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Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2023

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	%

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 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.

Summary of Financing Receivable Credit Losses Charged-off by Portfolio Class


(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.

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

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.

summary of the Company's internal credit quality rating of loans by portfolio class

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.

Loans modified by class and modification type

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.

Effects of Loan Modifications Made During the Period

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.

Loans Modified by Class and Delinquency Status

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.

Summary Of Loans That Defaulted And Modified

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.

Summary of Loans Modified as TDRs

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

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

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