Credit Quality And Allowance For Credit Losses (Tables)

6 Months Ended

Jun. 30, 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
June 30, 2023
Business loans:
Commercial	$	52	$	11	$	7	$	70	$	93	$	31,582	$	31,745
Real estate construction:
Commercial Real Estate business line (a)	—		—		—		—		—		3,422		3,422
Other business lines (b)	13		13		—		26		2		533		561
Total real estate construction	13		13		—		26		2		3,955		3,983
Commercial mortgage:
Commercial Real Estate business line (a)	—		—		—		—		1		4,982		4,983
Other business lines (b)	24		8		1		33		36		8,799		8,868
Total commercial mortgage	24		8		1		33		37		13,781		13,851
Lease financing	5		—		—		5		—		751		756
International	3		—		—		3		4		1,275		1,282
Total business loans	97		32		8		137		136		51,344		51,617

Retail loans:
Residential mortgage	8		—		—		8		33		1,853		1,894
Consumer:
Home equity	6		2		—		8		17		1,747		1,772
Other consumer	3		2		1		6		—		475		481
Total consumer	9		4		1		14		17		2,222		2,253
Total retail loans	17		4		1		22		50		4,075		4,147
Total loans	$	114	$	36	$	9	$	159	$	186	$	55,419	$	55,764
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 and vintage year. Credit quality indicator 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.


	June 30, 2023
	Vintage Year
(in millions)	2023		2022		2021		2020		2019		Prior		Revolvers		Revolvers Converted to Term		Total
Business loans:
Commercial:
Pass (a)	$	2,304	$	3,532	$	2,931	$	775	$	760	$	1,223	$	18,699	$	10	$	30,234


Criticized (b)	15		104		273		48		107		85		877		2		1,511

Total commercial	2,319		3,636		3,204		823		867		1,308		19,576		12		31,745
Commercial gross charge-offs	—		2		2		1		2		10		3		—		20
Real estate construction
Pass (a)	181		1,401		1,473		472		115		53		249		—		3,944


Criticized (b)	—		29		8		2		—		—		—		—		39

Total real estate construction	181		1,430		1,481		474		115		53		249		—		3,983
Real estate construction gross charge-offs	—		—		—		—		—		—		—		—		—
Commercial mortgage
Pass (a)	1,058		3,316		2,390		1,867		1,275		2,780		798		—		13,484


Criticized (b)	—		79		40		13		86		148		1		—		367

Total commercial mortgage	1,058		3,395		2,430		1,880		1,361		2,928		799		—		13,851
Commercial mortgage gross charge-offs	—		—		—		—		—		—		—		—		—
Lease financing
Pass (a)	102		275		121		56		41		129		—		—		724


Criticized (b)	5		9		3		2		7		6		—		—		32

Total lease financing	107		284		124		58		48		135		—		—		756
Lease financing gross charge-offs	—		—		—		—		—		—		—		—		—
International
Pass (a)	344		156		119		44		71		24		487		—		1,245


Criticized (b)	1		3		5		1		—		11		16		—		37

Total international	345		159		124		45		71		35		503		—		1,282
International gross charge-offs	1		—		—		—		—		—		—		—		1
Total business loans	4,010		8,904		7,363		3,280		2,462		4,459		21,127		12		51,617





Retail loans:
Residential mortgage
Pass (a)	180		306		388		467		135		385		—		—		1,861


Criticized (b)	1		2		1		—		1		28		—		—		33

Total residential mortgage	181		308		389		467		136		413		—		—		1,894
Residential mortgage gross charge-offs	—		—		—		—		—		—		—		—		—
Consumer:
Home equity
Pass (a)	—		—		—		—		—		8		1,698		42		1,748


Criticized (b)	—		—		—		—		—		—		21		3		24

Total home equity	—		—		—		—		—		8		1,719		45		1,772
Home equity gross charge-offs	—		—		—		—		—		—		1		—		1
Other consumer
Pass (a)	23		44		32		9		7		8		353		—		476


Criticized (b)	—		—		—		—		—		3		2		—		5

Total other consumer	23		44		32		9		7		11		355		—		481
Other consumer gross charge-offs	—		—		—		—		1		—		—		—		1
Total consumer	23		44		32		9		7		19		2,074		45		2,253
Total retail loans	204		352		421		476		143		432		2,074		45		4,147
Total loans	$	4,214	$	9,256	$	7,784	$	3,756	$	2,605	$	4,891	$	23,201	$	57	$	55,764





	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 June 30
Balance at beginning 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

Loan charge-offs	(10)			(1)			(11)			(13)			—			(13)
Recoveries on loans previously charged-off	13			—			13			12			1			13
Net loan recoveries (charge-offs)	3			(1)			2			(1)			1			—
Provision for credit losses:
Provision for loan losses	41			—			41			10			(1)			9
Provision for credit losses on lending-related commitments	(5)			(3)			(8)			1			—			1
Provision for credit losses	36			(3)			33			11			(1)			10

Balance at end of period:
Allowance for loan losses	614			70			684			502			61			563
Allowance for credit losses on lending-related commitments	34			10			44			34			12			46
Allowance for credit losses	$	648		$	80		$	728		$	536		$	73		$	609
Six Months Ended June 30
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	(21)			(2)			(23)			(30)			(1)			(31)
Recoveries on loans previously charged-off	26			1			27			21			2			23
Net loan recoveries (charge-offs)	5			(1)			4			(9)			1			(8)
Provision for credit losses:
Provision for loan losses	68			2			70			(20)			3			(17)
Provision for credit losses on lending-related commitments	(6)			(1)			(7)			10			6			16
Provision for credit losses	62			1			63			(10)			9			(1)

Balance at end of period:
Allowance for loan losses	614			70			684			502			61			563
Allowance for credit losses on lending-related commitments	34			10			44			34			12			46
Allowance for credit losses	$	648		$	80		$	728		$	536		$	73		$	609
Allowance for loan losses as a percentage of total loans	1.19		%	1.70		%	1.23		%	1.06		%	1.55		%	1.09		%

Allowance for credit losses as a percentage of total loans	1.26			1.95			1.31			1.13			1.85			1.18

Financing Receivable, Nonaccrual

The following table presents additional information regarding nonaccrual loans. Interest income of $2 million was recognized on nonaccrual loans for both the three-month periods ended June 30, 2023 and 2022. For the six months ended June 30, 2023 and 2022, the Corporation recognized interest income of $6 million and $4 million, respectively, on nonaccrual loans.


(in millions)	Nonaccrual Loans with No Related Allowance		Nonaccrual Loans with Related Allowance		Total Nonaccrual Loans
June 30, 2023
Business loans:
Commercial	$	49	$	44	$	93
Real estate construction:

Other business lines (a)	—		2		2

Commercial mortgage:
Commercial Real Estate business line (b)	—		1		1
Other business lines (a)	9		27		36
Total commercial mortgage	9		28		37

International	—		4		4
Total business loans	58		78		136
Retail loans:
Residential mortgage	30		3		33
Consumer:
Home equity	17		—		17


Total retail loans	47		3		50
Total nonaccrual loans	$	105	$	81	$	186
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 June 30, 2023 of loan modifications made to borrowers experiencing financial difficulty that were restructured during the three- and six-month periods ended June 30, 2023 by type of modification.


(in millions)	Term Extension (a)		Payment Delay (a)		Interest Rate Reduction		Combinations (b)		Total		Percent of Total Class
For the Three Months Ended June 30, 2023
Business loans:
Commercial	$	25	$	22	$	—	$	—	$	47	0.15	%




Commercial mortgage:

Other business lines (d)	2		—		2		—		4		0.05
Total commercial mortgage	2		—		2		—		4		0.03
International	—		—		—		1		1		0.10
Total business loans	27		22		2		1		52		0.10







Total loans	$	27	$	22	$	2	$	1	$	52	0.09	%
For the Six Months Ended June 30, 2023
Business loans:
Commercial	$	30	$	22	$	—	$	1	$	53	0.17	%




Commercial mortgage:
Commercial Real Estate business line (c)	1		—		—		—		1		0.02
Other business lines (d)	4		—		2		5		11		0.11
Total commercial mortgage	5		—		2		5		12		0.08
International	—		—		—		1		1		0.10
Total business loans	35		22		2		7		66		0.13







Total loans	$	35	$	22	$	2	$	7	$	66	0.12	%

(a)Represents loan balances where terms were extended or payments were delayed by a more than an insignificant time period, typically more than 180 days, at or above contractual interest rates. Please see Note 1 to the consolidated financial statements for further information.

(b)Relates to FDMs where more than one type of modification was made. For the three months ended June 30, 2023, this primarily related to a modification where an other-than- insignificant payment delay was agreed upon and a portion of principal was forgiven. For the six months ended June 30, 2023, this also includes 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- and six-month periods ended June 30, 2023.


	Weighted-Average Term Extension (in months)	Weighted-Average Interest Rate Reduction
For the Three Months Ended June 30, 2023
Business loans:
Commercial	6.6	—	%




Commercial mortgage:

Other business lines (b)	60.1	(1.92)
Total commercial mortgage	60.1	(1.92)


Total business loans	11.5	(1.92)







Total loans	11.5	(1.92)	%
For the Six Months Ended June 30, 2023
Business loans:
Commercial	9.2	(0.44)	%




Commercial mortgage:
Commercial Real Estate business line (a)	6.0	—
Other business lines (b)	31.9	(0.71)
Total commercial mortgage	29.5	(0.71)


Total business loans	13.8	(0.67)







Total loans	13.8	(0.67)	%

(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 June 30, 2022 of loans considered to be TDRs that were restructured during the three- and six-month periods ended June 30, 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 June 30, 2022
Business loans:
Commercial	$	15
Real estate construction:

Other business lines (b)	3

Commercial mortgage:

Other business lines (b)	8












Total loans	$	26
Six Months Ended June 30, 2022
Business loans:
Commercial	$	21
Real estate construction:

Other business lines (b)	3

Commercial mortgage:

Other business lines (b)	15



Total business loans	39


Consumer:
Home equity (c)	1



Total loans	$	40

(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)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.