The Corporation has entered into long-term credit protection agreements with FNMA and FHLMC on loans totaling $9.5 billion and $10.5 billion at December 31, 2022 and 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 $1.1 billion at December 31, 2022 from $1.6 billion at December 31, 2021, as paydowns and returns to performing status more than offset new downgrades to nonaccrual status. Consumer nonperforming loans decreased to $2.8 billion at December 31, 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 whose prior-period deferrals expired and 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 December 31, 2022 and 2021. Nonperforming 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.



Credit Quality


	Nonperforming Loans and Leases						Accruing Past Due 90 Days or More
	December 31
(Dollars in millions)	2022			2021			2022			2021
Residential mortgage (1)	$	2,167		$	2,284		$	368		$	634
With no related allowance (2)	1,973			1,950			—			—
Home equity (1)	510			630			—			—
With no related allowance (2)	393			414			—			—
Credit Card	n/a			n/a			717			487
Direct/indirect consumer	77			75			2			11

Total consumer	2,754			2,989			1,087			1,132
U.S. commercial	553			825			190			171
Non-U.S. commercial	212			268			25			19
Commercial real estate	271			382			46			40
Commercial lease financing	4			80			8			8
U.S. small business commercial	14			23			355			87
Total commercial	1,054			1,578			624			325
Total nonperforming loans	$	3,808		$	4,567		$	1,711		$	1,457
Percentage of outstanding loans and leases	0.37		%	0.47		%	0.16		%	0.15		%

(1)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At December 31, 2022 and 2021 residential mortgage included $260 million and $444 million of loans on which interest had been curtailed by the FHA, and therefore were no longer accruing interest, although principal was still insured, and $108 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. Within the Consumer Real Estate portfolio segment, the primary credit quality indicators are refreshed 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 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 and gross charge-offs for the Corporation's Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments by year of origination, except for revolving loans and revolving loans that were modified into term loans, which are shown on an aggregate basis at December 31, 2022.



Residential Mortgage – Credit Quality Indicators By Vintage

















			Term Loans by Origination Year
(Dollars in millions)	Total as of December 31, 2022		2022		2021		2020		2019		2018		Prior
Residential Mortgage
Refreshed LTV
Less than or equal to 90 percent	$	215,713	$	39,625	$	81,437	$	37,228	$	18,980	$	5,734	$	32,709
Greater than 90 percent but less than or equal to 100 percent	1,615		950		530		93		15		8		19
Greater than 100 percent	648		374		169		43		15		8		39
Fully-insured loans	11,694		580		3,667		3,102		949		156		3,240
Total Residential Mortgage	$	229,670	$	41,529	$	85,803	$	40,466	$	19,959	$	5,906	$	36,007

Residential Mortgage
Refreshed FICO score
Less than 620	$	2,156	$	377	$	518	$	373	$	124	$	84	$	680
Greater than or equal to 620 and less than 680	4,978		1,011		1,382		840		329		233		1,183
Greater than or equal to 680 and less than 740	25,444		5,411		8,290		4,369		2,187		830		4,357
Greater than or equal to 740	185,398		34,150		71,946		31,782		16,370		4,603		26,547
Fully-insured loans	11,694		580		3,667		3,102		949		156		3,240
Total Residential Mortgage	$	229,670	$	41,529	$	85,803	$	40,466	$	19,959	$	5,906	$	36,007


Gross charge-offs	$	161	$	—	$	6	$	5	$	6	$	1	$	143



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, 2022
Home Equity
Refreshed LTV
Less than or equal to 90 percent	$	26,395	$	1,304	$	19,960	$	5,131
Greater than 90 percent but less than or equal to 100 percent	62		20		24		18
Greater than 100 percent	106		37		35		34
Total Home Equity	$	26,563	$	1,361	$	20,019	$	5,183

Home Equity
Refreshed FICO score
Less than 620	$	683	$	166	$	189	$	328
Greater than or equal to 620 and less than 680	1,190		152		507		531
Greater than or equal to 680 and less than 740	4,321		312		2,747		1,262
Greater than or equal to 740	20,369		731		16,576		3,062
Total Home Equity	$	26,563	$	1,361	$	20,019	$	5,183

Gross charge-offs	$	45	$	5	$	24	$	16

(1)Includes reverse mortgages of $937 million and home equity loans of $424 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, 2022		Revolving Loans		2022		2021		2020		2019		2018		Prior		Total Credit Card as of December 31, 2022		Revolving Loans		Revolving Loans Converted to Term Loans (1)
Refreshed FICO score
Less than 620	$	847	$	12	$	237	$	301	$	113	$	84	$	43	$	57	$	4,056	$	3,866	$	190
Greater than or equal to 620 and less than 680	2,521		12		1,108		816		269		150		69		97		10,994		10,805		189
Greater than or equal to 680 and less than 740	8,895		52		4,091		2,730		992		520		214		296		32,186		32,017		169
Greater than or equal to 740	39,679		83		16,663		11,392		5,630		2,992		1,236		1,683		46,185		46,142		43
Other internal credit metrics (2,3)	54,294		53,404		259		305		70		57		40		159		—		—		—
Total credit card and other consumer	$	106,236	$	53,563	$	22,358	$	15,544	$	7,074	$	3,803	$	1,602	$	2,292	$	93,421	$	92,830	$	591


Gross charge-offs	$	232	$	7	$	31	$	79	$	34	$	27	$	14	$	40	$	1,985	$	1,909	$	76

(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 $53.4 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, 2022.



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

(Dollars in millions)	Total as of December 31, 2022		2022		2021		2020		2019		2018		Prior		Revolving Loans
U.S. Commercial
Risk ratings
Pass rated	$	348,447	$	61,200	$	39,717	$	18,609	$	16,566	$	8,749	$	30,282	$	173,324
Reservable criticized	10,034		278		794		697		884		1,202		856		5,323
Total U.S. Commercial	$	358,481	$	61,478	$	40,511	$	19,306	$	17,450	$	9,951	$	31,138	$	178,647
Gross charge-offs	$	151	$	2	$	24	$	24	$	9	$	6	$	13	$	73

Non-U.S. Commercial
Risk ratings
Pass rated	$	121,890	$	24,839	$	19,098	$	5,183	$	3,882	$	2,423	$	4,697	$	61,768
Reservable criticized	2,589		45		395		331		325		98		475		920
Total Non-U.S. Commercial	$	124,479	$	24,884	$	19,493	$	5,514	$	4,207	$	2,521	$	5,172	$	62,688
Gross charge-offs	$	41	$	—	$	3	$	1	$	—	$	37	$	—	$	—

Commercial Real Estate
Risk ratings
Pass rated	$	64,619	$	15,290	$	13,089	$	5,756	$	9,013	$	4,384	$	8,606	$	8,481
Reservable criticized	5,147		11		837		545		1,501		1,151		1,017		85
Total Commercial Real Estate	$	69,766	$	15,301	$	13,926	$	6,301	$	10,514	$	5,535	$	9,623	$	8,566
Gross charge-offs	$	75	$	—	$	—	$	6	$	—	$	26	$	43	$	—

Commercial Lease Financing
Risk ratings
Pass rated	$	13,404	$	3,255	$	2,757	$	1,955	$	1,578	$	1,301	$	2,558	$	—
Reservable criticized	240		9		35		12		71		50		63		—
Total Commercial Lease Financing	$	13,644	$	3,264	$	2,792	$	1,967	$	1,649	$	1,351	$	2,621	$	—
Gross charge-offs	$	8	$	—	$	4	$	—	$	4	$	—	$	—	$	—

U.S. Small Business Commercial (2)
Risk ratings
Pass rated	$	8,726	$	1,825	$	1,953	$	1,408	$	864	$	624	$	1,925	$	127
Reservable criticized	329		11		35		48		76		51		105		3
Total U.S. Small Business Commercial	$	9,055	$	1,836	$	1,988	$	1,456	$	940	$	675	$	2,030	$	130
Gross charge-offs	$	31	$	—	$	1	$	11	$	4	$	1	$	6	$	8

Total	$	575,425	$	106,763	$	78,710	$	34,544	$	34,760	$	20,033	$	50,584	$	250,031

Total gross charge-offs	$	306	$	2	$	32	$	42	$	17	$	70	$	62	$	81

(1) Excludes $5.4 billion of loans accounted for under the fair value option at December 31, 2022.

(2) Excludes U.S. Small Business Card loans of $8.5 billion. Refreshed FICO scores for this portfolio are $297 million for less than 620; $859 million for greater than or equal to 620 and less than 680; $2.4 billion for greater than or equal to 680 and less than 740; and $5.0 billion greater than or equal to 740. Excludes U.S. Small Business Card loans gross charge-offs of $172 million.

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 year of origination, except for revolving loans and revolving loans that were modified into term loans, which are shown on an aggregate basis at December 31, 2021.



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 2022, commercial credit quality showed some signs of stabilization. Commercial reservable criticized utilized exposure decreased to $19.3 billion at December 31, 2022 from $22.4 billion (to 3.12 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 $211 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 December 31, 2022, of which $53 million were classified as nonperforming and $33 million were loans fully insured.

At December 31, 2022 and 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 $121 million and $101 million at December 31, 2022 and 2021. The carrying value of consumer real estate loans, including fully-insured loans, for which formal foreclosure proceedings were in process at December 31, 2022 and 2021 was $871 million and $1.1 billion. During 2022 and 2021, the Corporation reclassified $190 million and $64 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 December 31, 2022, 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 2022, 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 2022, 2021 and 2020

		Unpaid Principal Balance		Carrying Value		Pre-Modification Interest Rate		Post-Modification Interest Rate (1)

(Dollars in millions)	December 31, 2022
Residential mortgage		$	1,144	$	1,015	3.52	%	3.40	%
Home equity		238		191		4.61		4.65
Total		$	1,382	$	1,206	3.71		3.62


	December 31, 2021
Residential mortgage		$	891	$	788	3.48	%	3.38	%
Home equity		107		77		3.60		3.59
Total		$	998	$	865	3.49		3.41

	December 31, 2020
Residential mortgage		$	732	$	646	3.66	%	3.59	%
Home equity		87		69		3.67		3.61
Total		$	819	$	715	3.66		3.59

(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 December 31, 2022, 2021 and 2020 carrying value for consumer real estate loans that were modified in a TDR during 2022, 2021 and 2020, by type of modification.



Consumer Real Estate – Modification Programs

	TDRs Entered into During

(Dollars in millions)	2022		2021		2020
Modifications under government programs	$	2	$	4	$	13




Modifications under proprietary programs	1,100		774		570





Loans discharged in Chapter 7 bankruptcy (1)	14		33		53
Trial modifications	90		54		79
Total modifications	$	1,206	$	865	$	715

(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 2022, 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


(Dollars in millions)	2022		2021		2020
Modifications under government programs	$	—	$	4	$	16
Modifications under proprietary programs	189		128		51
Loans discharged in Chapter 7 bankruptcy (1)	2		9		19
Trial modifications (2)	25		19		54
Total modifications	$	216	$	160	$	140

(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 December 31, 2022, 2021 and 2020 unpaid principal balance, carrying value, and average pre- and post-modification interest rates of loans that were modified in TDRs during 2022, 2021 and 2020.



Credit Card and Other Consumer – TDRs Entered into During 2022, 2021 and 2020

		Unpaid Principal Balance		Carrying Value (1)		Pre-Modification Interest Rate		Post-Modification Interest Rate

(Dollars in millions)	December 31, 2022
Credit card		$	284	$	293	22.34	%	3.89	%

Direct/Indirect consumer		6		5		5.51		5.50

Total		$	290	$	298	22.06		3.92

	December 31, 2021
Credit card		$	237	$	248	18.45	%	4.09	%

Direct/Indirect consumer		23		16		5.88		5.88

Total		$	260	$	264	17.68		4.20

		December 31, 2020
Credit card		$	269	$	277	18.16	%	5.63	%

Direct/Indirect consumer		52		37		5.83		5.83

Total		$	321	$	314	16.70		5.65

(1)Includes accrued interest and fees.

The table below presents the December 31, 2022, 2021 and 2020 carrying value for Credit Card and Other Consumer loans that were modified in a TDR during 2022, 2021 and 2020 by program type.



Credit Card and Other Consumer – TDRs by Program Type at December 31 (1)






(Dollars in millions)	2022		2021		2020
Internal programs	$	251	$	214	$	225
External programs	44		44		73
Other	3		6		16
Total	$	298	$	264	$	314

(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 15 percent of new credit card TDRs and 15 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 2022, the carrying value of the Corporation’s commercial loans that were modified as TDRs was $1.9 billion compared to $1.3 billion and $1.2 billion for 2021 and 2020. At December 31, 2022, 2021 and 2020, the Corporation had commitments to lend $358 million, $283 million and $402 million to commercial borrowers whose loans were classified as TDRs. The balance of commercial TDRs in payment default was $105 million, $262 million and $218 million at December 31, 2022, 2021 and 2020.

Loans Held-for-sale

The Corporation had LHFS of $6.9 billion and $15.6 billion at December 31, 2022 and 2021. Cash and non-cash proceeds from sales and paydowns of loans originally classified as LHFS were $32.0 billion, $43.6 billion and $20.1 billion for 2022, 2021 and 2020, respectively. Cash used for originations and purchases of LHFS totaled $24.9 billion, $37.3 billion and $19.7 billion for 2022, 2021 and 2020, respectively. Also included were non-cash net transfers into LHFS of $1.9 billion during 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 $808 million during 2021.

Accrued Interest Receivable

Accrued interest receivable for loans and leases and loans held-for-sale at December 31, 2022 and 2021 was $3.8 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 2022 and 2021, the Corporation reversed $332 million and $446 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 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

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.

The December 31, 2022 estimate for allowance for credit losses was based on various economic scenarios, including a baseline scenario derived from consensus estimates, an adverse scenario reflecting an extended moderate recession, a downside scenario reflecting persistent inflation and interest rates above the baseline scenario, a tail risk scenario similar to the severely adverse scenario used in stress testing and an upside scenario that considers the potential for improvement above the baseline scenario. The overall economic outlook is weighted 95 percent towards a recessionary environment in 2023, with continued inflationary pressures leading to lower GDP and higher unemployment rate expectations as compared to the prior year. The weighted economic outlook assumes that the U.S. average unemployment rate will be above five and a half percent by the fourth quarter of 2023 and will slowly decline to five percent by the fourth quarter of 2024. Additionally, in this economic outlook, U.S. gross domestic product is forecasted to contract at 0.4 percent and grow at 1.2 percent year-over-year in the fourth quarters of 2023 and 2024. For comparison, as of December 31, 2021, the weighted economic outlook for the U.S. average unemployment rate was forecasted to be just above five percent by the fourth quarter of 2022 and slowly decline to just under five percent by the fourth quarter of 2023 and U.S. gross domestic product was forecasted at 2.1 percent and 1.9 percent year-over-year in the fourth quarters of 2022 and 2023.

The allowance for credit losses at December 31, 2022 was $14.2 billion, an increase of $379 million compared to December 31, 2021. The increase in the allowance for credit losses was primarily driven by loan growth and a dampened macroeconomic outlook, partially offset by a reserve release for reduced pandemic uncertainties. The change in the allowance for credit losses was comprised of a net increase of $295 million in the allowance for loan and lease losses and an increase of $84 million in the reserve for unfunded lending commitments. The increase in the allowance for credit losses was attributed to increases in the credit card and other consumer portfolios of $341 million, and commercial portfolio of $177 million, partially offset by a decrease in the consumer real estate portfolio of $139 million. The provision for credit losses increased $7.1 billion to an expense of $2.5 billion in 2022 compared to a benefit of $4.6 billion in 2021 and an expense of $11.3 billion in 2020. The increase in the provision for credit losses in 2022 was primarily driven by loan growth and a dampened macroeconomic outlook, partially offset by reduced pandemic uncertainties. The benefit in 2021 was primarily due to an improved macroeconomic outlook and credit quality.

Outstanding loans and leases excluding loans accounted for under the fair value option increased $68.7 billion in 2022 primarily driven by commercial loans, which increased $47.7 billion, driven by broad-based growth, and consumer loans which

increased $21.0 billion, primarily driven by credit card and residential mortgage.

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)	2022
Allowance for loan and lease losses, January 1	$	557	$	6,476	$	5,354	$	12,387
Loans and leases charged off	(206)		(2,755)		(478)		(3,439)
Recoveries of loans and leases previously charged off	224		882		161		1,267
Net charge-offs	18		(1,873)		(317)		(2,172)
Provision for loan and lease losses	(164)		2,215		409		2,460
Other	9		(1)		(1)		7
Allowance for loan and lease losses, December 31	420		6,817		5,445		12,682
Reserve for unfunded lending commitments, January 1	96		—		1,360		1,456
Provision for unfunded lending commitments	(3)		—		86		83
Other	1		—		—		1
Reserve for unfunded lending commitments, December 31	94		—		1,446		1,540
Allowance for credit losses, December 31	$	514	$	6,817	$	6,891	$	14,222

	2021
Allowance for loan and lease losses, January 1	$	858	$	9,213	$	8,731	$	18,802
Loans and leases charged off	(78)		(3,000)		(719)		(3,797)
Recoveries of loans and leases previously charged off	225		1,006		323		1,554
Net charge-offs	147		(1,994)		(396)		(2,243)
Provision for loan and lease losses	(449)		(744)		(2,980)		(4,173)
Other	1		1		(1)		1
Allowance for loan and lease losses, December 31	557		6,476		5,354		12,387
Reserve for unfunded lending commitments, January 1	137		—		1,741		1,878
Provision for unfunded lending commitments	(41)		—		(380)		(421)
Other	—		—		(1)		(1)
Reserve for unfunded lending commitments, December 31	96		—		1,360		1,456
Allowance for credit losses, December 31	$	653	$	6,476	$	6,714	$	13,843

	2020
Allowance for loan and lease losses, January 1	$	440	$	7,430	$	4,488	$	12,358
Loans and leases charged off	(98)		(3,646)		(1,675)		(5,419)
Recoveries of loans and leases previously charged off	201		891		206		1,298
Net charge-offs	103		(2,755)		(1,469)		(4,121)
Provision for loan and lease losses	307		4,538		5,720		10,565
Other	8		—		(8)		—
Allowance for loan and lease losses, December 31	858		9,213		8,731		18,802
Reserve for unfunded lending commitments, January 1	119		—		1,004		1,123
Provision for unfunded lending commitments	18		—		737		755
Reserve for unfunded lending commitments, December 31	137		—		1,741		1,878
Allowance for credit losses, December 31	$	995	$	9,213	$	10,472	$	20,680