Loans

12 Months Ended

Dec. 31, 2017

NOTE 4—LOANS

Loan Portfolio Composition

Our loan portfolio consists of loans held for investment, including loans held in our consolidated 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 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 are referred to as PCI loans. See “Note 1—Summary of Significant Accounting Policies” for additional information on the accounting guidance for these loans. The credit metrics presented in this section exclude loans held for sale, which are carried at lower of cost or fair value.

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 as of December 31, 2017 and 2016. The delinquency aging includes all past due loans, both performing and nonperforming.

Table 4.1: Loan Portfolio Composition and Aging Analysis



	December 31, 2017
(Dollars in millions)	Current			30-59 Days			60-89 Days			> 90 Days			Total Delinquent Loans			PCI Loans			Total Loans
Credit Card:
Domestic credit card	$	101,072		$	1,211		$	915		$	2,093		$	4,219		$	2		$	105,293
International card businesses	9,110			144			81			134			359			0			9,469
Total credit card	110,182			1,355			996			2,227			4,578			2			114,762
Consumer Banking:
Auto	50,151			2,483			1,060			297			3,840			0			53,991
Home loan	7,235			37			16			70			123			10,275			17,633
Retail banking	3,389			24			5			18			47			18			3,454
Total consumer banking	60,775			2,544			1,081			385			4,010			10,293			75,078
Commercial Banking:
Commercial and multifamily real estate	26,018			41			17			49			107			25			26,150
Commercial and industrial	37,412			1			70			87			158			455			38,025
Total commercial lending	63,430			42			87			136			265			480			64,175
Small-ticket commercial real estate	393			2			1			4			7			0			400
Total commercial banking	63,823			44			88			140			272			480			64,575
Other loans	54			2			1			1			4			0			58
Total loans⁽¹⁾	$	234,834		$	3,945		$	2,166		$	2,753		$	8,864		$	10,775		$	254,473
% of Total loans	92.29		%	1.55		%	0.85		%	1.08		%	3.48		%	4.23		%	100.00		%



	December 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	$	93,279		$	1,153		$	846		$	1,840		$	3,839		$	2		$	97,120
International card businesses	8,115			124			72			121			317			0			8,432
Total credit card	101,394			1,277			918			1,961			4,156			2			105,552
Consumer Banking:
Auto	44,762			2,041			890			223			3,154			0			47,916
Home loan	6,951			44			20			141			205			14,428			21,584
Retail banking	3,477			22			7			20			49			28			3,554
Total consumer banking	55,190			2,107			917			384			3,408			14,456			73,054
Commercial Banking:
Commercial and multifamily real estate	26,536			45			0			0			45			28			26,609
Commercial and industrial	38,831			27			84			297			408			585			39,824
Total commercial lending	65,367			72			84			297			453			613			66,433
Small-ticket commercial real estate	473			7			1			2			10			0			483
Total commercial banking	65,840			79			85			299			463			613			66,916
Other loans	56			3			0			5			8			0			64
Total loans⁽¹⁾	$	222,480		$	3,466		$	1,920		$	2,649		$	8,035		$	15,071		$	245,586
% of Total loans	90.59		%	1.41		%	0.78		%	1.08		%	3.27		%	6.14		%	100.00		%

__________


⁽¹⁾	Loans, other than PCI loans, include unamortized premiums and discounts, and unamortized deferred fees and costs totaling $773 million and $558 million as of December 31, 2017 and 2016, respectively.

We pledged loan collateral of $27.3 billion and $29.3 billion to secure the majority of our FHLB borrowing capacity of $21.0 billion and $24.9 billion as of December 31, 2017 and 2016, respectively.

The following table 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, 2017 and 2016. Nonperforming loans generally include loans that have been placed on nonaccrual status. PCI loans are excluded from the table below. See “Note 1—Summary of Significant Accounting Policies” for additional information on our policies for nonperforming loans and accounting for PCI loans.

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



	December 31, 2017						December 31, 2016
(Dollars in millions)	> 90 Days and Accruing			Nonperforming Loans			> 90 Days and Accruing			Nonperforming Loans
Credit Card:
Domestic credit card	$	2,093		N/A			$	1,840		N/A
International card businesses	128			$	24		96			$	42
Total credit card	2,221			24			1,936			42
Consumer Banking:
Auto	0			376			0			223
Home loan	0			176			0			273
Retail banking	0			35			0			31
Total consumer banking	0			587			0			527
Commercial Banking:
Commercial and multifamily real estate	12			38			0			30
Commercial and industrial	0			239			0			988
Total commercial lending	12			277			0			1,018
Small-ticket commercial real estate	0			7			0			4
Total commercial banking	12			284			0			1,022
Other loans	0			4			0			8
Total	$	2,233		$	899		$	1,936		$	1,599
% of Total loans	0.88		%	0.35		%	0.79		%	0.65		%

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 based on portfolios with common risk characteristics. The risk in our credit card loan portfolio correlates to broad economic trends, such as unemployment rates and home values, as well as consumers’ financial condition, all of which can have a material effect on credit performance. The primary indicators we assess in monitoring the credit quality and risk of our credit card portfolio are delinquency and charge-off trends, including an analysis of loan migration between delinquency categories over time.

The table below displays the geographic profile of our credit card loan portfolio as of December 31, 2017 and 2016.

Table 4.3: Credit Card Risk Profile by Geographic Region



	December 31, 2017				December 31, 2016
(Dollars in millions)	Amount		% of Total		Amount		% of Total
Domestic credit card:
California	$	11,475	10.0	%	$	11,068	10.5	%
Texas	7,847		6.8		7,227		6.8
New York	7,389		6.4		7,090		6.7
Florida	6,790		5.9		6,540		6.2
Illinois	4,734		4.1		4,492		4.3
Pennsylvania	4,550		4.0		4,048		3.8
Ohio	3,929		3.4		3,654		3.5
New Jersey	3,621		3.2		3,488		3.3
Michigan	3,523		3.1		3,164		3.0
Other	51,435		44.8		46,349		43.9
Total domestic credit card	105,293		91.7		97,120		92.0
International card businesses:
Canada	6,286		5.5		5,594		5.3
United Kingdom	3,183		2.8		2,838		2.7
Total international card businesses	9,469		8.3		8,432		8.0
Total credit card	$	114,762	100.0	%	$	105,552	100.0	%

The table below presents net charge-offs for the years ended December 31, 2017 and 2016.

Table 4.4: Credit Card Net Charge-Offs



	Year Ended December 31,
	2017				2016
(Dollars in millions)	Amount		Rate⁽¹⁾		Amount		Rate⁽¹⁾
Net charge-offs:⁽¹⁾
Domestic credit card⁽²⁾	$	4,739	4.99	%	$	3,681	4.16	%
International card businesses	315		3.69		272		3.33
Total credit card⁽²⁾	$	5,054	4.88		$	3,953	4.09

__________

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


⁽²⁾	Excluding the impact of the Cabela’s acquisition, the domestic credit card and total credit card net charge-off rates for the year ended December 31, 2017 would have been 5.07% and 4.95%, respectively.

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 consumers’ financial condition, all of which can have a material effect on credit performance. Delinquency, nonperforming loans and charge-off trends are key indicators 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, as of December 31, 2017 and 2016.

Table 4.5: Consumer Banking Risk Profile by Geographic Region



	December 31, 2017				December 31, 2016
(Dollars in millions)	Amount		% of Total		Amount		% of Total
Auto:
Texas	$	7,040	9.4	%	$	6,304	8.6	%
California	6,099		8.1		5,448		7.5
Florida	4,486		6.0		3,985		5.5
Georgia	2,726		3.6		2,506		3.4
Ohio	2,318		3.1		2,017		2.8
Louisiana	2,236		3.0		2,159		3.0
Illinois	2,181		2.9		2,065		2.8
Other	26,905		35.8		23,432		32.0
Total auto	53,991		71.9		47,916		65.6
Home loan:
California	3,734		5.0		4,993		6.8
New York	1,941		2.6		2,036		2.8
Maryland	1,226		1.6		1,409		1.9
Virginia	1,034		1.4		1,204		1.7
Illinois	976		1.3		1,218		1.7
New Jersey	931		1.2		1,112		1.5
Texas	882		1.2		823		1.1
Other	6,909		9.2		8,789		12.0
Total home loan	17,633		23.5		21,584		29.5
Retail banking:
New York	955		1.3		941		1.3
Louisiana	953		1.3		1,010		1.4
Texas	717		0.9		756		1.0
New Jersey	221		0.3		238		0.3
Maryland	187		0.2		190		0.3
Virginia	154		0.2		156		0.2
Other	267		0.4		263		0.4
Total retail banking	3,454		4.6		3,554		4.9
Total consumer banking	$	75,078	100.0	%	$	73,054	100.0	%

The table below presents net charge-offs in our consumer banking loan portfolio for the years ended December 31, 2017 and 2016, as well as nonperforming loans as of December 31, 2017 and 2016.

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



	Year Ended December 31,
	2017				2016
(Dollars in millions)	Amount		Rate⁽¹⁾		Amount		Rate⁽¹⁾
Net charge-offs:
Auto	$	957	1.86	%	$	752	1.69	%
Home loan⁽²⁾	15		0.08		14		0.06
Retail banking	66		1.92		54		1.53
Total consumer banking⁽²⁾	$	1,038	1.39		$	820	1.15



	December 31, 2017				December 31, 2016
(Dollars in millions)	Amount		Rate⁽³⁾		Amount		Rate⁽³⁾
Nonperforming loans:
Auto	$	376	0.70	%	$	223	0.47	%
Home loan⁽⁴⁾	176		1.00		273		1.26
Retail banking	35		1.00		31		0.86
Total consumer banking⁽⁴⁾	$	587	0.78		$	527	0.72

__________


⁽¹⁾	Net charge-off rate is calculated by dividing net charge-offs by average loans held for investment for the period for each loan category.


⁽²⁾	Excluding the impact of PCI loans, the net charge-off rates for our home loan and total consumer banking portfolios were 0.07% and 1.65%, respectively, for the year ended December 31, 2017 compared to 0.20% and 1.49%, respectively, for the year ended December 31, 2016.


⁽³⁾	Nonperforming loan rates are calculated based on nonperforming loans for each category divided by period-end total loans held for investment for each respective category.


⁽⁴⁾	Excluding the impact of PCI loans, the nonperforming loan rates for our home loan and total consumer banking portfolios were 2.39% and 0.91%, respectively, as of December 31, 2017 compared to 3.81% and 0.90%, respectively, as of December 31, 2016.

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 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 December 31, 2017 and 2016 based on selected key risk characteristics.

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



	December 31, 2017
	Loans				PCI Loans⁽¹⁾				Total Home Loans
(Dollars in millions)	Amount		% of Total		Amount		% of Total		Amount		% of Total
Origination year:⁽²⁾
< 2008	$	1,586	9.0	%	$	6,919	39.2	%	$	8,505	48.2	%
2009	62		0.4		769		4.4		831		4.8
2010	64		0.4		1,078		6.1		1,142		6.5
2011	113		0.6		1,181		6.7		1,294		7.3
2012	673		3.8		178		1.0		851		4.8
2013	381		2.2		46		0.3		427		2.5
2014	467		2.6		25		0.1		492		2.7
2015	905		5.1		28		0.2		933		5.3
2016	1,604		9.1		23		0.1		1,627		9.2
2017	1,503		8.5		28		0.2		1,531		8.7
Total	$	7,358	41.7	%	$	10,275	58.3	%	$	17,633	100.0	%
Geographic concentration:
California	$	987	5.6	%	$	2,747	15.6	%	$	3,734	21.2	%
New York	1,427		8.1		514		2.9		1,941		11.0
Maryland	608		3.4		618		3.5		1,226		6.9
Virginia	532		3.0		502		2.8		1,034		5.8
Illinois	163		0.9		813		4.6		976		5.5
New Jersey	389		2.2		542		3.1		931		5.3
Texas	811		4.6		71		0.4		882		5.0
Louisiana	826		4.7		17		0.1		843		4.8
Florida	186		1.1		582		3.3		768		4.4
Arizona	91		0.5		577		3.3		668		3.8
Other	1,338		7.6		3,292		18.7		4,630		26.3
Total	$	7,358	41.7	%	$	10,275	58.3	%	$	17,633	100.0	%
Lien type:
1^st lien	$	6,364	36.1	%	$	10,054	57.0	%	$	16,418	93.1	%
2^nd lien	994		5.6		221		1.3		1,215		6.9
Total	$	7,358	41.7	%	$	10,275	58.3	%	$	17,633	100.0	%
Interest rate type:
Fixed rate	$	3,722	21.1	%	$	1,505	8.5	%	$	5,227	29.6	%
Adjustable rate	3,636		20.6		8,770		49.8		12,406		70.4
Total	$	7,358	41.7	%	$	10,275	58.3	%	$	17,633	100.0	%



	December 31, 2016
	Loans				PCI Loans⁽¹⁾				Total Home Loans
(Dollars in millions)	Amount		% of Total		Amount		% of Total		Amount		% of Total
Origination year:⁽²⁾
< 2008	$	2,166	10.0	%	$	9,684	44.9	%	$	11,850	54.9	%
2009	80		0.4		1,088		5.0		1,168		5.4
2010	82		0.4		1,562		7.2		1,644		7.6
2011	139		0.6		1,683		7.8		1,822		8.4
2012	969		4.5		268		1.2		1,237		5.7
2013	465		2.2		59		0.2		524		2.4
2014	557		2.6		31		0.2		588		2.8
2015	1,024		4.7		30		0.2		1,054		4.9
2016	1,674		7.8		23		0.1		1,697		7.9
Total	$	7,156	33.2	%	$	14,428	66.8	%	$	21,584	100.0	%
Geographic concentration:
California	$	976	4.5	%	$	4,017	18.6	%	$	4,993	23.1	%
New York	1,343		6.2		693		3.2		2,036		9.4
Maryland	585		2.7		824		3.9		1,409		6.6
Illinois	108		0.5		1,110		5.1		1,218		5.6
Virginia	490		2.3		714		3.3		1,204		5.6
New Jersey	379		1.8		733		3.4		1,112		5.2
Louisiana	962		4.5		23		0.1		985		4.6
Florida	159		0.7		772		3.6		931		4.3
Arizona	89		0.4		799		3.7		888		4.1
Texas	725		3.4		98		0.4		823		3.8
Other	1,340		6.2		4,645		21.5		5,985		27.7
Total	$	7,156	33.2	%	$	14,428	66.8	%	$	21,584	100.0	%
Lien type:
1^st lien	$	6,182	28.7	%	$	14,159	65.5	%	$	20,341	94.2	%
2^nd lien	974		4.5		269		1.3		1,243		5.8
Total	$	7,156	33.2	%	$	14,428	66.8	%	$	21,584	100.0	%
Interest rate type:
Fixed rate	$	3,394	15.8	%	$	1,822	8.4	%	$	5,216	24.2	%
Adjustable rate	3,762		17.4		12,606		58.4		16,368		75.8
Total	$	7,156	33.2	%	$	14,428	66.8	%	$	21,584	100.0	%

__________


⁽¹⁾	PCI loan balances with an origination date in the years subsequent to 2012 represent refinancing of previously acquired home loans.


⁽²⁾	Modified loans are reported in the origination year of the initial borrowing.

Our recorded investment in home loans that are in process of foreclosure was $149 million and $382 million as of December 31, 2017 and 2016, respectively. 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 timelines vary according to state laws. As of December 31, 2017 and 2016, the carrying value of the foreclosed residential real estate properties we hold and include in other assets on our consolidated balance sheets totaled $39 million and $69 million, respectively.

Commercial Banking

We evaluate the credit risk of commercial loans using a risk rating system. We assign internal risk ratings to loans based on relevant information about the ability of the borrowers to repay 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 of $1 million or more 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 concentration and internal risk ratings of our commercial loan portfolio as of December 31, 2017 and 2016.

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



	December 31, 2017
(Dollars in millions)	Commercial and Multifamily Real Estate		% of Total		Commercial and Industrial		% of Total		Small-Ticket Commercial Real Estate		% of Total		Total Commercial Banking		% of Total
Geographic concentration:⁽¹⁾
Northeast	$	14,969	57.3	%	$	7,774	20.4	%	$	250	62.4	%	$	22,993	35.7	%
Mid-Atlantic	2,675		10.2		3,922		10.3		15		3.8		6,612		10.2
South	3,719		14.2		14,739		38.8		22		5.5		18,480		28.6
Other	4,787		18.3		11,590		30.5		113		28.3		16,490		25.5
Total	$	26,150	100.0	%	$	38,025	100.0	%	$	400	100.0	%	$	64,575	100.0	%
Internal risk rating:⁽²⁾
Noncriticized	$	25,609	98.0	%	$	35,161	92.5	%	$	392	97.9	%	$	61,162	94.7	%
Criticized performing	478		1.8		2,170		5.7		1		0.3		2,649		4.1
Criticized nonperforming	38		0.1		239		0.6		7		1.8		284		0.4
PCI loans	25		0.1		455		1.2		0		0.0		480		0.8
Total	$	26,150	100.0	%	$	38,025	100.0	%	$	400	100.0	%	$	64,575	100.0	%



	December 31, 2016
(Dollars in millions)	Commercial and Multifamily Real Estate		% of Total⁽¹⁾		Commercial and Industrial		% of Total		Small-Ticket Commercial Real Estate		% of Total		Total Commercial Banking		% of Total
Geographic concentration:⁽¹⁾
Northeast	$	15,714	59.0	%	$	9,628	24.2	%	$	298	61.7	%	$	25,640	38.3	%
Mid-Atlantic	3,024		11.4		3,450		8.7		16		3.3		6,490		9.7
South	4,032		15.2		15,193		38.1		34		7.0		19,259		28.8
Other	3,839		14.4		11,553		29.0		135		28.0		15,527		23.2
Total	$	26,609	100.0	%	$	39,824	100.0	%	$	483	100.0	%	$	66,916	100.0	%
Internal risk rating:⁽²⁾
Noncriticized	$	26,309	98.9	%	$	36,046	90.5	%	$	473	97.9	%	$	62,828	93.9	%
Criticized performing	242		0.9		2,205		5.5		6		1.3		2,453		3.7
Criticized nonperforming	30		0.1		988		2.5		4		0.8		1,022		1.5
PCI loans	28		0.1		585		1.5		0		0.0		613		0.9
Total	$	26,609	100.0	%	$	39,824	100.0	%	$	483	100.0	%	$	66,916	100.0	%

__________


⁽¹⁾	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.


⁽²⁾	Criticized exposures correspond to the “Special Mention,” “Substandard” and “Doubtful” asset categories defined by bank regulatory authorities.

Impaired Loans

The following table presents information on our impaired loans as of December 31, 2017 and 2016, and for the years ended December 31, 2017, 2016 and 2015. 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. PCI loans are excluded from the following tables.

Table 4.9: Impaired Loans



	December 31, 2017
(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	$	639	$	0	$	639	$	208	$	431	$	625
International card businesses	173		0		173		84		89		167
Total credit card⁽¹⁾	812		0		812		292		520		792
Consumer Banking:
Auto⁽²⁾	363		118		481		30		451		730
Home loan	192		41		233		15		218		298
Retail banking	51		10		61		8		53		66
Total consumer banking	606		169		775		53		722		1,094
Commercial Banking:
Commercial and multifamily real estate	138		2		140		13		127		143
Commercial and industrial	489		222		711		63		648		844
Total commercial lending	627		224		851		76		775		987
Small-ticket commercial real estate	7		0		7		0		7		9
Total commercial banking	634		224		858		76		782		996
Total	$	2,052	$	393	$	2,445	$	421	$	2,024	$	2,882



	December 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	$	581	$	0	$	581	$	174	$	407	$	566
International card businesses	134		0		134		65		69		129
Total credit card⁽¹⁾	715		0		715		239		476		695
Consumer Banking:
Auto⁽²⁾	316		207		523		24		499		807
Home loan	241		117		358		19		339		464
Retail banking	52		10		62		14		48		65
Total consumer banking	609		334		943		57		886		1,336
Commercial Banking:
Commercial and multifamily real estate	83		29		112		7		105		112
Commercial and industrial	1,249		144		1,393		162		1,231		1,444
Total commercial lending	1,332		173		1,505		169		1,336		1,556
Small-ticket commercial real estate	4		0		4		0		4		4
Total commercial banking	1,336		173		1,509		169		1,340		1,560
Total	$	2,660	$	507	$	3,167	$	465	$	2,702	$	3,591



	Year Ended December 31,
	2017				2016				2015
(Dollars in millions)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Credit Card:
Domestic credit card	$	602	$	63	$	540	$	58	$	539	$	57
International card businesses	154		11		133		10		135		10
Total credit card⁽¹⁾	756		74		673		68		674		67
Consumer Banking:
Auto⁽²⁾	495		53		501		86		462		82
Home loan	299		5		361		5		364		4
Retail banking	59		1		62		2		56		2
Total consumer banking	853		59		924		93		882		88
Commercial Banking:
Commercial and multifamily real estate	134		4		111		3		109		3
Commercial and industrial	1,118		18		1,215		13		466		5
Total commercial lending	1,252		22		1,326		16		575		8
Small-ticket commercial real estate	7		0		7		0		7		0
Total commercial banking	1,259		22		1,333		16		582		8
Total	$	2,868	$	155	$	2,930	$	177	$	2,138	$	163

________


⁽¹⁾	The period-end and average recorded investments of credit card loans include finance charges and fees.


⁽²⁾	Includes certain TDRs that are recorded as other assets on our consolidated balance sheets.

Total recorded TDRs were $2.2 billion and $2.5 billion as of December 31, 2017 and 2016, respectively. TDRs classified as performing in our credit card and consumer banking loan portfolios totaled $1.3 billion and $1.1 billion as of December 31, 2017 and 2016, respectively. TDRs classified as performing in our commercial banking loan portfolio totaled $574 million and $487 million as of December 31, 2017 and 2016, respectively. Commitments to lend additional funds on loans modified in TDRs totaled $241 million and $208 million as of December 31, 2017 and 2016, 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 years ended December 31, 2017, 2016 and 2015.

Table 4.10: Troubled Debt Restructurings



	Total Loans Modified⁽¹⁾		Year Ended December 31, 2017
			Reduced Interest Rate				Term Extension			Balance Reduction
(Dollars in millions)			% of TDR Activity⁽²⁾		Average Rate Reduction		% of TDR Activity⁽²⁾		Average Term Extension (Months)	% of TDR Activity⁽²⁾		Gross Balance Reduction
Credit Card:
Domestic credit card	$	406	100	%	14.50	%	0	%	0	0	%	$	0
International card businesses	169		100		26.51		0		0	0		0
Total credit card	575		100		18.02		0		0	0		0
Consumer Banking:
Auto⁽³⁾	324		44		3.82		95		6	2		7
Home loan	19		48		2.77		78		233	2		0
Retail banking	13		22		5.77		73		10	0		0
Total consumer banking	356		44		3.79		93		16	2		7
Commercial Banking:
Commercial and multifamily real estate	29		7		0.02		26		5	0		0
Commercial and industrial	557		19		0.80		59		17	0		0
Total commercial lending	586		18		0.79		57		16	0		0
Small-ticket commercial real estate	3		0		0.00		4		0	0		0
Total commercial banking	589		18		0.79		57		16	0		0
Total	$	1,520	55		13.19		44		16	0		$	7



	Total Loans Modified⁽¹⁾		Year Ended December 31, 2016
			Reduced Interest Rate				Term Extension			Balance Reduction
(Dollars in millions)			% of TDR Activity⁽²⁾		Average Rate Reduction		% of TDR Activity⁽²⁾		Average Term Extension (Months)	% of TDR Activity⁽²⁾		Gross Balance Reduction
Credit Card:
Domestic credit card	$	312	100	%	13.19	%	0	%	0	0	%	$	0
International card businesses	138		100		25.87		0		0	0		0
Total credit card	450		100		17.09		0		0	0		0
Consumer Banking:
Auto⁽³⁾	356		44		3.91		74		7	25		78
Home loan	48		64		2.25		87		243	2		0
Retail banking	18		23		7.89		68		10	9		1
Total consumer banking	422		46		3.73		75		38	22		79
Commercial Banking:
Commercial and multifamily real estate	38		0		0.00		67		6	32		3
Commercial and industrial	743		5		0.09		57		20	7		26
Total commercial lending	781		4		0.09		57		19	8		29
Small-ticket commercial real estate	1		0		0.00		0		0	0		0
Total commercial banking	782		4		0.09		57		19	8		29
Total	$	1,654	41		12.42		46		27	9		$	108



	Total Loans Modified⁽¹⁾		Year Ended December 31, 2015
			Reduced Interest Rate				Term Extension			Balance Reduction
(Dollars in millions)			% of TDR Activity⁽²⁾		Average Rate Reduction		% of TDR Activity⁽²⁾		Average Term Extension (Months)	% of TDR Activity⁽²⁾		Gross Balance Reduction
Credit Card:
Domestic credit card	$	293	100	%	12.28	%	0	%	0	0	%	$	0
International card businesses	121		100		25.88		0		0	0		0
Total credit card	414		100		16.26		0		0	0		0
Consumer Banking:
Auto⁽³⁾	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

__________


⁽¹⁾	Represents the recorded investment of total loans modified in TDRs at the end of the quarter in which they were modified. As not every modification type is included in the table above, the total percentage of TDR activity may not add up to 100%. Some loans may receive more than one type of concession as part of the modification.


⁽²⁾	Due to multiple concessions granted to some troubled borrowers, percentages may total more than 100% for certain loan types.


⁽³⁾	Includes certain TDRs that are recorded as other assets on our consolidated balance sheets.

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



	Year Ended December 31,
	2017			2016			2015
(Dollars in millions)	Number of Contracts	Amount		Number of Contracts	Amount		Number of Contracts	Amount
Credit Card:
Domestic credit card	55,121	$	111	42,250	$	73	42,808	$	71
International card businesses	51,641	93		40,498	82		33,888	81
Total credit card	106,762	204		82,748	155		76,696	152
Consumer Banking:
Auto	9,446	109		8,587	96		8,647	99
Home loan	28	7		56	7		14	2
Retail banking	41	4		48	9		26	2
Total consumer banking	9,515	120		8,691	112		8,687	103
Commercial Banking:
Commercial and multifamily real estate	0	0		1	1		0	0
Commercial and industrial	244	269		150	281		7	19
Total commercial lending	244	269		151	282		7	19
Small-ticket commercial real estate	2	1		7	1		3	0
Total commercial banking	246	270		158	283		10	19
Total	116,523	$	594	91,597	$	550	85,393	$	274

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 December 31, 2017 and 2016. See “Note 1—Summary of Significant Accounting Policies” for information related to our accounting policies for impaired loans.

Table 4.12: PCI Loans



	PCI Loans
(Dollars in millions)	December 31, 2017		December 31, 2016
Outstanding balance	$	11,855	$	16,506
Carrying value⁽¹⁾	10,767		15,074

__________


⁽¹⁾	Includes $37 million and $31 million of allowance for loan and lease losses for these loans as of December 31, 2017 and 2016, respectively. We recorded a $6 million provision and a $6 million release for credit losses for the years ended December 31, 2017 and 2016, respectively, for PCI loans.

Changes in Accretable Yield

The following table presents changes in the accretable yield on PCI loans. Reclassification from or to nonaccretable differences represent changes in accretable yield for those loans in pools that are driven primarily by credit performance. Changes in accretable yield for non-credit related changes in expected cash flows are driven primarily by actual prepayments and changes in estimated prepayments.

Table 4.13: Changes in Accretable Yield on PCI Loans



(Dollars in millions)	PCI Loans
Accretable yield as of December 31, 2014	$	4,653
Addition due to acquisition	123
Accretion recognized in earnings	(817		)
Reclassifications from nonaccretable differences	26
Changes in accretable yield for non-credit related changes in expected cash flows	(502		)
Accretable yield as of December 31, 2015	3,483
Accretion recognized in earnings	(711		)
Reclassifications from nonaccretable differences	138
Changes in accretable yield for non-credit related changes in expected cash flows	267
Accretable yield as of December 31, 2016	3,177
Accretion recognized in earnings	(594		)
Reclassifications to nonaccretable differences	(3		)
Changes in accretable yield for non-credit related changes in expected cash flows	(412		)
Accretable yield as of December 31, 2017	$	2,168

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. Total net revenue was reduced by $1.4 billion, $1.1 billion and $732 million in 2017, 2016 and 2015, respectively, for the estimated uncollectible amount of billed finance charges and fees and related losses. The finance charge and fee reserve, which is recorded as a contra asset on our consolidated balance sheets, totaled $491 million and $402 million as of December 31, 2017 and 2016, respectively.

Loans Held for Sale

We had total loans held for sale of $971 million and $1.0 billion as of December 31, 2017 and 2016, respectively. We also originated for sale $8.4 billion, $7.6 billion and $6.4 billion of conforming residential mortgage loans and commercial multifamily real estate loans in 2017, 2016 and 2015, respectively. We retained servicing on approximately 100% of these loans sold in 2017, 2016 and 2015.