Loans and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

Loans and Allowance for Credit Losses

 Note 4    Loans and Allowance for Credit Losses

The composition of the loan portfolio, disaggregated by class and underlying specific portfolio type, was as follows:

	September 30, 2020					December 31, 2019
(Dollars in Millions)	Amount		Percent of Total			Amount		Percent of Total
Commercial
Commercial	$	105,109		34.2	%	$	98,168		33.2	%
Lease financing		5,655		1.9			5,695		1.9
Total commercial		110,764		36.1			103,863		35.1
Commercial Real Estate
Commercial mortgages		29,264		9.6			29,404		9.9
Construction and development		11,116		3.6			10,342		3.5
Total commercial real estate		40,380		13.2			39,746		13.4
Residential Mortgages
Residential mortgages		66,952		21.8			59,865		20.2
Home equity loans, first liens		9,837		3.2			10,721		3.6
Total residential mortgages		76,789		25.0			70,586		23.8
Credit Card		21,898		7.1			24,789		8.4
Other Retail
Retail leasing		8,405		2.7			8,490		2.9
Home equity and second mortgages		13,208		4.3			15,036		5.1
Revolving credit		2,660		.9			2,899		1.0
Installment		13,513		4.4			11,038		3.7
Automobile		19,188		6.2			19,435		6.5
Student		180		.1			220		.1
Total other retail		57,154		18.6			57,118		19.3
Total loans	$	306,985		100.0	%	$	296,102		100.0	%

The Company had loans of $95.9 billion at September 30, 2020, and $96.2 billion at December 31, 2019, pledged at the Federal Home Loan Bank, and loans of $67.1 billion at September 30, 2020, and $76.3 billion at December 31, 2019, pledged at the Federal Reserve Bank.

Originated loans are reported at the principal amount outstanding, net of unearned interest and deferred fees and costs, and any partial charge-offs recorded. Net unearned interest and deferred fees and costs amounted to $848 million at September 30, 2020 and $781 million at December 31, 2019. All purchased loans are recorded at fair value at the date of purchase. Beginning January 1, 2020, the Company evaluates purchased loans for more-than-insignificant deterioration at the date of purchase in accordance with applicable authoritative accounting guidance. Purchased loans that have experienced more-than-insignificant deterioration from origination are considered purchased credit deteriorated (“PCD”) loans. All other purchased loans are considered non-purchased credit deteriorated loans.

The Company offers a broad array of lending products and categorizes its loan portfolio into two segments, which is the level at which it develops and documents a systematic methodology to determine the allowance for credit losses. The Company’s two loan portfolio segments are commercial lending and consumer lending.

Allowance for Credit Losses Beginning January 1, 2020, the allowance for credit losses is established for current expected credit losses on the Company’s loan and lease portfolio, including unfunded credit commitments. The allowance for credit losses is increased through provisions charged to earnings and reduced by net charge-offs. Management evaluates the appropriateness of the allowance for credit losses on a quarterly basis. The allowance considers expected losses for the remaining lives of the applicable assets, inclusive of expected recoveries. Remaining lives of the applicable assets are adjusted for prepayments. Multiple economic scenarios are considered over a three-year reasonable and supportable forecast period, which incorporates historical loss experience in years two and three. These economic scenarios are constructed with interrelated projections of multiple economic variables, and loss estimates are produced that consider the historical correlation of those economic variables with credit losses. After the forecast period, the Company fully reverts to long-term historical loss experience, adjusted for prepayments and characteristics of the current loan and lease portfolio, to estimate losses over the remaining lives. The economic scenarios are updated at least quarterly and are designed to provide a range of reasonable estimates, both better and worse than current expectations. Scenarios are weighted based on the Company’s expectation of future conditions. Final loss estimates also consider factors affecting credit losses not reflected in the scenarios, due to the unique aspects of current conditions and expectations. These factors may include, but are not limited to, loan servicing practices, regulatory guidance, and/or fiscal and monetary policy actions.

The allowance recorded for credit losses utilizes forward-looking expected loss models to consider a variety of factors affecting lifetime credit losses. These factors include, but are not limited to, macroeconomic variables such as unemployment rate, real estate prices, gross domestic product levels, corporate bonds spreads and long-term interest rate forecasts, as well as loan and borrower characteristics, such as internal risk ratings on commercial loans and consumer credit scores, delinquency status, collateral type and available valuation information, consideration of end-of-term losses on lease residuals, and the remaining term of the loan, adjusted for expected prepayments. Where loans do not exhibit similar risk characteristics, an individual analysis is performed to consider expected credit losses. For each loan portfolio, model estimates are adjusted as necessary to consider any relevant changes in portfolio composition, lending policies, underwriting standards, risk management practices, economic conditions or other factors that would affect the accuracy of the model. Expected credit loss estimates also include consideration of expected cash recoveries on loans previously charged-off, or expected recoveries on collateral dependent loans where recovery is expected through sale of the collateral. The allowance recorded for individually evaluated loans greater than $5 million in the commercial lending segment is based on an analysis utilizing expected cash flows discounted using the original effective interest rate, the observable market price of the loan, or the fair value of the collateral, less selling costs, for collateral-dependent loans.

The allowance recorded for Troubled Debt Restructuring (“TDR”) loans in the consumer lending segment is determined on a homogenous pool basis utilizing expected cash flows discounted using the original effective interest rate of the pool. TDRs do not include loan modifications granted to customers resulting directly from the economic effects of the COVID-19 pandemic. The expected cash flows on TDR loans consider subsequent payment defaults since modification, the borrower’s ability to pay under the restructured terms, and the timing and amount of payments. The allowance for collateral-dependent loans in the consumer lending segment is determined based on the fair value of the collateral less costs to sell. With respect to the commercial lending segment, TDRs may be collectively evaluated for impairment where observed performance history, including defaults, is a primary driver of the loss allocation. For commercial TDRs individually evaluated for impairment, attributes of the borrower are the primary factors in determining the allowance for credit losses. However, historical loss experience is also incorporated into the allowance methodology applied to this category of loans.

Beginning January 1, 2020, when a loan portfolio is purchased, an allowance is established for those loans considered purchased with more-than-insignificant credit deterioration, or PCD loans, and those not considered purchased with more-than-insignificant credit deterioration. The allowance established for each population considers product mix, risk characteristics of the portfolio, bankruptcy experience, delinquency status, refreshed loan-to-value ratios when possible, and portfolio growth. The allowance established for purchased loans not considered PCD is recognized through provision expense upon acquisition, whereas the allowance established for loans considered PCD at acquisition is offset by an increase in the basis of the acquired loans. Any subsequent increases and decreases in the allowance related to purchased loans are recognized through provision expense, with future charge-offs charged to the allowance. The Company did not have a material amount of PCD loans included in its loan portfolio at September 30, 2020.

The Company’s methodology for determining the appropriate allowance for credit losses for each loan portfolio also considers the imprecision inherent in the methodologies used. As a result, amounts determined under the methodologies described above are adjusted by management to consider the potential impact of other qualitative factors not captured in quantitative model adjustments which include, but are not limited to, the following: model imprecision, imprecision in economic scenario assumptions, and emerging risks related to either changes in the environment that are affecting specific portfolios, or changes in portfolio concentrations over time that may affect model performance. The consideration of these items results in adjustments to allowance amounts included in the Company’s allowance for credit losses specific to each portfolio class.

The Company also assesses the credit risk associated with off-balance sheet loan commitments, letters of credit, investment securities and derivatives. Credit risk associated with derivatives is reflected in the fair values recorded for those positions. The liability for off-balance sheet credit exposure related to loan commitments and other credit guarantees is included in other liabilities. Because business processes and credit risks associated with unfunded credit commitments are essentially the same as for loans, the Company utilizes similar processes to estimate its liability for unfunded credit commitments.

The results of the analysis are evaluated quarterly to confirm the estimates are appropriate for each loan portfolio.

Activity in the allowance for credit losses by portfolio class was as follows:

Three Months Ended September 30 (Dollars in Millions)	Commercial			Commercial Real Estate			Residential Mortgages			Credit Card			Other Retail			Total Loans
2020
Balance at beginning of period	$	2,645		$	1,269		$	633		$	2,156		$	1,187		$	7,890
Add
Provision for credit losses		20			263			(49	)		369			32			635
Deduct
Loans charged-off		193			89			4			236			89			611
Less recoveries of loans charged-off		(15	)		(6	)		(7	)		(35	)		(33	)		(96	)
Net loans charged-off		178			83			(3	)		201			56			515
Balance at end of period	$	2,487		$	1,449		$	587		$	2,324		$	1,163		$	8,010
2019
Balance at beginning of period	$	1,464		$	794		$	438		$	1,132		$	638		$	4,466
Add
Provision for credit losses		101			3			(10	)		212			61			367
Deduct
Loans charged-off		91			7			8			248			97			451
Less recoveries of loans charged-off		(16	)		(1	)		(11	)		(37	)		(34	)		(99	)
Net loans charged-off		75			6			(3	)		211			63			352
Balance at end of period	$	1,490		$	791		$	431		$	1,133		$	636		$	4,481
Nine Months Ended September 30 (Dollars in Millions)	Commercial			Commercial Real Estate			Residential Mortgages			Credit Card			Other Retail			Total Loans
2020
Balance at beginning of period	$	1,484		$	799		$	433		$	1,128		$	647		$	4,491
Add
Change in accounting principle (a)		378			(122	)		(30	)		872			401			1,499
Provision for credit losses		988			875			179			988			335			3,365
Deduct
Loans charged-off		406			112			15			775			316			1,624
Less recoveries of loans charged-off		(43	)		(9	)		(20	)		(111	)		(96	)		(279	)
Net loans charged-off		363			103			(5	)		664			220			1,345
Balance at end of period	$	2,487		$	1,449		$	587		$	2,324		$	1,163		$	8,010
2019
Balance at beginning of period	$	1,454		$	800		$	455		$	1,102		$	630		$	4,441
Add
Provision for credit losses		243			(2	)		(20	)		694			194			1,109
Deduct
Loans charged-off		300			11			27			767			283			1,388
Less recoveries of loans charged-off		(93	)		(4	)		(23	)		(104	)		(95	)		(319	)
Net loans charged-off		207			7			4			663			188			1,069
Balance at end of period	$	1,490		$	791		$	431		$	1,133		$	636		$	4,481

(a) Effective January 1, 2020, the Company adopted accounting guidance which changed impairment recognition of financial instruments to a model that is based on expected losses rather than incurred losses.

The increase in the allowance for credit losses from December 31, 2019 to September 30, 2020 reflected the deteriorating and ongoing effects of adverse economic conditions driven by the impact of COVID-19 on the domestic and global economies. Expected loss estimates consider both the changes in economic activity, and the mitigating effects of government stimulus and industrywide loan modification efforts designed to limit long term effects of the pandemic.

Credit Quality The credit quality of the Company’s loan portfolios is assessed as a function of net credit losses, levels of nonperforming assets and delinquencies, and credit quality ratings as defined by the Company.

For all loan classes, loans are considered past due based on the number of days delinquent except for monthly amortizing loans which are classified delinquent based upon the number of contractually required payments not made (for example, two missed payments is considered 30 days delinquent). When a loan is placed on nonaccrual status, unpaid accrued interest is reversed, reducing interest income in the current period.

Commercial lending segment loans are generally placed on nonaccrual status when the collection of principal and interest has become 90 days past due or is otherwise considered doubtful. Commercial lending segment loans are generally fully or partially charged down to the fair value of the collateral securing the loan, less costs to sell, when the loan is placed on nonaccrual.

Consumer lending segment loans are generally charged-off at a specific number of days or payments past due. Residential mortgages and other retail loans secured by 1-4 family properties are generally charged down to the fair value of the collateral securing the loan, less costs to sell, at 180 days past due. Residential mortgage loans and lines in a first lien position are placed on nonaccrual status in instances where a partial charge-off occurs unless the loan is well secured and in the process of collection. Residential mortgage loans and lines in a junior lien position secured by 1-4 family properties are placed on nonaccrual status at 120 days past due or when they are behind a first lien that has become 180 days or greater past due or placed on nonaccrual status. Any secured consumer lending segment loan whose borrower has had debt discharged through bankruptcy, for which the loan amount exceeds the fair value of the collateral, is charged down to the fair value of the related collateral and the remaining balance is placed on nonaccrual status. Credit card loans continue to accrue interest until the account is charged-off. Credit cards are charged-off at 180 days past due. Other retail loans not secured by 1-4 family properties are charged-off at 120 days past due; and revolving consumer lines are charged-off at 180 days past due. Similar to credit cards, other retail loans are generally not placed on nonaccrual status because of the relative short period of time to charge-off. Certain retail customers having financial difficulties may have the terms of their credit card and other loan agreements modified to require only principal payments and, as such, are reported as nonaccrual.

For all loan classes, interest payments received on nonaccrual loans are generally recorded as a reduction to a loan’s carrying amount while a loan is on nonaccrual and are recognized as interest income upon payoff of the loan. However, interest income may be recognized for interest payments if the remaining carrying amount of the loan is believed to be collectible. In certain circumstances, loans in any class may be restored to accrual status, such as when a loan has demonstrated sustained repayment performance or no amounts are past due and prospects for future payment are no longer in doubt; or when the loan becomes well secured and is in the process of collection. Loans where there has been a partial charge-off may be returned to accrual status if all principal and interest (including amounts previously charged-off) is expected to be collected and the loan is current. Generally, purchased credit deteriorated loans are considered accruing loans. However, the timing and amount of future cash flows for some loans is not reasonably estimable, and those loans are classified as nonaccrual loans with interest income not recognized until the timing and amount of the future cash flows can be reasonably estimated.

The following table provides a summary of loans by portfolio class, including the delinquency status of those that continue to accrue interest, and those that are nonperforming:

	Accruing
(Dollars in Millions)	Current		30-89 Days Past Due		90 Days or More Past Due		Nonperforming (b)		Total
September 30, 2020
Commercial	$	109,994	$	243	$	68	$	459	$	110,764
Commercial real estate		39,957		92		1		330		40,380
Residential mortgages (a)		76,197		238		114		240		76,789
Credit card		21,493		206		199		–		21,898
Other retail		56,666		257		79		152		57,154
Total loans	$	304,307	$	1,036	$	461	$	1,181	$	306,985
December 31, 2019
Commercial	$	103,273	$	307	$	79	$	204	$	103,863
Commercial real estate		39,627		34		3		82		39,746
Residential mortgages (a)		70,071		154		120		241		70,586
Credit card		24,162		321		306		–		24,789
Other retail		56,463		393		97		165		57,118
Total loans	$	293,596	$	1,209	$	605	$	692	$	296,102

(a) At September 30, 2020, $1.3 billion of loans 30–89 days past due and $1.6 billion of loans 90 days or more past due purchased from Government National Mortgage Association (“GNMA”) mortgage pools whose repayments are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs, were classified as current, compared with $428 million and $1.7 billion at December 31, 2019, respectively.

(b) Substantially all nonperforming loans at September 30, 2020 and December 31, 2019, had an associated allowance for credit losses. The Company recognized interest income on nonperforming loans of $9 million and $7 million for the three months ended September 30, 2020 and 2019, respectively, and $19 million and $18 million for the nine months ended September 30, 2020 and 2019, respectively.

At September 30, 2020, the amount of foreclosed residential real estate held by the Company, and included in other real estate owned (“OREO”), was $32 million, compared with $74 million at December 31, 2019. These amounts excluded $42 million and $155 million at September 30, 2020 and December 31, 2019, respectively, of foreclosed residential real estate related to mortgage loans whose payments are primarily insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs. In addition, the amount of residential mortgage loans secured by residential real estate in the process of foreclosure at September 30, 2020 and December 31, 2019, was $1.1 billion and $1.5 billion, respectively, of which $857 million and $1.2 billion,

respectively, related to loans purchased from Government National Mortgage Association (“GNMA”) mortgage pools whose repayments are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs.

The Company classifies its loan portfolios using internal credit quality ratings on a quarterly basis. These ratings include pass, special mention and classified, and are an important part of the Company’s overall credit risk management process and evaluation of the allowance for credit losses. Loans with a pass rating represent those loans not classified on the Company’s rating scale for problem credits, as minimal credit risk has been identified. Special mention loans are those loans that have a potential weakness deserving management’s close attention. Classified loans are those loans where a well-defined weakness has been identified that may put full collection of contractual cash flows at risk. It is possible that others, given the same information, may reach different reasonable conclusions regarding the credit quality rating classification of specific loans.

The following table provides a summary of loans by portfolio class and the Company’s internal credit quality rating:

	September 30, 2020										December 31, 2019
			Criticized										Criticized
(Dollars in Millions)	Pass		Special Mention		Classified (a)		Total Criticized		Total		Pass		Special Mention		Classified (a)		Total Criticized		Total
Commercial
Originated in 2020	$	34,060	$	2,211	$	1,239	$	3,450	$	37,510	$	–	$	–	$	–	$	–	$	–
Originated in 2019		20,897		469		249		718		21,615		33,550		174		222		396		33,946
Originated in 2018		14,093		453		160		613		14,706		21,394		420		136		556		21,950
Originated in 2017		6,356		182		222		404		6,760		10,464		165		97		262		10,726
Originated in 2016		2,761		52		46		98		2,859		4,984		10		37		47		5,031
Originated prior to 2016		3,235		61		68		129		3,364		5,151		86		96		182		5,333
Revolving		22,906		756		288		1,044		23,950		26,307		292		278		570		26,877
Total commercial		104,308		4,184		2,272		6,456		110,764		101,850		1,147		866		2,013		103,863
Commercial real estate
Originated in 2020		7,276		921		382		1,303		8,579		–		–		–		–		–
Originated in 2019		10,517		1,022		313		1,335		11,852		12,976		108		108		216		13,192
Originated in 2018		6,880		728		356		1,084		7,964		9,455		71		56		127		9,582
Originated in 2017		3,305		370		172		542		3,847		5,863		99		64		163		6,026
Originated in 2016		2,338		224		183		407		2,745		3,706		117		60		177		3,883
Originated prior to 2016		3,167		248		163		411		3,578		4,907		78		101		179		5,086
Revolving		1,712		97		5		102		1,814		1,965		11		1		12		1,977
Revolving converted to term		1		–		–		–		1		–		–		–		–		–
Total commercial real estate		35,196		3,610		1,574		5,184		40,380		38,872		484		390		874		39,746
Residential mortgages (b)
Originated in 2020		18,800		1		3		4		18,804		–		–		–		–		–
Originated in 2019		15,313		3		9		12		15,325		18,819		2		1		3		18,822
Originated in 2018		6,468		1		20		21		6,489		9,204		–		11		11		9,215
Originated in 2017		7,745		1		17		18		7,763		9,605		–		21		21		9,626
Originated in 2016		9,469		–		30		30		9,499		11,378		–		29		29		11,407
Originated prior to 2016		18,597		–		311		311		18,908		21,168		–		348		348		21,516
Revolving		1		–		–		–		1		–		–		–		–		–
Total residential mortgages		76,393		6		390		396		76,789		70,174		2		410		412		70,586
Credit card (c)		21,699		–		199		199		21,898		24,483		–		306		306		24,789
Other retail
Originated in 2020		13,416		–		3		3		13,419		–		–		–		–		–
Originated in 2019		12,527		–		16		16		12,543		15,907		–		11		11		15,918
Originated in 2018		7,574		–		23		23		7,597		10,131		–		23		23		10,154
Originated in 2017		4,708		–		22		22		4,730		7,907		–		28		28		7,935
Originated in 2016		2,162		–		12		12		2,174		3,679		–		20		20		3,699
Originated prior to 2016		2,135		–		17		17		2,152		3,274		–		28		28		3,302
Revolving		13,939		–		116		116		14,055		15,509		10		138		148		15,657
Revolving converted to term		449		–		35		35		484		418		–		35		35		453
Total other retail		56,910		–		244		244		57,154		56,825		10		283		293		57,118
Total loans	$	294,506		7,800	$	4,679	$	12,479	$	306,985	$	292,204	$	1,643	$	2,255	$	3,898	$	296,102
Total outstanding commitments	$	635,980	$	10,868	$	5,664	$	16,532	$	652,512	$	619,224	$	2,451	$	2,873	$	5,324	$	624,548

(a) Classified rating on consumer loans primarily based on delinquency status.

(b) At September 30, 2020, $1.6 billion of GNMA loans 90 days or more past due and $1.4 billion of restructured GNMA loans whose repayments are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs were classified with a pass rating, compared with $1.7 billion and $1.6 billion at December 31, 2019, respectively.

(c) All credit card loans are considered revolving loans.

Troubled Debt Restructurings In certain circumstances, the Company may modify the terms of a loan to maximize the collection of amounts due when a borrower is experiencing financial difficulties or is expected to experience difficulties in the near-term. Concessionary modifications are classified as TDRs unless the modification results in only an insignificant delay in payments to be received. The Company recognizes interest on TDRs if the borrower complies with the revised terms and conditions as agreed upon with the Company and has demonstrated repayment performance at a level commensurate with the modified terms over several payment cycles, which is generally six months or greater. To the extent a previous restructuring was insignificant, the Company considers the cumulative effect of past restructurings related to the receivable when determining whether a current restructuring is a TDR.

The following table provides a summary of loans modified as TDRs during the periods presented by portfolio class:

	2020						2019
(Dollars in Millions)	Number of Loans		Pre-Modification Outstanding Loan Balance		Post-Modification Outstanding Loan Balance		Number of Loans		Pre-Modification Outstanding Loan Balance		Post-Modification Outstanding Loan Balance
Three Months Ended September 30
Commercial		699	$	262	$	159		886	$	116	$	100
Commercial real estate		51		105		81		32		23		23
Residential mortgages		374		108		108		117		17		15
Credit card		4,699		27		27		8,429		46		46
Other retail		508		26		26		814		20		19
Total loans, excluding loans purchased from GNMA mortgage pools		6,331		528		401		10,278		222		203
Loans purchased from GNMA mortgage pools		735		106		105		1,524		211		203
Total loans		7,066	$	634	$	506		11,802	$	433	$	406
Nine Months Ended September 30
Commercial		2,837	$	505	$	375		2,622	$	242	$	215
Commercial real estate		116		165		141		76		95		93
Residential mortgages		585		142		142		318		43		41
Credit card		19,282		110		112		26,018		140		141
Other retail		1,537		50		48		2,029		44		42
Total loans, excluding loans purchased from GNMA mortgage pools		24,357		972		818		31,063		564		532
Loans purchased from GNMA mortgage pools		3,648		514		503		4,617		629		606
Total loans		28,005	$	1,486	$	1,321		35,680	$	1,193	$	1,138

Residential mortgages, home equity and second mortgages, and loans purchased from GNMA mortgage pools in the table above include trial period arrangements offered to customers during the periods presented. The post-modification balances for these loans reflect the current outstanding balance until a permanent modification is made. In addition, the post-modification balances typically include capitalization of unpaid accrued interest and/or fees under the various modification programs. For those loans modified as TDRs during the third quarter of 2020, at September 30, 2020, 15 residential mortgages, 4 home equity and second mortgage loans and 238 loans purchased from GNMA mortgage pools with outstanding balances of $4 million, less than $1 million and $36 million, respectively, were in a trial period and have estimated post-modification balances of $4 million, less than $1 million and $36 million, respectively, assuming permanent modification occurs at the end of the trial period.

The Company has implemented certain restructuring programs that may result in TDRs. However, many of the Company’s TDRs are also determined on a case-by-case basis in connection with ongoing loan collection processes.

For the commercial lending segment, modifications generally result in the Company working with borrowers on a case-by-case basis. Commercial and commercial real estate modifications generally include extensions of the maturity date and may be accompanied by an increase or decrease to the interest rate, which may not be deemed a market interest rate. In addition, the Company may work with the borrower in identifying other changes that mitigate loss to the Company, which may include additional collateral or guarantees to support the loan. To a lesser extent, the Company may waive contractual principal. The Company classifies all of the above concessions as TDRs to the extent the Company determines that the borrower is experiencing financial difficulty.

Modifications for the consumer lending segment are generally part of programs the Company has initiated. The Company modifies residential mortgage loans under Federal Housing Administration, United States Department of Veterans Affairs, or its own internal programs. Under these programs, the Company offers qualifying homeowners the opportunity to permanently modify their loan and achieve more affordable monthly payments by providing loan concessions. These concessions may include adjustments to interest rates, conversion of adjustable rates to fixed rates,

extension of maturity dates or deferrals of payments, capitalization of accrued interest and/or outstanding advances, or in limited situations, partial forgiveness of loan principal. In most instances, participation in residential mortgage loan restructuring programs requires the customer to complete a short-term trial period. A permanent loan modification is contingent on the customer successfully completing the trial period arrangement, and the loan documents are not modified until that time. The Company reports loans in a trial period arrangement as TDRs and continues to report them as TDRs after the trial period.

Credit card and other retail loan TDRs are generally part of distinct restructuring programs providing customers experiencing financial difficulty with modifications whereby balances may be amortized up to 60 months, and generally include waiver of fees and reduced interest rates.

In addition, the Company considers secured loans to consumer borrowers that have debt discharged through bankruptcy where the borrower has not reaffirmed the debt to be TDRs.

Loan modifications or concessions granted to borrowers resulting directly from the effects of the COVID-19 pandemic, who were otherwise in current payment status, are not considered to be TDRs. As of September 30, 2020, approximately $12.1 billion of loan modifications included on the Company’s consolidated balance sheet related to borrowers impacted by the COVID-19 pandemic, consisting primarily of payment deferrals of 90 days or less.

The following table provides a summary of TDR loans that defaulted (fully or partially charged-off or became 90 days or more past due) during the periods presented that were modified as TDRs within 12 months previous to default:

	2020				2019
(Dollars in Millions)	Number of Loans		Amount Defaulted		Number of Loans		Amount Defaulted
Three Months Ended September 30
Commercial		305	$	21		263	$	9
Commercial real estate		5		8		8		7
Residential mortgages		5		2		13		1
Credit card		1,363		8		2,025		10
Other retail		55		1		72		1
Total loans, excluding loans purchased from GNMA mortgage pools		1,733		40		2,381		28
Loans purchased from GNMA mortgage pools		72		9		263		33
Total loans		1,805	$	49		2,644	$	61
Nine Months Ended September 30
Commercial		922	$	49		749	$	18
Commercial real estate		33		24		23		17
Residential mortgages		23		4		124		14
Credit card		5,169		27		6,001		29
Other retail		245		3		299		9
Total loans, excluding loans purchased from GNMA mortgage pools		6,392		107		7,196		87
Loans purchased from GNMA mortgage pools		427		57		697		93
Total loans		6,819	$	164		7,893	$	180

In addition to the defaults in the table above, the Company had a total of 161 and 402 residential mortgage loans, home equity and second mortgage loans and loans purchased from GNMA mortgage pools for the three months and nine months ended September 30, 2020, respectively, where borrowers did not successfully complete the trial period arrangement and, therefore, are no longer eligible for a permanent modification under the applicable modification program. These loans had aggregate outstanding balances of $19 million and $53 million for the three months and nine months ended September 30, 2020, respectively.

As of September 30, 2020, the Company had $156 million of commitments to lend additional funds to borrowers whose terms of their outstanding owed balances have been modified in TDRs.