Bank of America 2015 Annual Report Download - page 166

164 Bank of America 2015
During 2015, the Corporation sold nonperforming and other
delinquent consumer real estate loans with a carrying value of
$3.2 billion, including $1.4 billion of PCI loans, compared to $6.7
billion, including $1.9 billion of PCI loans, in 2014. The Corporation
recorded recoveries related to these sales of $133 million and
$407 million during 2015 and 2014. Gains related to these sales
of $173 million and $247 million were recorded in other income
in the Consolidated Statement of Income during 2015 and 2014.
The table below presents the Corporation’s nonperforming
loans and leases including nonperforming TDRs, and loans
accruing past due 90 days or more at December 31, 2015 and
2014. Nonperforming LHFS are excluded from nonperforming
loans and leases as they are recorded at either fair value or the
lower of cost or fair value. For more information on the criteria for
classification as nonperforming, see Note 1 – Summary of
Significant Accounting Principles.
Credit Quality
December 31
Nonperforming Loans
and Leases
Accruing Past Due
90 Days or More
(Dollars in millions) 2015 2014 2015 2014
Consumer real estate
Core portfolio
Residential mortgage (1) $ 1,845 $ 2,398 $ 2,645 $ 3,942
Home equity 1,354 1,496 ——
Legacy Assets & Servicing portfolio
Residential mortgage (1) 2,958 4,491 4,505 7,465
Home equity 1,983 2,405 ——
Credit card and other consumer
U.S. credit card n/a n/a 789 866
Non-U.S. credit card n/a n/a 76 95
Direct/Indirect consumer 24 28 39 64
Other consumer 1131
Total consumer 8,165 10,819 8,057 12,433
Commercial
U.S. commercial 867 701 113 110
Commercial real estate 93 321 33
Commercial lease financing 12 317 41
Non-U.S. commercial 158 11—
U.S. small business commercial 82 87 61 67
Total commercial 1,212 1,113 195 221
Total loans and leases $ 9,377 $ 11,932 $ 8,252 $ 12,654
(1) Residential mortgage loans in the Core and Legacy Assets & Servicing portfolios accruing past due 90 days or more are fully-insured loans. At December 31, 2015 and 2014, residential mortgage
includes $4.3 billion and $7.3 billion of loans on which interest has been curtailed by the FHA, and therefore are no longer accruing interest, although principal is still insured, and $2.9 billion and
$4.1 billion of loans on which interest is still accruing.
n/a = not applicable
Credit Quality Indicators
The Corporation monitors credit quality within its Consumer Real
Estate, Credit Card and Other Consumer, and Commercial portfolio
segments based on primary credit quality indicators. For more
information on the portfolio segments, see Note 1 – Summary of
Significant Accounting Principles. Within the Consumer Real Estate
portfolio segment, the primary credit quality indicators are
refreshed LTV and refreshed FICO score. Refreshed LTV measures
the carrying value of the loan as a percentage of the value of the
property securing the loan, refreshed quarterly. Home equity loans
are evaluated using combined loan-to-value (CLTV) which
measures the carrying value of the Corporation’s loan and available
line of credit combined with any outstanding senior liens against
the property as a percentage of the value of the property securing
the loan, refreshed quarterly. FICO score measures the
creditworthiness of the borrower based on the financial obligations
of the borrower and the borrower’s credit history. At a minimum,
FICO scores are refreshed quarterly, and in many cases, more
frequently. FICO scores are also a primary credit quality indicator
for the Credit Card and Other Consumer portfolio segment and the
business card portfolio within U.S. small business commercial.
Within the Commercial portfolio segment, loans are evaluated
using the internal classifications of pass rated or reservable
criticized as the primary credit quality indicators. The term
reservable criticized refers to those commercial loans that are
internally classified or listed by the Corporation as Special Mention,
Substandard or Doubtful, 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 considered reservable criticized.
In addition to these primary credit quality indicators, the
Corporation uses other credit quality indicators for certain types
of loans.