The Corporation has entered into long-term credit protection agreements with FNMA and FHLMC on loans totaling $10.0 billion and $9.0 billion at June 30, 2021 and December 31, 2020, providing full credit protection on residential mortgage loans that become severely delinquent. All of these loans are individually insured, and therefore the Corporation does not record an allowance for credit losses related to these loans.

Nonperforming Loans and Leases

Commercial nonperforming loans decreased to $1.9 billion at June 30, 2021 from $2.2 billion at December 31, 2020. Consumer nonperforming loans increased to $3.0 billion at June 30, 2021 from $2.7 billion at December 31, 2020 driven by consumer real estate deferral activity.

The following table presents the Corporation’s nonperforming loans and leases including nonperforming troubled debt restructurings (TDRs), and loans accruing past due 90 days or more at June 30, 2021 and December 31, 2020. Nonperforming loans held-for-sale (LHFS) are excluded from nonperforming loans and leases as they are recorded at either fair value or the lower of cost or fair value. For more information on the criteria for classification as nonperforming, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.



Credit Quality


	Nonperforming Loans and Leases						Accruing Past Due 90 Days or More (1)

(Dollars in millions)	June 30 2021			December 31 2020			June 30 2021			December 31 2020
Residential mortgage (2)	$	2,343		$	2,005		$	687		$	762
With no related allowance (3)	2,019			1,378			—			—
Home equity (2)	651			649			—			—
With no related allowance (3)	423			347			—			—
Credit Card	n/a			n/a			533			903
Direct/indirect consumer	50			71			15			33

Total consumer	3,044			2,725			1,235			1,698
U.S. commercial	1,060			1,243			172			228
Non-U.S. commercial	275			418			19			10
Commercial real estate	404			404			—			6
Commercial lease financing	81			87			24			25
U.S. small business commercial	43			75			69			115
Total commercial	1,863			2,227			284			384
Total nonperforming loans	$	4,907		$	4,952		$	1,519		$	2,082
Percentage of outstanding loans and leases	0.54		%	0.54		%	0.17		%	0.23		%

(1)For information on the Corporation's interest accrual policies and delinquency status for loan modifications related to the pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.

(2)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At June 30, 2021 and December 31, 2020 residential mortgage includes $501 million and $537 million of loans on which interest had been curtailed by the Federal Housing Administration (FHA), and therefore were no longer accruing interest, although principal was still insured, and $186 million and $225 million of loans on which interest was still accruing.

(3)Primarily relates to loans for which the estimated fair value of the underlying collateral less any costs to sell is greater than the amortized cost of the loans as of the reporting date.

n/a = not applicable

Credit Quality Indicators

The Corporation monitors credit quality within its Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments based on primary credit quality indicators. For more information on the portfolio segments, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K. Within the Consumer Real Estate portfolio segment, the primary credit quality indicators are refreshed loan-to-value (LTV) and refreshed Fair Isaac Corporation (FICO) score. Refreshed LTV measures the carrying value of the loan as a percentage of the value of the property securing the loan, refreshed quarterly. Home equity loans are evaluated using combined loan-to-value (CLTV), which measures the carrying value of the Corporation’s loan and available line of credit combined with any outstanding senior liens against the property as a percentage of the value of the property securing the loan, refreshed quarterly. FICO score measures the creditworthiness of the borrower based on the financial obligations of the borrower and the borrower’s credit history. FICO scores are typically refreshed quarterly or more frequently. Certain borrowers (e.g., borrowers that have had debts discharged in a

bankruptcy proceeding) may not have their FICO scores updated. FICO scores are also a primary credit quality indicator for the Credit Card and Other Consumer portfolio segment and the business card portfolio within U.S. small business commercial. Within the Commercial portfolio segment, loans are evaluated using the internal classifications of pass rated or reservable criticized as the primary credit quality indicators. The term reservable criticized refers to those commercial loans that are internally classified or listed by the Corporation as Special Mention, Substandard or Doubtful, which are asset quality categories defined by regulatory authorities. These assets have an elevated level of risk and may have a high probability of default or total loss. Pass rated refers to all loans not considered reservable criticized. In addition to these primary credit quality indicators, the Corporation uses other credit quality indicators for certain types of loans.

The following tables present certain credit quality indicators for the Corporation's Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments by class of financing receivables and year of origination for term loan balances at June 30, 2021, including revolving loans that converted to term loans without an additional credit decision after origination or through a TDR.



Residential Mortgage – Credit Quality Indicators By Vintage

















			Term Loans by Origination Year
(Dollars in millions)	Total as of June 30, 2021		2021		2020		2019		2018		2017		Prior
Total Residential Mortgage
Refreshed LTV
Less than or equal to 90 percent	$	198,103	$	44,858	$	55,361	$	30,311	$	9,583	$	14,423	$	43,567
Greater than 90 percent but less than or equal to 100 percent	2,790		1,021		1,238		275		46		33		177
Greater than 100 percent	912		385		260		84		22		17		144
Fully-insured loans	12,519		2,134		3,913		1,512		279		280		4,401
Total Residential Mortgage	$	214,324	$	48,398	$	60,772	$	32,182	$	9,930	$	14,753	$	48,289

Total Residential Mortgage
Refreshed FICO score
Less than 620	$	2,539	$	438	$	507	$	152	$	121	$	137	$	1,184
Greater than or equal to 620 and less than 680	5,002		791		1,277		565		338		333		1,698
Greater than or equal to 680 and less than 740	23,440		4,246		6,688		3,267		1,398		1,763		6,078
Greater than or equal to 740	170,824		40,789		48,387		26,686		7,794		12,240		34,928
Fully-insured loans	12,519		2,134		3,913		1,512		279		280		4,401
Total Residential Mortgage	$	214,324	$	48,398	$	60,772	$	32,182	$	9,930	$	14,753	$	48,289



Home Equity - Credit Quality Indicators

	Total		Home Equity Loans and Reverse Mortgages (1)		Revolving Loans		Revolving Loans Converted to Term Loans
(Dollars in millions)	June 30, 2021
Total Home Equity
Refreshed LTV
Less than or equal to 90 percent	$	29,884	$	1,857	$	20,266	$	7,761
Greater than 90 percent but less than or equal to 100 percent	236		98		62		76
Greater than 100 percent	349		125		86		138
Total Home Equity	$	30,469	$	2,080	$	20,414	$	7,975

Total Home Equity
Refreshed FICO score
Less than 620	$	974	$	246	$	217	$	511
Greater than or equal to 620 and less than 680	1,574		243		509		822
Greater than or equal to 680 and less than 740	5,027		517		2,559		1,951
Greater than or equal to 740	22,894		1,074		17,129		4,691
Total Home Equity	$	30,469	$	2,080	$	20,414	$	7,975

(1)Includes reverse mortgages of $1.4 billion and home equity loans of $717 million which are no longer originated.



Credit Card and Direct/Indirect Consumer – Credit Quality Indicators By Vintage










	Direct/Indirect
					Term Loans by Origination Year												Credit Card
(Dollars in millions)	Total Direct/ Indirect as of June 30, 2021		Revolving Loans		2021		2020		2019		2018		2017		Prior		Total Credit Card as of June 30, 2021		Revolving Loans		Revolving Loans Converted to Term Loans (1)
Refreshed FICO score
Less than 620	$	704	$	15	$	54	$	107	$	152	$	115	$	149	$	112	$	2,859	$	2,692	$	167
Greater than or equal to 620 and less than 680	2,031		16		528		502		402		212		201		170		8,293		8,087		206
Greater than or equal to 680 and less than 740	7,646		67		2,315		2,145		1,484		693		483		459		26,228		26,024		204
Greater than or equal to 740	36,196		101		8,352		10,544		8,439		4,046		2,384		2,330		38,219		38,170		49
Other internal credit metrics (2,3)	50,326		49,307		519		79		96		83		65		177		—		—		—
Total credit card and other consumer	$	96,903	$	49,506	$	11,768	$	13,377	$	10,573	$	5,149	$	3,282	$	3,248	$	75,599	$	74,973	$	626

(1)Represents TDRs that were modified into term loans.

(2)Other internal credit metrics may include delinquency status, geography or other factors.

(3)Direct/indirect consumer includes $49.3 billion of securities-based lending which is typically supported by highly liquid collateral with market value greater than or equal to the outstanding loan balance and therefore has minimal credit risk at June 30, 2021.



Commercial – Credit Quality Indicators By Vintage (1, 2)
			Term Loans
			Amortized Cost Basis by Origination Year

(Dollars in millions)	Total as of June 30, 2021		2021		2020		2019		2018		2017		Prior		Revolving Loans
U.S. Commercial
Risk ratings
Pass rated	$	277,504	$	25,307	$	25,782	$	28,019	$	13,523	$	12,219	$	27,464	$	145,190
Reservable criticized	13,616		294		1,342		1,696		2,192		661		1,485		5,946
Total U.S. Commercial	$	291,120	$	25,601	$	27,124	$	29,715	$	15,715	$	12,880	$	28,949	$	151,136

Non-U.S. Commercial
Risk ratings
Pass rated	$	94,717	$	11,442	$	11,854	$	8,529	$	5,739	$	3,445	$	3,071	$	50,637
Reservable criticized	3,433		285		395		644		397		331		367		1,014
Total Non-U.S. Commercial	$	98,150	$	11,727	$	12,249	$	9,173	$	6,136	$	3,776	$	3,438	$	51,651

Commercial Real Estate
Risk ratings
Pass rated	$	50,781	$	4,669	$	7,940	$	13,339	$	7,356	$	4,183	$	8,528	$	4,766
Reservable criticized	8,825		162		1,025		2,403		2,030		1,179		1,481		545
Total Commercial Real Estate	$	59,606	$	4,831	$	8,965	$	15,742	$	9,386	$	5,362	$	10,009	$	5,311

Commercial Lease Financing
Risk ratings
Pass rated	$	15,035	$	1,090	$	2,793	$	2,896	$	2,396	$	2,194	$	3,666	$	—
Reservable criticized	733		122		71		155		106		72		207		—
Total Commercial Lease Financing	$	15,768	$	1,212	$	2,864	$	3,051	$	2,502	$	2,266	$	3,873	$	—

U.S. Small Business Commercial (3)
Risk ratings
Pass rated	$	22,235	$	9,756	$	8,245	$	1,124	$	816	$	702	$	1,438	$	154
Reservable criticized	696		4		49		145		131		98		264		5
Total U.S. Small Business Commercial	$	22,931	$	9,760	$	8,294	$	1,269	$	947	$	800	$	1,702	$	159
Total	$	487,575	$	53,131	$	59,496	$	58,950	$	34,686	$	25,084	$	47,971	$	208,257

(1) Excludes $6.3 billion of loans accounted for under the fair value option at June 30, 2021.

(2) Includes $40 million of loans that converted from revolving to term loans.

(3) Excludes U.S. Small Business Card loans of $6.9 billion. Refreshed FICO scores for this portfolio are $193 million for less than 620; $555 million for greater than or equal to 620 and less than 680; $1.8 billion for greater than or equal to 680 and less than 740; and $4.4 billion greater than or equal to 740.

The following tables present certain credit quality indicators for the Corporation's Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments by class of financing receivables and year of origination for term loan balances at December 31, 2020, including revolving loans that converted to term loans without an additional credit decision after origination or through a TDR.



Residential Mortgage – Credit Quality Indicators By Vintage




































			Term Loans by Origination Year
(Dollars in millions)	Total as of December 31, 2020		2020		2019		2018		2017		2016		Prior
Total Residential Mortgage
Refreshed LTV
Less than or equal to 90 percent	$	207,389	$	68,907	$	43,771	$	14,658	$	21,589	$	22,967	$	35,497
Greater than 90 percent but less than or equal to 100 percent	3,138		1,970		684		128		70		96		190
Greater than 100 percent	1,210		702		174		47		39		37		211
Fully-insured loans	11,818		3,826		2,014		370		342		1,970		3,296
Total Residential Mortgage	$	223,555	$	75,405	$	46,643	$	15,203	$	22,040	$	25,070	$	39,194

Total Residential Mortgage
Refreshed FICO score
Less than 620	$	2,717	$	823	$	177	$	139	$	170	$	150	$	1,258
Greater than or equal to 620 and less than 680	5,462		1,804		666		468		385		368		1,771
Greater than or equal to 680 and less than 740	25,349		8,533		4,679		1,972		2,427		2,307		5,431
Greater than or equal to 740	178,209		60,419		39,107		12,254		18,716		20,275		27,438
Fully-insured loans	11,818		3,826		2,014		370		342		1,970		3,296
Total Residential Mortgage	$	223,555	$	75,405	$	46,643	$	15,203	$	22,040	$	25,070	$	39,194



Home Equity - Credit Quality Indicators

		Total		Home Equity Loans and Reverse Mortgages (1)		Revolving Loans		Revolving Loans Converted to Term Loans
(Dollars in millions)	December 31, 2020
Total Home Equity
Refreshed LTV
Less than or equal to 90 percent		$	33,447	$	1,919	$	22,639	$	8,889
Greater than 90 percent but less than or equal to 100 percent		351		126		94		131
Greater than 100 percent		513		172		118		223
Total Home Equity		$	34,311	$	2,217	$	22,851	$	9,243

Total Home Equity
Refreshed FICO score
Less than 620		$	1,082	$	250	$	244	$	588
Greater than or equal to 620 and less than 680		1,798		263		568		967
Greater than or equal to 680 and less than 740		5,762		556		2,905		2,301
Greater than or equal to 740		25,669		1,148		19,134		5,387
Total Home Equity		$	34,311	$	2,217	$	22,851	$	9,243

(1)Includes reverse mortgages of $1.3 billion and home equity loans of $885 million which are no longer originated.



Credit Card and Direct/Indirect Consumer – Credit Quality Indicators By Vintage





















	Direct/Indirect
					Term Loans by Origination Year												Credit Card
(Dollars in millions)	Total Direct/Indirect as of December 31, 2020		Revolving Loans		2020		2019		2018		2017		2016		Prior		Total Credit Card as of December 31, 2020		Revolving Loans		Revolving Loans Converted to Term Loans (1)
Refreshed FICO score
Less than 620	$	959	$	19	$	111	$	200	$	175	$	243	$	148	$	63	$	4,018	$	3,832	$	186
Greater than or equal to 620 and less than 680	2,143		20		653		559		329		301		176		105		9,419		9,201		218
Greater than or equal to 680 and less than 740	7,431		80		2,848		2,015		1,033		739		400		316		27,585		27,392		193
Greater than or equal to 740	36,064		120		12,540		10,588		5,869		3,495		1,781		1,671		37,686		37,642		44
Other internal credit metrics (2, 3)	44,766		44,098		74		115		84		67		52		276		—		—		—
Total credit card and other consumer	$	91,363	$	44,337	$	16,226	$	13,477	$	7,490	$	4,845	$	2,557	$	2,431	$	78,708	$	78,067	$	641

(1)Represents TDRs that were modified into term loans.

(2)Other internal credit metrics may include delinquency status, geography or other factors.

(3)Direct/indirect consumer includes $44.1 billion of securities-based lending which is typically supported by highly liquid collateral with market value greater than or equal to the outstanding loan balance and therefore has minimal credit risk at December 31, 2020.



Commercial – Credit Quality Indicators By Vintage (1, 2)
			Term Loans
			Amortized Cost Basis by Origination Year

(Dollars in millions)	Total as of December 31, 2020		2020		2019		2018		2017		2016		Prior		Revolving Loans
U.S. Commercial
Risk ratings
Pass rated	$	268,812	$	33,456	$	33,305	$	17,363	$	14,102	$	7,420	$	21,784	$	141,382
Reservable criticized	19,916		2,524		2,542		2,689		854		698		1,402		9,207
Total U.S. Commercial	$	288,728	$	35,980	$	35,847	$	20,052	$	14,956	$	8,118	$	23,186	$	150,589

Non-U.S. Commercial
Risk ratings
Pass rated	$	85,914	$	16,301	$	11,396	$	7,451	$	5,037	$	1,674	$	2,194	$	41,861
Reservable criticized	4,546		914		572		492		436		138		259		1,735
Total Non-U.S. Commercial	$	90,460	$	17,215	$	11,968	$	7,943	$	5,473	$	1,812	$	2,453	$	43,596

Commercial Real Estate
Risk ratings
Pass rated	$	50,260	$	8,429	$	14,126	$	8,228	$	4,599	$	3,299	$	6,542	$	5,037
Reservable criticized	10,104		933		2,558		2,115		1,582		606		1,436		874
Total Commercial Real Estate	$	60,364	$	9,362	$	16,684	$	10,343	$	6,181	$	3,905	$	7,978	$	5,911

Commercial Lease Financing
Risk ratings
Pass rated	$	16,384	$	3,083	$	3,242	$	2,956	$	2,532	$	1,703	$	2,868	$	—
Reservable criticized	714		117		117		132		81		88		179		—
Total Commercial Lease Financing	$	17,098	$	3,200	$	3,359	$	3,088	$	2,613	$	1,791	$	3,047	$	—

U.S. Small Business Commercial (3)
Risk ratings
Pass rated	$	28,786	$	24,539	$	1,121	$	837	$	735	$	527	$	855	$	172
Reservable criticized	1,148		76		239		210		175		113		322		13
Total U.S. Small Business Commercial	$	29,934	$	24,615	$	1,360	$	1,047	$	910	$	640	$	1,177	$	185
Total	$	486,584	$	90,372	$	69,218	$	42,473	$	30,133	$	16,266	$	37,841	$	200,281

(1) Excludes $5.9 billion of loans accounted for under the fair value option at December 31, 2020.

(2) Includes $58 million of loans that converted from revolving to term loans.

(3) Excludes U.S. Small Business Card loans of $6.5 billion. Refreshed FICO scores for this portfolio are $265 million for less than 620; $582 million for greater than or equal to 620 and less than 680; $1.7 billion for greater than or equal to 680 and less than 740; and $3.9 billion greater than or equal to 740.

During the six months ended June 30, 2021, commercial asset quality showed signs of stabilization as economic recovery gained momentum. Commercial reservable criticized utilized exposure decreased to $28.9 billion at June 30, 2021 from $38.7 billion (to 5.45 percent from 7.31 percent of total commercial reservable utilized exposure) at December 31, 2020, which was broad-based across industries.

Troubled Debt Restructurings

The Corporation has been entering into loan modifications with borrowers in response to the pandemic, most of which are not classified as TDRs, and therefore are not included in the following discussion. For more information on the criteria for classifying loans as TDRs, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.

Consumer Real Estate

Modifications of consumer real estate loans are classified as TDRs when the borrower is experiencing financial difficulties and a concession has been granted. Concessions may include reductions in interest rates, capitalization of past due amounts, principal and/or interest forbearance, payment extensions, principal and/or interest forgiveness, or combinations thereof. Prior to permanently modifying a loan, the Corporation may enter into trial modifications with certain borrowers under both government and proprietary programs. Trial modifications generally represent a three- to four-month period during which the borrower makes monthly payments under the anticipated modified payment terms. Upon successful completion of the trial period, the Corporation and the borrower enter into a permanent modification. Binding trial modifications are classified as TDRs when the trial offer is made and continue to be classified as TDRs regardless of whether the borrower enters into a permanent modification.

Consumer real estate loans of $343 million that have been discharged in Chapter 7 bankruptcy with no change in repayment terms and not reaffirmed by the borrower were included in TDRs at June 30, 2021, of which $99 million were classified as nonperforming and $61 million were loans fully insured.

Consumer real estate TDRs are measured primarily based on the net present value of the estimated cash flows discounted at the loan’s original effective interest rate. If the carrying value of a TDR exceeds this amount, a specific allowance is recorded as

a component of the allowance for loan and lease losses. Alternatively, consumer real estate TDRs that are considered to be dependent solely on the collateral for repayment (e.g., due to the lack of income verification) are measured based on the estimated fair value of the collateral, and a charge-off is recorded if the carrying value exceeds the fair value of the collateral. Consumer real estate loans that reach 180 days past due prior to modification are charged off to their net realizable value, less costs to sell, before they are modified as TDRs in accordance with established policy. Subsequent declines in the fair value of the collateral after a loan has reached 180 days past due are recorded as charge-offs. Fully-insured loans are protected against principal loss, and therefore, the Corporation does not record an allowance for loan and lease losses on the outstanding principal balance, even after they have been modified in a TDR.

At June 30, 2021 and December 31, 2020, remaining commitments to lend additional funds to debtors whose terms have been modified in a consumer real estate TDR were not significant. Consumer real estate foreclosed properties totaled $93 million and $123 million at June 30, 2021 and December 31, 2020. The carrying value of consumer real estate loans, including fully-insured loans, for which formal foreclosure proceedings were in process at June 30, 2021 was $1.1 billion. Although the Corporation has continued to pause formal loan foreclosure proceedings and foreclosure sales for occupied properties, during the six months ended June 30, 2021, the Corporation reclassified $20 million of consumer real estate loans completed or which were in process prior to the pause in foreclosures, to foreclosed properties or, for properties acquired upon foreclosure of certain government-guaranteed loans (principally FHA-insured loans), to other assets. The reclassifications represent non-cash investing activities and, accordingly, are not reflected in the Consolidated Statement of Cash Flows.

The table below presents the June 30, 2021 and 2020 unpaid principal balance, carrying value, and average pre- and post-modification interest rates of consumer real estate loans that were modified in TDRs during the three and six months ended June 30, 2021 and 2020. The following Consumer Real Estate portfolio segment tables include loans that were initially classified as TDRs during the period and also loans that had previously been classified as TDRs and were modified again during the period.



Consumer Real Estate – TDRs Entered into During the Three and Six Months Ended June 30, 2021 and 2020

	Unpaid Principal Balance		Carrying Value		Pre-Modification Interest Rate		Post-Modification Interest Rate (1)		Unpaid Principal Balance		Carrying Value		Pre-Modification Interest Rate		Post-Modification Interest Rate (1)
(Dollars in millions)	Three Months Ended June 30, 2021								Six Months Ended June 30, 2021

Residential mortgage	$	522	$	466	3.53	%	3.51	%	$	744	$	667	3.51	%	3.49	%
Home equity	62		47		3.58		3.61		83		63		3.55		3.58
Total	$	584	$	513	3.53		3.52		$	827	$	730	3.52		3.50

	Three Months Ended June 30, 2020								Six Months Ended June 30, 2020

Residential mortgage	$	120	$	103	4.22	%	4.19	%	$	219	$	185	4.10	%	4.01	%
Home equity	22		18		3.68		3.65		45		38		3.99		3.92
Total	$	142	$	121	4.14		4.11		$	264	$	223	4.08		3.99

(1)The post-modification interest rate reflects the interest rate applicable only to permanently completed modifications, which exclude loans that are in a trial modification period.

The table below presents the June 30, 2021 and 2020 carrying value for consumer real estate loans that were modified in a TDR during the three and six months ended June 30, 2021 and 2020, by type of modification.



Consumer Real Estate – Modification Programs

	TDRs Entered into During the
	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2021		2020		2021		2020
Modifications under government programs	$	1	$	—	$	3	$	3




Modifications under proprietary programs	479		20		665		59





Loans discharged in Chapter 7 bankruptcy (1)	12		21		22		32
Trial modifications	21		80		40		129
Total modifications	$	513	$	121	$	730	$	223

(1)Includes loans discharged in Chapter 7 bankruptcy with no change in repayment terms that are classified as TDRs.

The table below presents the carrying value of consumer real estate loans that entered into payment default during the three and six months ended June 30, 2021 and 2020 that were modified in a TDR during the 12 months preceding payment default. A payment default for consumer real estate TDRs is recognized when a borrower has missed three monthly payments (not necessarily consecutively) since modification.



Consumer Real Estate – TDRs Entering Payment Default that were Modified During the Preceding 12 Months

	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2021		2020		2021		2020
Modifications under government programs	$	1	$	2	$	2	$	8
Modifications under proprietary programs	33		5		45		19
Loans discharged in Chapter 7 bankruptcy (1)	2		4		5		11
Trial modifications (2)	6		12		12		30
Total modifications	$	42	$	23	$	64	$	68

(1)Includes loans discharged in Chapter 7 bankruptcy with no change in repayment terms that are classified as TDRs.

(2)Includes trial modification offers to which the customer did not respond.

Credit Card and Other Consumer

The Corporation seeks to assist customers that are experiencing financial difficulty by modifying loans while ensuring compliance with federal and local laws and guidelines. Credit card and other consumer loan modifications generally involve reducing the interest rate on the account, placing the customer on a fixed payment plan not exceeding 60 months and canceling the customer’s available line of credit, all of which are considered TDRs. The Corporation makes loan modifications directly with borrowers for debt held only by the Corporation (internal programs). Additionally, the Corporation makes loan modifications for borrowers working with third-party renegotiation

agencies that provide solutions to customers’ entire unsecured debt structures (external programs). The Corporation classifies other secured consumer loans that have been discharged in Chapter 7 bankruptcy as TDRs, which are written down to collateral value and placed on nonaccrual status no later than the time of discharge.

The table below provides information on the Corporation’s Credit Card and Other Consumer TDR portfolio including the June 30, 2021 and 2020 unpaid principal balance, carrying value, and average pre- and post-modification interest rates of loans that were modified in TDRs during the three and six months ended June 30, 2021 and 2020.



Credit Card and Other Consumer – TDRs Entered into During the Three and Six Months Ended June 30, 2021 and 2020

	Unpaid Principal Balance		Carrying Value (1)		Pre-Modification Interest Rate		Post-Modification Interest Rate		Unpaid Principal Balance		Carrying Value (1)		Pre-Modification Interest Rate		Post-Modification Interest Rate
(Dollars in millions)	Three Months Ended June 30, 2021								Six Months Ended June 30, 2021

Credit card	$	62	$	68	18.44	%	4.24	%	$	137	$	147	18.48	%	4.53	%

Direct/Indirect consumer	6		4		5.64		5.64		11		7		5.62		5.62

Total	$	68	$	72	17.75		4.31		$	148	$	154	17.87		4.58

	Three Months Ended June 30, 2020								Six Months Ended June 30, 2020
Credit card	$	57	$	61	18.08	%	5.15	%	$	144	$	152	18.02	%	5.24	%

Direct/Indirect consumer	14		8		5.26		5.26		23		12		5.31		5.31

Total	$	71	$	69	16.61		5.16		$	167	$	164	17.07		5.25

(1)Includes accrued interest and fees.

The table below presents the June 30, 2021 and 2020 carrying value for Credit Card and Other Consumer loans that were modified in a TDR during the three and six months ended June 30, 2021 and 2020, by program type.



Credit Card and Other Consumer – TDRs by Program Type




	TDRs Entered into During the Three Months Ended June 30				TDRs Entered into During the Six Months Ended June 30
(Dollars in millions)	2021		2020		2021		2020
Internal programs	$	57	$	43	$	121	$	109
External programs	13		18		29		43
Other	2		8		4		12
Total	$	72	$	69	$	154	$	164

Credit card and other consumer loans are deemed to be in payment default during the quarter in which a borrower misses the second of two consecutive payments. Payment defaults are one of the factors considered when projecting future cash flows in the calculation of the allowance for loan and lease losses for credit card and other consumer. Based on historical experience, the Corporation estimates that 11 percent of new credit card TDRs and 20 percent of new direct/indirect consumer TDRs may be in payment default within 12 months after modification.

Commercial Loans

Modifications of loans to commercial borrowers that are experiencing financial difficulty are designed to reduce the Corporation’s loss exposure while providing the borrower with an opportunity to work through financial difficulties, often to avoid foreclosure or bankruptcy. Each modification is unique and reflects the individual circumstances of the borrower. Modifications that result in a TDR may include extensions of maturity at a concessionary (below market) rate of interest, payment forbearances or other actions designed to benefit the borrower while mitigating the Corporation’s risk exposure. Reductions in interest rates are rare. Instead, the interest rates are typically increased, although the increased rate may not represent a market rate of interest. Infrequently, concessions may also include principal forgiveness in connection with foreclosure, short sale or other settlement agreements leading to termination or sale of the loan.

At the time of restructuring, the loans are remeasured to reflect the impact, if any, on projected cash flows resulting from the modified terms. If a portion of the loan is deemed to be uncollectible, a charge-off may be recorded at the time of restructuring. Alternatively, a charge-off may have already been recorded in a previous period such that no charge-off is required at the time of modification.

During the three and six months ended June 30, 2021, the carrying value of the Corporation’s commercial loans that were modified as TDRs was $320 million and $865 million compared to $789 million and $1.3 billion for the same periods in 2020. At June 30, 2021 and December 31, 2020, the Corporation had $1.9 billion and $1.7 billion of commercial TDRs with remaining

commitments to lend additional funds to debtors of $343 million and $402 million. The balance of commercial TDRs in payment default was $149 million and $218 million at June 30, 2021 and December 31, 2020.

Loans Held-for-sale

The Corporation had LHFS of $8.3 billion and $9.2 billion at June 30, 2021 and December 31, 2020. Cash and non-cash proceeds from sales and paydowns of loans originally classified as LHFS were $18.2 billion and $11.1 billion for the six months ended June 30, 2021 and 2020. Cash used for originations and purchases of LHFS totaled approximately $17.0 billion and $9.2 billion for the six months ended June 30, 2021 and 2020.

Accrued Interest Receivable

Accrued interest receivable for loans and leases and loans held-for-sale at June 30, 2021 and December 31, 2020 was $2.3 billion and $2.4 billion and is reported in customer and other receivables on the Consolidated Balance Sheet.

Outstanding credit card loan balances include unpaid principal, interest and fees. Credit card loans are not classified as nonperforming but are charged off no later than the end of the month in which the account becomes 180 days past due, within 60 days after receipt of notification of death or bankruptcy, or upon confirmation of fraud. During the three and six months ended June 30, 2021, the Corporation reversed $124 million and $282 million of interest and fee income against the income statement line item in which it was originally recorded upon charge-off of the principal balance of the loan.

For the outstanding residential mortgage, home equity, direct/indirect consumer and commercial loan balances classified as nonperforming during the three and six months ended June 30, 2021, the Corporation reversed $9 million and $17 million of interest and fee income at the time the loans were classified as nonperforming against the income statement line item in which it was originally recorded. For more information on the Corporation's nonperforming loan policies, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.

Allowance for Credit Losses

The allowance for credit losses is estimated using quantitative and qualitative methods that consider a variety of factors, such as historical loss experience, the current credit quality of the portfolio and an economic outlook over the life of the loan. Qualitative reserves cover losses that are expected but, in the Corporation's assessment, may not be adequately reflected in the quantitative methods or the economic assumptions. The Corporation incorporates forward-looking information through the use of several macroeconomic scenarios in determining the weighted economic outlook over the forecasted life of the assets. These scenarios include key macroeconomic variables such as gross domestic product, unemployment rate, real estate prices and corporate bond spreads. The scenarios that are chosen each quarter and the weighting given to each scenario depend on a variety of factors including recent economic events, leading economic indicators, internal and third-party economist views, and industry trends. For more information on the Corporation's credit loss accounting policies including the allowance for credit losses, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.

The June 30, 2021 estimate for allowance for credit losses was based on various economic outlooks that included consensus estimates, a downside scenario that assumed a significantly longer period until economic recovery, a tail risk scenario similar to the severely adverse scenario used in stress testing, a scenario to account for inflationary risk and higher interest rates and an upside scenario to reflect the continued improvement in the consensus outlooks. The weighted economic outlook assumed that the U.S. unemployment rate at the end of 2021 will be relatively consistent with the level as of June 2021, which was approximately six percent, and continue to decline to slightly above five percent by the end of 2022. Additionally, in this economic outlook, year-over-year U.S. gross

domestic product is forecasted to grow at 4.5 percent, 1.9 percent and 2.1 percent in the fourth quarters of 2021, 2022 and 2023, respectively. The allowance for credit losses considered the impact of enacted government stimulus measures and continued to factor in the uncertainty resulting from the unprecedented nature of the current health crisis and risks that may prevent a full economic recovery.

The Corporation also factored into its allowance for credit losses an estimated impact from higher-risk segments that included leveraged loans and industries such as travel and entertainment, which have been adversely impacted by the effects of the pandemic, as well as the energy sector.

The allowance for credit losses at June 30, 2021 was $15.8 billion, a decrease of $4.9 billion compared to December 31, 2020. The decrease in the allowance for credit losses was primarily driven by an improved macroeconomic outlook. The decrease in the allowance for credit losses was comprised of a net decrease of $4.7 billion in the allowance for loan and lease losses and a $191 million decrease in the reserve for unfunded lending commitments. The decrease in the allowance for credit losses was attributed to $291 million in the consumer real estate portfolio, $2.4 billion in the credit card and other consumer portfolio, and $2.2 billion in the commercial portfolio.

Outstanding loans and leases excluding loans accounted for under the fair value option decreased $9.2 billion in the six months ended June 30, 2021, driven by consumer loans, which decreased $10.6 billion primarily due to a decline in consumer real estate due to prepayments in a low rate environment. However, outstanding commercial loans and leases, excluding small business, increased $8.0 billion during the six months ended June 30, 2021, primarily driven by Global Markets with most of the increase in investment grade exposures.

The changes in the allowance for credit losses, including net charge-offs and provision for loan and lease losses, are detailed in the following table.



	Consumer Real Estate		Credit Card and Other Consumer		Commercial		Total
(Dollars in millions)	Three Months Ended June 30, 2021
Allowance for loan and lease losses, April 1	$	689	$	7,946	$	7,533	$	16,168
Loans and leases charged off	(30)		(799)		(232)		(1,061)
Recoveries of loans and leases previously charged off	60		256		150		466
Net charge-offs	30		(543)		(82)		(595)

Provision for loan and lease losses	(122)		(568)		(790)		(1,480)
Other	—		—		2		2
Allowance for loan and lease losses, June 30	597		6,835		6,663		14,095
Reserve for unfunded lending commitments, April 1	124		—		1,705		1,829
Provision for unfunded lending commitments	(17)		—		(124)		(141)
Other	—		—		(1)		(1)
Reserve for unfunded lending commitments, June 30	107		—		1,580		1,687
Allowance for credit losses, June 30	$	704	$	6,835	$	8,243	$	15,782

	Three Months Ended June 30, 2020
Allowance for loan and lease losses, April 1	$	808	$	8,258	$	6,700	$	15,766
Loans and leases charged off	(27)		(985)		(447)		(1,459)
Recoveries of loans and leases previously charged off	61		217		35		313
Net charge-offs	34		(768)		(412)		(1,146)

Provision for loan and lease losses	(9)		2,632		2,152		4,775
Other	—		—		(6)		(6)
Allowance for loan and lease losses, June 30	833		10,122		8,434		19,389


Reserve for unfunded lending commitments, April 1	149		—		1,211		1,360
Provision for unfunded lending commitments	(8)		—		350		342

Reserve for unfunded lending commitments, June 30	141		—		1,561		1,702
Allowance for credit losses, June 30	$	974	$	10,122	$	9,995	$	21,091

(Dollars in millions)	Six Months Ended June 30, 2021
Allowance for loan and lease losses, January 1	$	858	$	9,213	$	8,731	$	18,802
Loans and leases charged off	(45)		(1,776)		(426)		(2,247)
Recoveries of loans and leases previously charged off	114		501		214		829
Net charge-offs	69		(1,275)		(212)		(1,418)
Provision for loan and lease losses	(329)		(1,104)		(1,858)		(3,291)
Other	(1)		1		2		2
Allowance for loan and lease losses, June 30	597		6,835		6,663		14,095
Reserve for unfunded lending commitments, January 1	137		—		1,741		1,878
Provision for unfunded lending commitments	(30)		—		(160)		(190)
Other	—		—		(1)		(1)
Reserve for unfunded lending commitments, June 30	107		—		1,580		1,687
Allowance for credit losses, June 30	$	704	$	6,835	$	8,243	$	15,782

	Six Months Ended June 30, 2020
Allowance for loan and lease losses, January 1	$	440	$	7,430	$	4,488	$	12,358
Loans and leases charged off	(62)		(2,106)		(729)		(2,897)
Recoveries of loans and leases previously charged off	108		454		67		629
Net charge-offs	46		(1,652)		(662)		(2,268)
Provision for loan and lease losses	342		4,344		4,614		9,300
Other	5		—		(6)		(1)
Allowance for loan and lease losses, June 30	833		10,122		8,434		19,389
Reserve for unfunded lending commitments, January 1	119		—		1,004		1,123
Provision for unfunded lending commitments	22		—		556		578
Other	—		—		1		1
Reserve for unfunded lending commitments, June 30	141		—		1,561		1,702
Allowance for credit losses, June 30	$	974	$	10,122	$	9,995	$	21,091