The Corporation has entered into long-term credit protection agreements with FNMA and FHLMC on loans totaling $9.7 billion and $10.5 billion at September 30, 2022 and December 31, 2021, 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 $1.2 billion at September 30, 2022 from $1.6 billion at December 31, 2021. Consumer nonperforming loans decreased to $2.8 billion at September 30, 2022 from $3.0 billion at December 31, 2021 primarily due to decreases from consumer real estate loan

sales, partially offset by increases from loans with expired deferrals that were modified in TDRs during the first quarter of 2022.

The following table presents the Corporation’s nonperforming loans and leases, including nonperforming TDRs, and loans accruing past due 90 days or more at September 30, 2022 and December 31, 2021. 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 2021 Annual Report on Form 10-K.



Credit Quality


	Nonperforming Loans and Leases						Accruing Past Due 90 Days or More

(Dollars in millions)	September 30 2022			December 31 2021			September 30 2022			December 31 2021
Residential mortgage (1)	$	2,187		$	2,284		$	427		$	634
With no related allowance (2)	1,942			1,950			—			—
Home equity (1)	532			630			—			—
With no related allowance (2)	394			414			—			—
Credit Card	n/a			n/a			547			487
Direct/indirect consumer	41			75			27			11

Total consumer	2,760			2,989			1,001			1,132
U.S. commercial	640			825			300			171
Non-U.S. commercial	274			268			22			19
Commercial real estate	282			382			34			40
Commercial lease financing	11			80			12			8
U.S. small business commercial	16			23			252			87
Total commercial	1,223			1,578			620			325
Total nonperforming loans	$	3,983		$	4,567		$	1,621		$	1,457
Percentage of outstanding loans and leases	0.39		%	0.47		%	0.16		%	0.15		%

(1)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At September 30, 2022 and December 31, 2021 residential mortgage includes $321 million and $444 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 $106 million and $190 million of loans on which interest was still accruing.

(2)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 2021 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, 2022, 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, 2022		2022		2021		2020		2019		2018		Prior
Residential Mortgage
Refreshed LTV
Less than or equal to 90 percent	$	215,122	$	35,371	$	82,564	$	37,941	$	19,347	$	5,900	$	33,999
Greater than 90 percent but less than or equal to 100 percent	1,446		803		513		87		15		9		19
Greater than 100 percent	562		331		119		39		18		10		45
Fully-insured loans	11,932		511		3,737		3,173		977		165		3,369
Total Residential Mortgage	$	229,062	$	37,016	$	86,933	$	41,240	$	20,357	$	6,084	$	37,432

Residential Mortgage
Refreshed FICO score
Less than 620	$	2,054	$	317	$	489	$	343	$	108	$	86	$	711
Greater than or equal to 620 and less than 680	4,933		903		1,356		836		371		240		1,227
Greater than or equal to 680 and less than 740	24,594		4,303		8,441		4,372		2,159		812		4,507
Greater than or equal to 740	185,549		30,982		72,910		32,516		16,742		4,781		27,618
Fully-insured loans	11,932		511		3,737		3,173		977		165		3,369
Total Residential Mortgage	$	229,062	$	37,016	$	86,933	$	41,240	$	20,357	$	6,084	$	37,432



Home Equity - Credit Quality Indicators

	Total		Home Equity Loans and Reverse Mortgages (1)		Revolving Loans		Revolving Loans Converted to Term Loans
(Dollars in millions)	September 30, 2022
Home Equity
Refreshed LTV
Less than or equal to 90 percent	$	26,662	$	1,406	$	19,805	$	5,451
Greater than 90 percent but less than or equal to 100 percent	68		25		24		19
Greater than 100 percent	115		41		37		37
Total Home Equity	$	26,845	$	1,472	$	19,866	$	5,507

Home Equity
Refreshed FICO score
Less than 620	$	689	$	177	$	175	$	337
Greater than or equal to 620 and less than 680	1,210		167		475		568
Greater than or equal to 680 and less than 740	4,228		355		2,550		1,323
Greater than or equal to 740	20,718		773		16,666		3,279
Total Home Equity	$	26,845	$	1,472	$	19,866	$	5,507

(1)Includes reverse mortgages of $1.2 billion and home equity loans of $450 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 September 30, 2022		Revolving Loans		2022		2021		2020		2019		2018		Prior		Total Credit Card as of September 30, 2022		Revolving Loans		Revolving Loans Converted to Term Loans (1)
Refreshed FICO score
Less than 620	$	730	$	12	$	140	$	262	$	108	$	90	$	48	$	70	$	3,442	$	3,277	$	165
Greater than or equal to 620 and less than 680	2,381		12		832		867		293		177		81		119		10,134		9,950		184
Greater than or equal to 680 and less than 740	8,723		53		3,290		3,036		1,116		619		254		355		30,181		30,012		169
Greater than or equal to 740	38,988		86		12,944		12,425		6,354		3,675		1,505		1,999		43,539		43,496		43
Other internal credit metrics (2,3)	56,337		55,534		168		292		79		56		39		169		—		—		—
Total credit card and other consumer	$	107,159	$	55,697	$	17,374	$	16,882	$	7,950	$	4,617	$	1,927	$	2,712	$	87,296	$	86,735	$	561

(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 $55.5 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, 2022.



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

(Dollars in millions)	Total as of September 30, 2022		2022		2021		2020		2019		2018		Prior		Revolving Loans
U.S. Commercial
Risk ratings
Pass rated	$	346,130	$	51,059	$	42,706	$	19,446	$	17,967	$	9,431	$	31,503	$	174,018
Reservable criticized	9,240		176		636		665		831		1,320		918		4,694
Total U.S. Commercial	$	355,370	$	51,235	$	43,342	$	20,111	$	18,798	$	10,751	$	32,421	$	178,712

Non-U.S. Commercial
Risk ratings
Pass rated	$	120,431	$	19,045	$	21,046	$	5,827	$	4,393	$	2,964	$	5,185	$	61,971
Reservable criticized	2,604		60		387		241		315		194		483		924
Total Non-U.S. Commercial	$	123,035	$	19,105	$	21,433	$	6,068	$	4,708	$	3,158	$	5,668	$	62,895

Commercial Real Estate
Risk ratings
Pass rated	$	63,433	$	11,573	$	13,619	$	6,313	$	9,474	$	5,080	$	9,066	$	8,308
Reservable criticized	4,519		9		366		567		1,513		888		1,065		111
Total Commercial Real Estate	$	67,952	$	11,582	$	13,985	$	6,880	$	10,987	$	5,968	$	10,131	$	8,419

Commercial Lease Financing
Risk ratings
Pass rated	$	12,720	$	1,583	$	2,699	$	2,076	$	2,048	$	1,404	$	2,910	$	—
Reservable criticized	236		5		23		14		76		47		71		—
Total Commercial Lease Financing	$	12,956	$	1,588	$	2,722	$	2,090	$	2,124	$	1,451	$	2,981	$	—

U.S. Small Business Commercial (2)
Risk ratings
Pass rated	$	8,910	$	1,323	$	2,174	$	1,688	$	907	$	657	$	2,030	$	131
Reservable criticized	313		3		21		41		75		53		117		3
Total U.S. Small Business Commercial	$	9,223	$	1,326	$	2,195	$	1,729	$	982	$	710	$	2,147	$	134
Total	$	568,536	$	84,836	$	83,677	$	36,878	$	37,599	$	22,038	$	53,348	$	250,160

(1) Excludes $4.5 billion of loans accounted for under the fair value option at September 30, 2022.

(2) Excludes U.S. Small Business Card loans of $8.5 billion. Refreshed FICO scores for this portfolio are $244 million for less than 620; $786 million for greater than or equal to 620 and less than 680; $2.3 billion for greater than or equal to 680 and less than 740; and $5.2 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, 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 December 31, 2021		2021		2020		2019		2018		2017		Prior
Residential Mortgage
Refreshed LTV
Less than or equal to 90 percent	$	206,562	$	87,051	$	43,597	$	23,205	$	7,392	$	10,956	$	34,361
Greater than 90 percent but less than or equal to 100 percent	1,938		1,401		331		81		17		14		94
Greater than 100 percent	759		520		112		29		11		12		75
Fully-insured loans	12,704		3,845		3,486		1,150		216		235		3,772
Total Residential Mortgage	$	221,963	$	92,817	$	47,526	$	24,465	$	7,636	$	11,217	$	38,302

Residential Mortgage
Refreshed FICO score
Less than 620	$	2,451	$	636	$	442	$	140	$	120	$	104	$	1,009
Greater than or equal to 620 and less than 680	5,199		1,511		1,123		477		294		307		1,487
Greater than or equal to 680 and less than 740	24,532		8,822		5,454		2,785		1,057		1,434		4,980
Greater than or equal to 740	177,077		78,003		37,021		19,913		5,949		9,137		27,054
Fully-insured loans	12,704		3,845		3,486		1,150		216		235		3,772
Total Residential Mortgage	$	221,963	$	92,817	$	47,526	$	24,465	$	7,636	$	11,217	$	38,302



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, 2021
Home Equity
Refreshed LTV
Less than or equal to 90 percent		$	27,594	$	1,773	$	19,095	$	6,726
Greater than 90 percent but less than or equal to 100 percent		130		55		34		41
Greater than 100 percent		211		85		54		72
Total Home Equity		$	27,935	$	1,913	$	19,183	$	6,839

Home Equity
Refreshed FICO score
Less than 620		$	893	$	244	$	209	$	440
Greater than or equal to 620 and less than 680		1,434		222		495		717
Greater than or equal to 680 and less than 740		4,625		468		2,493		1,664
Greater than or equal to 740		20,983		979		15,986		4,018
Total Home Equity		$	27,935	$	1,913	$	19,183	$	6,839

(1)Includes reverse mortgages of $1.3 billion and home equity loans of $582 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, 2021		Revolving Loans		2021		2020		2019		2018		2017		Prior		Total Credit Card as of December 31, 2021		Revolving Loans		Revolving Loans Converted to Term Loans (1)
Refreshed FICO score
Less than 620	$	685	$	13	$	179	$	115	$	129	$	79	$	101	$	69	$	3,017	$	2,857	$	160
Greater than or equal to 620 and less than 680	2,313		14		1,170		414		313		148		134		120		9,264		9,064		200
Greater than or equal to 680 and less than 740	8,530		60		4,552		1,659		1,126		466		314		353		28,347		28,155		192
Greater than or equal to 740	37,164		94		15,876		8,642		6,465		2,679		1,573		1,835		40,810		40,762		48
Other internal credit metrics (2, 3)	54,868		54,173		283		53		77		75		63		144		—		—		—
Total credit card and other consumer	$	103,560	$	54,354	$	22,060	$	10,883	$	8,110	$	3,447	$	2,185	$	2,521	$	81,438	$	80,838	$	600

(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 $54.2 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, 2021.



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

(Dollars in millions)	Total as of December 31, 2021		2021		2020		2019		2018		2017		Prior		Revolving Loans
U.S. Commercial
Risk ratings
Pass rated	$	315,618	$	55,862	$	25,012	$	23,373	$	11,439	$	10,426	$	23,877	$	165,629
Reservable criticized	10,318		598		687		1,308		1,615		514		1,072		4,524
Total U.S. Commercial	$	325,936	$	56,460	$	25,699	$	24,681	$	13,054	$	10,940	$	24,949	$	170,153

Non-U.S. Commercial
Risk ratings
Pass rated	$	110,787	$	25,749	$	8,703	$	7,133	$	4,521	$	3,016	$	3,062	$	58,603
Reservable criticized	2,479		223		324		487		275		257		216		697
Total Non-U.S. Commercial	$	113,266	$	25,972	$	9,027	$	7,620	$	4,796	$	3,273	$	3,278	$	59,300

Commercial Real Estate
Risk ratings
Pass rated	$	55,511	$	14,402	$	7,244	$	11,237	$	5,710	$	3,326	$	6,831	$	6,761
Reservable criticized	7,498		277		990		2,237		1,710		596		1,464		224
Total Commercial Real Estate	$	63,009	$	14,679	$	8,234	$	13,474	$	7,420	$	3,922	$	8,295	$	6,985

Commercial Lease Financing
Risk ratings
Pass rated	$	14,438	$	3,280	$	2,485	$	2,427	$	2,030	$	1,741	$	2,475	$	—
Reservable criticized	387		25		18		91		67		48		138		—
Total Commercial Lease Financing	$	14,825	$	3,305	$	2,503	$	2,518	$	2,097	$	1,789	$	2,613	$	—

U.S. Small Business Commercial (2)
Risk ratings
Pass rated	$	11,618	$	4,257	$	2,922	$	1,059	$	763	$	623	$	1,853	$	141
Reservable criticized	433		12		29		91		87		64		147		3
Total U.S. Small Business Commercial	$	12,051	$	4,269	$	2,951	$	1,150	$	850	$	687	$	2,000	$	144
Total	$	529,087	$	104,685	$	48,414	$	49,443	$	28,217	$	20,611	$	41,135	$	236,582

(1) Excludes $7.2 billion of loans accounted for under the fair value option at December 31, 2021.

(2) Excludes U.S. Small Business Card loans of $7.1 billion. Refreshed FICO scores for this portfolio are $192 million for less than 620; $618 million for greater than or equal to 620 and less than 680; $1.9 billion for greater than or equal to 680 and less than 740; and $4.4 billion greater than or equal to 740.

During the nine months ended September 30, 2022, commercial credit quality showed signs of stabilization. Commercial reservable criticized utilized exposure decreased to $17.7 billion at September 30, 2022 from $22.4 billion (to 2.88 percent from 3.91 percent of total commercial reservable utilized exposure) at December 31, 2021, which was broad-based across industries.

Troubled Debt Restructurings

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 $224 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, 2022, of which $56 million were classified as nonperforming and $38 million were loans fully insured.

At September 30, 2022 and December 31, 2021, 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 $125 million and $101 million at September 30, 2022 and December 31, 2021. The carrying value of consumer real estate loans, including fully-insured loans, for which formal foreclosure proceedings were in process at September 30, 2022 and December 31, 2021 was $946 million and $1.1 billion. During the nine months ended September 30, 2022 and 2021, the Corporation reclassified $151 million and $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, 2022 and 2021 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, 2022 and 2021. 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, 2022 and 2021

	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 September 30, 2022								Nine Months Ended September 30, 2022

Residential mortgage	$	420	$	379	3.35	%	3.34	%	$	1,036	$	929	3.50	%	3.36	%
Home equity	99		86		4.58		4.83		216		176		4.20		4.31
Total	$	519	$	465	3.58		3.62		$	1,252	$	1,105	3.62		3.52

	Three Months Ended September 30, 2021								Nine Months Ended September 30, 2021

Residential mortgage	$	451	$	399	3.52	%	3.49	%	$	832	$	742	3.49	%	3.44	%
Home equity	61		45		3.51		3.51		97		73		3.56		3.58
Total	$	512	$	444	3.52		3.49		$	929	$	815	3.50		3.46

(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, 2022 and 2021 carrying value for consumer real estate loans that were modified in a TDR during the three and nine months ended September 30, 2022 and 2021, by type of modification.



Consumer Real Estate – Modification Programs

	TDRs Entered into During the
	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2022		2021		2022		2021
Modifications under government programs	$	—	$	—	$	—	$	4




Modifications under proprietary programs	420		417		999		740





Loans discharged in Chapter 7 bankruptcy (1)	4		9		12		29
Trial modifications	41		18		94		42
Total modifications	$	465	$	444	$	1,105	$	815

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

The following table presents the carrying value of consumer real estate loans that entered into payment default during the three and nine months ended September 30, 2022 and 2021 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 30				Nine Months Ended September 30
(Dollars in millions)	2022		2021		2022		2021
Modifications under government programs	$	—	$	1	$	—	$	3
Modifications under proprietary programs	63		35		135		80
Loans discharged in Chapter 7 bankruptcy (1)	1		1		2		6
Trial modifications (2)	8		3		19		15
Total modifications	$	72	$	40	$	156	$	104

(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, 2022 and 2021 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, 2022 and 2021.



Credit Card and Other Consumer – TDRs Entered into During the Three and Nine Months Ended September 30, 2022 and 2021

	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 September 30, 2022								Nine Months Ended September 30, 2022

Credit card	$	86	$	90	21.17	%	3.80	%	$	198	$	206	21.02	%	3.82	%

Direct/Indirect consumer	2		2		5.65		5.65		5		4		5.48		5.48

Total	$	88	$	92	20.87		3.83		$	203	$	210	20.69		3.86

	Three Months Ended September 30, 2021								Nine Months Ended September 30, 2021
Credit card	$	66	$	71	18.48	%	3.71	%	$	189	$	200	18.47	%	4.26	%

Direct/Indirect consumer	4		2		5.20		5.20		13		8		5.53		5.53

Total	$	70	$	73	18.06		3.76		$	202	$	208	17.99		4.31

(1)Includes accrued interest and fees.

The table below presents the September 30, 2022 and 2021 carrying value for Credit Card and Other Consumer loans that were modified in a TDR during the three and nine months ended September 30, 2022 and 2021 by program type.



Credit Card and Other Consumer – TDRs by Program Type (1)




	TDRs Entered into During the Three Months Ended September 30				TDRs Entered into During the Nine Months Ended September 30
(Dollars in millions)	2022		2021		2022		2021
Internal programs	$	77	$	60	$	174	$	166
External programs	13		11		32		37
Other	2		2		4		5
Total	$	92	$	73	$	210	$	208

(1) Includes accrued interest and fees.

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 12 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 nine months ended September 30, 2022, the carrying value of the Corporation’s commercial loans that were modified as TDRs was $745 million and $1.7 billion compared to $213 million and $1.1 billion for the same periods in 2021. At September 30, 2022 and December 31, 2021, the Corporation had commitments to lend $347 million and $283 million to commercial borrowers whose loans were classified as TDRs. The balance of commercial TDRs in payment default was $117 million and $262 million at September 30, 2022 and December 31, 2021.

Loans Held-for-sale

The Corporation had LHFS of $7.6 billion and $15.6 billion at September 30, 2022 and December 31, 2021. Cash and non-cash proceeds from sales and paydowns of loans originally classified as LHFS were $27.8 billion and $27.0 billion for the nine months ended September 30, 2022 and 2021. Cash used for originations and purchases of LHFS totaled $18.7 billion and $27.0 billion for the nine months ended September 30, 2022 and 2021. Also included were non-cash net transfers into LHFS of $2.1 billion for the nine months ended September 30, 2022, primarily driven by the transfer of a $1.6 billion affinity card loan portfolio to held for sale that was sold in October 2022, and $804 million for the nine months ended September 30, 2021.

Accrued Interest Receivable

Accrued interest receivable for loans and leases and loans held-for-sale at September 30, 2022 and December 31, 2021 was $3.0 billion and $2.2 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, 2022, the Corporation reversed $81 million and $241 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 compared to $87 million and $369 million for the same periods in 2021.

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, 2022 and 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 2021 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 2021 Annual Report on Form 10-K.

The September 30, 2022 estimate for allowance for credit losses was based on various economic outlooks that included a baseline scenario derived from consensus estimates, a moderate recession scenario, a downside scenario to account for persistent inflation and interest rates at levels above what is factored into the baseline, and a tail risk scenario. In addition, an upside scenario considers the potential for improvement in the consensus outlooks. The weighted economic outlook assumes that the U.S. average unemployment rate will be above five percent in the fourth quarter of 2023 and fall just below five percent by the end of 2024. Additionally, in this economic outlook, U.S. gross domestic product is forecasted to grow at 0.2 percent and 1.5 percent year-over-year in the fourth quarters of 2023 and 2024. While asset quality continues to improve and the pandemic appears to have largely dissipated, uncertainty remains regarding broader economic impacts as a result of inflationary pressures, rising rates and the current geopolitical situation and could lead to adverse impacts to credit quality metrics in future periods. As such, the Corporation has factored the aforementioned uncertainties into its allowance for credit losses.

The allowance for credit losses at September 30, 2022 was $13.8 billion, a decrease of $26 million compared to December 31, 2021. The decrease in the allowance for credit losses was primarily driven by asset quality improvement and reduced pandemic uncertainties, partially offset by reserve builds related to loan growth, a dampening macroeconomic outlook and Russian exposure. The change in the allowance for credit losses was comprised of a net decrease of $85 million in the allowance for loan and lease losses and a $59 million increase in the reserve for unfunded lending commitments. The decrease in the allowance for credit losses was attributed to $191 million in the consumer real estate portfolio, partially offset by an increase of $20 million in the credit card and other consumer portfolio, and an increase of $145 million in the commercial portfolio. The provision for credit losses increased $1.5 billion to an expense of $898 million, and $5.6 billion to an expense of $1.5 billion for the three and nine months ended September 30, 2022 compared to the same periods in 2021. The provision for credit losses for the three months ended September 30, 2022 was primarily driven by loan growth and a dampening macroeconomic outlook, and the nine-month period was driven by the same factors as well as a reserve build related to Russian exposure, partially offset by asset quality improvement and reduced pandemic uncertainties. For the same periods in the prior year, the benefit in the provision for credit losses was due to an improved macroeconomic outlook.

Outstanding loans and leases excluding loans accounted for under the fair value option increased $56.3 billion during the nine months ended September 30, 2022 driven by commercial loans, which increased $40.9 billion, driven by broad-based

growth, and consumer loans, which increased $15.4 billion, primarily driven by residential mortgage and credit card.

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



	Consumer Real Estate		Credit Card and Other Consumer		Commercial		Total
(Dollars in millions)	Three Months Ended September 30, 2022
Allowance for loan and lease losses, July 1	$	396	$	6,216	$	5,361	$	11,973
Loans and leases charged off	(13)		(696)		(100)		(809)
Recoveries of loans and leases previously charged off	34		216		39		289
Net charge-offs	21		(480)		(61)		(520)

Provision for loan and lease losses	(37)		760		122		845
Other	4		—		—		4
Allowance for loan and lease losses, September 30	384		6,496		5,422		12,302
Reserve for unfunded lending commitments, July 1	79		—		1,382		1,461
Provision for unfunded lending commitments	(1)		—		54		53
Other	—		—		1		1
Reserve for unfunded lending commitments, September 30	78		—		1,437		1,515
Allowance for credit losses, September 30	$	462	$	6,496	$	6,859	$	13,817

	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 off	56		256		31		343
Net charge-offs	41		(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 1	107		—		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

(Dollars in millions)	Nine Months Ended September 30, 2022
Allowance for loan and lease losses, January 1	$	557	$	6,476	$	5,354	$	12,387
Loans and leases charged off	(196)		(2,007)		(284)		(2,487)
Recoveries of loans and leases previously charged off	195		684		125		1,004
Net charge-offs	(1)		(1,323)		(159)		(1,483)
Provision for loan and lease losses	(179)		1,344		229		1,394
Other	7		(1)		(2)		4
Allowance for loan and lease losses, September 30	384		6,496		5,422		12,302
Reserve for unfunded lending commitments, January 1	96		—		1,360		1,456
Provision for unfunded lending commitments	(18)		—		75		57
Other	—		—		2		2
Reserve for unfunded lending commitments, September 30	78		—		1,437		1,515
Allowance for credit losses, September 30	$	462	$	6,496	$	6,859	$	13,817

	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 off	170		757		245		1,172
Net charge-offs	110		(1,645)		(346)		(1,881)
Provision for loan and lease losses	(414)		(929)		(2,423)		(3,766)
Other	1		—		(1)		—
Allowance for loan and lease losses, September 30	555		6,639		5,961		13,155
Reserve for unfunded lending commitments, January 1	137		—		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