Credit Quality And Allowance For Credit Losses

12 Months Ended

Dec. 31, 2020

Credit Quality And Allowance For Credit Losses [Abstract]

Credit Quality And Allowance For Credit Losses

CREDIT QUALITY AND ALLOWANCE FOR CREDIT LOSSES

The following table presents an aging analysis of the amortized cost basis of loans.

	Loans Past Due and Still Accruing
(in millions)	30-59 Days		60-89  Days		90 Days or More		Total		Nonaccrual Loans		Current Loans (a)		Total  Loans
December 31, 2020
Business loans:
Commercial	$	62	$	115	$	33	$	210	$	252	$	32,291	$	32,753
Real estate construction:
Commercial Real Estate business line (b)	31		—		—		31		—		3,626		3,657
Other business lines (c)	9		—		—		9		1		415		425
Total real estate construction	40		—		—		40		1		4,041		4,082
Commercial mortgage:
Commercial Real Estate business line (b)	51		1		—		52		3		2,218		2,273
Other business lines (c)	48		40		5		93		26		7,520		7,639
Total commercial mortgage	99		41		5		145		29		9,738		9,912
Lease financing	14		—		1		15		1		578		594
International	—		—		—		—		—		926		926
Total business loans	215		156		39		410		283		47,574		48,267
Retail loans:
Residential mortgage	11		4		—		15		47		1,768		1,830
Consumer:
Home equity	7		1		—		8		17		1,563		1,588
Other consumer	10		—		6		16		—		590		606
Total consumer	17		1		6		24		17		2,153		2,194
Total retail loans	28		5		6		39		64		3,921		4,024
Total loans	$	243	$	161	$	45	$	449	$	347	$	51,495	$	52,291
December 31, 2019
Business loans:
Commercial	$	27	$	7	$	17	$	51	$	148	$	31,274	$	31,473
Real estate construction:
Commercial Real Estate business line (b)	6		—		—		6		—		3,038		3,044
Other business lines (c)	—		7		—		7		—		404		411
Total real estate construction	6		7		—		13		—		3,442		3,455
Commercial mortgage:
Commercial Real Estate business line (b)	9		—		—		9		2		2,165		2,176
Other business lines (c)	16		18		9		43		12		7,328		7,383
Total commercial mortgage	25		18		9		52		14		9,493		9,559
Lease financing	1		—		—		1		—		587		588
International	—		5		—		5		—		1,004		1,009
Total business loans	59		37		26		122		162		45,800		46,084
Retail loans:
Residential mortgage	15		2		—		17		20		1,808		1,845
Consumer:
Home equity	4		5		—		9		17		1,685		1,711
Other consumer	2		3		—		5		—		724		729
Total consumer	6		8		—		14		17		2,409		2,440
Total retail loans	21		10		—		31		37		4,217		4,285
Total loans	$	80	$	47	$	26	$	153	$	199	$	50,017	$	50,369

(a)Includes $141 million of loans with deferred payments not considered past due in accordance with the CARES Act, at December 31, 2020.

(b)Primarily loans to real estate developers.

(c)Primarily loans secured by owner-occupied real estate.

The following table presents loans by credit quality indicator (CQI) and vintage year. CQI is based on internal risk ratings assigned to each business loan at the time of approval and subjected to subsequent reviews, generally at least annually, and to pools of retail loans with similar risk characteristics. Vintage year is the year of origination or major modification.

	December 31, 2020																			December 31, 2019
	Vintage Year
(in millions)	2020			2019		2018		2017		2016		Prior		Revolvers		Revolvers Converted to Term		Total		Total
Business loans:
Commercial:
Pass (a)	$	5,991	(b)	$	2,316	$	1,563	$	1,051	$	429	$	755	$	18,416	$	17	$	30,538	$	29,785
Criticized (c)	30			281		191		116		64		166		1,365		2		2,215		1,688
Total commercial	6,021			2,597		1,754		1,167		493		921		19,781		19		32,753		31,473
Real estate construction
Pass (a)	433			1,080		1,244		631		335		141		171		—		4,035		3,424
Criticized (c)	3			28		5		8		—		1		2		—		47		31
Total real estate construction	436			1,108		1,249		639		335		142		173		—		4,082		3,455
Commercial mortgage
Pass (a)	2,053			1,559		1,146		1,120		818		2,272		431		—		9,399		9,262
Criticized (c)	47			130		42		45		41		193		15		—		513		297
Total commercial mortgage	2,100			1,689		1,188		1,165		859		2,465		446		—		9,912		9,559
Lease financing
Pass (a)	109			122		71		50		14		201		—		—		567		579
Criticized (c)	2			17		5		2		1		—		—		—		27		9
Total lease financing	111			139		76		52		15		201		—		—		594		588
International
Pass (a)	274			161		103		11		3		64		245		—		861		972
Criticized (c)	13			8		18		4		7		2		13		—		65		37
Total international	287			169		121		15		10		66		258		—		926		1,009
Total business loans	8,955			5,702		4,388		3,038		1,712		3,795		20,658		19		48,267		46,084
Retail loans:
Residential mortgage
Pass (a)	639			230		119		197		196		398		—		—		1,779		1,823
Criticized (c)	7			2		2		6		2		32		—		—		51		22
Total residential mortgage	646			232		121		203		198		430		—		—		1,830		1,845
Consumer:
Home equity
Pass (a)	—			—		—		—		—		15		1,489		63		1,567		1,682
Criticized (c)	—			—		—		—		—		1		13		7		21		29
Total home equity	—			—		—		—		—		16		1,502		70		1,588		1,711
Other consumer
Pass (a)	113			23		12		2		3		41		404		—		598		722
Criticized (c)	—			—		2		—		—		—		6		—		8		7
Total other consumer	113			23		14		2		3		41		410		—		606		729
Total consumer	113			23		14		2		3		57		1,912		70		2,194		2,440
Total retail loans	759			255		135		205		201		487		1,912		70		4,024		4,285
Total loans	$	9,714		$	5,957	$	4,523	$	3,243	$	1,913	$	4,282	$	22,570	$	89	$	52,291	$	50,369

(a)Includes all loans not included in the categories of special mention, substandard or nonaccrual.

(b)Includes $3.5 billion of Small Business Administration Paycheck Protection Program (PPP) loans at December 31, 2020.

(c)Includes loans with an internal rating of special mention, substandard loans for which the accrual of interest has not been discontinued and nonaccrual loans. Special mention loans have potential credit weaknesses that deserve management’s close attention, such as loans to borrowers who may be experiencing financial difficulties that may result in deterioration of repayment prospects from the borrower at some future date. Accruing substandard loans have a well-defined weakness, or weaknesses, such as loans to borrowers who may be experiencing losses from operations or inadequate liquidity of a degree and duration that jeopardizes the orderly repayment of the loan. Substandard loans are also distinguished by the distinct possibility of loss in the future if these weaknesses are not corrected. Nonaccrual loans are loans for which the accrual of interest has been discontinued. For further information regarding nonaccrual loans, refer to the Nonperforming Assets subheading in Note 1 - Basis of Presentation and Accounting Policies. These categories are generally consistent with the "special mention" and "substandard" categories as defined by regulatory authorities. A minority of nonaccrual loans are consistent with the "doubtful" category.

Loan interest receivable totaled $141 million and $172 million at December 31, 2020 and 2019, respectively, and was included in accrued income and other assets on the Consolidated Balance Sheets.

Allowance for Credit Losses

The following table details the changes in the allowance for credit losses.

	2020									2019									2018
(dollar amounts in millions)	Business Loans			Retail Loans			Total			Business Loans			Retail Loans			Total			Business Loans			Retail Loans			Total
Years Ended December 31,
Balance at beginning of period:
Allowance for loan losses	$	601		$	36		$	637		$	627		$	44		$	671		$	661		$	51		$	712
Allowance for credit losses on lending-related commitments	28			3			31			26			4			30			38			4			42
Allowance for credit losses	629			39			668			653			48			701			699			55			754
Cumulative effect of change in accounting principle	(42)			25			(17)			—			—			—			—			—			—
Loan charge-offs	(233)			(5)			(238)			(147)			(5)			(152)			(99)			(4)			(103)
Recoveries on loans previously charged-off	38			4			42			40			5			45			47			5			52
Net loan (charge-offs) recoveries	(195)			(1)			(196)			(107)			—			(107)			(52)			1			(51)
Provision for credit losses:
Provision for loan losses	531			(7)			524			81			(8)			73			19			(8)			11
Provision for credit losses on lending-related commitments	7			6			13			2			(1)			1			(12)			—			(12)
Provision for credit losses	538			(1)			537			83			(9)			74			7			(8)			(1)
Foreign currency translation adjustment	—			—			—			—			—			—			(1)			—			(1)
Balance at end of period:
Allowance for loan losses	895			53			948			601			36			637			627			44			671
Allowance for credit losses on lending-related commitments	35			9			44			28			3			31			26			4			30
Allowance for credit losses	$	930		$	62		$	992		$	629		$	39		$	668		$	653		$	48		$	701
Allowance for loan losses as a percentage of total loans	1.85		%	1.32		%	1.81		%	1.30		%	0.84		%	1.27		%	1.37		%	0.97		%	1.34		%
Allowance for loan losses as a percentage of total loans excluding PPP loans	2.00			n/a			1.94			n/a			n/a			n/a			n/a			n/a			n/a
Allowance for credit losses as a percentage of total loans	1.93			1.55			1.90			1.37			0.91			1.33			1.43			1.05			1.40
Allowance for credit losses as a percentage of total loans excluding PPP loans	2.08			n/a			2.03			n/a			n/a			n/a			n/a			n/a			n/a

n/a - not applicable

Nonaccrual Loans

The following table presents additional information regarding nonaccrual loans. No interest income was recognized on nonaccrual loans for the years ended December 31, 2020, 2019 and 2018.

(in millions)	Nonaccrual Loans with No Related Allowance		Nonaccrual Loans with Related Allowance		Total Nonaccrual Loans
December 31, 2020
Business loans:
Commercial	$	57	$	195	$	252
Real estate construction:
Other business lines (a)	—		1		1
Commercial mortgage:
Commercial Real Estate business line (b)	1		2		3
Other business lines (a)	5		21		26
Total commercial mortgage	6		23		29
Lease financing	—		1		1
Total business loans	63		220		283
Retail loans:
Residential mortgage	47		—		47
Consumer:
Home equity	17		—		17
Total retail loans	64		—		64
Total nonaccrual loans	$	127	$	220	$	347
December 31, 2019
Business loans:
Commercial	$	29	$	119	$	148
Commercial mortgage:
Commercial Real Estate business line (b)	2		—		2
Other business lines (a)	1		11		12
Total commercial mortgage	3		11		14
Total business loans	32		130		162
Retail loans:
Residential mortgage	20		—		20
Consumer:
Home equity	17		—		17
Total retail loans	37		—		37
Total nonaccrual loans	$	69	$	130	$	199

(a)Primarily loans secured by owner-occupied real estate.

(b)Primarily loans to real estate developers.

Foreclosed Properties

Foreclosed properties totaled $8 million and $11 million at December 31, 2020 and 2019, respectively. There were no retail loans secured by residential real estate properties in process of foreclosure included in nonaccrual loans in either of years ended December 31, 2020 and 2019.

Troubled Debt Restructurings

The following table details the amortized cost basis at December 31, 2020 and 2019 of loans considered to be TDRs that were restructured during the years ended December 31, 2020 and 2019, by type of modification. In cases of loans with more than one type of modification, the loans were categorized based on the most significant modification.

	2020						2019
	Type of Modification						Type of Modification
(in millions)	Principal Deferrals (a)		Interest Rate Reductions		Total Modifications		Principal Deferrals (a)		Interest Rate Reductions		Total Modifications
Years Ended December 31,
Business loans:
Commercial	$	18	$	—	$	18	$	28	$	—	$	28
Commercial mortgage:
Other business lines (b)	2		—		2		—		—		—
Total business loans	20		—		20		28		—		28
Retail loans:
Consumer:
Home equity (c)	—		2		2		—		1		1
Total loans	$	20	$	2	$	22	$	28	$	1	$	29

(a)Primarily represents loan balances where terms were extended by more than an insignificant time period, typically more than 180 days, at or above contractual interest rates. Also includes commercial loans restructured in bankruptcy. In accordance with the provisions of the CARES Act, 2020 balances exclude $72 million, primarily retail loans, with terms extended by more than an insignificant time period.

(b)Primarily loans secured by owner-occupied real estate.

(c)Includes bankruptcy loans for which the court has discharged the borrower's obligation and the borrower has not reaffirmed the debt.

The Corporation charges interest on principal balances outstanding during deferral periods. Additionally, none of the modifications involved forgiveness of principal. There were no commitments to lend additional funds to borrowers whose terms have been modified in TDRs at December 31, 2020, compared to $3 million at December 31, 2019. On an ongoing basis, the Corporation monitors the performance of modified loans to their restructured terms. The allowance for loan losses continues to be reassessed on the basis of an individual evaluation of the loan.

For principal deferrals, incremental deterioration in the credit quality of the loan, represented by a downgrade in the risk rating of the loan, for example, due to missed interest payments or a reduction of collateral value, is considered a subsequent default. For interest rate reductions, a subsequent payment default is defined in terms of delinquency, when a principal or interest payment is 90 days past due. Of the TDRs modified during the years ended December 31, 2020 and 2019, principal deferrals totaled $10 million and $12 million, respectively. There were no subsequent defaults of interest rate reductions during either of the years ended December 31, 2020 and 2019.