Credit Quality And Allowance For Credit Losses

3 Months Ended

Mar. 31, 2022

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
March 31, 2022
Business loans:
Commercial	$	101	$	5	$	9	$	115	$	163	$	29,284	$	29,562
Real estate construction:
Commercial Real Estate business line (b)	5		—		—		5		—		1,770		1,775
Other business lines (c)	5		—		2		7		4		515		526
Total real estate construction	10		—		2		12		4		2,285		2,301
Commercial mortgage:
Commercial Real Estate business line (b)	15		—		—		15		1		3,763		3,779
Other business lines (c)	24		2		14		40		26		8,147		8,213
Total commercial mortgage	39		2		14		55		27		11,910		11,992
Lease financing	9		2		—		11		—		633		644
International	3		1		—		4		5		1,239		1,248
Total business loans	162		10		25		197		199		45,351		45,747
Retail loans:
Residential mortgage	26		1		—		27		53		1,689		1,769
Consumer:
Home equity	2		2		1		5		14		1,524		1,543
Other consumer	1		—		—		1		3		500		504
Total consumer	3		2		1		6		17		2,024		2,047
Total retail loans	29		3		1		33		70		3,713		3,816
Total loans	$	191	$	13	$	26	$	230	$	269	$	49,064	$	49,563
December 31, 2021
Business loans:
Commercial	$	35	$	18	$	6	$	59	$	173	$	29,134	$	29,366
Real estate construction:
Commercial Real Estate business line (b)	—		—		—		—		—		2,391		2,391
Other business lines (c)	15		1		—		16		6		535		557
Total real estate construction	15		1		—		16		6		2,926		2,948
Commercial mortgage:
Commercial Real Estate business line (b)	—		—		—		—		1		3,337		3,338
Other business lines (c)	18		4		16		38		31		7,848		7,917
Total commercial mortgage	18		4		16		38		32		11,185		11,255
Lease financing	5		—		—		5		—		635		640
International	5		8		1		14		5		1,189		1,208
Total business loans	78		31		23		132		216		45,069		45,417
Retail loans:
Residential mortgage	4		—		—		4		36		1,731		1,771
Consumer:
Home equity	4		3		—		7		12		1,514		1,533
Other consumer	32		1		4		37		—		527		564
Total consumer	36		4		4		44		12		2,041		2,097
Total retail loans	40		4		4		48		48		3,772		3,868
Total loans	$	118	$	35	$	27	$	180	$	264	$	48,841	$	49,285

(a)Includes $22 million of loans with deferred payments not considered past due in accordance with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) at December 31, 2021.

(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.

	March 31, 2022
	Vintage Year
(in millions)	2022			2021			2020			2019		2018		Prior		Revolvers		Revolvers Converted to Term		Total
Business loans:
Commercial:
Pass (a)	$	1,210	(b)	$	4,411	(b)	$	1,512	(b)	$	1,318	$	814	$	1,328	$	17,736	$	8	$	28,337
Criticized (c)	12			172			120			110		64		136		609		2		1,225
Total commercial	1,222			4,583			1,632			1,428		878		1,464		18,345		10		29,562
Real estate construction
Pass (a)	80			552			762			499		162		126		107		—		2,288
Criticized (c)	—			—			3			—		1		9		—		—		13
Total real estate construction	80			552			765			499		163		135		107		—		2,301
Commercial mortgage
Pass (a)	642			2,640			1,910			1,574		1,382		3,147		446		—		11,741
Criticized (c)	2			27			42			44		29		104		3		—		251
Total commercial mortgage	644			2,667			1,952			1,618		1,411		3,251		449		—		11,992
Lease financing
Pass (a)	54			156			84			93		47		183		—		—		617
Criticized (c)	—			—			2			9		8		8		—		—		27
Total lease financing	54			156			86			102		55		191		—		—		644
International
Pass (a)	190			279			110			73		42		16		481		—		1,191
Criticized (c)	—			20			8			3		5		11		10		—		57
Total international	190			299			118			76		47		27		491		—		1,248
Total business loans	2,190			8,257			4,553			3,723		2,554		5,068		19,392		10		45,747
Retail loans:
Residential mortgage
Pass (a)	105			426			501			148		76		460		—		—		1,716
Criticized (c)	2			4			1			8		1		37		—		—		53
Total residential mortgage	107			430			502			156		77		497		—		—		1,769
Consumer:
Home equity
Pass (a)	—			—			—			—		—		10		1,474		42		1,526
Criticized (c)	—			—			—			—		—		1		13		3		17
Total home equity	—			—			—			—		—		11		1,487		45		1,543
Other consumer
Pass (a)	15			64			63			11		1		11		335		—		500
Criticized (c)	—			—			—			—		—		—		4		—		4
Total other consumer	15			64			63			11		1		11		339		—		504
Total consumer	15			64			63			11		1		22		1,826		45		2,047
Total retail loans	122			494			565			167		78		519		1,826		45		3,816
Total loans	$	2,312		$	8,751		$	5,118		$	3,890	$	2,632	$	5,587	$	21,218	$	55	$	49,563
Table continues on the following page.

	December 31, 2021
	Vintage Year
	2021			2020			2019		2018		2017		Prior		Revolvers		Revolvers Converted to Term		Total
Business loans:
Commercial:
Pass (a)	$	5,270	(b)	$	1,740	(b)	$	1,528	$	947	$	713	$	763	$	17,241	$	10	$	28,212
Criticized (c)	101			120			105		86		26		94		620		2		1,154
Total commercial	5,371			1,860			1,633		1,033		739		857		17,861		12		29,366
Real estate construction:
Pass (a)	458			858			849		424		158		34		132		—		2,913
Criticized (c)	—			3			—		13		8		8		3		—		35
Total real estate construction	458			861			849		437		166		42		135		—		2,948
Commercial mortgage:
Pass (a)	2,491			1,932			1,444		1,343		1,018		2,298		481		—		11,007
Criticized (c)	17			44			50		22		23		87		5		—		248
Total commercial mortgage	2,508			1,976			1,494		1,365		1,041		2,385		486		—		11,255
Lease financing
Pass (a)	166			88			97		50		38		179		—		—		618
Criticized (c)	—			2			10		8		1		1		—		—		22
Total lease financing	166			90			107		58		39		180		—		—		640
International
Pass (a)	381			141			103		29		1		16		480		—		1,151
Criticized (c)	20			10			3		5		4		8		7		—		57
Total international	401			151			106		34		5		24		487		—		1,208
Total business loans	8,904			4,938			4,189		2,927		1,990		3,488		18,969		12		45,417
Retail loans:
Residential mortgage
Pass (a)	443			527			164		83		111		407		—		—		1,735
Criticized (c)	5			—			1		2		7		21		—		—		36
Total residential mortgage	448			527			165		85		118		428		—		—		1,771
Consumer:
Home equity
Pass (a)	—			—			—		—		—		11		1,460		45		1,516
Criticized (c)	—			—			—		—		—		1		12		4		17
Total home equity	—			—			—		—		—		12		1,472		49		1,533
Other consumer
Pass (a)	101			68			13		9		1		31		337		—		560
Criticized (c)	—			—			—		—		—		—		4		—		4
Total other consumer	101			68			13		9		1		31		341		—		564
Total consumer	101			68			13		9		1		43		1,813		49		2,097
Total retail loans	549			595			178		94		119		471		1,813		49		3,868
Total loans	$	9,453		$	5,533		$	4,367	$	3,021	$	2,109	$	3,959	$	20,782	$	61	$	49,285

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

(b)Includes Small Business Administration Paycheck Protection Program (PPP) loans of $233 million and $458 million at March 31, 2022 and December 31, 2021, respectively.

(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 on page F-52 in the Corporation's 2021 Annual Report. 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 $120 million at both March 31, 2022 and December 31, 2021, 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.

	2022									2021
(in millions)	Business Loans			Retail Loans			Total			Business Loans			Retail Loans			Total
Three Months Ended March 31
Balance at beginning of period:
Allowance for loan losses	$	531		$	57		$	588		$	895		$	53		$	948
Allowance for credit losses on lending-related commitments	24			6			30			35			9			44
Allowance for credit losses	555			63			618			930			62			992
Loan charge-offs	(17)			(1)			(18)			(15)			(1)			(16)
Recoveries on loans previously charged-off	9			1			10			12			1			13
Net loan charge-offs	(8)			—			(8)			(3)			—			(3)
Provision for credit losses:
Provision for loan losses	(30)			4			(26)			(183)			15			(168)
Provision for credit losses on lending-related commitments	9			6			15			(13)			(1)			(14)
Provision for credit losses	(21)			10			(11)			(196)			14			(182)
Balance at end of period:
Allowance for loan losses	493			61			554			709			68			777
Allowance for credit losses on lending-related commitments	33			12			45			22			8			30
Allowance for credit losses	$	526		$	73		$	599		$	731		$	76		$	807
Allowance for loan losses as a percentage of total loans	1.08		%	1.61		%	1.12		%	1.52		%	1.74		%	1.54		%
Allowance for credit losses as a percentage of total loans	1.15			1.92			1.21			1.57			1.94			1.59

Nonaccrual Loans

The following table presents additional information regarding nonaccrual loans. No interest income was recognized on nonaccrual loans for the three-month periods ended March 31, 2022 and 2021.

(in millions)	Nonaccrual Loans with No Related Allowance		Nonaccrual Loans with Related Allowance		Total Nonaccrual Loans
March 31, 2022
Business loans:
Commercial	$	70	$	93	$	163
Real estate construction:
Other business lines (a)	—		4		4
Commercial mortgage:
Commercial Real Estate business line (b)	—		1		1
Other business lines (a)	6		20		26
Total commercial mortgage	6		21		27
International	5		—		5
Total business loans	81		118		199
Retail loans:
Residential mortgage	53		—		53
Consumer:
Home equity	14		—		14
Other consumer	3		—		3
Total consumer	17		—		17
Total retail loans	70		—		70
Total nonaccrual loans	$	151	$	118	$	269
December 31, 2021
Business loans:
Commercial	$	8	$	165	$	173
Real estate construction:
Other business lines (a)	—		6		6
Commercial mortgage:
Commercial Real Estate business line (b)	—		1		1
Other business lines (a)	4		27		31
Total commercial mortgage	4		28		32
International	—		5		5
Total business loans	12		204		216
Retail loans:
Residential mortgage	36		—		36
Consumer:
Home equity	12		—		12
Total retail loans	48		—		48
Total nonaccrual loans	$	60	$	204	$	264

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

(b)Primarily loans to real estate developers.

Foreclosed Properties

Foreclosed properties totaled $1 million at both March 31, 2022 and December 31, 2021. Retail loans secured by residential real estate properties in process of foreclosure included in nonaccrual loans totaled $1 million at March 31, 2022, compared to none at December 31, 2021.

Troubled Debt Restructurings

The following table details the amortized cost basis at March 31, 2022 and 2021 of loans considered to be TDRs that were restructured during the three-month periods ended March 31, 2022 and 2021, 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.

	Principal Deferrals (a)
(in millions)	2022		2021 (b)
Three Months Ended March 31,
Commercial	$	21	$	—
Consumer:
Home equity (c)	2		—
Total loans	$	23	$	—

(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.

(b)Under the provisions of the CARES Act, qualifying COVID-19-related modifications, primarily principal deferrals, were not considered TDRs during the three months ended March 31, 2021.

(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. Commitments to lend additional funds to borrowers whose terms have been modified in TDRs were $1 million at March 31, 2022 compared to none at December 31, 2021, respectively. 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 twelve-month periods ended March 31, 2022 and 2021, there were no subsequent defaults of principal deferrals or interest rate reductions for the three-month period ended March 31, 2022 and 2021.