The Corporation has entered into long-term credit protection agreements with FNMA and FHLMC on loans totaling $9.3 billion and $9.5 billion at March 31, 2023 and December 31, 2022, 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 increased to $1.2 billion at March 31, 2023 from $1.1 billion at December 31, 2022, driven by the commercial real estate office property type. Consumer nonperforming loans decreased to $2.7 billion at March 31, 2023 from $2.8 billion at December 31, 2022

primarily due to decreases from consumer real estate loans as returns to performing status and paydowns more than offset new additions.

The following table presents the Corporation’s nonperforming loans and leases and loans accruing past due 90 days or more at March 31, 2023 and December 31, 2022. 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 to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K.



Credit Quality


	Nonperforming Loans and Leases						Accruing Past Due 90 Days or More

(Dollars in millions)	March 31 2023			December 31 2022			March 31 2023			December 31 2022
Residential mortgage (1)	$	2,125		$	2,167		$	338		$	368
With no related allowance (2)	1,935			1,973			—			—
Home equity (1)	488			510			—			—
With no related allowance (2)	396			393			—			—
Credit Card	n/a			n/a			828			717
Direct/indirect consumer	101			77			2			2

Total consumer	2,714			2,754			1,168			1,087
U.S. commercial	559			553			112			190
Non-U.S. commercial	125			212			92			25
Commercial real estate	502			271			35			46
Commercial lease financing	4			4			6			8
U.S. small business commercial	14			14			261			355
Total commercial	1,204			1,054			506			624
Total nonperforming loans	$	3,918		$	3,808		$	1,674		$	1,711
Percentage of outstanding loans and leases	0.38		%	0.37		%	0.16		%	0.16		%

(1)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At March 31, 2023 and December 31, 2022 residential mortgage included $232 million and $260 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 $108 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 2022 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 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 March 31, 2023.



Residential Mortgage – Credit Quality Indicators By Vintage

















			Term Loans by Origination Year
(Dollars in millions)	Total as of March 31, 2023		2023		2022		2021		2020		2019		Prior
Residential Mortgage
Refreshed LTV
Less than or equal to 90 percent	$	214,159	$	3,115	$	39,127	$	79,059	$	37,281	$	18,552	$	37,025
Greater than 90 percent but less than or equal to 100 percent	2,352		196		1,404		612		96		19		25
Greater than 100 percent	934		105		479		240		46		16		48
Fully-insured loans	11,382		44		464		3,624		3,033		924		3,293
Total Residential Mortgage	$	228,827	$	3,460	$	41,474	$	83,535	$	40,456	$	19,511	$	40,391

Residential Mortgage
Refreshed FICO score
Less than 620	$	2,112	$	21	$	385	$	519	$	357	$	109	$	721
Greater than or equal to 620 and less than 680	4,885		68		1,082		1,266		818		327		1,324
Greater than or equal to 680 and less than 740	23,704		309		5,033		7,482		4,046		2,033		4,801
Greater than or equal to 740	186,744		3,018		34,510		70,644		32,202		16,118		30,252
Fully-insured loans	11,382		44		464		3,624		3,033		924		3,293
Total Residential Mortgage	$	228,827	$	3,460	$	41,474	$	83,535	$	40,456	$	19,511	$	40,391


Gross charge-offs	$	8	$	—	$	3	$	1	$	1	$	—	$	3



Home Equity - Credit Quality Indicators

	Total		Home Equity Loans and Reverse Mortgages (1)		Revolving Loans		Revolving Loans Converted to Term Loans
(Dollars in millions)	March 31, 2023
Home Equity
Refreshed LTV
Less than or equal to 90 percent	$	25,692	$	1,238	$	19,627	$	4,827
Greater than 90 percent but less than or equal to 100 percent	72		21		35		16
Greater than 100 percent	104		36		38		30
Total Home Equity	$	25,868	$	1,295	$	19,700	$	4,873

Home Equity
Refreshed FICO score
Less than 620	$	677	$	167	$	197	$	313
Greater than or equal to 620 and less than 680	1,138		144		504		490
Greater than or equal to 680 and less than 740	4,186		292		2,728		1,166
Greater than or equal to 740	19,867		692		16,271		2,904
Total Home Equity	$	25,868	$	1,295	$	19,700	$	4,873

Gross charge-offs	$	6	$	1	$	3	$	2

(1)Includes reverse mortgages of $893 million and home equity loans of $402 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 March 31, 2023		Revolving Loans		2023		2022		2021		2020		2019		Prior		Total Credit Card as of March 31, 2023		Revolving Loans		Revolving Loans Converted to Term Loans (1)
Refreshed FICO score
Less than 620	$	940	$	12	$	32	$	308	$	318	$	113	$	76	$	81	$	4,268	$	4,052	$	216
Greater than or equal to 620 and less than 680	2,463		11		245		1,022		707		225		121		132		10,732		10,526		206
Greater than or equal to 680 and less than 740	8,693		49		1,059		3,563		2,375		821		422		404		31,858		31,673		185
Greater than or equal to 740	40,766		77		5,101		15,273		10,501		4,837		2,527		2,450		45,611		45,566		45
Other internal credit metrics (2,3)	51,678		50,942		52		181		191		63		59		190		—		—		—
Total credit card and other consumer	$	104,540	$	51,091	$	6,489	$	20,347	$	14,092	$	6,059	$	3,205	$	3,257	$	92,469	$	91,817	$	652


Gross charge-offs	$	40	$	1	$	—	$	17	$	11	$	4	$	2	$	5	$	650	$	633	$	17

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

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

(3)Direct/indirect consumer includes $50.9 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 March 31, 2023.



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

(Dollars in millions)	Total as of March 31, 2023		2023		2022		2021		2020		2019		Prior		Revolving Loans
U.S. Commercial
Risk ratings
Pass rated	$	350,224	$	9,255	$	55,496	$	33,787	$	17,310	$	15,264	$	37,296	$	181,816
Reservable criticized	10,431		49		605		803		582		885		1,925		5,582
Total U.S. Commercial	$	360,655	$	9,304	$	56,101	$	34,590	$	17,892	$	16,149	$	39,221	$	187,398
Gross charge-offs	$	59	$	—	$	3	$	18	$	—	$	—	$	5	$	33

Non-U.S. Commercial
Risk ratings
Pass rated	$	122,545	$	4,204	$	19,937	$	18,102	$	4,634	$	3,736	$	6,585	$	65,347
Reservable criticized	2,282		81		144		321		277		254		225		980
Total Non-U.S. Commercial	$	124,827	$	4,285	$	20,081	$	18,423	$	4,911	$	3,990	$	6,810	$	66,327
Gross charge-offs	$	23	$	—	$	—	$	8	$	7	$	1	$	—	$	7

Commercial Real Estate
Risk ratings
Pass rated	$	67,512	$	1,856	$	16,836	$	13,350	$	5,281	$	8,861	$	12,414	$	8,914
Reservable criticized	5,539		—		11		829		538		1,737		2,217		207
Total Commercial Real Estate	$	73,051	$	1,856	$	16,847	$	14,179	$	5,819	$	10,598	$	14,631	$	9,121
Gross charge-offs	$	24	$	—	$	—	$	—	$	—	$	13	$	11	$	—

Commercial Lease Financing
Risk ratings
Pass rated	$	13,227	$	613	$	3,208	$	2,576	$	1,775	$	1,428	$	3,627	$	—
Reservable criticized	221		—		20		43		17		36		105		—
Total Commercial Lease Financing	$	13,448	$	613	$	3,228	$	2,619	$	1,792	$	1,464	$	3,732	$	—
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

U.S. Small Business Commercial (2)
Risk ratings
Pass rated	$	8,653	$	453	$	1,806	$	1,833	$	1,209	$	826	$	2,401	$	125
Reservable criticized	352		—		22		52		52		72		151		3
Total U.S. Small Business Commercial	$	9,005	$	453	$	1,828	$	1,885	$	1,261	$	898	$	2,552	$	128
Gross charge-offs	$	13	$	—	$	—	$	—	$	8	$	1	$	1	$	3

Total	$	580,986	$	16,511	$	98,085	$	71,696	$	31,675	$	33,099	$	66,946	$	262,974

Total gross charge-offs	$	119	$	—	$	3	$	26	$	15	$	15	$	17	$	43

(1) Excludes $4.1 billion of loans accounted for under the fair value option at March 31, 2023.

(2) Excludes U.S. Small Business Card loans of $9.2 billion. Refreshed FICO scores for this portfolio are $360 million for less than 620; $931 million for greater than or equal to 620 and less than 680; $2.5 billion for greater than or equal to 680 and less than 740; and $5.4 billion greater than or equal to 740. Excludes U.S. Small Business Card loans gross charge-offs of $62 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, 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.

During the three months ended March 31, 2023, commercial reservable criticized utilized exposure increased to $19.8 billion at March 31, 2023 from $19.3 billion (to 3.17 percent from 3.12 percent of total commercial reservable utilized exposure) at December 31, 2022, primarily driven by our U.S. commercial and industrial portfolio as well as commercial real estate.

Loan Modifications to Borrowers in Financial Difficulty

As part of its credit risk management, the Corporation may modify a loan agreement with a borrower experiencing financial difficulties through a refinancing or restructuring of the borrower’s loan agreement (modification programs).

Consumer Real Estate

The following modification programs are offered for consumer real estate loans to borrowers experiencing financial difficulties. These modifications represented 0.09 percent and 0.15 percent of outstanding residential mortgage and home equity loans at March 31, 2023.

Forbearance and Other Payment Plans: Forbearance plans generally consist of the Corporation suspending the borrower’s payments for a defined period with those payments then due at the conclusion of the forbearance period. The aging status of a loan is generally frozen when it enters into a forbearance plan. Alternatively, the Corporation may offer the borrower a payment plan, which allows the borrower to repay past due amounts through payments over a defined period. At March 31, 2023, the amortized cost of residential mortgage and home equity loans that were modified through these plans during the three months ended March 31, 2023 was $158 million and $30 million. The weighted-average duration of these modifications was 8.2 months and 8.9 months. The total forborne payments for these modifications was $7 million and $3 million for residential mortgage and home equity loans. If a borrower is unable to fulfill their obligations under the forbearance plans, they may be offered a trial or permanent modification.

Trial Modifications: Trial modification plans generally consist of the Corporation offering a borrower modified loan terms that reduce their contractual payments temporarily over a three-to-four-month trial period. If the customer successfully makes the modified payments during the trial period and formally accepts the modified terms, the modified loan terms become permanent. At March 31, 2023, the amortized cost of residential mortgage and home equity loans entering trial modifications during the three months ended March 31, 2023 was $21 million and $9 million.

Permanent Modifications: Permanent modifications include borrowers that have completed a trial modification and have had their contractual payment terms permanently modified, as well as borrowers that proceed directly to a permanent modification without a trial period. In a permanent modification, the borrower’s payment terms are typically modified in more than one manner but generally include a term extension and an interest rate reduction. At times, the permanent modification may also include principal forgiveness and/or a deferral of past due principal and interest amounts to the end of the loan term. The combinations utilized are based on modifying the terms that give the borrower an improved ability to meet the contractual obligations. At March 31, 2023, the amortized cost of residential mortgage and home equity loans that were granted a permanent modification during the three months ended March 31, 2023 was $47 million and $10 million. The term extensions granted for residential mortgage and home equity permanent modifications vary widely and can be up to 30 years, but are mostly in the range of 1 to 10 years and 1 to 15 years. The weighted-average term extension of permanent modifications for residential mortgage and home equity loans was 7.7 years and 12.1 years, while the weighted-average interest rate reduction was 1.50 percent and 2.37 percent. Principal forgiveness and payment deferrals were insignificant for the three months ended March 31, 2023.

For consumer real estate borrowers in financial difficulty that received a forbearance, trial or permanent modification, there were no commitments to lend additional funds at March 31, 2023. Borrowers with a home equity line of credit that received a forbearance plan could have all or a portion of their lines reinstated in the future if they cure their payment default and meet certain Bank conditions.

Chapter 7 Discharges: If a borrower’s consumer real estate obligation is discharged in a Chapter 7 bankruptcy proceeding, the contractual payment terms of the loan are not modified, although they can no longer be enforced against the individual borrower. The Corporation’s ability to collect amounts due on the loan is limited to enforcement against the property through the foreclosure and sale of the collateral. The Corporation will only pursue foreclosure upon default by the borrower, and otherwise will recover pursuant to the loan terms or at the time of a sale. Residential mortgage and home equity loans that were granted a Chapter 7 discharge were insignificant for the three months ended March 31, 2023.

The Corporation tracks the performance of modified loans to assess effectiveness of modification programs. Defaults of modified consumer real estate loans since January 1, 2023 were insignificant during the three months ended March 31, 2023. The table below provides aging information as of March 31, 2023 for consumer real estate loans modified since January 1, 2023.



Consumer Real Estate - Payment Status of Modifications to Borrowers in Financial Difficulty (1)

	Current		30–89 Days Past Due		90+ Days Past Due		Total
(Dollars in millions)	March 31, 2023

Residential mortgage	$	126	$	49	$	30	$	205
Home equity	23		7		10		40




Total	$	149	$	56	$	40	$	245

(1)Excludes trial modifications and Chapter 7 discharges.

Consumer real estate foreclosed properties totaled $117 million and $121 million at March 31, 2023 and December 31, 2022. The carrying value of consumer real estate loans, including fully-insured loans, for which formal foreclosure proceedings were in process at March 31, 2023 and December 31, 2022 was $819 million and $871 million. During the three months ended March 31, 2023 and 2022, the Corporation reclassified $37 million and $56 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.

Credit Card and Other Consumer

Credit card and other consumer loans are primarily modified by placing the customer on a fixed payment plan with a fixed interest rate. As of March 31, 2023, substantially all payment plans provided to customers had a 60-month term. In certain circumstances, the Corporation will forgive a portion of the outstanding balance if the borrower makes payments up to a set amount. The Corporation makes modifications directly with borrowers for loans held by the Corporation (internal programs) as well as through third-party renegotiation agencies that provide solutions to customers’ entire unsecured debt structures (external programs). The March 31, 2023 amortized cost of credit card and other consumer loans that were modified through these programs during the three months ended March 31, 2023 was $157 million. The financial effect of modifications resulted in a weighted-average interest rate reduction of 18.65 percent and principal forgiveness of $11 million.

The Corporation tracks the performance of modified loans to assess the effectiveness of modification programs. Defaults of modified credit card and other consumer loans since January 1, 2023 were insignificant during the three months ended March 31, 2023. Of the $157 million in modified credit card and other consumer loans to borrowers experiencing financial difficulty as of March 31, 2023, $109 million were current, $24 million were 30-89 days past due, and $24 million were greater than 90 days past due. These modifications represented 0.08 percent of outstanding credit card and other consumer loans at March 31, 2023.

Commercial Loans

Modifications of loans to commercial borrowers experiencing financial difficulty are designed to reduce the Corporation’s loss exposure while providing borrowers with an opportunity to work through financial difficulties, often to avoid foreclosure or bankruptcy. Each modification is unique, reflects the borrower’s individual circumstances and is designed to benefit the borrower while mitigating the Corporation’s risk exposure. Commercial modifications are primarily term extensions and payment forbearances. Payment forbearances involve the Bank forbearing its contractual right to collect certain payments or payment in

full (maturity forbearance) for a defined period of time. Reductions in interest rates and principal forgiveness occur infrequently for commercial borrowers. Principal forgiveness may occur in connection with foreclosure, short sales or other settlement agreements, leading to termination or sale of the loan.

As of March 31, 2023, the amortized cost basis of modified commercial loans that were entered into during the three months ended March 31, 2023 was $822 million, including term extensions of $700 million, forbearances of $102 million and other miscellaneous modifications of $20 million. Term extensions granted during the three months ended March 31, 2023 increased the weighted-average life of the impacted loans by 1.3 years. The weighted-average duration of loan payments deferred under the Corporation’s commercial loan forbearance program was 15 months, substantially all of which were deferred over a range of 12 to 24 months. Of the $822 million in modified Commercial loans to borrowers experiencing financial difficulty as of March 31, 2023, $775 million were current, $5 million were 30-89 days past due, and $42 million were greater than 90 days past due. These modifications represented 0.14 percent of outstanding commercial loans at March 31, 2023. Defaults of modified commercial loans since January 1, 2023 were insignificant during the three months ended March 31, 2023. For the three months ended March 31, 2023, the Corporation had commitments to lend $534 million to commercial borrowers experiencing financial difficulty whose loans were modified during the period.

Prior-period Troubled Debt Restructuring Disclosures

Prior to adopting the new accounting standard on loan modifications, the Corporation accounted for modifications of loans to borrowers experiencing financial difficulty as TDRs, when the modification resulted in a concession. The following discussion reflects loans that were considered TDRs prior to January 1, 2023. For more information on TDR accounting policies, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K.

Consumer Real Estate

The following table presents the March 31, 2022 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 months ended March 31, 2022. 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. 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.

At December 31, 2022, 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 – TDRs Entered into During the Three Months Ended March 31, 2022

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







(Dollars in millions)	March 31, 2022
Residential mortgage		$	585	$	539	3.50	%	3.33	%
Home equity		92		75		3.62		3.63
Total		$	677	$	614	3.52		3.37

(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 March 31, 2022 carrying value for consumer real estate loans that were modified in a TDR during the three months ended March 31, 2022, by type of modification.



Consumer Real Estate – Modification Programs

(Dollars in millions)	TDRs Entered into During the Three Months Ended March 31, 2022






Modifications under proprietary programs	552





Loans discharged in Chapter 7 bankruptcy (1)	5
Trial modifications	57
Total modifications	$	614

(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 months ended March 31, 2022 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)	Three Months Ended March 31, 2022


Modifications under proprietary programs		40
Loans discharged in Chapter 7 bankruptcy (1)		1
Trial modifications (2)		4
Total modifications		$	45

(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 table below provides information on the Corporation’s Credit Card and Other Consumer TDR portfolio including the March 31, 2022 unpaid principal balance, carrying value, and average pre- and post-modification interest rates of loans that were modified in TDRs during the three months ended March 31, 2022.



Credit Card and Other Consumer – TDRs Entered into During the Three Months Ended March 31, 2022

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








(Dollars in millions)	March 31, 2022
Credit card		$	69	$	73	18.67	%	3.69	%

Direct/Indirect consumer		4		3		5.75		5.75

Total		$	73	$	76	18.03		3.77

(1)Includes accrued interest and fees.

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



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

(Dollars in millions)	TDRs Entered into During the Three Months Ended March 31, 2022


Internal programs		$	63
External programs		10
Other		3
Total		$	76

(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 10 percent of new credit card TDRs and 17 percent of new direct/indirect consumer TDRs may be in payment default within 12 months after modification.

Commercial Loans

During the three months ended March 31, 2022, the carrying value of the Corporation’s commercial loans that were modified as TDRs was $848 million. At December 31, 2022, the Corporation had commitments to lend $358 million to commercial borrowers whose loans were classified as TDRs. The balance of commercial TDRs in payment default was $105 million at December 31, 2022.

Loans Held-for-sale

The Corporation had LHFS of $6.8 billion and $6.9 billion at March 31, 2023 and December 31, 2022. Cash and non-cash proceeds from sales and paydowns of loans originally classified as LHFS were $2.4 billion and $13.3 billion for the three months ended March 31, 2023 and 2022. Cash used for originations and purchases of LHFS totaled $2.3 billion and $6.8 billion for the three months ended March 31, 2023 and 2022. Also included were non-cash net transfers into LHFS of $459 million and $1.5 billion for the three months ended March 31, 2023 and 2022.

Accrued Interest Receivable

Accrued interest receivable for loans and leases and loans held-for-sale at March 31, 2023 and December 31, 2022 was $4.0 billion and $3.8 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 months ended March 31, 2023 and 2022, the Corporation reversed $118 million and $131 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 months ended March 31, 2023 and 2022, 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 2022 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 2022 Annual Report on Form 10-K.

The March 31, 2023 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 mild recessionary environment in 2023. The weighted economic outlook assumes that the U.S. average unemployment rate will be above five percent by the fourth quarter of 2023 and will remain near this level through the fourth quarter of 2024. Additionally, in this economic outlook, U.S. real gross domestic product is forecasted to contract at 0.5 percent and grow at 1.4 percent year-over-year in the fourth quarters of 2023 and 2024. For comparison, as of December 31, 2022, the weighted economic outlook for the U.S. average unemployment rate was forecasted to be just above five and a half percent by the fourth quarter of 2023 and slowly decline to five percent by the fourth quarter of 2024 and U.S. real gross domestic product was forecasted to contract at 0.4 percent and grow at 1.2 percent year-over-year in the fourth

quarters of 2023 and 2024, respectively. In addition, as of March 31, 2023, the latest estimate of the year-over-year real gross domestic product growth in the fourth quarter of 2022 was 0.9 percent. For comparison, as of December 31, 2022, the year-over-year baseline real gross domestic product growth in the fourth quarter of 2022 was forecasted at 0.4 percent.

The allowance for credit losses decreased $271 million from December 31, 2022 to $14.0 billion at March 31, 2023, which included a $123 million reserve increase related to the consumer portfolio and a $394 million reserve decrease related to the commercial portfolio. The decrease in the allowance reflected a reserve release in our commercial portfolio primarily driven by certain improved macroeconomic conditions, partially offset by a reserve build in our consumer portfolio primarily due to higher-than-expected credit card balances during the three months ended March 31, 2023. The decrease in allowance also includes the impact of the accounting change to remove the recognition and measurement guidance on TDRs, which reduced the allowance for credit losses by $243 million. The change in the allowance for credit losses was comprised of a net decrease of $168 million in the allowance for loan and lease losses and a decrease of $103 million in the reserve for unfunded lending commitments. The decrease in the allowance for credit losses

was attributed to decreases in the commercial portfolio of $394 million and the consumer real estate portfolio of $18 million, partially offset by an increase in the credit card and other consumer portfolios of $141 million. The provision for credit losses increased $901 million to $931 million for the three months ended March 31, 2023 compared to the same period in 2022. The provision for credit losses for the three months ended March 31, 2023 was driven by our consumer portfolio primarily due to higher-than-expected credit card balances during the first quarter of 2023. This was partially offset by certain improved macroeconomic conditions that primarily benefited our commercial portfolio.

Outstanding loans and leases excluding loans accounted for under the fair value option increased $2.0 billion during the three months ended March 31, 2023 primarily driven by commercial loans, which increased $6.3 billion driven by broad-based growth, and consumer loans, which decreased $4.2 billion primarily driven by securities-based lending 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 March 31, 2023
Allowance for loan and lease losses, December 31	$	420	$	6,817	$	5,445	$	12,682
January 1, 2023 adoption of credit loss standard	(67)		(109)		(67)		(243)
Allowance for loan and lease losses, January 1	353		6,708		5,378		12,439
Loans and leases charged off	(14)		(861)		(181)		(1,056)
Recoveries of loans and leases previously charged off	25		197		27		249
Net charge-offs	11		(664)		(154)		(807)

Provision for loan and lease losses	34		913		(47)		900
Other	5		1		(24)		(18)
Allowance for loan and lease losses, March 31	403		6,958		5,153		12,514
Reserve for unfunded lending commitments, January 1	94		—		1,446		1,540
Provision for unfunded lending commitments	(1)		—		(102)		(103)

Reserve for unfunded lending commitments, March 31	93		—		1,344		1,437
Allowance for credit losses, March 31	$	496	$	6,958	$	6,497	$	13,951

	Three Months Ended March 31, 2022
Allowance for loan and lease losses, January 1	$	557	$	6,476	$	5,354	$	12,387
Loans and leases charged off	(23)		(619)		(92)		(734)
Recoveries of loans and leases previously charged off	63		239		40		342
Net charge-offs	40		(380)		(52)		(392)

Provision for loan and lease losses	(126)		146		88		108
Other	2		—		(1)		1
Allowance for loan and lease losses, March 31	473		6,242		5,389		12,104


Reserve for unfunded lending commitments, January 1	96		—		1,360		1,456
Provision for unfunded lending commitments	(6)		—		(72)		(78)
Other	1		—		—		1
Reserve for unfunded lending commitments, March 31	91		—		1,288		1,379
Allowance for credit losses, March 31	$	564	$	6,242	$	6,677	$	13,483