantic consists of DC, DE, 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.

⁽⁴⁾

Acquired Loans that are being accounted for under ASC310-30 (formerly “SOP 03-3”) are classified as noncriticized. From a managed perspective, we evaluate loans based on their actual risk ratings. Were these Acquired Loans to be classified based on their risk ratings, $128 million and $171 million would be classified as Noncriticized, $793 million and $18 million as Criticized performing, and $37 million and $3 million as Criticized nonperforming as of December 31, 2015 and December 31, 2014, respectively.

Impaired Loans

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

Table 5.9: Impaired Loans⁽¹⁾



	December 31, 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	$	541	$	0	$	541	$	150	$	391	$	526
International credit card	125		0		125		59		66		121
Total credit card⁽²⁾	666		0		666		209		457		647
Consumer Banking:
Auto⁽³⁾	273		215		488		22		466		772
Home loan	229		136		365		18		347		456
Retail banking	51		10		61		14		47		62
Total consumer banking	553		361		914		54		860		1,290
Commercial Banking:
Commercial and multifamily real estate	82		3		85		11		74		88
Commercial and industrial	515		278		793		75		718		862
Total commercial lending	597		281		878		86		792		950
Small-ticket commercial real estate	6		0		6		0		6		7
Total commercial banking	603		281		884		86		798		957
Total	$	1,822	$	642	$	2,464	$	349	$	2,115	$	2,894



	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



	Year Ended December 31,
	2015				2014
(Dollars in millions)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Credit Card:
Domestic credit card	$	539	$	57	$	571	$	58
International credit card	135		10		160		11
Total credit card⁽²⁾	674		67		731		69
Consumer Banking:
Auto⁽³⁾	462		82		387		72
Home loan	364		4		388		5
Retail banking	56		2		69		2
Total consumer banking	882		88		844		79
Commercial Banking:
Commercial and multifamily real estate	109		3		175		6
Commercial and industrial	466		5		185		4
Total commercial lending	575		8		360		10
Small-ticket commercial real estate	7		0		8		0
Total commercial banking	582		8		368		10
Total	$	2,138	$	163	$	1,943	$	158

__________

⁽¹⁾

Impaired loans include loans modified in 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 $1.8 billion and $1.7 billion of the impaired loans presented above as of December 31, 2015 and 2014, respectively. Consumer TDRs classified as performing totaled $1.0 billion as of both December 31, 2015 and 2014. Commercial TDRs classified as performing totaled $334 million and $194 million as of December 31, 2015 and 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 years ended December 31, 2015 and 2014:

Table 5.10: Troubled Debt Restructurings



	Total Loans Modified⁽¹⁾⁽²⁾		Year Ended December 31, 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	$	293	100%	12.28%	0%	0	0	%	$	0
International credit card	121		100	25.88	0	0	0		0
Total credit card	414		100	16.26	0	0	0		0
Consumer Banking:
Auto	347		41	3.49	69	8	30		93
Home loan	48		61	2.70	79	231	7		0
Retail banking	24		18	6.88	87	6	0		0
Total consumer banking	419		42	3.44	71	36	26		93
Commercial Banking:
Commercial and multifamily real estate	12		0	0.00	86	14	18		1
Commercial and industrial	249		0	0.67	34	7	0		0
Total commercial lending	261		0	0.67	36	8	1		1
Small-ticket commercial real estate	1		0	0.00	0	0	0		0
Total commercial banking	262		0	0.67	36	8	1		1
Total	$	1,095	54	12.42	36	29	10		$	94



	Total Loans Modified⁽¹⁾⁽²⁾		Year Ended December 31, 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	$	269	100%	11.59%	0	%	0	0%	$	0
International credit card	149		100	25.39	0		0	0	0
Total credit card	418		100	16.51	0		0	0	0
Consumer Banking:
Auto	334		39	1.38	65		9	34	102
Home loan	35		31	2.60	38		152	5	1
Retail banking	11		10	4.21	67		9	0	0
Total consumer banking	380		37	1.50	63		17	30	103
Commercial Banking:
Commercial and multifamily real estate	72		35	1.31	93		8	6	2
Commercial and industrial	101		3	1.66	62		9	1	1
Total commercial lending	173		17	1.35	75		9	3	3
Small-ticket commercial real estate	2		0	0.00	0		0	0	0
Total commercial banking	175		17	1.35	74		9	3	3
Total	$	973	60	12.17	38		14	12	$	106

__________


⁽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 5.11: TDR—Subsequent Defaults



	Year Ended December 31,
	2015			2014			2013
(Dollars in millions)	Number of Contracts	Amount		Number of Contracts	Amount		Number of Contracts	Amount
Credit Card:
Domestic credit card	42,808	$	71	40,814	$	63	41,859	$	72
International credit card⁽¹⁾	33,888	81		38,195	106		47,688	138
Total credit card	76,696	152		79,009	169		89,547	210
Consumer Banking:
Auto	8,647	99		6,651	72		9,525	68
Home loan	14	2		24	5		33	3
Retail banking	26	2		75	10		126	7
Total consumer banking	8,687	103		6,750	87		9,684	78
Commercial Banking:
Commercial and multifamily real estate	0	0		5	11		14	23
Commercial and industrial	7	19		2	1		24	22
Total commercial lending	7	19		7	12		38	45
Small-ticket commercial real estate	3	0		33	3		4	0
Total commercial banking	10	19		40	15		42	45
Total	85,393	$	274	85,799	$	271	99,273	$	333

___________


⁽¹⁾	In the U.K., regulators require the acceptance of payment plan proposals in which the modified payments may be 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 to be collected as of December 31, 2015 and 2014. The table separately displays loans considered impaired due to their deterioration in credit quality at acquisition and loans not considered impaired at acquisition.

Table 5.12: Acquired Loans Accounted for Based on Expected Cash Flows



	December 31, 2015						December 31, 2014
(Dollars in millions)	Total		Impaired Loans		Non-Impaired Loans		Total		Impaired Loans		Non-Impaired Loans
Outstanding balance⁽¹⁾	$	21,151	$	3,840	$	17,311	$	25,201	$	4,279	$	20,922
Carrying value⁽²⁾	19,516		2,629		16,887		23,519		2,882		20,637

__________


⁽¹⁾	Includes Acquired Loans from the GE Healthcare acquisition, with an outstanding balance and carrying value of $957 million and $847 million, respectively. The gross contractual cash flows of these Acquired Loans were $1.1 billion, of which $138 million are not expected to be collected.


⁽²⁾	Includes $37 million and $27 million of allowance for loan and lease losses for these loans as of December 31, 2015 and 2014, respectively. We recorded a $10 million provision and a $11 million release of the allowance for credit losses for the years ended December 31, 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 5.13: Changes in Accretable Yield on Acquired Loans



(Dollars in millions)	Total Loans			Impaired Loans			Non-Impaired Loans
Accretable yield as of December 31, 2013	$	6,420		$	2,114		$	4,306
Accretion recognized in earnings	(1,042		)	(379		)	(663		)
Reclassifications from nonaccretable difference for loans with improving cash flows⁽¹⁾	214			94			120
Changes in accretable yield for non-credit related changes in expected cash flows⁽²⁾	(939		)	(344		)	(595		)
Accretable yield as of December 31, 2014	$	4,653		$	1,485		$	3,168
Addition due to acquisition	123			7			116
Accretion recognized in earnings	(817		)	(284		)	(533		)
Reclassifications from (to) nonaccretable difference for loans with changing cash flows⁽¹⁾	26			43			(17		)
Changes in accretable yield for non-credit related changes in expected cash flows⁽²⁾	(502		)	(7		)	(495		)
Accretable yield as of December 31, 2015	$	3,483		$	1,244		$	2,239

__________


⁽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 $308.3 billion and $292.9 billion as of December 31, 2015 and 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 $27.9 billion and $24.5 billion, which included $1.0 billion and $924 million of advised lines of credit as of December 31, 2015 and 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.

Finance Charge and Fee Reserves

We continue to accrue finance charges and fees on credit card loans until the account is charged-off. Our methodology for estimating the uncollectible portion of billed finance charges and fees is consistent with the methodology we use to estimate the allowance for incurred principal losses on our credit card loan receivables. Revenue was reduced by $732 million, $645 million and $796 million in 2015, 2014 and 2013, respectively, for the estimated uncollectible portion of billed finance charges and fees. The finance charge and fee reserve, which is recorded as a contra asset on our consolidated balance sheets, totaled $262 million as of December 31, 2015, compared to $216 million as of December 31, 2014.

Loans Held for Sale

We had total loans held for sale of $904 million and $626 million as of December 31, 2015 and 2014, respectively. We also originated for sale $6.4 billion, $5.4 billion and $2.1 billion of conforming residential mortgage loans and commercial multifamily real estate loans in 2015, 2014 and 2013, respectively. We retained servicing on approximately 100%, 96% and 92% of these loans sold in 2015, 2014 and 2013, respectively.