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Outstanding Loans and Leases and Allowance for Credit Losses
 9 Months Ended
Sep. 30, 2021
Receivables [Abstract]  
Outstanding Loans and Leases and Allowance for Credit Losses Outstanding Loans and Leases and Allowance for Credit Losses
The following tables present total outstanding loans and leases and an aging analysis for the Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments, by class of financing receivables, at September 30, 2021 and December 31, 2020.
30-59 Days
 Past Due (1)
60-89 Days
 Past Due (1)
90 Days or
More
Past Due (1)
Total Past
Due 30 Days
or More
Total
 Current or
 Less Than
 30 Days
 Past Due (1)
Loans
 Accounted
 for Under
 the Fair
 Value
 Option		Total
Outstandings
(Dollars in millions)September 30, 2021
Consumer real estate      
Residential mortgage$1,010 $276 $1,504 $2,790 $214,150 $216,940 
Home equity132 69 366 567 28,433 29,000 
Credit card and other consumer
Credit card286 198 450 934 75,935 76,869 
Direct/Indirect consumer (2)
119 31 16 166 99,679 99,845 
Other consumer— — — — 202 202 
Total consumer1,547 574 2,336 4,457 418,399 422,856 
Consumer loans accounted for under the fair value option (3)
     $616 616 
Total consumer loans and leases1,547 574 2,336 4,457 418,399 616 423,472 
Commercial
U.S. commercial640 234 238 1,112 294,815 295,927 
Non-U.S. commercial77 48 130 255 102,595 102,850 
Commercial real estate (4)
138 — 208 346 60,377 60,723 
Commercial lease financing32 33 15 80 14,964 15,044 
U.S. small business commercial (5)
70 43 66 179 22,591 22,770 
Total commercial957 358 657 1,972 495,342 497,314 
Commercial loans accounted for under the fair value option (3)
     6,950 6,950 
Total commercial loans and leases957 358 657 1,972 495,342 6,950 504,264 
Total loans and leases (6)
$2,504 $932 $2,993 $6,429 $913,741 $7,566 $927,736 
Percentage of outstandings 0.27 %0.10 %0.32 %0.69 %98.49 %0.82 %100.00 %
(1)Consumer real estate loans 30-59 days past due includes fully-insured loans of $185 million and nonperforming loans of $116 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $97 million and nonperforming loans of $102 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $648 million. Consumer real estate loans current or less than 30 days past due includes $1.5 billion and direct/indirect consumer includes $29 million of nonperforming loans. 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)Total outstandings primarily includes auto and specialty lending loans and leases of $47.2 billion, U.S. securities-based lending loans of $48.7 billion and non-U.S. consumer loans of $3.0 billion.
(3)Consumer loans accounted for under the fair value option includes residential mortgage loans of $241 million and home equity loans of $375 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $4.5 billion and non-U.S. commercial loans of $2.4 billion. For more information, see Note 14 – Fair Value Measurements and Note 15 – Fair Value Option.
(4)Total outstandings includes U.S. commercial real estate loans of $56.6 billion and non-U.S. commercial real estate loans of $4.1 billion.
(5)Includes Paycheck Protection Program loans.
(6)Total outstandings includes loans and leases pledged as collateral of $12.8 billion. The Corporation also pledged $150.2 billion of loans with no related outstanding borrowings to secure potential borrowing capacity with the Federal Reserve Bank and Federal Home Loan Bank.
30-59 Days
Past Due (1)
60-89 Days
 Past Due (1)
90 Days or
More
Past Due (1)
Total Past
Due 30 Days
or More
Total
Current or
Less Than
30 Days
Past Due (1)
Loans
Accounted
for Under
the Fair
Value Option		Total Outstandings
(Dollars in millions)December 31, 2020
Consumer real estate      
Residential mortgage$1,430 $297 $1,699 $3,426 $220,129 $223,555 
Home equity154 78 345 577 33,734 34,311 
Credit card and other consumer     
Credit card445 341 903 1,689 77,019  78,708 
Direct/Indirect consumer (2)
209 67 37 313 91,050  91,363 
Other consumer — — — — 124  124 
Total consumer2,238 783 2,984 6,005 422,056 428,061 
Consumer loans accounted for under the fair value option (3)
$735 735 
Total consumer loans and leases2,238 783 2,984 6,005 422,056 735 428,796 
Commercial       
U.S. commercial561 214 512 1,287 287,441  288,728 
Non-U.S. commercial61 44 11 116 90,344  90,460 
Commercial real estate (4)
128 113 226 467 59,897  60,364 
Commercial lease financing86 20 57 163 16,935  17,098 
U.S. small business commercial (5)
84 56 123 263 36,206  36,469 
Total commercial920 447 929 2,296 490,823  493,119 
Commercial loans accounted for under the fair value option (3)
5,946 5,946 
Total commercial loans and leases
920 447 929 2,296 490,823 5,946 499,065 
Total loans and leases (6)
$3,158 $1,230 $3,913 $8,301 $912,879 $6,681 $927,861 
Percentage of outstandings 0.34 %0.13 %0.42 %0.89 %98.39 %0.72 %100.00 %
(1)Consumer real estate loans 30-59 days past due includes fully-insured loans of $225 million and nonperforming loans of $126 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $103 million and nonperforming loans of $95 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $762 million. Consumer real estate loans current or less than 30 days past due includes $1.2 billion and direct/indirect consumer includes $66 million of nonperforming loans. 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)Total outstandings primarily includes auto and specialty lending loans and leases of $46.4 billion, U.S. securities-based lending loans of $41.1 billion and non-U .S. consumer loans of $3.0 billion.
(3)Consumer loans accounted for under the fair value option includes residential mortgage loans of $298 million and home equity loans of $437 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $2.9 billion and non-U.S. commercial loans of $3.0 billion. For more information, see Note 14 – Fair Value Measurements and Note 15 – Fair Value Option.
(4)Total outstandings includes U.S. commercial real estate loans of $57.2 billion and non-U.S. commercial real estate loans of $3.2 billion.
(5)Includes Paycheck Protection Program loans.
(6)Total outstandings includes loans and leases pledged as collateral of $15.5 billion. The Corporation also pledged $153.1 billion of loans with no related outstanding borrowings to secure potential borrowing capacity with the Federal Reserve Bank and Federal Home Loan Bank.
The Corporation has entered into long-term credit protection agreements with FNMA and FHLMC on loans totaling $10.3 billion and $9.0 billion at September 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 $1.7 billion at September 30, 2021 from $2.2 billion at December 31, 2020. Consumer nonperforming loans increased to $3.0 billion at September 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 September 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)September 30
2021		December 31
2020		September 30
2021		December 31
2020
Residential mortgage (2)
$2,296 $2,005 $648 $762 
With no related allowance (3)
1,984 1,378 — — 
Home equity (2)
676 649 — — 
With no related allowance (3)
419 347 — — 
Credit Cardn/an/a450 903 
Direct/indirect consumer45 71 8 33 
Total consumer3,017 2,725 1,106 1,698 
U.S. commercial909 1,243 84 228 
Non-U.S. commercial272 418 60 10 
Commercial real estate414 404 5 6 
Commercial lease financing70 87 11 25 
U.S. small business commercial32 75 64 115 
Total commercial1,697 2,227 224 384 
Total nonperforming loans$4,714 $4,952 $1,330 $2,082 
Percentage of outstanding loans and leases
0.51 %0.54 %0.14 %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 September 30, 2021 and December 31, 2020 residential mortgage includes $466 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 $182 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 September 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
September 30,
 2021		20212020201920182017Prior
Total Residential Mortgage
Refreshed LTV
   
Less than or equal to 90 percent$201,127 $66,702 $48,549 $26,414 $8,448 $12,487 $38,527 
Greater than 90 percent but less than or equal to 100 percent
2,388 1,327 704 169 31 24 133 
Greater than 100 percent
801 451 155 57 16 14 108 
Fully-insured loans
12,624 2,945 3,698 1,370 253 259 4,099 
Total Residential Mortgage$216,940 $71,425 $53,106 $28,010 $8,748 $12,784 $42,867 
Total Residential Mortgage
Refreshed FICO score
Less than 620$2,499 $517 $480 $151 $123 $124 $1,104 
Greater than or equal to 620 and less than 680
4,932 1,057 1,162 525 318 310 1,560 
Greater than or equal to 680 and less than 740
23,689 6,536 5,973 2,935 1,225 1,563 5,457 
Greater than or equal to 740
173,196 60,370 41,793 23,029 6,829 10,528 30,647 
Fully-insured loans
12,624 2,945 3,698 1,370 253 259 4,099 
Total Residential Mortgage$216,940 $71,425 $53,106 $28,010 $8,748 $12,784 $42,867 
Home Equity - Credit Quality Indicators
Total
Home Equity Loans and Reverse Mortgages (1)
Revolving LoansRevolving Loans Converted to Term Loans
(Dollars in millions)September 30, 2021
Total Home Equity
Refreshed LTV
   
Less than or equal to 90 percent$28,529 $1,789 $19,526 $7,214 
Greater than 90 percent but less than or equal to 100 percent
192 83 47 62 
Greater than 100 percent
279 105 70 104 
Total Home Equity$29,000 $1,977 $19,643 $7,380 
Total Home Equity
Refreshed FICO score
Less than 620$930 $240 $214 $476 
Greater than or equal to 620 and less than 680
1,483 230 497 756 
Greater than or equal to 680 and less than 740
4,807 487 2,509 1,811 
Greater than or equal to 740
21,780 1,020 16,423 4,337 
Total Home Equity$29,000 $1,977 $19,643 $7,380 
(1)Includes reverse mortgages of $1.3 billion and home equity loans of $646 million which are no longer originated.
Credit Card and Direct/Indirect Consumer – Credit Quality Indicators By Vintage
Direct/Indirect
Term Loans by Origination YearCredit Card
(Dollars in millions)Total Direct/
Indirect as of September 30,
 2021		Revolving Loans20212020201920182017PriorTotal Credit Card as of September 30,
 2021		Revolving Loans
Revolving Loans Converted to Term Loans (1)
Refreshed FICO score  
Less than 620$677 $14 $117 $110 $139 $95 $122 $80 $2,846 $2,686 $160 
Greater than or equal to 620 and less than 6802,194 15 890 464 355 173 165 132 8,665 8,460 205 
Greater than or equal to 680 and less than 740
8,083 63 3,544 1,869 1,290 565 390 362 26,939 26,740 199 
Greater than or equal to 74036,456 97 12,248 9,572 7,425 3,284 1,940 1,890 38,419 38,370 49 
Other internal credit
   metrics (2,3)
52,435 51,699 283 67 91 84 61 150 — — — 
Total credit card and other
   consumer		$99,845 $51,888 $17,082 $12,082 $9,300 $4,201 $2,678 $2,614 $76,869 $76,256 $613 
(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 $51.7 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 September 30, 2021.
Commercial – Credit Quality Indicators By Vintage (1, 2)
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in millions)Total as of
September 30,
 2021		20212020201920182017PriorRevolving Loans
U.S. Commercial
Risk ratings    
Pass rated$284,704 $39,184 $24,933 $25,500 $11,900 $11,207 $23,764 $148,216 
Reservable criticized11,223 461 1,082 1,491 1,730 583 1,191 4,685 
Total U.S. Commercial
$295,927 $39,645 $26,015 $26,991 $13,630 $11,790 $24,955 $152,901 
Non-U.S. Commercial
Risk ratings
Pass rated$100,057 $17,768 $10,213 $7,795 $4,775 $3,633 $3,000 $52,873 
Reservable criticized2,793 188 341 616 378 200 285 785 
Total Non-U.S. Commercial
$102,850 $17,956 $10,554 $8,411 $5,153 $3,833 $3,285 $53,658 
Commercial Real Estate
Risk ratings
Pass rated$52,861 $8,993 $7,653 $12,445 $7,021 $3,742 $7,669 $5,338 
Reservable criticized7,862 209 993 1,972 1,856 996 1,339 497 
Total Commercial Real Estate
$60,723 $9,202 $8,646 $14,417 $8,877 $4,738 $9,008 $5,835 
Commercial Lease Financing
Risk ratings
Pass rated$14,640 $1,515 $2,641 $2,921 $2,203 $2,020 $3,340 $— 
Reservable criticized404 27 11 96 71 52 147 — 
Total Commercial Lease Financing
$15,044 $1,542 $2,652 $3,017 $2,274 $2,072 $3,487 $— 
U.S. Small Business Commercial (3)
Risk ratings
Pass rated$15,149 $6,414 $4,524 $1,101 $800 $665 $1,504 $141 
Reservable criticized546 7 32 111 99 78 216 3 
Total U.S. Small Business Commercial
$15,695 $6,421 $4,556 $1,212 $899 $743 $1,720 $144 
 Total$490,239 $74,766 $52,423 $54,048 $30,833 $23,176 $42,455 $212,538 
(1) Excludes $7.0 billion of loans accounted for under the fair value option at September 30, 2021.
(2)     Includes $18 million of loans that converted from revolving to term loans.
(3)     Excludes U.S. Small Business Card loans of $7.1 billion. Refreshed FICO scores for this portfolio are $188 million for less than 620; $572 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 $4.5 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		20202019201820172016Prior
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 740178,209 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 LoansRevolving 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 YearCredit Card
(Dollars in millions)Total Direct/Indirect as of December 31, 2020Revolving Loans20202019201820172016PriorTotal Credit Card as of December 31, 2020Revolving 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 74036,064 120 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, 202020202019201820172016PriorRevolving 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 criticized19,916 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 criticized4,546 914 572 492 436 138 259 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 criticized10,104 933 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 criticized714 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 criticized1,148 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 nine months ended September 30, 2021, commercial credit quality showed signs of stabilization as the economy continued to recover. Commercial reservable criticized utilized exposure decreased to $24.1 billion at September 30, 2021 from $38.7 billion (to 4.53 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 $323 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 September 30, 2021, of which $95 million were classified as nonperforming and $57 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 September 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 $87 million and $123 million at September 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 September 30, 2021 was $1.1 billion. During the nine months ended September 30, 2021, the Corporation reclassified $33 million of consumer real estate loans, 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 September 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 nine months ended September 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 Nine Months Ended September 30, 2021 and 2020
Unpaid Principal BalanceCarrying
Value		Pre-Modification Interest Rate
Post-Modification Interest Rate (1)
Unpaid Principal BalanceCarrying
Value		Pre-Modification Interest Rate
Post-Modification Interest Rate (1)
(Dollars in millions)Three Months Ended September 30, 2021Nine Months Ended September 30, 2021
Residential mortgage$451 $399 3.52 %3.49 %$832 $742 3.49 %3.44 %
Home equity61 45 3.51 3.51 97 73 3.56 3.58 
Total $512 $444 3.52 3.49 $929 $815 3.50 3.46 
Three Months Ended September 30, 2020Nine Months Ended September 30, 2020
Residential mortgage$103 $88 4.06 %3.99 %$294 $244 4.07 %3.90 %
Home equity12 10 4.25 4.08 56 45 3.85 3.73 
Total $115 $98 4.08 4.00 $350 $289 4.03 3.87 
(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 September 30, 2021 and 2020 carrying value for consumer real estate loans that were modified in a TDR during the three and nine months ended September 30, 2021 and 2020, by type of modification.
Consumer Real Estate – Modification Programs
TDRs Entered into During the
Three Months Ended September 30Nine Months Ended September 30
(Dollars in millions)2021202020212020
Modifications under government programs $— $— $4 $8 
Modifications under proprietary programs 417 50 740 136 
Loans discharged in Chapter 7 bankruptcy (1)
9 15 29 44 
Trial modifications18 33 42 101 
Total modifications$444 $98 $815 $289 
(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 nine months ended September 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 September 30Nine Months Ended September 30
(Dollars in millions)2021202020212020
Modifications under government programs$1 $6 $3 $14 
Modifications under proprietary programs35 8 80 27 
Loans discharged in Chapter 7 bankruptcy (1)
1 4 6 15 
Trial modifications (2)
3 15 15 45 
Total modifications$40 $33 $104 $101 
(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 who 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 September 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 nine months ended September 30, 2021 and 2020.
Credit Card and Other Consumer – TDRs Entered into During the Three and Nine Months Ended September 30, 2021
and 2020
 Unpaid Principal Balance
Carrying
Value (1)
Pre-Modification Interest RatePost-Modification Interest RateUnpaid Principal Balance
Carrying
Value (1)
Pre-Modification Interest RatePost-Modification Interest Rate
(Dollars in millions)Three Months Ended September 30, 2021Nine Months Ended September 30, 2021
Credit card$66 $71 18.48 %3.71 %$189 $200 18.47 %4.26 %
Direct/Indirect consumer4 2 5.20 5.20 13 8 5.53 5.53 
Total $70 $73 18.06 3.76 $202 $208 17.99 4.31 
Three Months Ended September 30, 2020Nine Months Ended September 30, 2020
Credit card$71 $77 18.19 %6.86 %$203 $214 18.06 %5.82 %
Direct/Indirect consumer35 29 6.02 6.02 50 37 5.87 5.87 
Total $106 $106 14.85 6.63 $253 $251 16.29 5.83 
(1)Includes accrued interest and fees.
The table below presents the September 30, 2021 and 2020 carrying value for Credit Card and Other Consumer loans that were modified in a TDR during the three and nine months ended September 30, 2021 and 2020, by program type.
Credit Card and Other Consumer – TDRs by Program Type
TDRs Entered into During the
Three Months Ended September 30		TDRs Entered into During the
Nine Months Ended September 30
(Dollars in millions)
2021202020212020
Internal programs$60 $80 $166 $178 
External programs
11 19 37 59 
Other
2 7 5 14 
Total$73 $106 $208 $251 
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 10 percent of new credit card TDRs and 16 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 nine months ended September 30, 2021, the carrying value of the Corporation’s commercial loans that were modified as TDRs was $213 million and $1.1 billion compared to $588 million and $1.5 billion for the same periods in 2020. At September 30, 2021 and December 31, 2020, the Corporation had commitments to lend $272 million and $402 million to commercial borrowers whose loans are classified as
TDRs. The balance of commercial TDRs in payment default was $168 million and $218 million at September 30, 2021 and December 31, 2020.
Loans Held-for-sale
The Corporation had LHFS of $9.4 billion and $9.2 billion at September 30, 2021 and December 31, 2020. Cash and non-cash proceeds from sales and paydowns of loans originally classified as LHFS were $27.0 billion and $16.1 billion for the nine months ended September 30, 2021 and 2020. Cash used for originations and purchases of LHFS totaled approximately $27.0 billion and $11.1 billion for the nine months ended September 30, 2021 and 2020.
Accrued Interest Receivable
Accrued interest receivable for loans and leases and loans held-for-sale at September 30, 2021 and December 31, 2020 was $2.2 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 nine months ended September 30, 2021, the Corporation reversed $87 million and $369 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 nine months ended September 30, 2021, interest and fee income reversed at the time the loans were classified as nonperforming was not significant. 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 September 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 consider the potential for improvement in the consensus outlooks. The weighted economic outlook assumes that the U.S. unemployment rate will be just above five percent by the fourth quarters of 2022 and 2023, which includes the impacts of the downside scenarios noted above. Additionally, in this economic outlook, U.S. gross domestic product is forecasted to grow at 1.8 percent and 1.9 percent year-over-year in the fourth quarters of 2022 and 2023. 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.
While there has been improvement across the economy, the Corporation continues to factor 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.
The allowance for credit losses at September 30, 2021 was $14.7 billion, a decrease of $6.0 billion compared to December 31, 2020. The decrease in the allowance for credit losses was primarily driven by improvements in the macroeconomic outlook and credit quality. The change in the allowance for credit losses was comprised of a net decrease of $5.6 billion in the allowance for loan and lease losses and a $340 million decrease in the reserve for unfunded lending commitments. The decrease in the allowance for credit losses was attributed to $342 million in the consumer real estate portfolio, $2.6 billion in the credit card and other consumer portfolio, and $3.1 billion in the commercial portfolio. Similarly, the provision for credit losses improved $2.0 billion to a benefit of $624 million and $15.4 billion to a benefit of $4.1 billion for the three and nine months ended September 30, 2021 compared to the same periods in 2020. The benefit in the three-month period was primarily due to credit quality improvements. The benefit in the nine-month period was primarily driven by improvements in the macroeconomic outlook and credit quality.
Outstanding loans and leases excluding loans accounted for under the fair value option decreased $1.0 billion in the nine months ended September 30, 2021 driven by consumer loans, which decreased $5.2 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 $17.9 billion during the nine months ended September 30, 2021, primarily driven by Global Markets.
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		CommercialTotal
(Dollars in millions)Three Months Ended September 30, 2021
Allowance for loan and lease losses, July 1$597 $6,835 $6,663 $14,095 
Loans and leases charged off(15)(626)(165)(806)
Recoveries of loans and leases previously charged off56 256 31 343 
Net charge-offs41 (370)(134)(463)
Provision for loan and lease losses(85)175 (565)(475)
Other 2 (1)(3)(2)
Allowance for loan and lease losses, September 30
555 6,639 5,961 13,155 
Reserve for unfunded lending commitments, July 1107 — 1,580 1,687 
Provision for unfunded lending commitments(9)— (140)(149)
Reserve for unfunded lending commitments, September 30
98 — 1,440 1,538 
Allowance for credit losses, September 30
$653 $6,639 $7,401 $14,693 
Three Months Ended September 30, 2020
Allowance for loan and lease losses, July 1$833 $10,122 $8,434 $19,389 
Loans and leases charged off(13)(810)(470)(1,293)
Recoveries of loans and leases previously charged off39 220 62 321 
Net charge-offs26 (590)(408)(972)
Provision for loan and lease losses(6)304 882 1,180 
Other2 — (3)(1)
Allowance for loan and lease losses, September 30
855 9,836 8,905 19,596 
Reserve for unfunded lending commitments, July 1141 — 1,561 1,702 
Provision for unfunded lending commitments(3)— 212 209 
Other— — (1)(1)
Reserve for unfunded lending commitments, September 30
138 — 1,772 1,910 
Allowance for credit losses, September 30
$993 $9,836 $10,677 $21,506 
(Dollars in millions)Nine Months Ended September 30, 2021
Allowance for loan and lease losses, January 1$858 $9,213 $8,731 $18,802 
Loans and leases charged off(60)(2,402)(591)(3,053)
Recoveries of loans and leases previously charged off170 757 245 1,172 
Net charge-offs110 (1,645)(346)(1,881)
Provision for loan and lease losses(414)(929)(2,423)(3,766)
Other1 — (1)— 
Allowance for loan and lease losses, September 30
555 6,639 5,961 13,155 
Reserve for unfunded lending commitments, January 1137 — 1,741 1,878 
Provision for unfunded lending commitments(39)— (300)(339)
Other— — (1)(1)
Reserve for unfunded lending commitments, September 30
98 — 1,440 1,538 
Allowance for credit losses, September 30
$653 $6,639 $7,401 $14,693 
Nine Months Ended September 30, 2020
Allowance for loan and lease losses, January 1$440 $7,430 $4,488 $12,358 
Loans and leases charged off(75)(2,916)(1,199)(4,190)
Recoveries of loans and leases previously charged off147 674 129 950 
Net charge-offs72 (2,242)(1,070)(3,240)
Provision for loan and lease losses336 4,648 5,496 10,480 
Other7 — (9)(2)
Allowance for loan and lease losses, September 30
855 9,836 8,905 19,596 
Reserve for unfunded lending commitments, January 1119 — 1,004 1,123 
Provision for unfunded lending commitments19 — 768 787 
Reserve for unfunded lending commitments, September 30
138 — 1,772 1,910 
Allowance for credit losses, September 30
$993 $9,836 $10,677 $21,506