Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Loans and Allowance for Credit Losses

 Note 5    Loans and Allowance for Credit Losses

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

	June 30, 2023					December 31, 2022
(Dollars in Millions)	Amount		Percent of Total			Amount		Percent of Total
Commercial
Commercial	$	132,374		34.9	%	$	131,128		33.8	%
Lease financing		4,401		1.2			4,562		1.2
Total commercial		136,775		36.1			135,690		35.0
Commercial Real Estate
Commercial mortgages		42,775		11.3			43,765		11.3
Construction and development		11,582		3.0			11,722		3.0
Total commercial real estate		54,357		14.3			55,487		14.3
Residential Mortgages
Residential mortgages		107,017		28.2			107,858		27.8
Home equity loans, first liens		7,432		2.0			7,987		2.0
Total residential mortgages		114,449		30.2			115,845		29.8
Credit Card		26,626		7.0			26,295		6.8
Other Retail
Retail leasing		4,637		1.2			5,519		1.4
Home equity and second mortgages		12,799		3.4			12,863		3.3
Revolving credit		3,797		1.0			3,983		1.0
Installment		14,452		3.8			14,592		3.8
Automobile		11,536		3.0			17,939		4.6
Total other retail		47,221		12.4			54,896		14.1
Total loans	$	379,428		100.0	%	$	388,213		100.0	%

The Company had loans of $124.6 billion at June 30, 2023, and $134.6 billion at December 31, 2022, pledged at the Federal Home Loan Bank, and loans of $87.9 billion at June 30, 2023, and $85.8 billion at December 31, 2022, 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. Purchased loans are recorded at fair value at the date of purchase. Net unearned interest and deferred fees and costs on originated loans and unamortized premiums and discounts on purchased loans amounted to $2.9 billion at June 30, 2023 and $3.1 billion at December 31, 2022. 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 loans. All other purchased loans are considered non-purchased credit deteriorated loans.

Allowance for Credit Losses 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 considers expected losses for the remaining lives of the applicable assets, inclusive of expected recoveries. 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.

Multiple economic scenarios are considered over a three-year reasonable and supportable forecast period, which includes increasing consideration of historical loss experience over 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 life of the portfolio. The economic scenarios are updated at least quarterly and are designed to provide a range of reasonable estimates, from better to worse than current expectations. Scenarios are weighted based on the Company’s expectation of economic conditions for the foreseeable future and reflect significant judgment and consideration of economic forecast uncertainty. 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 rates, real estate prices, gross domestic product levels, inflation, interest rates and corporate bonds spreads, 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. For each loan portfolio, including those loans modified under various loan modification programs, 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 at fair value less selling costs. Where loans do not exhibit similar risk characteristics, an individual analysis is performed to consider expected credit losses. 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 as appropriate. For smaller commercial loans collectively evaluated for impairment, historical loss experience is also incorporated into the allowance methodology applied to this category of loans.

The Company’s methodology for determining the appropriate allowance for credit losses also considers the imprecision inherent in the methodologies used and allocated to the various loan portfolios. 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 the 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 for each loan portfolio.

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 specific loan portfolio, as well as the entire loan portfolio, as the entire allowance for credit losses is available for the entire loan portfolio.

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

Three Months Ended June 30 (Dollars in Millions)	Commercial			Commercial Real Estate			Residential Mortgages			Credit Card			Other Retail			Total Loans
2023
Balance at beginning of period		$2,180			$1,359			$947			$2,112			$925			$7,523
Add
Provision for credit losses		119			140			66			272			224			821
Deduct
Loans charged-off		110			31			121			242			251			755
Less recoveries of loans charged-off		(20	)		(5	)		(7	)		(43	)		(31	)		(106	)
Net loan charge-offs (recoveries)		90			26			114			199			220			649
Balance at end of period		$2,209			$1,473			$899			$2,185			$929			$7,695
2022
Balance at beginning of period		$1,836			$1,074			$600			$1,639			$956			$6,105
Add
Provision for credit losses		90			(95	)		49			225			42			311
Deduct
Loans charged-off		53			9			2			162			50			276
Less recoveries of loans charged-off		(23	)		(3	)		(11	)		(44	)		(34	)		(115	)
Net loan charge-offs (recoveries)		30			6			(9	)		118			16			161
Balance at end of period		$1,896			$973			$658			$1,746			$982			$6,255

Six Months Ended June 30 (Dollars in Millions)	Commercial			Commercial Real Estate			Residential Mortgages			Credit Card			Other Retail			Total Loans
2023
Balance at beginning of period		$2,163			$1,325			$926			$2,020			$970			$7,404
Add
Change in accounting principle (a)		—			—			(31	)		(27	)		(4	)		(62	)
Allowance for acquired credit losses (b)		—			127			—			—			—			127
Provision for credit losses		183			164			117			566			218			1,248
Deduct
Loans charged-off		173			154			125			457			315			1,224
Less recoveries of loans charged-off		(36	)		(11	)		(12	)		(83	)		(60	)		(202	)
Net loan charge-offs (recoveries)		137			143			113			374			255			1,022
Balance at end of period		$2,209			$1,473			$899			$2,185			$929			$7,695
2022
Balance at beginning of period		$1,849			$1,123			$565			$1,673			$945			$6,155
Add
Provision for credit losses		109			(149	)		78			303			82			423
Deduct
Loans charged-off		108			10			7			320			111			556
Less recoveries of loans charged-off		(46	)		(9	)		(22	)		(90	)		(66	)		(233	)
Net loan charge-offs (recoveries)		62			1			(15	)		230			45			323
Balance at end of period		$1,896			$973			$658			$1,746			$982			$6,255

(a) Effective January 1, 2023, the Company adopted accounting guidance which removed the separate recognition and measurement of troubled debt restructurings.

(b) Represents allowance for credit deteriorated and charged-off loans acquired from MUB.

The increase in the allowance for credit losses at June 30, 2023, compared with December 31, 2022, was primarily driven by increasing economic uncertainty and normalizing credit losses as well as adjustments made to the purchase accounting estimate for certain acquired loans.

The following table provides a summary of loans charged-off by portfolio class and year of origination:

(Dollars in Millions)	Commercial		Commercial Real Estate (a)		Residential Mortgages (b)		Credit Card		Other Retail (c)		Total Loans
Three Months Ended June 30, 2023
Originated in 2023		$ 7		$—		$—		$—		$ 46		$ 53
Originated in 2022		34		—		—		—		89		123
Originated in 2021		4		17		5		—		46		72
Originated in 2020		6		—		8		—		19		33
Originated in 2019		2		—		15		—		13		30
Originated prior to 2019		17		14		93		—		5		129
Revolving		40		—		—		242		5		287
Revolving converted to term		—		—		—		—		28		28
Total charge-offs		$110		$31		$121		$242		$251		$755
Six Months Ended June 30, 2023
Originated in 2023		$7		$—		$—		$—		$46		$53
Originated in 2022		40		88		—		—		99		227
Originated in 2021		8		17		5		—		57		87
Originated in 2020		10		—		8		—		25		43
Originated in 2019		7		3		16		—		20		46
Originated prior to 2019		28		46		96		—		13		183
Revolving		73		—		—		457		27		557
Revolving converted to term		—		—		—		—		28		28
Total charge-offs		$173		$154		$125		$457		$315		$1,224

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) Includes $91 million of charge-offs in the first quarter of 2023 related to uncollectible amounts on acquired loans.

(b) Includes $117 million of charge-offs related to balance sheet repositioning and capital management actions taken in the second quarter of 2023.

(c) Includes $192 million of charge-offs related to balance sheet repositioning and capital management actions taken in the second quarter of 2023.

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 portfolio 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 charged down if unsecured by collateral 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.

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
June 30, 2023
Commercial	$	136,136		$   347		$  61		$   231		$136,775
Commercial real estate		53,810		72		1		474		54,357
Residential mortgages (a)		114,028		128		86		207		114,449
Credit card		26,048		307		271		—		26,626
Other retail		46,802		235		55		129		47,221
Total loans	$	376,824		$1,089		$474		$1,041		$379,428
December 31, 2022
Commercial	$	135,077		$   350		$  94		$   169		$135,690
Commercial real estate		55,057		87		5		338		55,487
Residential mortgages (a)		115,224		201		95		325		115,845
Credit card		25,780		283		231		1		26,295
Other retail		54,382		309		66		139		54,896
Total loans	$	385,520		$1,230		$491		$   972		$388,213

(a) At June 30, 2023, $556 million of loans 30–89 days past due and $2.1 billion of loans 90 days or more past due purchased and that could be purchased from Government National Mortgage Association (“GNMA”) mortgage pools under delinquent loan repurchase options 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 $647 million and $2.2 billion at December 31, 2022, respectively.

(b) Substantially all nonperforming loans at June 30, 2023 and December 31, 2022, had an associated allowance for credit losses. The Company recognized interest income on nonperforming loans of $3 million and $5 million for the three months ended June 30, 2023 and 2022, respectively, and $7 million and $8 million for the six months ended June 30, 2023 and 2022, respectively.

At June 30, 2023, the amount of foreclosed residential real estate held by the Company, and included in other real estate owned (“OREO”), was $25 million, compared with $23 million at December 31, 2022. These amounts excluded $56 million and $54 million at June 30, 2023 and December 31, 2022, 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 June 30, 2023 and December 31, 2022, was $928 million and $1.1 billion, respectively, of which $683 million and $830 million, respectively, related to loans purchased and that could be purchased from Government National Mortgage Association (“GNMA”) mortgage pools under delinquent loan repurchase options whose repayments are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs.

The Company classifies its loan portfolio classes 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 the Company’s internal credit quality rating of loans by portfolio class and year of origination:

	June 30, 2023										December 31, 2022
			Criticized										Criticized
(Dollars in Millions)	Pass		Special Mention		Classified (a)		Total Criticized		Total		Pass		Special Mention		Classified (a)		Total Criticized		Total
Commercial
Originated in 2023		$  29,444		$     441		$   319		$     760		$  30,204		$          —		$       —		$       —		$         —		$          —
Originated in 2022		51,218		547		306		853		52,071		61,229		245		315		560		61,789
Originated in 2021		13,287		154		183		337		13,624		26,411		159		78		237		26,648
Originated in 2020		3,764		51		179		230		3,994		7,049		68		138		206		7,255
Originated in 2019		1,852		15		181		196		2,048		3,962		51		210		261		4,223
Originated prior to 2019		4,715		43		103		146		4,861		8,986		64		129		193		9,179
Revolving (b)		28,735		216		1,022		1,238		29,973		25,888		344		364		708		26,596
Total commercial		133,015		1,467		2,293		3,760		136,775		133,525		931		1,234		2,165		135,690
Commercial real estate
Originated in 2023		5,791		302		1,055		1,357		7,148		—		—		—		—		—
Originated in 2022		14,037		211		1,147		1,358		15,395		14,527		206		519		725		15,252
Originated in 2021		10,998		434		445		879		11,877		13,565		171		99		270		13,835
Originated in 2020		4,467		23		154		177		4,644		6,489		97		117		214		6,703
Originated in 2019		5,438		169		408		577		6,015		6,991		251		304		555		7,546
Originated prior to 2019		7,321		27		429		456		7,777		9,639		138		875		1,013		10,652
Revolving		1,467		—		34		34		1,501		1,489		—		10		10		1,499
Total commercial real estate		49,519		1,166		3,672		4,838		54,357		52,700		863		1,924		2,787		55,487
Residential mortgages (c)
Originated in 2023		6,040		—		—		—		6,040		—		—		—		—		—
Originated in 2022		29,081		—		7		7		29,088		28,452		—		—		—		28,452
Originated in 2021		37,015		—		9		9		37,024		39,527		—		7		7		39,534
Originated in 2020		15,276		—		10		10		15,286		16,556		—		8		8		16,564
Originated in 2019		6,106		—		18		18		6,124		7,222		—		18		18		7,240
Originated prior to 2019		20,626		—		261		261		20,887		23,658		—		397		397		24,055
Total residential mortgages		114,144		—		305		305		114,449		115,415		—		430		430		115,845
Credit card (d)		26,355		—		271		271		26,626		26,063		—		232		232		26,295
Other retail
Originated in 2023		2,700		—		1		1		2,701		—		—		—		—		—
Originated in 2022		6,419		—		8		8		6,427		9,563		—		6		6		9,569
Originated in 2021		12,281		—		11		11		12,292		15,352		—		12		12		15,364
Originated in 2020		5,999		—		9		9		6,008		7,828		—		11		11		7,839
Originated in 2019		2,300		—		8		8		2,308		3,418		—		13		13		3,431
Originated prior to 2019		2,689		—		14		14		2,703		3,689		—		31		31		3,720
Revolving		13,864		—		97		97		13,961		14,029		—		98		98		14,127
Revolving converted to term		773		—		48		48		821		800		—		46		46		846
Total other retail		47,025		—		196		196		47,221		54,679		—		217		217		54,896
Total loans		$370,058		$2,633		$6,737		$  9,370		$379,428		$382,382		$1,794		$4,037		$5,831		$388,213
Total outstanding commitments		$768,418		$3,811		$8,265		$12,076		$780,494		$772,804		$2,825		$5,041		$7,866		$780,670

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) Includes an immaterial amount of revolving converted to term loans.

(c) At June 30, 2023, $2.1 billion of GNMA loans 90 days or more past due and $579 million of modified 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 $2.2 billion and $1.0 billion at December 31, 2022, respectively.

(d) Predominately all credit card loans are considered revolving loans. Includes an immaterial amount of revolving converted to term loans.

Loan Modifications 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. The Company recognizes interest on modified loans if full collection of contractual principal and interest is expected. The effects of modifications on credit loss expectations, such as improved payment capacity, longer expected lives and other factors, are considered when measuring the allowance for credit losses. Modification performance, including redefault rates and how these compare to historical losses, are also considered. Modifications generally do not result in significant changes to the Company’s allowance for credit losses.

The following table provides a summary of loan balances at June 30, 2023, which were modified during the three months and six months ended June 30, 2023, by portfolio class and modification granted:

(Dollars in Millions)	Interest Rate Reduction		Payment Delay		Term Extension		Multiple Modifications (a)		Total Modifications		Percent of Class Total
Three Months Ended June 30, 2023
Commercial	$	13	$	—	$	136	$	—	$	149		.1	%
Commercial real estate		—		—		101		—		101		.2
Residential mortgages (b)		—		79		6		4		89		.1
Credit card		91		—		—		—		91		.3
Other retail		2		14		39		1		56		.1
Total loans, excluding loans purchased from GNMA mortgage pools		106		93		282		5		486		.1
Loans purchased from GNMA mortgage pools (b)		—		453		86		98		637		.6
Total loans	$	106	$	546	$	368	$	103	$	1,123		.3	%
Six Months Ended June 30, 2023
Commercial	$	159	$	—	$	159	$	—	$	318		.2	%
Commercial real estate		—		—		109		—		109		.2
Residential mortgages (b)		—		202		15		16		233		.2
Credit card		174		—		—		—		174		.7
Other retail		4		18		81		3		106		.2
Total loans, excluding loans purchased from GNMA mortgage pools		337		220		364		19		940		.2
Loans purchased from GNMA mortgage pools (b)		—		649		147		143		939		.8
Total loans	$	337	$	869	$	511	$	162	$	1,879		.5	%

(a) Includes $100 million of total loans receiving a payment delay and term extension, $2 million of total loans receiving an interest rate reduction and term extension and $1 million of total loans receiving an interest rate reduction, payment delay and term extension for three months ended June 30, 2023. Includes $151 million of total loans receiving a payment delay and term extension, $5 million of total loans receiving an interest rate reduction and term extension and $6 million of total loans receiving an interest rate reduction, payment delay and term extension for six months ended June 30, 2023.

(b) Percent of class total amounts expressed as a percent of total residential mortgage loan balances.

Loan modifications included in the table above exclude trial period arrangements offered to customers and secured loans to consumer borrowers that have had debt discharged through bankruptcy where the borrower has not reaffirmed the debt during the periods presented. At June 30, 2023, the balance of loans modified in trial period arrangements was $93 million, while the balance of secured loans to consumer borrowers that have had debt discharged through bankruptcy was not material.

The following table summarizes the effects of loan modifications made to borrowers on loans modified during the three months and six months ended June 30, 2023:

(Dollars in Millions)	Weighted-Average Interest Rate Reduction			Weighted-Average Months of Term Extension
Three Months Ended June 30, 2023
Commercial		21.3	%		8
Commercial real estate		—			10
Residential mortgages		1.4			89
Credit card		16.4			—
Other retail		8.6			108
Loans purchased from GNMA mortgage pools		.7			87
Six Months Ended June 30, 2023
Commercial		3.3	%		7
Commercial real estate		—			10
Residential mortgages		1.4			111
Credit card		16.2			—
Other retail		7.3			134
Loans purchased from GNMA mortgage pools		.7			79

Note: The weighted-average payment deferral for all portfolio classes was less than $1 million for both the three months and six months ended June 30, 2023. Forbearance payments are required to be paid at the end of the original term loan.

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. 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 provide an interest rate reduction.

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. These modifications 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 modification 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.

Credit card and other retail loan modifications are generally part of distinct modification 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.

Loans that receive a forbearance plan generally remain in default until they are no longer delinquent as the result of the payment of all past due amounts or the borrower receiving a term extension or modification. Therefore, loans only receiving forbearance plans are not included in the table below.

The following table provides a summary of loan balances at June 30, 2023, which were modified during the six months ended June 30, 2023, by portfolio class and delinquency status:

(Dollars in Millions)	Current		30-89 Days Past Due		90 Days or More Past Due		Total
Commercial	$	287	$	7	$	24	$	318
Commercial real estate		43		—		66		109
Residential mortgages (a)		668		11		13		692
Credit card		125		34		15		174
Other retail		68		3		4		75
Total loans	$	1,191	$	55	$	122	$	1,368

(a) At June 30, 2023, $95 million of loans 30-89 days past due and $20 million of loans 90 days or more past due purchased and that could be purchased from GNMA mortgage pools under delinquent loan repurchase options whose payments are insured by the Federal Housing administration or guaranteed by the United States Department of Veterans Affairs, were classified as current.

The following table provides a summary of loans that defaulted (fully or partially charged-off or became 90 days or more past due) that were modified during the six months ended June 30, 2023.

(Dollars in Millions)	Interest Rate Reduction		Payment Delay		Term Extension		Multiple Modifications (a)
Three Months Ended June 30, 2023
Commercial	$	1	$	—	$	—	$	—
Residential mortgages		—		1		—		1
Credit card		5		—		—		—
Other retail		—		2		1		—
Total loans, excluding loans purchased from GNMA mortgage pools		6		3		1		1
Loans purchased from GNMA mortgage pools		—		6		1		2
Total loans	$	6	$	9	$	2	$	3
Six Months Ended June 30, 2023
Commercial	$	1	$	—	$	—	$	—
Residential mortgages		—		1		—		1
Credit card		5		—		—		—
Other retail		—		2		1		—
Total loans, excluding loans purchased from GNMA mortgage pools		6		3		1		1
Loans purchased from GNMA mortgage pools		—		6		1		2
Total loans	$	6	$	9	$	2	$	3

(a) Includes $2 million of total loans receiving a payment delay and term extension and $1 million of total loans receiving an interest rate reduction, payment delay and term extension for three and six months ended June 30, 2023.

As of June 30, 2023, the Company had $144 million of commitments to lend additional funds to borrowers whose terms of their outstanding owed balances have been modified.

Prior Period Troubled Debt Restructuring Information

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

(Dollars in Millions)	Number of Loans		Pre-Modification Outstanding Loan Balance		Post-Modification Outstanding Loan Balance
Three Months Ended June 30, 2022
Commercial		506	$	50	$	41
Commercial real estate		28		11		9
Residential mortgages		366		106		106
Credit card		8,696		48		49
Other retail		756		24		20
Total loans, excluding loans purchased from GNMA mortgage pools		10,352		239		225
Loans purchased from GNMA mortgage pools		353		47		50
Total loans		10,705	$	286	$	275
Six Months Ended June 30, 2022
Commercial		1,015	$	88	$	73
Commercial real estate		37		22		19
Residential mortgages		1,206		334		332
Credit card		18,035		98		99
Other retail		1,484		61		57
Total loans, excluding loans purchased from GNMA mortgage pools		21,777		603		580
Loans purchased from GNMA mortgage pools		743		102		105
Total loans		22,520	$	705	$	685

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

(Dollars in Millions)	Number of Loans		Amount Defaulted
Three Months Ended June 30, 2022
Commercial		175	$	3
Commercial real estate		2		1
Residential mortgages		79		7
Credit card		1,727		9
Other retail		60		1
Total loans, excluding loans purchased from GNMA mortgage pools		2,043		21
Loans purchased from GNMA mortgage pools		120		17
Total loans		2,163	$	38
Six Months Ended June 30, 2022
Commercial		389	$	6
Commercial real estate		5		2
Residential mortgages		113		10
Credit card		3,361		18
Other retail		143		2
Total loans, excluding loans purchased from GNMA mortgage pools		4,011		38
Loans purchased from GNMA mortgage pools		169		25
Total loans		4,180	$	63