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Loans and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2023

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


	September 30, 2023					December 31, 2022
(Dollars in Millions)	Amount		Percent of Total			Amount		Percent of Total
Commercial
Commercial	$	129,040		34.4	%	$	131,128		33.8	%
Lease financing		4,279		1.1			4,562		1.2
Total commercial		133,319		35.5			135,690		35.0
Commercial Real Estate
Commercial mortgages		42,473		11.3			43,765		11.3
Construction and development		11,658		3.1			11,722		3.0
Total commercial real estate		54,131		14.4			55,487		14.3
Residential Mortgages
Residential mortgages		107,875		28.8			107,858		27.8
Home equity loans, first liens		7,180		1.9			7,987		2.0
Total residential mortgages		115,055		30.7			115,845		29.8
Credit Card		27,080		7.2			26,295		6.8
Other Retail
Retail leasing		4,271		1.2			5,519		1.4
Home equity and second mortgages		12,879		3.4			12,863		3.3
Revolving credit		3,766		1.0			3,983		1.0
Installment		14,145		3.8			14,592		3.8
Automobile		10,588		2.8			17,939		4.6
Total other retail		45,649		12.2			54,896		14.1
Total loans	$	375,234		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 September 30 (Dollars in Millions)	Commercial			Commercial Real Estate			Residential Mortgages			Credit Card			Other Retail			Total Loans
2023
Balance at beginning of period		$2,209			$1,473			$899			$2,185			$929			$7,695
Add
Provision for credit losses		(14	)		266			(49	)		285			27			515
Deduct
Loans charged-off		110			51			1			259			87			508
Less recoveries of loans charged-off		(18	)		(2	)		(4	)		(39	)		(25	)		(88	)
Net loan charge-offs (recoveries)		92			49			(3	)		220			62			420
Balance at end of period		$2,103			$1,690			$853			$2,250			$894			$7,790
2022
Balance at beginning of period		$1,896			$973			$658			$1,746			$982			$6,255
Add
Provision for credit losses		97			(7	)		38			222			12			362
Deduct
Loans charged-off		56			—			2			161			56			275
Less recoveries of loans charged-off		(29	)		(6	)		(7	)		(42	)		(29	)		(113	)
Net loan charge-offs (recoveries)		27			(6	)		(5	)		119			27			162
Balance at end of period		$1,966			$972			$701			$1,849			$967			$6,455


Nine Months Ended September 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		169			430			68			851			245			1,763
Deduct
Loans charged-off		283			205			126			716			402			1,732
Less recoveries of loans charged-off		(54	)		(13	)		(16	)		(122	)		(85	)		(290	)
Net loan charge-offs (recoveries)		229			192			110			594			317			1,442
Balance at end of period		$2,103			$1,690			$853			$2,250			$894			$7,790
2022
Balance at beginning of period		$1,849			$1,123			$565			$1,673			$945			$6,155
Add
Provision for credit losses		206			(156	)		116			525			94			785
Deduct
Loans charged-off		164			10			9			481			167			831
Less recoveries of loans charged-off		(75	)		(15	)		(29	)		(132	)		(95	)		(346	)
Net loan charge-offs (recoveries)		89			(5	)		(20	)		349			72			485
Balance at end of period		$1,966			$972			$701			$1,849			$967			$6,455

(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

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 September 30, 2023
Originated in 2023		$22		$20		$—		$—		$5		$47
Originated in 2022		11		—		—		—		17		28
Originated in 2021		17		27		—		—		13		57
Originated in 2020		4		—		—		—		6		10
Originated in 2019		4		—		—		—		6		10
Originated prior to 2019		10		4		1		—		13		28
Revolving		42		—		—		259		27		328
Total charge-offs		$110		$51		$1		$259		$87		$508

Nine Months Ended September 30, 2023
Originated in 2023		$29		$20		$—		$—		$51		$100
Originated in 2022		51		88		—		—		116		255
Originated in 2021		25		44		5		—		70		144
Originated in 2020		14		—		8		—		31		53
Originated in 2019		11		3		16		—		26		56
Originated prior to 2019		38		50		97		—		26		211
Revolving		115		—		—		716		54		885
Revolving converted to term		—		—		—		—		28		28
Total charge-offs		$283		$205		$126		$716		$402		$1,732

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

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, 2023
Commercial	$	132,678		$315		$70		$256		$133,319
Commercial real estate		53,369		40		1		721		54,131
Residential mortgages (a)		114,641		131		122		161		115,055
Credit card		26,399		365		316		—		27,080
Other retail		45,206		254		60		129		45,649
Total loans	$	372,293		$1,105		$569		$1,267		$375,234
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 September 30, 2023, $558 million of loans 30–89 days past due and $2.0 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 September 30, 2023 and December 31, 2022, had an associated allowance for credit losses. The Company recognized interest income on nonperforming loans of $5 million and $4 million for the three months ended September 30, 2023 and 2022, respectively, and $12 million for the nine months ended September 30, 2023 and 2022.

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:


	September 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		$ 35,634		$ 725		$ 710		$ 1,435		$ 37,069		$ —		$ —		$ —		$ —		$ —
Originated in 2022		45,120		502		293		795		45,915		61,229		245		315		560		61,789
Originated in 2021		10,681		82		176		258		10,939		26,411		159		78		237		26,648
Originated in 2020		3,476		47		157		204		3,680		7,049		68		138		206		7,255
Originated in 2019		1,653		5		113		118		1,771		3,962		51		210		261		4,223
Originated prior to 2019		4,293		42		110		152		4,445		8,986		64		129		193		9,179
Revolving (b)		28,020		346		1,134		1,480		29,500		25,888		344		364		708		26,596
Total commercial		128,877		1,749		2,693		4,442		133,319		133,525		931		1,234		2,165		135,690

Commercial real estate
Originated in 2023		7,676		367		1,749		2,116		9,792		—		—		—		—		—
Originated in 2022		12,594		211		1,339		1,550		14,144		14,527		206		519		725		15,252
Originated in 2021		9,951		303		386		689		10,640		13,565		171		99		270		13,835
Originated in 2020		4,088		41		112		153		4,241		6,489		97		117		214		6,703
Originated in 2019		5,149		105		381		486		5,635		6,991		251		304		555		7,546
Originated prior to 2019		6,596		53		369		422		7,018		9,639		138		875		1,013		10,652
Revolving		2,627		3		31		34		2,661		1,489		—		10		10		1,499
Total commercial real estate		48,681		1,083		4,367		5,450		54,131		52,700		863		1,924		2,787		55,487

Residential mortgages (c)
Originated in 2023		8,056		—		1		1		8,057		—		—		—		—		—
Originated in 2022		29,113		—		9		9		29,122		28,452		—		—		—		28,452
Originated in 2021		36,675		1		9		10		36,685		39,527		—		7		7		39,534
Originated in 2020		14,995		—		10		10		15,005		16,556		—		8		8		16,564
Originated in 2019		5,981		—		17		17		5,998		7,222		—		18		18		7,240
Originated prior to 2019		19,937		1		250		251		20,188		23,658		—		397		397		24,055
Total residential mortgages		114,757		2		296		298		115,055		115,415		—		430		430		115,845

Credit card (d)		26,765		—		315		315		27,080		26,063		—		232		232		26,295

Other retail
Originated in 2023		4,033		—		1		1		4,034		—		—		—		—		—
Originated in 2022		5,990		—		9		9		5,999		9,563		—		6		6		9,569
Originated in 2021		11,274		—		14		14		11,288		15,352		—		12		12		15,364
Originated in 2020		5,212		—		9		9		5,221		7,828		—		11		11		7,839
Originated in 2019		2,012		—		8		8		2,020		3,418		—		13		13		3,431
Originated prior to 2019		2,422		—		14		14		2,436		3,689		—		31		31		3,720
Revolving		13,748		—		98		98		13,846		14,029		—		98		98		14,127
Revolving converted to term		756		—		49		49		805		800		—		46		46		846
Total other retail		45,447		—		202		202		45,649		54,679		—		217		217		54,896
Total loans		$364,527		$2,834		$7,873		$10,707		$ 375,234		$382,382		$1,794		$4,037		$5,831		$388,213
Total outstanding commitments		$765,095		$3,866		$9,635		$13,501		$778,596		$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 September 30, 2023, $2.0 billion of GNMA loans 90 days or more past due and $963 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 September 30, 2023, which were modified during the three months and nine months ended September 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 September 30, 2023
Commercial	$	16	$	—	$	98	$	—	$	114		.1	%
Commercial real estate		—		—		426		9		435		.8
Residential mortgages (b)		—		58		6		1		65		.1
Credit card		117		—		—		—		117		.4
Other retail		2		12		39		—		53		.1
Total loans, excluding loans purchased from GNMA mortgage pools		135		70		569		10		784		.2
Loans purchased from GNMA mortgage pools (b)		—		455		75		127		657		.6

Total loans	$	135	$	525	$	644	$	137	$	1,441		.4	%
Nine Months Ended September 30, 2023
Commercial	$	36	$	—	$	213	$	—	$	249		.2	%
Commercial real estate		—		—		527		9		536		1.0
Residential mortgages (b)		—		221		21		17		259		.2
Credit card		268		1		—		—		269		1.0
Other retail		6		20		113		2		141		.3
Total loans, excluding loans purchased from GNMA mortgage pools		310		242		874		28		1,454		.4
Loans purchased from GNMA mortgage pools (b)		—		1,020		211		261		1,492		1.3

Total loans	$	310	$	1,262	$	1,085	$	289	$	2,946		.8	%

(a)

Includes $126 million of total loans receiving a payment delay and term extension, $9 million of total loans receiving an interest rate reduction and term extension and $2 million of total loans receiving an interest rate reduction, payment delay and term extension for three months ended September 30, 2023. Includes $268 million of total loans receiving a payment delay and term extension, $14 million of total loans receiving an interest rate reduction and term extension and $7 million of total loans receiving an interest rate reduction, payment delay and term extension for nine months ended September 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 nine months ended September 30, 2023:


(Dollars in Millions)	Weighted-Average Interest Rate Reduction			Weighted-Average Months of Term Extension
Three Months Ended September 30, 2023
Commercial		21.5	%		13
Commercial real estate		—			11
Residential mortgages		.9			99
Credit card		15.4			—
Other retail		9.1			2
Loans purchased from GNMA mortgage pools		.5			121
Nine Months Ended September 30, 2023
Commercial		21.0	%		10
Commercial real estate		—			10
Residential mortgages		1.3			109
Credit card		15.1			—
Other retail		7.8			4
Loans purchased from GNMA mortgage pools		.6			98

Note: The weighted-average payment deferral for all portfolio classes was less than $1 million for both the three months and nine months ended September 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 September 30, 2023, which were modified during the nine months ended September 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	$	223	$	11	$	14	$	248
Commercial real estate		347		1		189		537
Residential mortgages (a)		1,089		15		14		1,118
Credit card		192		54		22		268
Other retail		106		15		7		128

Total loans	$	1,957	$	96	$	246	$	2,299

(a)

At September 30, 2023, $263 million of loans

30-89

days past due and $64 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 nine months ended September 30, 2023.


(Dollars in Millions)	Interest Rate Reduction		Payment Delay		Term Extension		Multiple Modifications (a)
Three Months Ended September 30, 2023
Commercial	$	2	$	—	$	—	$	—
Residential mortgages		—		4		1		—
Credit card		10		—		—		—
Other retail		—		—		4		—
Total loans, excluding loans purchased from GNMA mortgage pools		12		4		5		—
Loans purchased from GNMA mortgage pools		—		20		9		6

Total loans	$	12	$	24	$	14	$	6
Nine Months Ended September 30, 2023
Commercial	$	3	$	—	$	—	$	—
Residential mortgages		—		5		1		1
Credit card		15		—		—		—
Other retail		—		—		5		—
Total loans, excluding loans purchased from GNMA mortgage pools		18		5		6		1
Loans purchased from GNMA mortgage pools		—		23		10		7

Total loans	$	18	$	28	$	16	$	8

(a)

Represents loans receiving a payment delay and term extension for three months ended September 30, 2023. Includes $7 million of total loans receiving a payment delay and term extension and $

million of total loans receiving an interest rate reduction, payment delay and term extension for the nine months ended September 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 September 30, 2022
Commercial		552	$	34	$	35
Commercial real estate		24		23		23
Residential mortgages		283		84		85
Credit card		11,632		63		64
Other retail		479		14		13
Total loans, excluding loans purchased from GNMA mortgage pools		12,970		218		220
Loans purchased from GNMA mortgage pools		421		61		62

Total loans		13,391	$	279	$	282
Nine Months Ended September 30, 2022
Commercial		1,567	$	122	$	108
Commercial real estate		61		45		42
Residential mortgages		1,489		418		417
Credit card		29,667		161		163
Other retail		1,963		75		70
Total loans, excluding loans purchased from GNMA mortgage pools		34,747		821		800
Loans purchased from GNMA mortgage pools		1,164		163		167

Total loans		35,911	$	984	$	967

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 September 30, 2022
Commercial		186	$	15
Commercial real estate		5		6
Residential mortgages		67		8
Credit card		2,117		11
Other retail		73		1
Total loans, excluding loans purchased from GNMA mortgage pools		2,448		41
Loans purchased from GNMA mortgage pools		113		17

Total loans		2,561	$	58
Nine Months Ended September 30, 2022
Commercial		575	$	21
Commercial real estate		10		8
Residential mortgages		180		18
Credit card		5,478		29
Other retail		216		3
Total loans, excluding loans purchased from GNMA mortgage pools		6,459		79
Loans purchased from GNMA mortgage pools		282		42

Total loans		6,741	$	121