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Loans and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2021

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


	September 30, 2021					December 31, 2020
(Dollars in Millions)	Amount		Percent of Total			Amount		Percent of Total
Commercial
Commercial	$	95,876		32.2	%	$	97,315		32.7	%
Lease financing		5,137		1.8			5,556		1.9
Total commercial		101,013		34.0			102,871		34.6
Commercial Real Estate
Commercial mortgages		28,029		9.4			28,472		9.6
Construction and development		10,779		3.6			10,839		3.6
Total commercial real estate		38,808		13.0			39,311		13.2
Residential Mortgages
Residential mortgages		65,941		22.2			66,525		22.4
Home equity loans, first liens		9,013		3.0			9,630		3.2
Total residential mortgages		74,954		25.2			76,155		25.6
Credit Card		22,137		7.4			22,346		7.5
Other Retail
Retail leasing		7,505		2.5			8,150		2.7
Home equity and second mortgages		10,718		3.6			12,472		4.2
Revolving credit		2,682		.9			2,688		.9
Installment		16,166		5.5			13,823		4.6
Automobile		23,488		7.9			19,722		6.6
Student		137		–			169		.1
Total other retail		60,696		20.4			57,024		19.1
Total loans	$	297,608		100.0	%	$	297,707		100.0	%

Activity in Allowance for Credit Losses by Portfolio Class

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
2021
Balance at beginning of period		$1,838			$1,409			$478			$1,891			$ 994			$6,610
Add
Provision for credit losses		(75	)		(104	)		3			(23	)		36			(163	)
Deduct
Loans charged-off		40			14			3			154			55			266
Less recoveries of loans charged-off		(26	)		(1	)		(13	)		(43	)		(36	)		(119	)
Net loan charge-offs (recoveries)		14			13			(10	)		111			19			147
Balance at end of period		$1,749			$1,292			$491			$1,757			$1,011			$6,300
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 loan charge-offs (recoveries)		178			83			(3	)		201			56			515
Balance at end of period		$2,487			$1,449			$587			$2,324			$1,163			$8,010


Nine Months Ended September 30 (Dollars in Millions)	Commercial			Commercial Real Estate			Residential Mortgages			Credit Card			Other Retail			Total Loans
2021
Balance at beginning of period		$2,423			$1,544			$573			$2,355			$1,115			$8,010
Add
Provision for credit losses		(577	)		(246	)		(107	)		(195	)		(35	)		(1,160	)
Deduct
Loans charged-off		184			28			13			536			193			954
Less recoveries of loans charged-off		(87	)		(22	)		(38	)		(133	)		(124	)		(404	)
Net loan charge-offs (recoveries)		97			6			(25	)		403			69			550
Balance at end of period		$1,749			$1,292			$491			$1,757			$1,011			$6,300
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 loan charge-offs (recoveries)		363			103			(5	)		664			220			1,345
Balance at end of period		$2,487			$1,449			$587			$2,324			$1,163			$8,010

(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.

Summary of Loans by Portfolio Class, Including Delinquency Status of those that Continue to Accrue Interest and are Nonperforming

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, 2021
Commercial	$	100,595		$ 163		$ 39		$ 216		$101,013
Commercial real estate		38,459		32		21		296		38,808
Residential mortgages (a)		74,450		153		114		237		74,954
Credit card		21,807		183		147		–		22,137
Other retail		60,224		251		64		157		60,696
Total loans	$	295,535		$ 782		$385		$ 906		$297,608
December 31, 2020
Commercial	$	102,127		$ 314		$ 55		$ 375		$102,871
Commercial real estate		38,676		183		2		450		39,311
Residential mortgages (a)		75,529		244		137		245		76,155
Credit card		21,918		231		197		–		22,346
Other retail		56,466		318		86		154		57,024
Total loans	$	294,716		$1,290		$477		$1,224		$297,707

(a)

At September 30, 2021, $946 million of loans 30–89 days past due and $1.5 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 $1.4 billion and $1.8 billion at December 31, 2020, respectively.

(b)

Substantially all nonperforming loans at September 30, 2021 and December 31, 2020, had an associated allowance for credit losses. The Company recognized interest income on nonperforming loans of $4 million and $9 million for the three months ended September 30, 2021 and 2020, respectively, and $11 million and $19 million for the nine months ended September 30, 2021 and 2020, respectively.

Summary of Loans by Portfolio Class and Company's Internal Credit Quality Rating

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


	September 30, 2021										December 31, 2020
			Criticized										Criticized
(Dollars in Millions)	Pass		Special Mention		Classified (a)		Total Criticized		Total		Pass		Special Mention		Classified (a)		Total Criticized		Total
Commercial
Originated in 2021		$ 32,826		$ 346		$ 277		$ 623		$ 33,449		$ –		$ –		$ –		$ –		$ –
Originated in 2020		17,202		637		252		889		18,091		34,557		1,335		1,753		3,088		37,645
Originated in 2019		11,851		198		63		261		12,112		17,867		269		349		618		18,485
Originated in 2018		6,853		77		51		128		6,981		12,349		351		176		527		12,876
Originated in 2017		3,213		14		53		67		3,280		5,257		117		270		387		5,644
Originated prior to 2017		3,373		30		40		70		3,443		4,954		128		115		243		5,197
Revolving		23,204		353		100		453		23,657		22,445		299		280		579		23,024
Total commercial		98,522		1,655		836		2,491		101,013		97,429		2,499		2,943		5,442		102,871

Commercial real estate
Originated in 2021		9,456		50		772		822		10,278		–		–		–		–		–
Originated in 2020		8,238		119		435		554		8,792		9,446		461		1,137		1,598		11,044
Originated in 2019		7,382		298		694		992		8,374		9,514		454		1,005		1,459		10,973
Originated in 2018		3,662		142		330		472		4,134		6,053		411		639		1,050		7,103
Originated in 2017		1,943		25		150		175		2,118		2,650		198		340		538		3,188
Originated prior to 2017		3,239		26		103		129		3,368		4,762		240		309		549		5,311
Revolving		1,556		1		187		188		1,744		1,445		9		238		247		1,692
Total commercial real estate		35,476		661		2,671		3,332		38,808		33,870		1,773		3,668		5,441		39,311

Residential mortgages (b)
Originated in 2021		21,045		–		–		–		21,045		–		–		–		–		–
Originated in 2020		18,043		1		5		6		18,049		23,262		1		3		4		23,266
Originated in 2019		8,508		1		18		19		8,527		13,969		1		17		18		13,987
Originated in 2018		3,492		–		21		21		3,513		5,670		1		22		23		5,693
Originated in 2017		4,494		–		21		21		4,515		6,918		1		24		25		6,943
Originated prior to 2017		19,002		–		302		302		19,304		25,921		2		342		344		26,265
Revolving		1		–		–		–		1		1		–		–		–		1
Total residential mortgages		74,585		2		367		369		74,954		75,741		6		408		414		76,155

Credit card (c)		21,990		–		147		147		22,137		22,149		–		197		197		22,346

Other retail
Originated in 2021		17,248		–		3		3		17,251		–		–		–		–		–
Originated in 2020		13,318		–		8		8		13,326		17,589		–		7		7		17,596
Originated in 2019		8,300		–		16		16		8,316		11,605		–		23		23		11,628
Originated in 2018		4,332		–		16		16		4,348		6,814		–		27		27		6,841
Originated in 2017		2,130		–		11		11		2,141		3,879		–		22		22		3,901
Originated prior to 2017		2,259		–		16		16		2,275		3,731		–		29		29		3,760
Revolving		12,400		–		123		123		12,523		12,647		–		110		110		12,757
Revolving converted to term		473		–		43		43		516		503		–		38		38		541
Total other retail		60,460		–		236		236		60,696		56,768		–		256		256		57,024
Total loans		$291,033		$2,318		$4,257		$ 6,575		$297,608		$285,957		$4,278		$7,472		$11,750		$297,707
Total outstanding commitments		$645,955		$4,606		$6,342		$10,948		$656,903		$627,606		$8,772		$9,374		$18,146		$645,752

Note:

Year of origination is based on the origination date of a loan, or for existing loans the date when the maturity date, pricing or commitment amount is amended.

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

(b)

At September 30, 2021, $1.5 billion of GNMA loans 90 days or more past due and $1.2 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 $1.8 billion and $1.4 billion at December 31, 2020, respectively.

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

Summary of Loans Modified as TDRs

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


	2021						2020
(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		506		$ 46		$ 47		699		$ 262		$ 159
Commercial real estate		14		12		13		51		105		81
Residential mortgages		171		54		54		374		108		108
Credit card		6,656		38		38		4,699		27		27
Other retail		382		9		9		508		26		26
Total loans, excluding loans purchased from GNMA mortgage pools		7,729		159		161		6,331		528		401
Loans purchased from GNMA mortgage pools		802		113		118		735		106		105
Total loans		8,531		$ 272		$279		7,066		$ 634		$ 506
Nine Months Ended September 30
Commercial		1,736		$ 133		$120		2,837		$ 505		$ 375
Commercial real estate		100		136		125		116		165		141
Residential mortgages		867		299		298		585		142		142
Credit card		17,492		102		103		19,282		110		112
Other retail		2,175		64		58		1,537		50		48
Total loans, excluding loans purchased from GNMA mortgage pools		22,370		734		704		24,357		972		818
Loans purchased from GNMA mortgage pools		1,839		267		276		3,648		514		503
Total loans		24,209		$1,001		$980		28,005		$1,486		$1,321

Summary of Loans Modified as TDRs in the Past Twelve Months that have Subsequently Defaulted

The following table provides a summary of TDR loans that defaulted (fully or partially

charged-off

or became 90 days or more past due) for the periods presented, that were modified as TDRs within 12 months previous to default:


	2021				2020
(Dollars in Millions)	Number of Loans		Amount Defaulted		Number of Loans		Amount Defaulted
Three Months Ended September 30
Commercial		244		$ 5		305		$ 21
Commercial real estate		4		1		5		8
Residential mortgages		20		2		5		2
Credit card		2,069		12		1,363		8
Other retail		124		2		55		1
Total loans, excluding loans purchased from GNMA mortgage pools		2,461		22		1,733		40
Loans purchased from GNMA mortgage pools		29		5		72		9
Total loans		2,490		$27		1,805		$ 49
Nine Months Ended September 30
Commercial		856		$29		922		$ 49
Commercial real estate		16		7		33		24
Residential mortgages		47		5		23		4
Credit card		5,638		32		5,169		27
Other retail		595		10		245		3
Total loans, excluding loans purchased from GNMA mortgage pools		7,152		83		6,392		107
Loans purchased from GNMA mortgage pools		102		15		427		57
Total loans		7,254		$98		6,819		$164