Credit Quality And Allowance For Credit Losses (Tables)

3 Months Ended

Mar. 31, 2023

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		Total Loans
March 31, 2023
Business loans:
Commercial	$	20	$	19	$	9	$	48	$	134	$	31,448	$	31,630
Real estate construction:
Commercial Real Estate business line (a)	—		—		—		—		—		2,946		2,946
Other business lines (b)	—		—		—		—		3		618		621
Total real estate construction	—		—		—		—		3		3,564		3,567
Commercial mortgage:
Commercial Real Estate business line (a)	46		20		—		66		1		4,796		4,863
Other business lines (b)	30		1		11		42		23		8,664		8,729
Total commercial mortgage	76		21		11		108		24		13,460		13,592
Lease financing	5		—		—		5		—		761		766
International	8		—		—		8		3		1,222		1,233
Total business loans	109		40		20		169		164		50,455		50,788

Retail loans:
Residential mortgage	6		1		—		7		39		1,776		1,822
Consumer:
Home equity	4		2		—		6		18		1,760		1,784
Other consumer	5		1		—		6		—		526		532
Total consumer	9		3		—		12		18		2,286		2,316
Total retail loans	15		4		—		19		57		4,062		4,138
Total loans	$	124	$	44	$	20	$	188	$	221	$	54,517	$	54,926
December 31, 2022
Business loans:
Commercial	$	238	$	13	$	20	$	271	$	142	$	30,496	$	30,909
Real estate construction:
Commercial Real Estate business line (a)	—		—		—		—		—		2,505		2,505
Other business lines (b)	2		—		—		2		3		595		600
Total real estate construction	2		—		—		2		3		3,100		3,105
Commercial mortgage:
Commercial Real Estate business line (a)	—		6		—		6		1		4,674		4,681
Other business lines (b)	64		5		3		72		22		8,531		8,625
Total commercial mortgage	64		11		3		78		23		13,205		13,306
Lease financing	6		—		—		6		—		754		760
International	—		9		—		9		3		1,185		1,197
Total business loans	310		33		23		366		171		48,740		49,277

Retail loans:
Residential mortgage	22		—		—		22		53		1,739		1,814
Consumer:
Home equity	4		3		—		7		15		1,754		1,776
Other consumer	5		1		—		6		1		528		535
Total consumer	9		4		—		13		16		2,282		2,311
Total retail loans	31		4		—		35		69		4,021		4,125
Total loans	$	341	$	37	$	23	$	401	$	240	$	52,761	$	53,402

(a)Primarily loans to real estate developers.

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

Loans By Credit Quality Indicator and Vintage Year

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, 2023
	Vintage Year
(in millions)	2023		2022		2021		2020		2019		Prior		Revolvers		Revolvers Converted to Term		Total
Business loans:
Commercial:
Pass (a)	$	934	$	3,690	$	3,346	$	818	$	858	$	1,470	$	19,089	$	10	$	30,215


Criticized (b)	—		105		295		57		110		117		730		1		1,415

Total commercial	934		3,795		3,641		875		968		1,587		19,819		11		31,630
Commercial gross charge-offs	—		—		—		1		1		9		—		—		11
Real estate construction
Pass (a)	57		1,064		1,316		588		151		119		243		—		3,538


Criticized (b)	—		26		—		3		—		—		—		—		29

Total real estate construction	57		1,090		1,316		591		151		119		243		—		3,567
Real estate construction gross charge-offs	—		—		—		—		—		—		—		—		—
Commercial mortgage
Pass (a)	570		3,388		2,424		1,797		1,275		2,979		810		—		13,243


Criticized (b)	—		52		17		14		110		155		1		—		349

Total commercial mortgage	570		3,440		2,441		1,811		1,385		3,134		811		—		13,592
Commercial mortgage gross charge-offs	—		—		—		—		—		—		—		—		—
Lease financing
Pass (a)	68		289		126		61		43		151		—		—		738


Criticized (b)	—		9		3		2		8		6		—		—		28

Total lease financing	68		298		129		63		51		157		—		—		766
Lease financing gross charge-offs	—		—		—		—		—		—		—		—		—
International
Pass (a)	275		142		124		45		76		22		515		—		1,199


Criticized (b)	7		4		—		2		—		12		9		—		34

Total international	282		146		124		47		76		34		524		—		1,233
International gross charge-offs	—		—		—		—		—		—		—		—		—
Total business loans	1,911		8,769		7,651		3,387		2,631		5,031		21,397		11		50,788





Retail loans:
Residential mortgage
Pass (a)	53		314		391		475		136		414		—		—		1,783


Criticized (b)	1		2		1		—		2		33		—		—		39

Total residential mortgage	54		316		392		475		138		447		—		—		1,822
Residential mortgage gross charge-offs	—		—		—		—		—		—		—		—		—
Consumer:
Home equity
Pass (a)	—		—		—		—		—		8		1,717		38		1,763


Criticized (b)	—		—		—		—		—		—		18		3		21

Total home equity	—		—		—		—		—		8		1,735		41		1,784
Home equity gross charge-offs	—		—		—		—		—		—		1		—		1
Other consumer
Pass (a)	6		48		36		50		7		10		372		—		529


Criticized (b)	—		—		—		—		2		—		1		—		3

Total other consumer	6		48		36		50		9		10		373		—		532
Other consumer gross charge-offs	—		—		—		—		—		—		—		—		—
Total consumer	6		48		36		50		9		18		2,108		41		2,316
Total retail loans	60		364		428		525		147		465		2,108		41		4,138
Total loans	$	1,971	$	9,133	$	8,079	$	3,912	$	2,778	$	5,496	$	23,505	$	52	$	54,926


Table continues on the following page.


	December 31, 2022
	Vintage Year
	2022		2021		2020		2019		2018		Prior		Revolvers		Revolvers Converted to Term		Total
Business loans:
Commercial:
Pass (a)	$	3,946	$	3,509	$	917	$	1,041	$	598	$	1,030	$	18,604	$	9	$	29,654



Criticized (b)	75		274		81		69		45		78		632		1		1,255
Total commercial	4,021		3,783		998		1,110		643		1,108		19,236		10		30,909
Real estate construction:
Pass (a)	836		1,134		633		162		102		28		207		—		3,102



Criticized (b)	—		—		3		—		—		—		—		—		3
Total real estate construction	836		1,134		636		162		102		28		207		—		3,105
Commercial mortgage:
Pass (a)	3,349		2,501		1,825		1,394		1,050		2,182		838		—		13,139



Criticized (b)	7		5		7		32		31		75		10		—		167
Total commercial mortgage	3,356		2,506		1,832		1,426		1,081		2,257		848		—		13,306
Lease financing
Pass (a)	316		140		64		47		37		130		—		—		734



Criticized (b)	10		—		2		8		5		1		—		—		26
Total lease financing	326		140		66		55		42		131		—		—		760
International
Pass (a)	317		161		55		88		19		14		498		—		1,152



Criticized (b)	12		—		3		—		3		10		17		—		45
Total international	329		161		58		88		22		24		515		—		1,197
Total business loans	8,868		7,724		3,590		2,841		1,890		3,548		20,806		10		49,277
Retail loans:
Residential mortgage
Pass (a)	327		398		480		133		68		355		—		—		1,761



Criticized (b)	4		—		—		9		1		39		—		—		53
Total residential mortgage	331		398		480		142		69		394		—		—		1,814
Consumer:
Home equity
Pass (a)	—		—		—		—		—		9		1,708		40		1,757



Criticized (b)	—		—		—		—		—		—		17		2		19
Total home equity	—		—		—		—		—		9		1,725		42		1,776
Other consumer
Pass (a)	69		38		50		8		1		10		355		—		531



Criticized (b)	—		—		—		1		—		—		3		—		4
Total other consumer	69		38		50		9		1		10		358		—		535
Total consumer	69		38		50		9		1		19		2,083		42		2,311
Total retail loans	400		436		530		151		70		413		2,083		42		4,125
Total loans	$	9,268	$	8,160	$	4,120	$	2,992	$	1,960	$	3,961	$	22,889	$	52	$	53,402

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

(b)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-49 in the Corporation's 2022 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.

Changes In The Allowance For Loan Losses

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


	2023									2022
(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	$	541		$	69		$	610		$	531		$	57		$	588
Allowance for credit losses on lending-related commitments	40			11			51			24			6			30
Allowance for credit losses	581			80			661			555			63			618

Loan charge-offs	(11)			(1)			(12)			(17)			(1)			(18)
Recoveries on loans previously charged-off	13			1			14			9			1			10
Net loan recoveries (charge-offs)	2			—			2			(8)			—			(8)
Provision for credit losses:
Provision for loan losses	27			2			29			(30)			4			(26)
Provision for credit losses on lending-related commitments	(1)			2			1			9			6			15
Provision for credit losses	26			4			30			(21)			10			(11)

Balance at end of period:
Allowance for loan losses	570			71			641			493			61			554
Allowance for credit losses on lending-related commitments	39			13			52			33			12			45
Allowance for credit losses	$	609		$	84		$	693		$	526		$	73		$	599


















Allowance for loan losses as a percentage of total loans	1.12		%	1.71		%	1.17		%	1.08		%	1.61		%	1.12		%

Allowance for credit losses as a percentage of total loans	1.20			2.04			1.26			1.15			1.92			1.21

Financing Receivable, Nonaccrual

The following table presents additional information regarding nonaccrual loans. Interest income of $4 million was recognized on nonaccrual loans for the three months ended March 31, 2023, compared to $2 million at March 31, 2022.


(in millions)	Nonaccrual Loans with No Related Allowance		Nonaccrual Loans with Related Allowance		Total Nonaccrual Loans
March 31, 2023
Business loans:
Commercial	$	79	$	55	$	134
Real estate construction:

Other business lines (a)	—		3		3

Commercial mortgage:
Commercial Real Estate business line (b)	—		1		1
Other business lines (a)	2		21		23
Total commercial mortgage	2		22		24

International	3		—		3
Total business loans	84		80		164
Retail loans:
Residential mortgage	36		3		39
Consumer:
Home equity	18		—		18


Total retail loans	54		3		57
Total nonaccrual loans	$	138	$	83	$	221
December 31, 2022
Business loans:
Commercial	$	64	$	78	$	142
Real estate construction:

Other business lines (a)	—		3		3

Commercial mortgage:
Commercial Real Estate business line (b)	—		1		1
Other business lines (a)	4		18		22
Total commercial mortgage	4		19		23
International	3		—		3
Total business loans	71		100		171
Retail loans:
Residential mortgage	53		—		53
Consumer:
Home equity	15		—		15
Other consumer	1		—		1
Total consumer	16		—		16
Total retail loans	69		—		69
Total nonaccrual loans	$	140	$	100	$	240

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

(b)Primarily loans to real estate developers.

Troubled Debt Restructurings By Type Of Modification

The following table displays the amortized cost basis at March 31, 2023 of loan modifications made to borrowers experiencing financial difficulty that were restructured during the three months ended March 31, 2023 by type of modification.


(in millions)	Term Extension (a)		Other (b)		Total		Percent of Total Class
For the Three Months Ended March 31, 2023
Business loans:
Commercial	$	7	$	1	$	8	0.02	%




Commercial mortgage:
Commercial Real Estate business line (c)	1		5		6		0.11
Other business lines (d)	1		—		1		0.02
Total commercial mortgage	2		5		7		0.05

Total business loans	$	9	$	6	$	15	0.03	%
Retail loans:

Consumer:

Other consumer	$	1	$	—	$	1	0.10
Total consumer	1		—		1		0.04
Total retail loans	1		—		1		0.02
Total loans	$	10	$	6	$	16	0.03	%

(a)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.

(b)Relates to FDMs where more than one type of modification was made. For the three months ended March 31, 2023, this primarily related to modifications where the interest rate was reduced and the term was extended.

(c)Primarily loans to real estate developers.

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

The following table summarizes the financial impacts of loan modifications made to specific loans during the three months ended March 31, 2023.


	Weighted-Average Interest Rate Reduction		Weighted-Average Term Extension (in months)
For the Three Months Ended March 31, 2023
Business loans:
Commercial	(0.25)	%	17.9




Commercial mortgage:
Commercial Real Estate business line (a)	(0.27)		21.2
Other business lines (b)	—		7.4
Total commercial mortgage	(0.27)		18.4


Total business loans	(0.27)	%	18.2
Retail loans:

Consumer:

Other consumer	—		10.0
Total consumer	—		10.0
Total retail loans	—		10.0
Total loans	(0.27)	%	17.9

(a)Primarily loans to real estate developers.

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

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


(in millions)	Principal Deferrals (a)
Three Months Ended March 31, 2022

Commercial	$	21














Consumer:
Home equity (b)	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)Includes bankruptcy loans for which the court has discharged the borrower's obligation and the borrower has not reaffirmed the debt.