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Asset Quality | 12 Months Ended
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Dec. 31, 2019
Receivables [Abstract] |
Asset Quality | 5. Asset Quality We assess the credit quality of the loan portfolio by monitoring net credit losses, levels of nonperforming assets and delinquencies, and credit quality ratings as defined by management. Credit Quality Indicators The prevalent risk characteristic for both commercial and consumer loans is the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms. Evaluation of this risk is stratified and monitored by the loan risk rating grades assigned for the commercial loan portfolios and the regulatory risk ratings assigned for the consumer loan portfolios. Most extensions of credit are subject to loan grading or scoring. Loan grades are assigned at the time of origination, verified by credit risk management, and periodically re-evaluated thereafter. This risk rating methodology blends our judgment with quantitative modeling. Commercial loans generally are assigned two internal risk ratings. The first rating reflects the probability that the borrower will default on an obligation; the second rating reflects expected recovery rates on the credit facility. Default probability is determined based on, among other factors, the financial strength of the borrower, an assessment of the borrower’s management, the borrower’s competitive position within its industry sector, and our view of industry risk in the context of the general economic outlook. Types of exposure, transaction structure, and collateral, including credit risk mitigants, affect the expected recovery assessment. Commercial Credit Exposure — Excluding PCI Credit Risk Profile by Creditworthiness Category (a), (b)
December 31, |  |  |  |  |  |  |  |  |  |
in millions | Commercial and industrial | RE — Commercial | RE — Construction | Commercial Lease | Total
RATING | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018
Pass | $ | 46,544 |  | $ | 44,138 |  | $ | 12,914 |  | $ | 13,672 |  | $ | 1,524 |  | $ | 1,537 |  | $ | 4,642 |  | $ | 4,557 |  | $ | 65,624 |  | $ | 63,904 |
Criticized (Accruing) | 1,439 |  | 1,402 |  | 370 |  | 354 |  | 31 |  | 125 |  | 40 |  | 41 |  | 1,880 |  | 1,922 |
Criticized (Nonaccruing) | 264 |  | 152 |  | 83 |  | 81 |  | 2 |  | 2 |  | 6 |  | 8 |  | 355 |  | 243 |
Total | $ | 48,247 |  | $ | 45,692 |  | $ | 13,367 |  | $ | 14,107 |  | $ | 1,557 |  | $ | 1,664 |  | $ | 4,688 |  | $ | 4,606 |  | $ | 67,859 |  | $ | 66,069 |
(a) | Credit quality indicators are updated on an ongoing basis and reflect credit quality information as of the dates indicated.
(b) | The term criticized refers to those loans that are internally classified by Key as special mention or worse, which are asset quality categories defined by regulatory authorities. These assets have an elevated level of risk and may have a high probability of default or total loss. Pass rated refers to all loans not classified as criticized.
Consumer Credit Exposure — Excluding PCI Non-PCI Loans by Refreshed FICO Score (a)
December 31, |  |  |  |  |  |  |  |  |  |
in millions | Residential — Prime | Consumer direct loans | Credit cards | Consumer indirect loans | Total
FICO SCORE | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018
750 and above | $ | 10,583 |  | $ | 9,794 |  | $ | 1,874 |  | $ | 549 |  | $ | 523 |  | $ | 521 |  | $ | 2,232 |  | $ | 1,647 |  | $ | 15,212 |  | $ | 12,511 |
660 to 749 | 4,823 |  | 4,906 |  | 1,069 |  | 700 |  | 484 |  | 507 |  | 1,652 |  | 1,320 |  | 8,028 |  | 7,433 |
Less than 660 | 1,360 |  | 1,411 |  | 223 |  | 224 |  | 123 |  | 116 |  | 641 |  | 565 |  | 2,347 |  | 2,316 |
No Score | 261 |  | 213 |  | 344 |  | 333 |  | — |  | — |  | 149 |  | 102 |  | 754 |  | 648 |
Total | $ | 17,027 |  | $ | 16,324 |  | $ | 3,510 |  | $ | 1,806 |  | $ | 1,130 |  | $ | 1,144 |  | $ | 4,674 |  | $ | 3,634 |  | $ | 26,341 |  | $ | 22,908 |
(a) | Borrower FICO scores provide information about the credit quality of our consumer loan portfolio as they provide an indication as to the likelihood that a debtor will repay their debts. The scores are obtained from a nationally recognized consumer rating agency and are presented in the above table at the dates indicated.
Commercial Credit Exposure — PCI Credit Risk Profile by Creditworthiness Category (a), (b)
December 31, |  |  |  |  |  |  |  |  |  |
in millions | Commercial and industrial | RE — Commercial | RE — Construction | Commercial Lease | Total
RATING | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018
Pass | $ | 28 |  | $ | 37 |  | $ | 87 |  | $ | 125 |  | $ | 1 |  | $ | 2 |  | — |  | — |  | $ | 116 |  | $ | 164 |
Criticized | 20 |  | 24 |  | 37 |  | 53 |  | — |  | — |  | — |  | — |  | 57 |  | 77 |
Total | $ | 48 |  | $ | 61 |  | $ | 124 |  | $ | 178 |  | $ | 1 |  | $ | 2 |  | — |  | — |  | $ | 173 |  | $ | 241 |
(a) | Credit quality indicators are updated on an ongoing basis and reflect credit quality information as of the dates indicated.
(b) | The term criticized refers to those loans that are internally classified by Key as special mention or worse, which are asset quality categories defined by regulatory authorities. These assets have an elevated level of risk and may have a high probability of default or total loss. Pass rated refers to all loans not classified as criticized.
Consumer Credit Exposure — PCI PCI Loans by Refreshed FICO Score (a)
December 31, |  |  |  |  |  |  |  |  |  |
in millions | Residential — Prime | Consumer direct loans | Credit cards | Consumer indirect loans | Total
FICO SCORE | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018
750 and above | $ | 103 |  | $ | 137 |  | 1 |  | — |  | — |  | — |  | — |  | — |  | $ | 104 |  | $ | 137 |
660 to 749 | 91 |  | 95 |  | $ | 1 |  | $ | 1 |  | — |  | — |  | — |  | — |  | 92 |  | 96 |
Less than 660 | 70 |  | 97 |  | 1 |  | 2 |  | — |  | — |  | — |  | — |  | 71 |  | 99 |
No Score | 6 |  | 2 |  | — |  | — |  | — |  | — |  | — |  | — |  | 6 |  | 2 |
Total | $ | 270 |  | $ | 331 |  | $ | 3 |  | $ | 3 |  | — |  | — |  | — |  | — |  | $ | 273 |  | $ | 334 |
(a) | Borrower FICO scores provide information about the credit quality of our consumer loan portfolio as they provide an indication as to the likelihood that a debtor will repay their debts. The scores are obtained from a nationally recognized consumer rating agency and are presented in the above table at the dates indicated.
Nonperforming and Past Due Loans Our policies for determining past due loans, placing loans on nonaccrual, applying payments on nonaccrual loans, and resuming accrual of interest for our commercial and consumer loan portfolios are disclosed in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Nonperforming Loans.” The following aging analysis of current and past due loans as of December 31, 2019, and December 31, 2018, provides further information regarding Key’s credit exposure. Aging Analysis of Loan Portfolio (a)
December 31, 2019 | Current | 30-59 Days Past Due (b) | 60-89 Days Past Due (b) | 90 and Greater Days Past Due (b) | Non-performing Loans | Total Past Due and Non-performing Loans | Purchased Credit Impaired | Total Loans (c), (d)
in millions
LOAN TYPE |  |  |  |  |  |  |  |
Commercial and industrial | $ | 47,768 |  | $ | 110 |  | $ | 52 |  | $ | 53 |  | $ | 264 |  | $ | 479 |  | $ | 48 |  | $ | 48,295 |
Commercial real estate: |  |  |  |  |  |  |  |
Commercial mortgage | 13,258 |  | 8 |  | 5 |  | 13 |  | 83 |  | 109 |  | 124 |  | 13,491 |
Construction | 1,551 |  | 3 |  | — |  | 1 |  | 2 |  | 6 |  | 1 |  | 1,558 |
Total commercial real estate loans | 14,809 |  | 11 |  | 5 |  | 14 |  | 85 |  | 115 |  | 125 |  | 15,049 |
Commercial lease financing | 4,647 |  | 22 |  | 11 |  | 2 |  | 6 |  | 41 |  | — |  | 4,688 |
Total commercial loans | $ | 67,224 |  | $ | 143 |  | $ | 68 |  | $ | 69 |  | $ | 355 |  | $ | 635 |  | $ | 173 |  | $ | 68,032 |
Real estate — residential mortgage | $ | 6,705 |  | $ | 7 |  | $ | 5 |  | $ | 1 |  | $ | 48 |  | $ | 61 |  | $ | 257 |  | $ | 7,023 |
Home equity loans | 10,071 |  | 30 |  | 10 |  | 5 |  | 145 |  | 190 |  | 13 |  | 10,274 |
Consumer direct loans | 3,484 |  | 10 |  | 5 |  | 7 |  | 4 |  | 26 |  | 3 |  | 3,513 |
Credit cards | 1,104 |  | 6 |  | 5 |  | 12 |  | 3 |  | 26 |  | — |  | 1,130 |
Consumer indirect loans | 4,609 |  | 32 |  | 8 |  | 3 |  | 22 |  | 65 |  | — |  | 4,674 |
Total consumer loans | $ | 25,973 |  | $ | 85 |  | $ | 33 |  | $ | 28 |  | $ | 222 |  | $ | 368 |  | $ | 273 |  | $ | 26,614 |
Total loans | $ | 93,197 |  | $ | 228 |  | $ | 101 |  | $ | 97 |  | $ | 577 |  | $ | 1,003 |  | $ | 446 |  | $ | 94,646 |
(a) | Amounts in table represent recorded investment and exclude loans held for sale. Recorded investment represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs.
(b) | Past due loan amounts exclude purchased impaired loans, even if contractually past due (or if we do not expect to collect principal or interest in full based on the original contractual terms), as we are currently accreting income over the remaining term of the loans.
(c) | Net of unearned income, net deferred loan fees and costs, and unamortized discounts and premiums.
(d) | Future accretable yield related to PCI loans is not included in the analysis of the loan portfolio.
December 31, 2018 | Current | 30-59 Days Past Due (b) | 60-89 Days Past Due (b) | 90 and Greater Days Past Due (b) | Non-performing Loans | Total Past Due and Non-performing Loans | Purchased Credit Impaired | Total Loans (c), (d)
in millions
LOAN TYPE |  |  |  |  |  |  |  |
Commercial and industrial | $ | 45,375 |  | $ | 89 |  | $ | 31 |  | $ | 45 |  | $ | 152 |  | $ | 317 |  | $ | 61 |  | $ | 45,753 |
Commercial real estate: |  |  |  |  |  |  |  |
Commercial mortgage | 13,957 |  | 27 |  | 17 |  | 25 |  | 81 |  | 150 |  | 178 |  | 14,285 |
Construction | 1,646 |  | — |  | 13 |  | 3 |  | 2 |  | 18 |  | 2 |  | 1,666 |
Total commercial real estate loans | 15,603 |  | 27 |  | 30 |  | 28 |  | 83 |  | 168 |  | 180 |  | 15,951 |
Commercial lease financing | 4,580 |  | 12 |  | 1 |  | 4 |  | 9 |  | 26 |  | — |  | 4,606 |
Total commercial loans | $ | 65,558 |  | $ | 128 |  | $ | 62 |  | $ | 77 |  | $ | 244 |  | $ | 511 |  | $ | 241 |  | $ | 66,310 |
Real estate — residential mortgage | $ | 5,119 |  | $ | 11 |  | $ | 3 |  | $ | 4 |  | $ | 62 |  | $ | 80 |  | $ | 314 |  | $ | 5,513 |
Home equity loans | 10,862 |  | 31 |  | 12 |  | 10 |  | 210 |  | 263 |  | 17 |  | 11,142 |
Consumer direct loans | 1,780 |  | 11 |  | 5 |  | 6 |  | 4 |  | 26 |  | 3 |  | 1,809 |
Credit cards | 1,119 |  | 6 |  | 5 |  | 12 |  | 2 |  | 25 |  | — |  | 1,144 |
Consumer indirect loans | 3,573 |  | 31 |  | 7 |  | 3 |  | 20 |  | 61 |  | — |  | 3,634 |
Total consumer loans | $ | 22,453 |  | $ | 90 |  | $ | 32 |  | $ | 35 |  | $ | 298 |  | $ | 455 |  | $ | 334 |  | $ | 23,242 |
Total loans | $ | 88,011 |  | $ | 218 |  | $ | 94 |  | $ | 112 |  | $ | 542 |  | $ | 966 |  | $ | 575 |  | $ | 89,552 |
(a) | Amounts in table represent recorded investment and exclude loans held for sale. Recorded investment represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs.
(b) | Past due loan amounts exclude purchased impaired loans, even if contractually past due (or if we do not expect to collect principal or interest in full based on the original contractual terms), as we are currently accreting income over the remaining term of the loans.
(c) | Net of unearned income, net deferred loan fees and costs, and unamortized discounts and premiums.
(d) | Future accretable yield related to PCI loans is not included in the analysis of the loan portfolio.
At December 31, 2019, the approximate carrying amount of our commercial nonperforming loans outstanding represented 76% of their original contractual amount owed, total nonperforming loans outstanding represented 80% of their original contractual amount owed, and nonperforming assets in total were carried at 88% of their original contractual amount owed. Nonperforming loans reduced expected interest income by $31 million, $30 million, and $25 million for each of the twelve months ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively. The following tables set forth a further breakdown of individually impaired loans:
| December 31, 2019 |  | December 31, 2018
| Recorded Investment (a) | Unpaid Principal Balance (b) | Specific Allowance (c) |  | Recorded Investment (a) | Unpaid Principal Balance (b) | Specific Allowance (c)
in millions
With no related allowance recorded: |  |  |  |  |  |  |
Commercial and industrial | $ | 156 |  | $ | 224 |  | — |  |  | $ | 118 |  | $ | 175 |  | — |
Commercial real estate: |  |  |  |  |  |  |
Commercial mortgage | 65 |  | 77 |  | — |  |  | 64 |  | 70 |  | — |
Total commercial real estate loans | 65 |  | 77 |  | — |  |  | 64 |  | 70 |  | — |
Total commercial loans | 221 |  | 301 |  | — |  |  | 182 |  | 245 |  | — |
Real estate — residential mortgage | 3 |  | 4 |  | — |  |  | 4 |  | 5 |  | — |
Home equity loans | 45 |  | 51 |  | — |  |  | 49 |  | 56 |  | — |
Consumer direct loans | — |  | 1 |  | — |  |  | 1 |  | 1 |  | — |
Consumer indirect loans | 2 |  | 4 |  | — |  |  | 2 |  | 4 |  | — |
Total consumer loans | 50 |  | 60 |  | — |  |  | 56 |  | 66 |  | — |
Total loans with no related allowance recorded | 271 |  | 361 |  | — |  |  | 238 |  | 311 |  | — |
With an allowance recorded: |  |  |  |  |  |  |
Commercial and industrial | 97 |  | 97 |  | $ | 17 |  |  | 44 |  | 47 |  | $ | 5 |
Commercial real estate: |  |  |  |  |  |  |
Commercial mortgage | — |  | — |  | — |  |  | 2 |  | 3 |  | 1 |
Total commercial real estate loans | — |  | — |  | — |  |  | 2 |  | 3 |  | 1 |
Total commercial loans | 97 |  | 97 |  | 17 |  |  | 46 |  | 50 |  | 6 |
Real estate — residential mortgage | 40 |  | 59 |  | 4 |  |  | 45 |  | 70 |  | 3 |
Home equity loans | 81 |  | 88 |  | 9 |  |  | 78 |  | 85 |  | 8 |
Consumer direct loans | 4 |  | 4 |  | — |  |  | 3 |  | 3 |  | — |
Credit cards | 3 |  | 3 |  | — |  |  | 3 |  | 3 |  | — |
Consumer indirect loans | 33 |  | 33 |  | 3 |  |  | 34 |  | 34 |  | 2 |
Total consumer loans | 161 |  | 187 |  | 16 |  |  | 163 |  | 195 |  | 13 |
Total loans with an allowance recorded | 258 |  | 284 |  | 33 |  |  | 209 |  | 245 |  | 19 |
Total | $ | 529 |  | $ | 645 |  | $ | 33 |  |  | $ | 447 |  | $ | 556 |  | $ | 19 |
(a) | The Recorded Investment represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs. This amount is a component of total loans on our consolidated balance sheet.
(b) | The Unpaid Principal Balance represents the customer’s legal obligation to us.
(c) | See Note 1 (“Summary of Significant Accounting Policies”) under the heading “Impaired Loans” for a description of the specific allowance methodology.
The following table sets forth a further breakdown of average individually impaired loans reported by Key:
Average Recorded Investment (a) | Twelve Months Ended December 31,
in millions | 2019 | 2018 | 2017
Commercial and industrial | $ | 208 |  | $ | 149 |  | $ | 210 |
Commercial real estate: |  |  |
Commercial mortgage | 65 |  | 39 |  | 9 |
Construction | — |  | — |  | — |
Total commercial real estate loans | 65 |  | 39 |  | 9 |
Total commercial loans | 273 |  | 188 |  | 219 |
Real estate — residential mortgage | 46 |  | 49 |  | 50 |
Home equity loans | 127 |  | 122 |  | 121 |
Consumer direct loans | 4 |  | 4 |  | 3 |
Credit cards | 3 |  | 3 |  | 3 |
Consumer indirect loans | 35 |  | 35 |  | 32 |
Total consumer loans | 215 |  | 213 |  | 209 |
Total | $ | 488 |  | $ | 401 |  | $ | 428 |
(a) | The Recorded Investment represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs. This amount is a component of total loans on our consolidated balance sheet.
For the twelve months ended December 31, 2019, December 31, 2018, and December 31, 2017, interest income recognized on the outstanding balances of accruing impaired loans totaled $14 million, $13 million, and $9 million, respectively. TDRs We classify loan modifications as TDRs when a borrower is experiencing financial difficulties and we have granted a concession without commensurate financial, structural, or legal consideration. Acquired loans that were previously modified by First Niagara in a TDR are no longer classified as TDRs at the Acquisition Date. An acquired loan may only be classified as a TDR if a modification meeting the above TDR criteria is performed after the Acquisition Date. PCI loans cannot be classified as TDRs. All commercial and consumer loan TDRs, regardless of size, are individually evaluated for impairment to determine the probable loss content and are assigned a specific loan allowance. This designation has the effect of moving the loan from the general reserve methodology (i.e., collectively evaluated) to the specific reserve methodology (i.e., individually evaluated) and may impact the ALLL through a charge-off or increased loan loss provision. These components affect the ultimate allowance level. As TDRs are individually evaluated for impairment under the specific reserve methodology, subsequent defaults do not generally have a significant additional impact on the ALLL. Commitments outstanding to lend additional funds to borrowers whose loan terms have been modified in TDRs are $4 million and $5 million at December 31, 2019, and December 31, 2018, respectively. Our loan modifications are handled on a case-by-case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet the borrower’s financial needs. The consumer TDR other concession category primarily includes those borrowers’ debts that are discharged through Chapter 7 bankruptcy and have not been formally re-affirmed. At December 31, 2019, and December 31, 2018, the recorded investment of loans secured by residential real estate in the process of foreclosure was approximately $97 million and $113 million, respectively. At December 31, 2019, and December 31, 2018, we had $35 million and $35 million, respectively, of OREO which included the carrying value of foreclosed residential real estate of approximately $34 million and $35 million, respectively. The following table shows the period-end post-modification outstanding recorded investment by concession type for our commercial and consumer accruing and nonaccruing TDRs added during the periods indicated:
| Twelve Months Ended December 31,
in millions | 2019 | 2018
Commercial loans: |  |
Extension of maturity date | $ | 11 |  | 15 |
Payment or covenant modification/deferment | 11 |  | $ | 99 |
Bankruptcy plan modification | — |  | 6 |
Increase in new commitment or new money | 8 |  | — |
Total | $ | 30 |  | $ | 120 |
Consumer loans: |  |
Interest rate reduction | $ | 14 |  | $ | 28 |
Forgiveness of principal | — |  | — |
Other | 29 |  | 38 |
Total | $ | 43 |  | $ | 66 |
Total commercial and consumer TDRs | $ | 73 |  | $ | 186 |
The following table summarizes the change in the post-modification outstanding recorded investment of our accruing and nonaccruing TDRs during the periods indicated:
Year ended December 31, |  |
in millions | 2019 | 2018
Balance at beginning of the period | $ | 399 |  | $ | 317 |
Additions | 112 |  | 228 |
Payments | (145 | ) | (110 | )
Charge-offs | (19 | ) | (36 | )
Balance at end of period (a) | $ | 347 |  | $ | 399 |
A further breakdown of TDRs included in nonperforming loans by loan category for the periods indicated are as follows:
| December 31, 2019 |  | December 31, 2018
| Number of Loans | Pre-modification Outstanding Recorded Investment | Post-modification Outstanding Recorded Investment |  | Number of Loans | Pre-modification Outstanding Recorded Investment | Post-modification Outstanding Recorded Investment
dollars in millions
LOAN TYPE |  |  |  |  |  |  |
Nonperforming: |  |  |  |  |  |  |
Commercial and industrial | 51 |  | $ | 72 |  | $ | 53 |  |  | 35 |  | $ | 121 |  | $ | 85 |
Commercial real estate: |  |  |  |  |  |  |
Real estate — commercial mortgage | 6 |  | 64 |  | 58 |  |  | 6 |  | 66 |  | 62 |
Total commercial real estate loans | 6 |  | 64 |  | 58 |  |  | 6 |  | 66 |  | 62 |
Total commercial loans | 57 |  | 136 |  | 111 |  |  | 41 |  | 187 |  | 147 |
Real estate — residential mortgage | 181 |  | 13 |  | 11 |  |  | 281 |  | 21 |  | 20 |
Home equity loans | 713 |  | 42 |  | 41 |  |  | 1,142 |  | 66 |  | 63 |
Consumer direct loans | 172 |  | 2 |  | 2 |  |  | 171 |  | 2 |  | 1 |
Credit cards | 368 |  | 2 |  | 2 |  |  | 330 |  | 2 |  | 2 |
Consumer indirect loans | 1,131 |  | 19 |  | 16 |  |  | 1,098 |  | 18 |  | 14 |
Total consumer loans | 2,565 |  | 78 |  | 72 |  |  | 3,022 |  | 109 |  | 100 |
Total nonperforming TDRs | 2,622 |  | 214 |  | 183 |  |  | 3,063 |  | 296 |  | 247 |
Prior-year accruing: (a) |  |  |  |  |  |  |
Commercial and industrial | 6 |  | 30 |  | 25 |  |  | 11 |  | 37 |  | 32 |
Commercial real estate: |  |  |  |  |  |  |
Real estate — commercial mortgage | 1 |  | — |  | — |  |  | 2 |  | — |  | — |
Total commercial loans | 7 |  | 30 |  | 25 |  |  | 13 |  | 37 |  | 32 |
Real estate — residential mortgage | 493 |  | 37 |  | 31 |  |  | 491 |  | 36 |  | 30 |
Home equity loans | 1,751 |  | 104 |  | 84 |  |  | 1,403 |  | 82 |  | 64 |
Consumer direct loans | 139 |  | 4 |  | 3 |  |  | 79 |  | 4 |  | 3 |
Credit cards | 486 |  | 3 |  | 1 |  |  | 479 |  | 3 |  | 1 |
Consumer indirect loans | 714 |  | 33 |  | 20 |  |  | 556 |  | 33 |  | 22 |
Total consumer loans | 3,583 |  | 181 |  | 139 |  |  | 3,008 |  | 158 |  | 120 |
Total prior-year accruing TDRs | 3,590 |  | 211 |  | 164 |  |  | 3,021 |  | 195 |  | 152 |
Total TDRs | 6,212 |  | $ | 425 |  | $ | 347 |  |  | 6,084 |  | $ | 491 |  | $ | 399 |
(a) | All TDRs that were restructured prior to January 1, 2019, and January 1, 2018, are fully accruing.
Commercial loan TDRs are considered defaulted when principal and interest payments are 90 days past due. Consumer loan TDRs are considered defaulted when principal and interest payments are more than 60 days past due. During the year ended December 31, 2019, there were no commercial loan TDR and 356 consumer loan TDRs with a combined recorded investment of $8 million that experienced payment defaults after modifications resulting in TDR status during 2018. During the year ended December 31, 2018, there were one commercial loan TDRs and 253 consumer loan TDRs with a combined recorded investment of $11 million that experienced payment defaults after modifications resulting in TDR status during 2017. During the year ended December 31, 2017, there were no commercial loan TDRs and 147 consumer loan TDRs with a combined recorded investment of $4 million that experienced payment defaults after modifications resulting in TDR status during 2016. ALLL and Liability for Credit Losses on Unfunded Lending-Related Commitments We determine the appropriate level of the ALLL on at least a quarterly basis. The methodology is described in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Allowance for Loan and Lease Losses.” The ALLL on the acquired non-impaired loan portfolio is estimated using the same methodology as the originated portfolio, however, the estimated ALLL is compared to the remaining accretable yield to determine if an ALLL must be recorded. For PCI loans, Key estimates cash flows expected to be collected quarterly. Decreases in expected cash flows are recognized as impairment through a provision for loan and lease losses and an increase in the ALLL. The changes in the ALLL by loan category for the periods indicated are as follows:
in millions | December 31, 2018 | Provision |  | Charge-offs | Recoveries | December 31, 2019
Commercial and industrial | $ | 532 |  | $ | 311 |  |  | $ | (319 | ) | $ | 27 |  | $ | 551 |
Real estate — commercial mortgage | 142 |  | 7 |  |  | (8 | ) | 2 |  | 143 |
Real estate — construction | 33 |  | (6 | ) |  | (5 | ) | — |  | 22 |
Commercial lease financing | 36 |  | 20 |  |  | (26 | ) | 5 |  | 35 |
Total commercial loans | 743 |  | 332 |  |  | (358 | ) | 34 |  | 751 |
Real estate — residential mortgage | 7 |  | 1 |  |  | (3 | ) | 2 |  | 7 |
Home equity loans | 35 |  | 7 |  |  | (19 | ) | 8 |  | 31 |
Consumer direct loans | 30 |  | 38 |  |  | (41 | ) | 7 |  | 34 |
Credit cards | 48 |  | 36 |  |  | (44 | ) | 7 |  | 47 |
Consumer indirect loans | 20 |  | 27 |  |  | (34 | ) | 17 |  | 30 |
Total consumer loans | 140 |  | 109 |  |  | (141 | ) | 41 |  | 149 |
Total ALLL — continuing operations | 883 |  | 441 |  | (a), (b) | (499 | ) | 75 |  | 900 |
Discontinued operations | 14 |  | 3 |  |  | (12 | ) | 5 |  | 10 |
Total ALLL — including discontinued operations | $ | 897 |  | $ | 444 |  |  | $ | (511 | ) | $ | 80 |  | $ | 910 |
(a) | Excludes a provision for losses on lending-related commitments of $4 million.
(b) | Includes the realization of $139 million loss related to a previously disclosed fraud incident.
in millions | December 31, 2017 | Provision |  | Charge-offs | Recoveries | December 31, 2018
Commercial and industrial | $ | 529 |  | $ | 125 |  |  | $ | (159 | ) | $ | 37 |  | $ | 532 |
Real estate — commercial mortgage | 133 |  | 27 |  |  | (21 | ) | 3 |  | 142 |
Real estate — construction | 30 |  | 1 |  |  | — |  | 2 |  | 33 |
Commercial lease financing | 43 |  | (2 | ) |  | (10 | ) | 5 |  | 36 |
Total commercial loans | 735 |  | 151 |  |  | (190 | ) | 47 |  | 743 |
Real estate — residential mortgage | 7 |  | 1 |  |  | (3 | ) | 2 |  | 7 |
Home equity loans | 43 |  | 2 |  |  | (21 | ) | 11 |  | 35 |
Consumer direct loans | 28 |  | 31 |  |  | (36 | ) | 7 |  | 30 |
Credit cards | 44 |  | 41 |  |  | (44 | ) | 7 |  | 48 |
Consumer indirect loans | 20 |  | 14 |  |  | (30 | ) | 16 |  | 20 |
Total consumer loans | 142 |  | 89 |  |  | (134 | ) | 43 |  | 140 |
Total ALLL — continuing operations | 877 |  | 240 |  | (a) | (324 | ) | 90 |  | 883 |
Discontinued operations | 16 |  | 8 |  |  | (15 | ) | 5 |  | 14 |
Total ALLL — including discontinued operations | $ | 893 |  | $ | 248 |  |  | $ | (339 | ) | $ | 95 |  | $ | 897 |
(a) | Excludes a provision for losses on lending-related commitments of $6 million.
in millions | December 31, 2016 | Provision |  | Charge-offs | Recoveries | December 31, 2017
Commercial and industrial | $ | 508 |  | $ | 114 |  |  | $ | (133 | ) | $ | 40 |  | $ | 529 |
Real estate — commercial mortgage | 144 |  | (2 | ) |  | (11 | ) | 2 |  | 133 |
Real estate — construction | 22 |  | 9 |  |  | (2 | ) | 1 |  | 30 |
Commercial lease financing | 42 |  | 9 |  |  | (14 | ) | 6 |  | 43 |
Total commercial loans | 716 |  | 130 |  |  | (160 | ) | 49 |  | 735 |
Real estate — residential mortgage | 17 |  | (11 | ) |  | (3 | ) | 4 |  | 7 |
Home equity loans | 54 |  | 4 |  |  | (30 | ) | 15 |  | 43 |
Consumer direct loans | 24 |  | 32 |  |  | (34 | ) | 6 |  | 28 |
Credit cards | 38 |  | 45 |  |  | (44 | ) | 5 |  | 44 |
Consumer indirect loans | 9 |  | 27 |  |  | (31 | ) | 15 |  | 20 |
Total consumer loans | 142 |  | 97 |  |  | (142 | ) | 45 |  | 142 |
Total ALLL — continuing operations | 858 |  | 227 |  | (a) | (302 | ) | 94 |  | 877 |
Discontinued operations | 24 |  | 10 |  |  | (26 | ) | 8 |  | 16 |
Total ALLL — including discontinued operations | $ | 882 |  | $ | 237 |  |  | $ | (328 | ) | $ | 102 |  | $ | 893 |
(a) | Excludes a provision for losses on lending-related commitments of $2 million.
A breakdown of the individual and collective ALLL and the corresponding loan balances for the periods indicated are as follows:
| Allowance | Outstanding
December 31, 2019 | Individually Evaluated for Impairment | Collectively Evaluated for Impairment | Purchased Credit Impaired | Loans |  | Individually Evaluated for Impairment | Collectively Evaluated for Impairment |  | Purchased Credit Impaired
in millions |  |
Commercial and industrial | $ | 17 |  | $ | 533 |  | $ | 1 |  | $ | 48,295 |  |  | $ | 253 |  | $ | 47,994 |  |  | $ | 48 |
Commercial real estate: |  |  |  |  |  |  |  |  |
Commercial mortgage | — |  | 141 |  | 2 |  | 13,491 |  |  | 65 |  | 13,302 |  |  | 124 |
Construction | — |  | 22 |  | — |  | 1,558 |  |  | — |  | 1,557 |  |  | 1 |
Total commercial real estate loans | — |  | 163 |  | 2 |  | 15,049 |  |  | 65 |  | 14,859 |  |  | 125 |
Commercial lease financing | — |  | 35 |  | — |  | 4,688 |  |  | — |  | 4,688 |  |  | — |
Total commercial loans | 17 |  | 731 |  | 3 |  | 68,032 |  |  | 318 |  | 67,541 |  |  | 173 |
Real estate — residential mortgage | 4 |  | 1 |  | 2 |  | 7,023 |  |  | 43 |  | 6,723 |  |  | 257 |
Home equity loans | 9 |  | 21 |  | 1 |  | 10,274 |  |  | 126 |  | 10,135 |  |  | 13 |
Consumer direct loans | — |  | 34 |  | — |  | 3,513 |  |  | 4 |  | 3,506 |  |  | 3 |
Credit cards | — |  | 47 |  | — |  | 1,130 |  |  | 3 |  | 1,127 |  |  | — |
Consumer indirect loans | 3 |  | 27 |  | — |  | 4,674 |  |  | 35 |  | 4,639 |  |  | — |
Total consumer loans | 16 |  | 130 |  | 3 |  | 26,614 |  |  | 211 |  | 26,130 |  |  | 273 |
Total ALLL — continuing operations | 33 |  | 861 |  | 6 |  | 94,646 |  |  | 529 |  | 93,671 |  |  | 446 |
Discontinued operations | 2 |  | 8 |  | — |  | 865 |  | (a) | 23 |  | 842 |  | (a) | — |
Total ALLL — including discontinued operations | $ | 35 |  | $ | 869 |  | $ | 6 |  | $ | 95,511 |  |  | $ | 552 |  | $ | 94,513 |  |  | $ | 446 |
(a) | Amount includes $2 million of loans carried at fair value that are excluded from ALLL consideration.
| Allowance | Outstanding
December 31, 2018 | Individually Evaluated for Impairment | Collectively Evaluated for Impairment | Purchased Credit Impaired | Loans |  | Individually Evaluated for Impairment | Collectively Evaluated for Impairment |  | Purchased Credit Impaired
in millions |  |
Commercial and industrial | $ | 5 |  | $ | 526 |  | $ | 1 |  | $ | 45,753 |  |  | $ | 162 |  | $ | 45,530 |  |  | $ | 61 |
Commercial real estate: |  |  |  |  |  |  |  |  |
Commercial mortgage | — |  | 139 |  | 3 |  | 14,285 |  |  | 66 |  | 14,041 |  |  | 178 |
Construction | — |  | 33 |  | — |  | 1,666 |  |  | — |  | 1,664 |  |  | 2 |
Total commercial real estate loans | — |  | 172 |  | 3 |  | 15,951 |  |  | 66 |  | 15,705 |  |  | 180 |
Commercial lease financing | — |  | 36 |  | — |  | 4,606 |  |  | — |  | 4,606 |  |  | — |
Total commercial loans | 5 |  | 734 |  | 4 |  | 66,310 |  |  | 228 |  | 65,841 |  |  | 241 |
Real estate — residential mortgage | 3 |  | 4 |  | — |  | 5,513 |  |  | 49 |  | 5,150 |  |  | 314 |
Home equity loans | 8 |  | 26 |  | 1 |  | 11,142 |  |  | 127 |  | 10,998 |  |  | 17 |
Consumer direct loans | — |  | 30 |  | — |  | 1,809 |  |  | 4 |  | 1,802 |  |  | 3 |
Credit cards | — |  | 48 |  | — |  | 1,144 |  |  | 3 |  | 1,141 |  |  | — |
Consumer indirect loans | 3 |  | 17 |  | — |  | 3,634 |  |  | 36 |  | 3,598 |  |  | — |
Total consumer loans | 14 |  | 125 |  | 1 |  | 23,242 |  |  | 219 |  | 22,689 |  |  | 334 |
Total ALLL — continuing operations | 19 |  | 859 |  | 5 |  | 89,552 |  |  | 447 |  | 88,530 |  |  | 575 |
Discontinued operations | 2 |  | 12 |  | — |  | 1,073 |  | (a) | 23 |  | 1,050 |  | (a) | — |
Total ALLL — including discontinued operations | $ | 21 |  | $ | 871 |  | $ | 5 |  | $ | 90,625 |  |  | $ | 470 |  | $ | 89,580 |  |  | $ | 575 |
(a) | Amount includes $2 million of loans carried at fair value that are excluded from ALLL consideration.
The liability for credit losses inherent in lending-related unfunded commitments, such as letters of credit and unfunded loan commitments, is included in “accrued expense and other liabilities” on the balance sheet. We establish the amount of this reserve by considering both historical trends and current market conditions quarterly, or more often if deemed necessary. Changes in the liability for credit losses on unfunded lending-related commitments are summarized as follows:
Year ended December 31, in millions | 2019 | 2018 | 2017
Balance at beginning of period | $ | 64 |  | $ | 57 |  | $ | 55 |
Provision (credit) for losses on lending-related commitments | 4 |  | 6 |  | 2 |
Balance at end of period | $ | 68 |  | $ | 63 |  | $ | 57 |
PCI Loans Purchased loans that have evidence of deterioration in credit quality since origination and for which it is probable, at acquisition, that all contractually required payments will not be collected are deemed PCI. Our policies for determining, recording payments on, and derecognizing PCI loans are disclosed in Note 1 (Summary of Significant Accounting Policies) under the heading “Purchases Loans.” We have PCI loans from two separate acquisitions, one in 2012 and one in 2016. The following tables present the rollforward of the accretable yield and the beginning and ending outstanding unpaid principal balance and carrying amount of all PCI loans for the for the periods indicated:
| Twelve Months Ended December 31,
| 2019 |  | 2018
in millions | Accretable Yield | Carrying Amount | Outstanding Unpaid Principal Balance |  | Accretable Yield | Carrying Amount | Outstanding Unpaid Principal Balance
Balance at beginning of period | $ | 117 |  | $ | 571 |  | $ | 607 |  |  | $ | 131 |  | $ | 738 |  | $ | 803 |
Additions | — |  |  |  |  | — |  |  |
Accretion | (34 | ) |  |  |  | (42 | ) |  |
Net reclassifications from non-accretable to accretable | 25 |  |  |  |  | 50 |  |  |
Payments received, net | (14 | ) |  |  |  | (21 | ) |  |
Disposals | — |  |  |  |  | — |  |  |
Loans charged off | — |  |  |  |  | (1 | ) |  |
Balance at end of period | $ | 94 |  | $ | 439 |  | $ | 462 |  |  | $ | 117 |  | $ | 571 |  | $ | 607 |

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