NOTE 4—LOANS

Loan Portfolio Composition

Our loan portfolio consists of loans held for investment, including 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. 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 combinations that were recorded at fair value at acquisition and subsequently accounted for based on cash flows expected to be collected, which were referred to as “purchased credit-impaired loans” or “PCI loans.” See “Note 1—Summary of Significant Accounting Policies” in our 2015 Form 10-K for additional information on the 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 rates 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 loans underlying our consolidated securitization trusts, as of March 31, 2016 and December 31, 2015. The delinquency aging includes all past due loans, both performing and nonperforming.

Table 4.1: Loan Portfolio Composition and Aging Analysis



	March 31, 2016
(Dollars in millions)	Current		30-59 Days		60-89 Days		> 90 Days		Total Delinquent Loans			PCI Loans		Total Loans
Credit Card:
Domestic credit card⁽¹⁾	$	81,946	$	757	$	555	$	1,303	$	2,615		$	0	$	84,561
International credit card	7,832		116		72		118		306			0		8,138
Total credit card	89,778		873		627		1,421		2,921			0		92,699
Consumer Banking:
Auto	40,386		1,576		619		133		2,328			0		42,714
Home loan	6,521		37		15		166		218			17,604		24,343
Retail banking	3,459		19		7		18		44			31		3,534
Total consumer banking	50,366		1,632		641		317		2,590			17,635		70,591
Commercial Banking:
Commercial and multifamily real estate	25,497		19		2		9		30			32		25,559
Commercial and industrial	36,744		52		98		307		457			901		38,102
Total commercial lending	62,241		71		100		316		487			933		63,661
Small-ticket commercial real estate	572		3		2		3		8			0		580
Total commercial banking	62,813		74		102		319		495			933		64,241
Other loans	73		2		1		6		9			0		82
Total loans⁽²⁾	$	203,030	$	2,581	$	1,371	$	2,063	$	6,015		$	18,568	$	227,613
% of Total loans	89.20%		1.13%		0.60%		0.91%		2.64		%	8.16%		100.00		%



	December 31, 2015
(Dollars in millions)	Current		30-59 Days		60-89 Days		> 90 Days		Total Delinquent Loans			PCI 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:
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⁽²⁾	$	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		%

__________


⁽¹⁾	Includes installment loans of $13 million and $16 million as of March 31, 2016 and December 31, 2015, respectively.


⁽²⁾	Loans are presented net of unearned income, unamortized premiums and discounts, and unamortized deferred fees and costs totaling $948 million and $989 million as of March 31, 2016 and December 31, 2015, respectively.

We pledge loan collateral at the FHLB to secure borrowing capacity. The outstanding balances of the pledged loans totaled $35.6 billion as of March 31, 2016, and $36.9 billion as of December 31, 2015.

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 March 31, 2016 and December 31, 2015.

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



	March 31, 2016				December 31, 2015
(Dollars in millions)	> 90 Days and Accruing		Nonperforming Loans		> 90 Days and Accruing		Nonperforming Loans
Credit Card:
Domestic credit card	$	1,303	$	0	$	1,421	$	0
International credit card	92		48		79		53
Total credit card	1,395		48		1,500		53
Consumer Banking:
Auto	0		133		0		219
Home loan	0		307		0		311
Retail banking	1		30		0		28
Total consumer banking	1		470		0		558



	March 31, 2016				December 31, 2015
(Dollars in millions)	> 90 Days and Accruing		Nonperforming Loans		> 90 Days and Accruing		Nonperforming Loans
Commercial Banking:
Commercial and multifamily real estate	$	1	$	30	$	0	$	7
Commercial and industrial	10		1,014		5		538
Total commercial lending	11		1,044		5		545
Small-ticket commercial real estate	0		6		0		5
Total commercial banking	11		1,050		5		550
Other loans	0		10		0		9
Total	$	1,407	$	1,578	$	1,505	$	1,170
% of Total loans	0.62%		0.69%		0.65%		0.51%

__________


⁽¹⁾	Nonperforming loans generally include loans that have been placed on nonaccrual status. PCI 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” in our 2015 Form 10-K for additional information on our policies for 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 loan portfolio correlates to broad economic trends, such as unemployment rates and 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 March 31, 2016 and December 31, 2015. We also present net charge-offs for the three months ended March 31, 2016 and 2015.

Table 4.3: Credit Card: Risk Profile by Geographic Region



	March 31, 2016			December 31, 2015
(Dollars in millions)	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾
Domestic credit card:
California	$	9,752	10.5%	$	10,029	10.5%
Texas	6,182		6.7	6,344		6.6
New York	6,163		6.6	6,446		6.7
Florida	5,574		6.0	5,712		5.9
Illinois	3,922		4.2	4,121		4.3
Pennsylvania	3,575		3.9	3,764		3.9
Ohio	3,180		3.4	3,371		3.5
New Jersey	3,061		3.3	3,210		3.3
Michigan	2,762		3.0	2,922		3.0
Other	40,390		43.6	42,020		43.8
Total domestic credit card	84,561		91.2	87,939		91.5
International credit card:
Canada	4,963		5.4	4,889		5.1
United Kingdom	3,175		3.4	3,297		3.4
Total international credit card	8,138		8.8	8,186		8.5
Total credit card	$	92,699	100.0%	$	96,125	100.0	%

__________


⁽¹⁾	Percentages by geographic region are calculated based on period-end amounts.

Table 4.4: Credit Card: Net Charge-Offs



	Three Months Ended March 31,
	2016			2015
(Dollars in millions)	Amount		Rate	Amount		Rate
Net charge-offs:⁽¹⁾
Domestic credit card	$	887	4.16%	$	664	3.55%
International credit card	63		3.24	55		2.80
Total credit card	$	950	4.09	$	719	3.48

__________


⁽¹⁾	Net charge-offs consist of the unpaid principal balance that we determine to be uncollectible, net of recovered amounts. The net charge-off rate is calculated for each loan category by dividing annualized net charge-offs by average loans held for investment for the period. Net charge-offs and the net charge-off rate are impacted periodically by fluctuations in recoveries, including debt sales.

Consumer Banking

Our consumer banking loan portfolio consists of auto, home 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, gross domestic product (“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 PCI loans. We also present the delinquency and nonperforming loan rates of our consumer banking loan portfolio as of March 31, 2016 and December 31, 2015, as well as net charge-offs for the three months ended March 31, 2016 and 2015.

Table 4.5: Consumer Banking: Risk Profile by Geographic Region



	March 31, 2016			December 31, 2015
(Dollars in millions)	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾
Auto:
Texas	$	5,597	7.9%	$	5,463	7.8%
California	4,812		6.8	4,611		6.5
Florida	3,485		4.9	3,315		4.7
Georgia	2,291		3.3	2,245		3.2
Louisiana	1,931		2.7	1,882		2.7
Illinois	1,891		2.7	1,859		2.6
Ohio	1,778		2.5	1,738		2.5
Other	20,929		29.7	20,436		29.0
Total auto	42,714		60.5	41,549		59.0
Home loan:
California	5,652		8.0	5,884		8.4
New York	2,119		3.0	2,171		3.1
Maryland	1,517		2.1	1,539		2.2
Illinois	1,433		2.0	1,490		2.1
Virginia	1,320		1.9	1,354		1.9
New Jersey	1,246		1.8	1,293		1.8
Florida	1,090		1.6	1,146		1.6
Other	9,966		14.1	10,350		14.8
Total home loan	24,343		34.5	25,227		35.9



	March 31, 2016				December 31, 2015
(Dollars in millions)	Amount		% of Total⁽¹⁾		Amount		% of Total⁽¹⁾
Retail banking:
Louisiana	$	1,054	1.5	%	$	1,071	1.5	%
New York	919		1.3		921		1.3
Texas	757		1.1		757		1.1
New Jersey	247		0.3		259		0.4
Maryland	187		0.3		180		0.3
Virginia	150		0.2		151		0.2
Other	220		0.3		257		0.3
Total retail banking	3,534		5.0		3,596		5.1
Total consumer banking	$	70,591	100.0%		$	70,372	100.0%

__________


⁽¹⁾	Percentages by geographic region are calculated based on period-end amounts.

Table 4.6: Consumer Banking: Net Charge-Offs and Nonperforming Loans



	Three Months Ended March 31,
	2016			2015
(Dollars in millions)	Amount		Rate⁽¹⁾	Amount		Rate⁽¹⁾
Net charge-offs:
Auto	$	168	1.60%	$	148	1.55%
Home loan⁽²⁾	3		0.05	2		0.03
Retail banking	12		1.36	9		0.96
Total consumer banking⁽²⁾	$	183	1.04	$	159	0.89



	March 31, 2016			December 31, 2015
(Dollars in millions)	Amount		Rate⁽³⁾	Amount		Rate⁽³⁾
Nonperforming loans:
Auto	$	133	0.31%	$	219	0.53	%
Home loan⁽⁴⁾	307		1.26	311		1.23
Retail banking	30		0.83	28		0.77
Total consumer banking⁽⁴⁾	$	470	0.66	$	558	0.79

__________


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


⁽²⁾	Excluding the impact of PCI loans, the net charge-off rates for our home loan and total consumer banking portfolios were 0.17% and 1.40%, respectively, for the three months ended March 31, 2016, compared to 0.11% and 1.30%, respectively, for the three months ended March 31, 2015.


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


⁽⁴⁾	Excluding the impact of PCI loans, the nonperforming loan rates for our home loan and total consumer banking portfolios were 4.55% and 0.89%, respectively, as of March 31, 2016, compared to 4.68% and 1.08%, respectively, as of December 31, 2015.

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 this 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 March 31, 2016 and December 31, 2015, based on selected key risk characteristics.

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



	March 31, 2016
	Loans			PCI Loans			Total Home Loans
(Dollars in millions)	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾
Origination year:⁽²⁾
< = 2007	$	2,449	10.1%	$	8,613	35.3%	$	11,062	45.4%
2008	151		0.6	2,743		11.3	2,894		11.9
2009	94		0.4	1,405		5.8	1,499		6.2
2010	95		0.4	2,054		8.4	2,149		8.8
2011	168		0.7	2,291		9.4	2,459		10.1
2012	1,219		5.0	362		1.5	1,581		6.5
2013	538		2.2	70		0.3	608		2.5
2014	663		2.7	30		0.1	693		2.8
2015	1,121		4.6	32		0.2	1,153		4.8
2016	241		1.0	4		0.0	245		1.0
Total	$	6,739	27.7%	$	17,604	72.3%	$	24,343	100.0%
Geographic concentration:⁽³⁾
California	$	876	3.6%	$	4,776	19.6%	$	5,652	23.2%
New York	1,288		5.3	831		3.4	2,119		8.7
Maryland	530		2.2	987		4.0	1,517		6.2
Illinois	90		0.4	1,343		5.5	1,433		5.9
Virginia	439		1.8	881		3.6	1,320		5.4
New Jersey	354		1.4	892		3.7	1,246		5.1
Florida	153		0.6	937		3.9	1,090		4.5
Louisiana	1,043		4.3	26		0.1	1,069		4.4
Arizona	83		0.3	958		4.0	1,041		4.3
Washington	115		0.5	753		3.1	868		3.6
Other	1,768		7.3	5,220		21.4	6,988		28.7
Total	$	6,739	27.7%	$	17,604	72.3%	$	24,343	100.0	%
Lien type:
1^st lien	$	5,747	23.6%	$	17,294	71.1%	$	23,041	94.7%
2^nd lien	992		4.1	310		1.2	1,302		5.3
Total	$	6,739	27.7%	$	17,604	72.3%	$	24,343	100.0%
Interest rate type:
Fixed rate	$	2,835	11.7%	$	2,153	8.8%	$	4,988	20.5%
Adjustable rate	3,904		16.0	15,451		63.5	19,355		79.5
Total	$	6,739	27.7%	$	17,604	72.3%	$	24,343	100.0%



	December 31, 2015
	Loans			PCI Loans			Total Home Loans
(Dollars in millions)	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾	Amount		% of Total⁽¹⁾
Origination year:⁽²⁾
< = 2007	$	2,559	10.1%	$	8,956	35.5%	$	11,515	45.6%
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%

__________


⁽¹⁾	Percentages within each risk category are calculated based on period-end amounts.


⁽²⁾	The PCI 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 those which have the highest individual concentration of home loans.

Our recorded investment in home loans that are in process of foreclosure was $451 million as of March 31, 2016. 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 March 31, 2016 and December 31, 2015, the carrying value of the foreclosed residential real estate properties we hold and report as other assets on our consolidated balance sheet totaled $111 million and $123 million, respectively.

Commercial Banking

We evaluate the credit risk of commercial loans individually and use a risk-rating system to determine credit quality. 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 and projected future credit performance, prospects for support from financially responsible guarantors, the estimated realizable value of any collateral and current economic trends. The 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 that are designated as criticized performing and criticized nonperforming are reviewed quarterly by management to determine if they are appropriately classified/rated and whether any impairment exists. Noncriticized loans greater than $1 million are specifically reviewed, at least annually, to determine the appropriate risk 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 March 31, 2016 and December 31, 2015.

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



	March 31, 2016
(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	$	15,312	59.8%	$	8,724	22.9%		$	358	61.6%	$	24,394	38.0%
Mid-Atlantic	3,032		11.9	3,255		8.5		23		4.0	6,310		9.8
South	4,054		15.9	15,303		40.2		37		6.4	19,394		30.2
Other	3,161		12.4	10,820		28.4		162		28.0	14,143		22.0
Total	$	25,559	100.0%	$	38,102	100.0%		$	580	100.0%	$	64,241	100.0%
Internal risk rating:⁽³⁾
Noncriticized	$	25,219	98.7%	$	33,872	88.9%		$	572	98.5%	$	59,663	92.9%
Criticized performing	278		1.1	2,315		6.0		2		0.4	2,595		4.0
Criticized nonperforming	30		0.1	1,014		2.7		6		1.1	1,050		1.6
PCI loans⁽⁴⁾	32		0.1	901		2.4		0		0.0	933		1.5
Total	$	25,559	100.0%	$	38,102	100.0	%	$	580	100.0%	$	64,241	100.0%



	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
PCI 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%

__________


⁽¹⁾	Percentages calculated based on total loans held for investment in each respective loan category using period-end amounts.


⁽²⁾	Geographic concentration is generally determined by the location of the borrower’s business or the location of the collateral associated with the loan. 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, MO, MS, NC, SC, TN and TX.


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


⁽⁴⁾	We evaluate PCI loans based on their actual risk ratings. Were these PCI loans to be classified based on their risk ratings, $204 million and $128 million would be classified as Noncriticized, $694 million and $793 million as Criticized performing, and $35 million and $37 million as Criticized nonperforming as of March 31, 2016 and December 31, 2015, respectively.

Impaired Loans

The following table presents information about our impaired loans, excluding PCI loans, which is reported separately as of March 31, 2016 and December 31, 2015, and for the three months ended March 31, 2016 and 2015:

Table 4.9: Impaired Loans⁽¹⁾



	March 31, 2016
(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	$	525	$	0	$	525	$	147	$	378	$	511
International credit card	133		0		133		66		67		129
Total credit card⁽²⁾	658		0		658		213		445		640
Consumer Banking:
Auto⁽³⁾	283		211		494		22		472		778
Home loan	233		133		366		15		351		458
Retail banking	50		10		60		14		46		61
Total consumer banking	566		354		920		51		869		1,297
Commercial Banking:
Commercial and multifamily real estate	106		27		133		10		123		136
Commercial and industrial	1,091		123		1,214		183		1,031		1,319
Total commercial lending	1,197		150		1,347		193		1,154		1,455
Small-ticket commercial real estate	0		7		7		0		7		8
Total commercial banking	1,197		157		1,354		193		1,161		1,463
Total	$	2,421	$	511	$	2,932	$	457	$	2,475	$	3,400



	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



	Three Months Ended March 31,
	2016				2015
(Dollars in millions)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Credit Card:
Domestic credit card	$	533	$	14	$	542	$	14
International credit card	129		3		141		2
Total credit card⁽²⁾	662		17		683		16
Consumer Banking:
Auto⁽³⁾	491		22		444		21
Home loan	366		1		366		1
Retail banking	60		0		52		0
Total consumer banking	917		23		862		22
Commercial Banking:
Commercial and multifamily real estate	109		1		133		1
Commercial and industrial	1,004		2		213		1
Total commercial lending	1,113		3		346		2
Small-ticket commercial real estate	6		0		10		0
Total commercial banking	1,119		3		356		2
Total	$	2,698	$	43	$	1,901	$	40

__________

⁽¹⁾

Impaired loans include loans modified in troubled debt restructuring (“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⁾	The average recorded investment of credit card loans includes 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.

The total recorded investment of loans modified in TDRs represents $1.9 billion and $1.8 billion of the impaired loans presented above as of March 31, 2016 and December 31, 2015, respectively. Consumer TDRs classified as performing totaled $1.0 billion as of both March 31, 2016 and December 31, 2015. Commercial TDRs classified as performing totaled $305 million and $334 million as of March 31, 2016 and December 31, 2015, respectively.

As part of our loan modification programs 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 months ended March 31, 2016 and 2015:

Table 4.10: Troubled Debt Restructurings



	Total Loans Modified⁽¹⁾⁽²⁾		Three Months Ended March 31, 2016
			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	$	62	100%	12.85%	0%	0	0	%	$	0
International credit card	36		100	25.66	0	0	0		0
Total credit card	98		100	17.52	0	0	0		0
Consumer Banking:
Auto	86		42	3.93	73	7	27		21
Home loan	13		62	2.63	75	249	1		0
Retail banking	3		21	6.30	87	11	0		0
Total consumer banking	102		44	3.72	74	39	23		21
Commercial Banking:
Commercial and multifamily real estate	25		0	0.00	100	8	0		0
Commercial and industrial	47		0	0.00	30	12	0		0
Total commercial lending	72		0	0.00	54	10	0		0
Small-ticket commercial real estate	0		0	0.00	0	0	0		0
Total commercial banking	72		0	0.00	54	10	0		0
Total	$	272	52	13.21	42	29	8		$	21



	Total Loans Modified⁽¹⁾⁽²⁾		Three Months Ended March 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	$	72	100%	12.13%	0	%	0	0%	$	0
International credit card	32		100	25.79	0		0	0	0
Total credit card	104		100	16.39	0		0	0	0
Consumer Banking:
Auto	88		41	1.71	71		9	28	22
Home loan	7		67	2.85	66		171	0	0
Retail banking	5		61	9.36	91		4	0	0
Total consumer banking	100		44	2.36	72		20	24	22
Commercial Banking:
Commercial and multifamily real estate	3		0	0.00	100		35	77	1
Commercial and industrial	21		0	2.02	3		7	0	0
Total commercial lending	24		0	2.02	13		29	8	1
Small-ticket commercial real estate	0		0	0.00	0		0	0	0
Total commercial banking	24		0	2.02	13		29	8	1
Total	$	228	65	12.19	33		20	12	$	23

__________


⁽¹⁾	Represents total loans modified and accounted for as TDRs during the period. Paydowns, net charge-offs and any other changes subsequent to the TDR date are not reflected in the recorded investment amount


⁽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 March 31,
	2016			2015
(Dollars in millions)	Number of Contracts	Amount		Number of Contracts	Amount
Credit Card:
Domestic credit card	10,594	$	18	9,667	$	16
International credit card⁽¹⁾	8,813	20		8,548	20
Total credit card	19,407	38		18,215	36
Consumer Banking:
Auto	1,852	21		1,747	20
Home loan	10	1		5	0
Retail banking	15	2		10	1
Total consumer banking	1,877	24		1,762	21
Commercial Banking:
Commercial and multifamily real estate	0	0		0	0
Commercial and industrial	17	23		0	0
Total commercial lending	17	23		0	0
Small-ticket commercial real estate	0	0		0	0
Total commercial banking	17	23		0	0
Total	21,301	$	85	19,977	$	57

__________


⁽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.

PCI Loans

Outstanding Balance and Carrying Value of PCI Loans

The table below presents the outstanding balance and the carrying value of PCI loans as of March 31, 2016 and December 31, 2015. The table also displays loans which would have otherwise been considered impaired at acquisition based on our applicable accounting policies. See “Note 1—Summary of Significant Accounting Policies” in our 2015 Form 10-K for information related to our accounting policies for impaired loans.

Table 4.12: PCI Loans



	March 31, 2016						December 31, 2015
(Dollars in millions)	Total		Impaired Loans		Non-Impaired Loans		Total		Impaired Loans		Non-Impaired Loans
Outstanding balance	$	20,179	$	3,704	$	16,475	$	21,151	$	3,840	$	17,311
Carrying value⁽¹⁾	18,580		2,537		16,043		19,516		2,629		16,887

__________


⁽¹⁾	Includes $35 million and $37 million of allowance for loan and lease losses for these loans as of March 31, 2016 and December 31, 2015, respectively. We recorded a $2 million release and $7 million provision of the allowance for credit losses for the three months ended March 31, 2016 and 2015, respectively, for PCI loans.

Changes in Accretable Yield

The following table presents changes in the accretable yield on the PCI loans:

Table 4.13: Changes in Accretable Yield on PCI Loans



(Dollars in millions)	Total PCI Loans			Impaired Loans			Non-Impaired Loans
Accretable yield as of December 31, 2015	$	3,483		$	1,244		$	2,239
Accretion recognized in earnings	(184		)	(61		)	(123		)
Reclassifications from (to) nonaccretable difference for loans with changing cash flows⁽¹⁾	5			2			3
Changes in accretable yield for non-credit related changes in expected cash flows⁽²⁾	194			16			178
Accretable yield as of March 31, 2016	$	3,498		$	1,201		$	2,297

__________


⁽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 actual prepayments and changes in 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 $311.1 billion and $308.3 billion as of March 31, 2016 and December 31, 2015, 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 $27.9 billion, which included $1.1 billion and $1.0 billion of advised lines of credit as of March 31, 2016 and December 31, 2015, 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.