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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK | 6 Months Ended
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Jun. 30, 2019
Receivables [Abstract] |
ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK | NOTE 4 - ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK The ACL consists of the ALLL and the reserve for unfunded commitments. It is adjusted through a provision for credit losses that is charged to earnings, based on the Company’s quarterly evaluation of the loan and lease portfolio and related commitments, and is reduced by net charge-offs and the ALLL associated with sold loans. See Note 5 “Allowance for Credit Losses, Nonperforming Assets, and Concentrations of Credit Risk” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2018, for a detailed discussion of the ALLL reserve methodology and estimation techniques. On a quarterly basis, the Company reviews and refines its estimate of the ACL, taking into consideration changes in portfolio size and composition, historical loss experience, internal risk ratings, current economic conditions, industry performance trends and other pertinent information. As of June 30, 2019, there were no material changes in assumptions or estimation techniques compared with prior periods that impacted the determination of the current period’s ALLL and the reserve for unfunded lending commitments. A summary of changes in the ACL is presented below:
| Three Months Ended June 30, 2019 |  | Six Months Ended June 30, 2019
(in millions) | Commercial |  | Retail |  | Total |  |  | Commercial |  | Retail |  | Total |
Allowance for loan and lease losses, beginning of period |  | $691 |  |  | $554 |  |  | $1,245 |  |  |  | $690 |  |  | $552 |  |  | $1,242 |
Charge-offs | (45 | ) | (111 | ) | (156 | ) |  | (71 | ) | (223 | ) | (294 | )
Recoveries | 12 |  | 38 |  | 50 |  |  | 14 |  | 85 |  | 99 |
Net charge-offs | (33 | ) | (73 | ) | (106 | ) |  | (57 | ) | (138 | ) | (195 | )
Provision charged to income | 22 |  | 66 |  | 88 |  |  | 47 |  | 133 |  | 180 |
Allowance for loan and lease losses, end of period | 680 |  | 547 |  | 1,227 |  |  | 680 |  | 547 |  | 1,227 |
Reserve for unfunded lending commitments, beginning of period | 84 |  | — |  | 84 |  |  | 91 |  | — |  | 91 |
Provision for unfunded lending commitments | 9 |  | — |  | 9 |  |  | 2 |  | — |  | 2 |
Reserve for unfunded lending commitments, end of period | 93 |  | — |  | 93 |  |  | 93 |  | — |  | 93 |
Total allowance for credit losses, end of period |  | $773 |  |  | $547 |  |  | $1,320 |  |  |  | $773 |  |  | $547 |  |  | $1,320 |
| Three Months Ended June 30, 2018 |  | Six Months Ended June 30, 2018
(in millions) | Commercial |  | Retail |  | Total |  |  | Commercial |  | Retail |  | Total |
Allowance for loan and lease losses, beginning of period |  | $711 |  |  | $535 |  |  | $1,246 |  |  |  | $685 |  |  | $551 |  |  | $1,236 |
Charge-offs | (14 | ) | (106 | ) | (120 | ) |  | (17 | ) | (219 | ) | (236 | )
Recoveries | 2 |  | 42 |  | 44 |  |  | 8 |  | 82 |  | 90 |
Net charge-offs | (12 | ) | (64 | ) | (76 | ) |  | (9 | ) | (137 | ) | (146 | )
Provision charged to income | 16 |  | 67 |  | 83 |  |  | 39 |  | 124 |  | 163 |
Allowance for loan and lease losses, end of period | 715 |  | 538 |  | 1,253 |  |  | 715 |  | 538 |  | 1,253 |
Reserve for unfunded lending commitments, beginning of period | 86 |  | — |  | 86 |  |  | 88 |  | — |  | 88 |
Provision for unfunded lending commitments | 2 |  | — |  | 2 |  |  | — |  | — |  | — |
Reserve for unfunded lending commitments, end of period | 88 |  | — |  | 88 |  |  | 88 |  | — |  | 88 |
Total allowance for credit losses, end of period |  | $803 |  |  | $538 |  |  | $1,341 |  |  |  | $803 |  |  | $538 |  |  | $1,341 |
The recorded investment in loans and leases based on the Company’s evaluation methodology is presented below:
| June 30, 2019 |  | December 31, 2018
(in millions) | Commercial |  | Retail |  | Total |  |  | Commercial |  | Retail |  | Total |
Individually evaluated |  | $314 |  |  | $686 |  |  | $1,000 |  |  |  | $391 |  |  | $723 |  |  | $1,114 |
Formula-based evaluation | 56,649 |  | 59,189 |  | 115,838 |  |  | 56,392 |  | 59,154 |  | 115,546 |
Total loans and leases |  | $56,963 |  |  | $59,875 |  |  | $116,838 |  |  |  | $56,783 |  |  | $59,877 |  |  | $116,660 |
A summary of the ACL by evaluation methodology is presented below:
| June 30, 2019 |  | December 31, 2018
(in millions) | Commercial |  | Retail |  | Total |  |  | Commercial |  | Retail |  | Total |
Individually evaluated |  | $34 |  |  | $25 |  |  | $59 |  |  |  | $38 |  |  | $26 |  |  | $64 |
Formula-based evaluation | 739 |  | 522 |  | 1,261 |  |  | 743 |  | 526 |  | 1,269 |
Allowance for credit losses |  | $773 |  |  | $547 |  |  | $1,320 |  |  |  | $781 |  |  | $552 |  |  | $1,333 |
For commercial loans and leases, Citizens utilizes regulatory classification ratings to monitor credit quality. For additional information on regulatory classification ratings, see Note 5 “Allowance for Credit Losses, Nonperforming Assets, and Concentrations of Credit Risk” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2018. The recorded investment in commercial loans and leases based on regulatory classification ratings is presented below:
| June 30, 2019
|  | Criticized |
(in millions) | Pass |  | Special Mention | Substandard |  | Doubtful |  | Total |
Commercial |  | $39,011 |  |  | $1,174 |  |  | $770 |  |  | $201 |  |  | $41,156 |
Commercial real estate | 12,705 |  | 377 |  | 38 |  | 3 |  | 13,123 |
Leases | 2,578 |  | 46 |  | 43 |  | 17 |  | 2,684 |
Total commercial loans and leases |  | $54,294 |  |  | $1,597 |  |  | $851 |  |  | $221 |  |  | $56,963 |
| December 31, 2018
|  | Criticized |
(in millions) | Pass |  | Special Mention | Substandard |  | Doubtful |  | Total |
Commercial |  | $38,600 |  |  | $1,231 |  |  | $828 |  |  | $198 |  |  | $40,857 |
Commercial real estate | 12,523 |  | 412 |  | 82 |  | 6 |  | 13,023 |
Leases | 2,823 |  | 39 |  | 41 |  | — |  | 2,903 |
Total commercial loans and leases |  | $53,946 |  |  | $1,682 |  |  | $951 |  |  | $204 |  |  | $56,783 |
The recorded investment in classes of retail loans, categorized by delinquency status is presented below:
| June 30, 2019
|  | Days Past Due
(in millions) | Current |  | 1-29 | 30-59 | 60-89 | 90 or More | Total |
Residential mortgages |  | $18,882 |  |  | $129 |  |  | $32 |  |  | $15 |  |  | $134 |  |  | $19,192 |
Home equity loans | 825 |  | 73 |  | 11 |  | 5 |  | 24 |  | 938 |
Home equity lines of credit | 11,652 |  | 372 |  | 58 |  | 31 |  | 153 |  | 12,266 |
Home equity loans serviced by others | 301 |  | 26 |  | 5 |  | 3 |  | 13 |  | 348 |
Home equity lines of credit serviced by others | 60 |  | 14 |  | 2 |  | 1 |  | 11 |  | 88 |
Automobile | 10,630 |  | 1,083 |  | 201 |  | 67 |  | 19 |  | 12,000 |
Education | 9,089 |  | 166 |  | 25 |  | 13 |  | 12 |  | 9,305 |
Credit cards | 1,935 |  | 67 |  | 15 |  | 9 |  | 20 |  | 2,046 |
Other retail | 3,528 |  | 97 |  | 30 |  | 21 |  | 16 |  | 3,692 |
Total retail loans |  | $56,902 |  |  | $2,027 |  |  | $379 |  |  | $165 |  |  | $402 |  |  | $59,875 |
| December 31, 2018
|  | Days Past Due
(in millions) | Current |  | 1-29 | 30-59 | 60-89 | 90 or More | Total |
Residential mortgages |  | $18,664 |  |  | $131 |  |  | $37 |  |  | $13 |  |  | $133 |  |  | $18,978 |
Home equity loans | 945 |  | 75 |  | 12 |  | 3 |  | 38 |  | 1,073 |
Home equity lines of credit | 12,042 |  | 386 |  | 65 |  | 22 |  | 195 |  | 12,710 |
Home equity loans serviced by others | 355 |  | 21 |  | 7 |  | 3 |  | 13 |  | 399 |
Home equity lines of credit serviced by others | 79 |  | 15 |  | 2 |  | 1 |  | 7 |  | 104 |
Automobile | 10,729 |  | 1,039 |  | 207 |  | 59 |  | 72 |  | 12,106 |
Education | 8,694 |  | 159 |  | 23 |  | 13 |  | 11 |  | 8,900 |
Credit cards | 1,894 |  | 53 |  | 14 |  | 10 |  | 20 |  | 1,991 |
Other retail | 3,481 |  | 76 |  | 26 |  | 18 |  | 15 |  | 3,616 |
Total retail loans |  | $56,883 |  |  | $1,955 |  |  | $393 |  |  | $142 |  |  | $504 |  |  | $59,877 |
Nonperforming Assets The following table presents nonperforming loans and leases and loans accruing and 90 days or more past due:
| Nonperforming |  | Accruing and 90 days or more past due
(in millions) | June 30, 2019 |  | December 31, 2018 |  | June 30, 2019 |  | December 31, 2018
Commercial |  | $198 |  |  |  | $194 |  |  |  | $4 |  |  |  | $1 |
Commercial real estate | 4 |  |  | 7 |  |  | — |  |  | — |
Leases | 17 |  |  | — |  |  | 1 |  |  | — |
Total commercial loans and leases | 219 |  |  | 201 |  |  | 5 |  |  | 1 |
Residential mortgages (1)(2) | 141 |  |  | 136 |  |  | 14 |  |  | 15 |
Home equity loans | 38 |  |  | 50 |  |  | — |  |  | — |
Home equity lines of credit | 210 |  |  | 231 |  |  | — |  |  | — |
Home equity loans serviced by others | 16 |  |  | 17 |  |  | — |  |  | — |
Home equity lines of credit serviced by others | 14 |  |  | 15 |  |  | — |  |  | — |
Automobile | 62 |  |  | 81 |  |  | — |  |  | — |
Education | 40 |  |  | 38 |  |  | 3 |  |  | 2 |
Credit card | 20 |  |  | 20 |  |  | — |  |  | — |
Other retail | 10 |  |  | 8 |  |  | 9 |  |  | 7 |
Total retail loans | 551 |  |  | 596 |  |  | 26 |  |  | 24 |
Total |  | $770 |  |  |  | $797 |  |  |  | $31 |  |  |  | $25 |
(1) Nonperforming balances exclude first lien residential mortgage loans which are accruing and 90 days or more past due that are 100% guaranteed by the Federal Housing Administration. These loans totaled $11 million and $12 million as of June 30, 2019 and December 31, 2018, respectively. (2) Nonperforming balances exclude guaranteed residential mortgage loans sold to GNMA for which the Company has the right, but not the obligation, to repurchase. These loans totaled $158 million and $133 million as of June 30, 2019 and December 31, 2018, respectively, and are included in the Company’s Consolidated Balance Sheets. Other nonperforming assets primarily consist of other real estate owned and are presented in other assets on the Consolidated Balance Sheets. Other real estate owned, net of valuation allowance, was $32 million and $34 million as of June 30, 2019 and December 31, 2018, respectively. A summary of nonperforming loan and lease key performance indicators is presented below:
| June 30, 2019 |  | December 31, 2018
Nonperforming commercial loans and leases as a percentage of total loans and leases | 0.19 | % |  | 0.17 | %
Nonperforming retail loans as a percentage of total loans and leases | 0.47 |  |  | 0.51 |
Nonperforming loans and leases as a percentage of total loans and leases | 0.66 | % |  | 0.68 | %
Nonperforming commercial assets as a percentage of total assets | 0.13 | % |  | 0.13 | %
Nonperforming retail assets as a percentage of total assets | 0.36 |  |  | 0.39 |
Nonperforming assets as a percentage of total assets | 0.49 | % |  | 0.52 | %
The recorded investment in mortgage loans collateralized by residential real estate property for which formal foreclosure proceedings were in process was $174 million and $172 million as of June 30, 2019 and December 31, 2018, respectively. The aging of both accruing and nonaccruing loan and lease past due amounts is presented below:
| June 30, 2019 |  | December 31, 2018
| Days Past Due |  | Days Past Due
(in millions) | 30-59 | 60-89 | 90 or More | Total |  |  | 30-59 | 60-89 | 90 or More | Total |
Commercial |  | $12 |  |  | $17 |  |  | $51 |  |  | $80 |  |  |  | $85 |  |  | $3 |  |  | $78 |  |  | $166 |
Commercial real estate | — |  | 6 |  | 2 |  | 8 |  |  | 8 |  | 32 |  | 5 |  | 45 |
Leases | 1 |  | — |  | 1 |  | 2 |  |  | 7 |  | — |  | — |  | 7 |
Total commercial loans and leases | 13 |  | 23 |  | 54 |  | 90 |  |  | 100 |  | 35 |  | 83 |  | 218 |
Residential mortgages | 32 |  | 15 |  | 134 |  | 181 |  |  | 37 |  | 13 |  | 133 |  | 183 |
Home equity loans | 11 |  | 5 |  | 24 |  | 40 |  |  | 12 |  | 3 |  | 38 |  | 53 |
Home equity lines of credit | 58 |  | 31 |  | 153 |  | 242 |  |  | 65 |  | 22 |  | 195 |  | 282 |
Home equity loans serviced by others | 5 |  | 3 |  | 13 |  | 21 |  |  | 7 |  | 3 |  | 13 |  | 23 |
Home equity lines of credit serviced by others | 2 |  | 1 |  | 11 |  | 14 |  |  | 2 |  | 1 |  | 7 |  | 10 |
Automobile | 201 |  | 67 |  | 19 |  | 287 |  |  | 207 |  | 59 |  | 72 |  | 338 |
Education | 25 |  | 13 |  | 12 |  | 50 |  |  | 23 |  | 13 |  | 11 |  | 47 |
Credit cards | 15 |  | 9 |  | 20 |  | 44 |  |  | 14 |  | 10 |  | 20 |  | 44 |
Other retail | 30 |  | 21 |  | 16 |  | 67 |  |  | 26 |  | 18 |  | 15 |  | 59 |
Total retail loans | 379 |  | 165 |  | 402 |  | 946 |  |  | 393 |  | 142 |  | 504 |  | 1,039 |
Total |  | $392 |  |  | $188 |  |  | $456 |  |  | $1,036 |  |  |  | $493 |  |  | $177 |  |  | $587 |  |  | $1,257 |
Impaired Loans Impaired loans include nonaccruing larger balance (greater than $3 million carrying value), non-homogeneous commercial and commercial real estate loans, and restructured loans that are deemed TDRs. A summary of impaired loans by class is presented below:
| June 30, 2019
(in millions) | Impaired Loans With a Related Allowance | Allowance on Impaired Loans | Impaired Loans Without a Related Allowance | Unpaid Contractual Balance | Total Recorded Investment in Impaired Loans
Commercial |  | $170 |  |  | $34 |  |  | $118 |  |  | $359 |  |  | $288 |
Commercial real estate | — |  | — |  | 26 |  | 26 |  | 26 |
Total commercial loans | 170 |  | 34 |  | 144 |  | 385 |  | 314 |
Residential mortgages | 25 |  | 2 |  | 122 |  | 192 |  | 147 |
Home equity loans | 26 |  | 2 |  | 70 |  | 130 |  | 96 |
Home equity lines of credit | 23 |  | 2 |  | 178 |  | 242 |  | 201 |
Home equity loans serviced by others | 19 |  | 1 |  | 17 |  | 48 |  | 36 |
Home equity lines of credit serviced by others | 1 |  | — |  | 6 |  | 10 |  | 7 |
Automobile | 1 |  | — |  | 21 |  | 31 |  | 22 |
Education | 121 |  | 9 |  | 23 |  | 144 |  | 144 |
Credit cards | 26 |  | 8 |  | 1 |  | 27 |  | 27 |
Other retail | 3 |  | 1 |  | 3 |  | 7 |  | 6 |
Total retail loans | 245 |  | 25 |  | 441 |  | 831 |  | 686 |
Total |  | $415 |  |  | $59 |  |  | $585 |  |  | $1,216 |  |  | $1,000 |
| December 31, 2018
(in millions) | Impaired Loans With a Related Allowance | Allowance on Impaired Loans | Impaired Loans Without a Related Allowance | Unpaid Contractual Balance | Total Recorded Investment in Impaired Loans
Commercial |  | $186 |  |  | $31 |  |  | $167 |  |  | $450 |  |  | $353 |
Commercial real estate | 32 |  | 7 |  | 6 |  | 38 |  | 38 |
Total commercial loans | 218 |  | 38 |  | 173 |  | 488 |  | 391 |
Residential mortgages | 28 |  | 2 |  | 127 |  | 201 |  | 155 |
Home equity loans | 34 |  | 3 |  | 76 |  | 148 |  | 110 |
Home equity lines of credit | 21 |  | 1 |  | 181 |  | 244 |  | 202 |
Home equity loans serviced by others | 22 |  | 1 |  | 19 |  | 54 |  | 41 |
Home equity lines of credit serviced by others | 1 |  | — |  | 7 |  | 11 |  | 8 |
Automobile | 1 |  | — |  | 22 |  | 31 |  | 23 |
Education | 130 |  | 11 |  | 23 |  | 153 |  | 153 |
Credit cards | 24 |  | 7 |  | 1 |  | 25 |  | 25 |
Other retail | 4 |  | 1 |  | 2 |  | 8 |  | 6 |
Total retail loans | 265 |  | 26 |  | 458 |  | 875 |  | 723 |
Total |  | $483 |  |  | $64 |  |  | $631 |  |  | $1,363 |  |  | $1,114 |
Additional information on impaired loans is presented below:
| Three Months Ended June 30,
| 2019 |  | 2018
(in millions) | Interest Income Recognized | Average Recorded Investment |  | Interest Income Recognized | Average Recorded Investment
Commercial |  | $2 |  |  | $310 |  |  |  | $2 |  |  | $332 |
Commercial real estate | 1 |  | 27 |  |  | — |  | 36 |
Total commercial loans | 3 |  | 337 |  |  | 2 |  | 368 |
Residential mortgages | 2 |  | 145 |  |  | 2 |  | 152 |
Home equity loans | 1 |  | 97 |  |  | 1 |  | 112 |
Home equity lines of credit | 2 |  | 199 |  |  | 2 |  | 198 |
Home equity loans serviced by others | — |  | 36 |  |  | — |  | 46 |
Home equity lines of credit serviced by others | — |  | 7 |  |  | — |  | 9 |
Automobile | — |  | 22 |  |  | — |  | 22 |
Education | 2 |  | 145 |  |  | 2 |  | 165 |
Credit cards | 1 |  | 25 |  |  | 1 |  | 24 |
Other retail | — |  | 6 |  |  | — |  | 8 |
Total retail loans | 8 |  | 682 |  |  | 8 |  | 736 |
Total |  | $11 |  |  | $1,019 |  |  |  | $10 |  |  | $1,104 |
| Six Months Ended June 30,
| 2019 |  | 2018
(in millions) | Interest Income Recognized | Average Recorded Investment |  | Interest Income Recognized | Average Recorded Investment
Commercial |  | $5 |  |  | $304 |  |  |  | $4 |  |  | $311 |
Commercial real estate | 1 |  | 27 |  |  | — |  | 32 |
Total commercial loans | 6 |  | 331 |  |  | 4 |  | 343 |
Residential mortgages | 3 |  | 142 |  |  | 3 |  | 149 |
Home equity loans | 3 |  | 97 |  |  | 3 |  | 112 |
Home equity lines of credit | 4 |  | 193 |  |  | 4 |  | 192 |
Home equity loans serviced by others | 1 |  | 37 |  |  | 1 |  | 47 |
Home equity lines of credit serviced by others | — |  | 7 |  |  | — |  | 9 |
Automobile | — |  | 21 |  |  | — |  | 21 |
Education | 4 |  | 145 |  |  | 4 |  | 165 |
Credit cards | 1 |  | 24 |  |  | 1 |  | 23 |
Other retail | — |  | 6 |  |  | — |  | 8 |
Total retail loans | 16 |  | 672 |  |  | 16 |  | 726 |
Total |  | $22 |  |  | $1,003 |  |  |  | $20 |  |  | $1,069 |
Troubled Debt Restructurings TDR is the classification given to a loan that has been restructured in a manner that grants a concession to a borrower experiencing financial hardship that we would not otherwise make. For additional information on regulatory classification ratings, see Note 5 “Allowance for Credit Losses, Nonperforming Assets, and Concentrations of Credit Risk” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2018. The table below summarizes TDRs by class and total unfunded commitments:
(in millions) | June 30, 2019 |  | December 31, 2018
Commercial |  | $253 |  |  |  | $304 |
Retail | 686 |  |  | 723 |
Unfunded commitments related to TDRs | 70 |  |  | 30 |
The table below summarizes how loans were modified during the three months and six months ended June 30, 2019 and 2018. The reported balances represent the post-modification outstanding recorded investment and can include loans that became TDRs during the period and were paid off in full, charged off, or sold prior to period end. Pre-modification balances for modified loans approximate the post-modification balances shown.
| Three Months Ended June 30, 2019
| Primary Modification Types
| Interest Rate Reduction 1 |  | Maturity Extension 2 |  | Other 3
(dollars in millions) | Number of Contracts | Recorded Investment |  | Number of Contracts | Recorded Investment |  | Number of Contracts | Recorded Investment
Commercial | 1 |  |  | $— |  |  | 7 |  |  | $— |  |  | 6 |  |  | $47 |
Commercial real estate | — |  | — |  |  | 1 |  | — |  |  | — |  | — |
Total commercial loans | 1 |  | — |  |  | 8 |  | — |  |  | 6 |  | 47 |
Residential mortgages | 9 |  | 2 |  |  | 10 |  | 1 |  |  | 32 |  | 5 |
Home equity loans | 6 |  | 1 |  |  | — |  | — |  |  | 18 |  | 1 |
Home equity lines of credit | 43 |  | 4 |  |  | 15 |  | 3 |  |  | 77 |  | 4 |
Home equity loans serviced by others | — |  | — |  |  | — |  | — |  |  | 3 |  | 1 |
Home equity lines of credit serviced by others | — |  | — |  |  | — |  | — |  |  | 2 |  | — |
Automobile | 40 |  | 1 |  |  | 7 |  | — |  |  | 335 |  | 5 |
Education | — |  | — |  |  | — |  | — |  |  | 13 |  | 1 |
Credit cards | 941 |  | 5 |  |  | — |  | — |  |  | 141 |  | — |
Other retail | — |  | — |  |  | — |  | — |  |  | 2 |  | — |
Total retail loans | 1,039 |  | 13 |  |  | 32 |  | 4 |  |  | 623 |  | 17 |
Total | 1,040 |  |  | $13 |  |  | 40 |  |  | $4 |  |  | 629 |  |  | $64 |
| Three Months Ended June 30, 2018
| Primary Modification Types
| Interest Rate Reduction 1 |  | Maturity Extension 2 |  | Other 3
(dollars in millions) | Number of Contracts | Recorded Investment |  | Number of Contracts | Recorded Investment |  | Number of Contracts | Recorded Investment
Commercial | 4 |  |  | $1 |  |  | 4 |  |  | $— |  |  | 17 |  |  | $59 |
Commercial real estate | — |  | — |  |  | — |  | — |  |  | 2 |  | 31 |
Total commercial loans | 4 |  | 1 |  |  | 4 |  | — |  |  | 19 |  | 90 |
Residential mortgages | 16 |  | 2 |  |  | 23 |  | 3 |  |  | 33 |  | 5 |
Home equity loans | 11 |  | 1 |  |  | 1 |  | — |  |  | 34 |  | 1 |
Home equity lines of credit | 13 |  | 1 |  |  | 47 |  | 6 |  |  | 113 |  | 7 |
Home equity loans serviced by others | — |  | — |  |  | — |  | — |  |  | 8 |  | — |
Home equity lines of credit serviced by others | 2 |  | — |  |  | 1 |  | — |  |  | 2 |  | — |
Automobile | 41 |  | 1 |  |  | 16 |  | — |  |  | 309 |  | 5 |
Education | — |  | — |  |  | — |  | — |  |  | 139 |  | 3 |
Credit cards | 559 |  | 3 |  |  | — |  | — |  |  | — |  | — |
Other retail | — |  | — |  |  | — |  | — |  |  | — |  | — |
Total retail loans | 642 |  | 8 |  |  | 88 |  | 9 |  |  | 638 |  | 21 |
Total | 646 |  |  | $9 |  |  | 92 |  |  | $9 |  |  | 657 |  |  | $111 |
| Six Months Ended June 30, 2019
| Primary Modification Types
| Interest Rate Reduction 1 |  | Maturity Extension 2 |  | Other 3
(dollars in millions) | Number of Contracts | Recorded Investment |  | Number of Contracts | Recorded Investment |  | Number of Contracts | Recorded Investment
Commercial | 1 |  |  | $— |  |  | 12 |  |  | $1 |  |  | 18 |  |  | $87 |
Commercial real estate | — |  | — |  |  | 1 |  | — |  |  | — |  | — |
Total commercial loans | 1 |  | — |  |  | 13 |  | 1 |  |  | 18 |  | 87 |
Residential mortgages | 13 |  | 4 |  |  | 21 |  | 3 |  |  | 62 |  | 9 |
Home equity loans | 13 |  | 1 |  |  | — |  | — |  |  | 45 |  | 2 |
Home equity lines of credit | 72 |  | 8 |  |  | 50 |  | 9 |  |  | 182 |  | 12 |
Home equity loans serviced by others | — |  | — |  |  | — |  | — |  |  | 7 |  | 1 |
Home equity lines of credit serviced by others | — |  | — |  |  | — |  | — |  |  | 4 |  | — |
Automobile | 65 |  | 1 |  |  | 12 |  | — |  |  | 624 |  | 9 |
Education | — |  | — |  |  | — |  | — |  |  | 80 |  | 3 |
Credit cards | 1,557 |  | 9 |  |  | — |  | — |  |  | 141 |  | — |
Other retail | — |  | — |  |  | — |  | — |  |  | 3 |  | — |
Total retail loans | 1,720 |  | 23 |  |  | 83 |  | 12 |  |  | 1,148 |  | 36 |
Total | 1,721 |  |  | $23 |  |  | 96 |  |  | $13 |  |  | 1,166 |  |  | $123 |
| Six Months Ended June 30, 2018
| Primary Modification Types
| Interest Rate Reduction 1 |  | Maturity Extension 2 |  | Other 3
(dollars in millions) | Number of Contracts | Recorded Investment |  | Number of Contracts | Recorded Investment |  | Number of Contracts | Recorded Investment
Commercial | 5 |  |  | $1 |  |  | 10 |  |  | $1 |  |  | 35 |  |  | $134 |
Commercial real estate | — |  | — |  |  | 1 |  | — |  |  | 2 |  | 31 |
Total commercial loans | 5 |  | 1 |  |  | 11 |  | 1 |  |  | 37 |  | 165 |
Residential mortgages | 23 |  | 3 |  |  | 30 |  | 4 |  |  | 86 |  | 11 |
Home equity loans | 22 |  | 2 |  |  | 1 |  | — |  |  | 66 |  | 3 |
Home equity lines of credit | 28 |  | 2 |  |  | 89 |  | 11 |  |  | 206 |  | 14 |
Home equity loans serviced by others | 1 |  | — |  |  | — |  | — |  |  | 15 |  | — |
Home equity lines of credit serviced by others | 4 |  | — |  |  | 1 |  | — |  |  | 5 |  | — |
Automobile | 77 |  | 2 |  |  | 33 |  | 1 |  |  | 578 |  | 9 |
Education | — |  | — |  |  | — |  | — |  |  | 251 |  | 4 |
Credit cards | 1,153 |  | 6 |  |  | — |  | — |  |  | — |  | — |
Other retail | 1 |  | — |  |  | — |  | — |  |  | 4 |  | — |
Total retail loans | 1,309 |  | 15 |  |  | 154 |  | 16 |  |  | 1,211 |  | 41 |
Total | 1,314 |  |  | $16 |  |  | 165 |  |  | $17 |  |  | 1,248 |  |  | $206 |
(1) Includes modifications that consist of multiple concessions, one of which is an interest rate reduction. (2) Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction). (3) Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification. The net change to ALLL resulting from modifications of loans for the three months ended June 30, 2019 and 2018 was $2 million and $1 million, respectively. The net change to ALLL resulting from modifications of loans for the six months ended June 30, 2019 and 2018 was $4 million and $2 million, respectively. Charge-offs may also be recorded on TDRs. Citizens recorded $1 million of charge-offs resulting from the modification of loans in the three months ended June 30, 2019 and 2018, and $2 million in the six months ended June 30, 2019 and 2018. A payment default refers to a loan that becomes 90 days or more past due under the modified terms. Loan data includes loans meeting the criteria that were paid off in full, charged off, or sold prior to June 30, 2019 and 2018. For commercial loans, recorded investment in TDRs that defaulted within 12 months of their modification date for the three months ended June 30, 2019 and 2018 were $1 million and $17 million, respectively, and $1 million and $20 million for the six months ended June 30, 2019 and 2018, respectively. For retail loans, there were $10 million and $10 million of loans which defaulted within 12 months of their restructuring date for the three months ended June 30, 2019 and 2018, respectively, and there were $19 million of loans which defaulted within 12 months of their restructuring date for the six months ended June 30, 2019 and 2018. Concentrations of Credit Risk Most of the Company’s lending activity is with customers located in the New England, Mid-Atlantic and Midwest regions. Generally, loans are collateralized by assets including real estate, inventory, accounts receivable, other personal property and investment securities. As of June 30, 2019 and December 31, 2018, Citizens had a significant amount of loans collateralized by residential and commercial real estate. There were no significant concentration risks within the commercial loan or retail loan portfolios. Exposure to credit losses arising from lending transactions may fluctuate with fair values of collateral supporting loans, which may not perform according to contractual agreements. The Company’s policy is to collateralize loans to the extent necessary; however, unsecured loans are also granted on the basis of the financial strength of the applicant and the facts surrounding the transaction. Certain loan products, including residential mortgages, home equity loans and lines of credit, and credit cards, have contractual features that may increase credit exposure to the Company in the event of an increase in interest rates or a decline in housing values. These products include loans that exceed 90% of the value of the underlying collateral (high LTV loans), interest-only and negative amortization residential mortgages, and loans with low introductory rates. Certain loans have more than one of these characteristics. The following tables present balances of loans with these characteristics:
| June 30, 2019
(in millions) | Residential Mortgages | Home Equity Loans and Lines of Credit | Home Equity Products Serviced by Others | Credit Cards |  | Total |
High loan-to-value |  | $441 |  |  | $78 |  |  | $125 |  |  | $— |  |  | $644 |
Interest-only/negative amortization | 1,765 |  | — |  | — |  | — |  | 1,765 |
Low introductory rate | — |  | — |  | — |  | 221 |  | 221 |
Multiple characteristics and other | 3 |  | — |  | — |  | — |  | 3 |
Total |  | $2,209 |  |  | $78 |  |  | $125 |  |  | $221 |  |  | $2,633 |
| December 31, 2018
(in millions) | Residential Mortgages | Home Equity Loans and Lines of Credit | Home Equity Products Serviced by Others | Credit Cards |  | Education |  | Total |
High loan-to-value |  | $318 |  |  | $87 |  |  | $148 |  |  | $— |  |  | $— |  |  | $553 |
Interest-only/negative amortization | 1,794 |  | — |  | — |  | — |  | 1 |  | 1,795 |
Low introductory rate | — |  | — |  | — |  | 217 |  | — |  | 217 |
Multiple characteristics and other | 1 |  | — |  | — |  | — |  | — |  | 1 |
Total |  | $2,113 |  |  | $87 |  |  | $148 |  |  | $217 |  |  | $1 |  |  | $2,566 |

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