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Loans and Related Allowance for Credit Losses

3 Months Ended

Mar. 31, 2021

LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

Loan Portfolio

Our loan portfolio consists of two portfolio segments – Commercial and Consumer. Each of these segments comprises multiple loan classes. Classes are characterized by similarities in risk attributes and the manner in which we monitor and assess credit risk.


Commercial						Consumer

• Commercial and industrial						• Home equity
• Commercial real estate						• Residential real estate
• Equipment lease financing						• Automobile
						• Credit card
						• Education
						• Other consumer

See Note 1 Accounting Policies included in Item 8 of our 2020 Form 10-K for additional information on our loan related policies.

Credit Quality

We closely monitor economic conditions and loan performance trends to manage and evaluate our exposure to credit risk within the loan portfolio based on our defined loan classes. In doing so, we use several credit quality indicators, including trends in delinquency rates, nonperforming status, analysis of PD and LGD ratings, updated credit scores, and originated and updated LTV ratios.

The measurement of delinquency status is based on the contractual terms of each loan. Loans that are 30 days or more past due in terms of payment are considered delinquent. Loan delinquencies include government insured or guaranteed loans, loans accounted for under the fair value option and PCD loans.

The following table presents the composition and delinquency status of our loan portfolio at March 31, 2021 and December 31, 2020. Pursuant to the interagency guidance issued in April 2020 and in connection with the credit reporting rules from the CARES Act, the delinquency status of loans modified due to COVID-19 related hardships aligns with the rules set forth for banks to report delinquency status to the credit agencies. These rules require that COVID-19 related loan modifications be reported as follows:

•if current at the time of modification, the loan remains current throughout the modification period,

•if delinquent at the time of modification and the borrower was not made current as part of the modification, the loan maintains its reported delinquent status during the modification period, or

•if delinquent at the time of modification and the borrower was made current as part of the modification or became current during the modification period, the loan is reported as current.

As a result, certain loans modified due to COVID-19 related hardships are not being reported as past due as of March 31, 2021 and December 31, 2020 based on the contractual terms of the loan, even where borrowers may not be making payments on their loans during the modification period. Loan modifications due to COVID-19 related hardships that permanently reduce either the contractual interest rate or the principal balance of a loan do not qualify for TDR relief under the CARES Act or the interagency guidance.

Table 40: Analysis of Loan Portfolio (a) (b)


	Accruing
Dollars in millions	Current or Less Than 30 Days Past Due			30-59 Days Past Due			60-89 Days Past Due			90 Days Or More Past Due			Total Past Due (c)				Nonperforming Loans			Fair Value Option Nonaccrual Loans (d)			Total Loans (e)(f)
March 31, 2021
Commercial
Commercial and industrial	$	129,130		$	80		$	13		$	63		$	156			$	512					$	129,798
Commercial real estate	28,085			12			1						13				221						28,319
Equipment lease financing	6,351			21			1						22				16						6,389
Total commercial	163,566			113			15			63			191				749						164,506
Consumer
Home equity	22,706			43			20						63				656			$	68		23,493
Residential real estate	20,862			162			73			275			510			(c)	541			505			22,418
Automobile	13,305			76			19			6			101				178						13,584
Credit card	5,561			31			24			52			107				7						5,675
Education	2,692			49			25			76			150			(c)							2,842
Other consumer	4,464			11			6			7			24				7						4,495
Total consumer	69,590			372			167			416			955				1,389			573			72,507
Total	$	233,156		$	485		$	182		$	479		$	1,146			$	2,138		$	573		$	237,013
Percentage of total loans	98.38		%	0.20		%	0.08		%	0.20		%	0.48		%		0.90		%	0.24		%	100.00		%
December 31, 2020
Commercial
Commercial and industrial	$	131,245		$	106		$	26		$	30		$	162			$	666					$	132,073
Commercial real estate	28,485			6			1						7				224						28,716
Equipment lease financing	6,345			31			5						36				33						6,414
Total commercial	166,075			143			32			30			205				923						167,203
Consumer
Home equity	23,318			50			21						71				645			$	54		24,088
Residential real estate	20,945			181			78			319			578			(c)	528			509			22,560
Automobile	13,863			134			34			12			180				175						14,218
Credit card	6,074			43			30			60			133				8						6,215
Education	2,785			55			29			77			161			(c)							2,946
Other consumer	4,656			14			10			11			35				7						4,698
Total consumer	71,641			477			202			479			1,158				1,363			563			74,725
Total	$	237,716		$	620		$	234		$	509		$	1,363			$	2,286		$	563		$	241,928
Percentage of total loans	98.27		%	0.26		%	0.10		%	0.21		%	0.56		%		0.94		%	0.23		%	100.00		%

(a)Amounts in table represent loans held for investment and do not include any associated valuation allowance.

(b)The accrued interest associated with our loan portfolio totaled $0.7 billion at both March 31, 2021 and December 31, 2020 and is included in Other assets on the Consolidated Balance Sheet.

(c)Past due loan amounts include government insured or guaranteed Residential real estate loans and Education loans totaling $0.4 billion and $0.1 billion at March 31, 2021. Comparable amounts at December 31, 2020 were $0.4 billion and $0.2 billion.

(d)Consumer loans accounted for under the fair value option for which we do not expect to collect substantially all principal and interest are subject to nonaccrual accounting and classification upon meeting any of our nonaccrual policies. Given that these loans are not accounted for at amortized cost, these loans have been excluded from the nonperforming loan population.

(e)Net of unearned income, unamortized deferred fees and costs on originated loans, and premiums or discounts on purchased loans totaling $1.4 billion and $1.3 billion at March 31, 2021 and December 31, 2020, respectively.

(f)Collateral dependent loans totaled $1.4 billion and $1.5 billion at March 31, 2021 and December 31, 2020, respectively. The majority of these loans are within the Home equity and Residential real estate loan classes and are secured by consumer real estate.

At March 31, 2021, we pledged $28.6 billion of commercial loans to the Federal Reserve Bank and $66.9 billion of residential real estate and other loans to the FHLB as collateral for the ability to borrow, if necessary. The comparable amounts at December 31, 2020 were $30.1 billion and $69.0 billion, respectively. Amounts pledged reflect the unpaid principal balances.

Nonperforming Assets

Nonperforming assets include nonperforming loans and leases, OREO and foreclosed assets. Nonperforming loans are those loans accounted for at amortized cost whose credit quality has deteriorated to the extent that full collection of contractual principal and interest is not probable. Interest income is not recognized on these loans. Loans accounted for under the fair value option are reported as performing loans, however, when nonaccrual criteria is met interest income is not recognized on these loans. Additionally, certain government insured or guaranteed loans for which we expect to collect substantially all principal and interest are not reported as

nonperforming loans and continue to accrue interest. Amounts include nonperforming PCD loans. See Note 1 Accounting Policies included in Item 8 of our 2020 Form 10-K for additional information on our nonperforming loan and lease policies.

The following table presents our nonperforming assets as of March 31, 2021 and December 31, 2020 , respectively:

Table 41: Nonperforming Assets


Dollars in millions	March 31 2021			December 31 2020
Nonperforming loans
Commercial	$	749		$	923
Consumer (a)	1,389			1,363
Total nonperforming loans (b)	2,138			2,286
OREO and foreclosed assets	41			51
Total nonperforming assets	$	2,179		$	2,337
Nonperforming loans to total loans	0.90		%	0.94		%
Nonperforming assets to total loans, OREO and foreclosed assets	0.92		%	0.97		%
Nonperforming assets to total assets	0.46		%	0.50		%

(a)Excludes most unsecured consumer loans and lines of credit, which are charged off after 120 to 180 days past due and are not placed on nonperforming status.

(b)Nonperforming loans for which there is no related ALLL totaled $0.7 billion at March 31, 2021, and is primarily comprised of loans with a fair value of collateral that exceeds the amortized cost basis. The comparable amount at December 31, 2020 was $0.8 billion.

Nonperforming loans also include certain loans whose terms have been restructured in a manner that grants a concession to a borrower experiencing financial difficulties. In accordance with applicable accounting guidance, these loans are considered TDRs. See Note 1 Accounting Policies included in Item 8 of our 2020 Form 10-K and the Troubled Debt Restructurings section of this Note 4 for additional information on TDRs.

Total nonperforming loans in Table 41 include TDRs of $0.9 billion at both March 31, 2021 and December 31, 2020. TDRs that are performing, including consumer credit card TDR loans, totaled $0.7 billion at both March 31, 2021 and December 31, 2020 and are excluded from nonperforming loans.

Additional Credit Quality Indicators by Loan Class

Commercial Loan Classes

See Note 4 Loans and Related Allowance for Credit Losses included in Item 8 of our 2020 Form 10-K for additional information related to these loan classes, including discussion around the credit quality indicators that we use to monitor and manage the credit risk associated with each loan class.

The following table presents credit quality indicators for the Commercial loan classes:

Table 42: Commercial Credit Quality Indicators (a)


	Term Loans by Origination Year
March 31, 2021 - In millions	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Commercial and industrial
Pass Rated	$	13,796	$	19,870	$	12,404	$	7,540	$	5,559	$	10,715	$	53,161	$	51	$	123,096
Criticized	158		429		725		603		317		594		3,856		20		6,702
Total commercial and industrial	13,954		20,299		13,129		8,143		5,876		11,309		57,017		71		129,798
Commercial real estate
Pass Rated	1,041		3,261		6,034		3,195		2,675		8,673		239				25,118
Criticized	132		137		663		166		487		1,597		19				3,201
Total commercial real estate	1,173		3,398		6,697		3,361		3,162		10,270		258				28,319
Equipment lease financing
Pass Rated	339		1,360		1,142		868		678		1,711						6,098
Criticized	11		71		73		79		34		23						291
Total equipment lease financing	350		1,431		1,215		947		712		1,734						6,389
Total commercial	$	15,477	$	25,128	$	21,041	$	12,451	$	9,750	$	23,313	$	57,275	$	71	$	164,506


	Term Loans by Origination Year
December 31, 2020 - In millions	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Commercial and industrial
Pass Rated	$	31,680	$	13,340	$	8,209	$	5,956	$	4,242	$	7,141	$	54,775	$	53	$	125,396
Criticized	339		702		578		334		224		351		4,130		19		6,677
Total commercial and industrial	32,019		14,042		8,787		6,290		4,466		7,492		58,905		72		132,073
Commercial real estate
Pass Rated	3,709		6,268		3,426		2,841		2,341		6,792		218				25,595
Criticized	319		548		148		423		400		1,159		124				3,121
Total commercial real estate	4,028		6,816		3,574		3,264		2,741		7,951		342				28,716
Equipment lease financing
Pass Rated	1,429		1,202		942		738		405		1,350						6,066
Criticized	78		92		86		39		22		31						348
Total equipment lease financing	1,507		1,294		1,028		777		427		1,381						6,414
Total commercial	$	37,554	$	22,152	$	13,389	$	10,331	$	7,634	$	16,824	$	59,247	$	72	$	167,203

(a)Loans in our commercial portfolio are classified as Pass Rated or Criticized based on the regulatory definitions, which are driven by the PD and LGD ratings that we assign. The Criticized classification includes loans that were rated special mention, substandard or doubtful as of March 31, 2021 and December 31, 2020.

Consumer Loan Classes

associated with each loan class.

Home Equity and Residential Real Estate

The following table presents credit quality indicators for the home equity and residential real estate loan classes:

Table 43: Home Equity and Residential Real Estate Credit Quality Indicators


	Term Loans by Origination Year
March 31, 2021 - In millions	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Home equity
Current estimated LTV ratios																	.
Greater than 100%			$	8	$	41	$	13	$	10	$	73	$	471	$	254	$	870
Greater than or equal to 80% to 100%	$	35	253		200		39		27		139		1,384		615		2,692
Less than 80%	196		3,019		1,560		482		712		4,081		6,418		3,463		19,931
Total home equity	$	231	$	3,280	$	1,801	$	534	$	749	$	4,293	$	8,273	$	4,332	$	23,493
Updated FICO scores
Greater than or equal to 780	$	127	$	1,925	$	960	$	273	$	467	$	2,640	$	5,148	$	1,844	$	13,384
720 to 779	84		947		505		138		164		865		1,950		1,084		5,737
660 to 719	19		346		264		83		80		428		905		678		2,803
Less than 660	1		61		71		39		37		350		255		628		1,442
No FICO score available			1		1		1		1		10		15		98		127
Total home equity	$	231	$	3,280	$	1,801	$	534	$	749	$	4,293	$	8,273	$	4,332	$	23,493
Residential real estate
Current estimated LTV ratios
Greater than 100%			$	4	$	56	$	23	$	28	$	150					$	261
Greater than or equal to 80% to 100%	$	346	142		274		70		113		328						1,273
Less than 80%	2,175		7,157		2,995		856		1,485		5,286						19,954
Government insured or guaranteed loans			8		29		25		39		829						930
Total residential real estate	$	2,521	$	7,311	$	3,354	$	974	$	1,665	$	6,593					$	22,418
Updated FICO scores
Greater than or equal to 780	$	1,409	$	5,220	$	2,411	$	661	$	1,206	$	3,564					$	14,471
720 to 779	1,061		1,767		708		182		308		1,056						5,082
660 to 719	51		267		166		81		85		518						1,168
Less than 660			43		38		23		24		501						629
No FICO score available			6		2		2		3		125						138
Government insured or guaranteed loans			8		29		25		39		829						930
Total residential real estate	$	2,521	$	7,311	$	3,354	$	974	$	1,665	$	6,593					$	22,418


	Term Loans by Origination Year
December 31, 2020 - In millions	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Home equity
Current estimated LTV ratios																	.
Greater than 100%	$	8	$	44	$	18	$	15	$	9	$	88	$	580	$	279	$	1,041
Greater than or equal to 80% to 100%	517		320		59		42		25		158		1,781		591		3,493
Less than 80%	2,909		1,636		513		773		660		3,754		6,433		2,876		19,554
Total home equity	$	3,434	$	2,000	$	590	$	830	$	694	$	4,000	$	8,794	$	3,746	$	24,088
Updated FICO scores
Greater than or equal to 780	$	2,019	$	1,094	$	311	$	525	$	449	$	2,467	$	5,382	$	1,480	$	13,727
720 to 779	1,028		558		153		181		145		777		2,137		941		5,920
660 to 719	334		273		86		84		66		402		985		625		2,855
Less than 660	52		74		39		39		33		345		277		620		1,479
No FICO score available	1		1		1		1		1		9		13		80		107
Total home equity	$	3,434	$	2,000	$	590	$	830	$	694	$	4,000	$	8,794	$	3,746	$	24,088
Residential real estate
Current estimated LTV ratios
Greater than 100%	$	3	$	52	$	26	$	42	$	41	$	160					$	324
Greater than or equal to 80% to 100%	495		422		127		156		124		307						1,631
Less than 80%	7,491		3,656		992		1,706		1,847		3,991						19,683
Government insured or guaranteed loans	7		28		27		38		57		765						922
Total residential real estate	$	7,996	$	4,158	$	1,172	$	1,942	$	2,069	$	5,223					$	22,560
Updated FICO scores
Greater than or equal to 780	$	5,425	$	3,099	$	814	$	1,432	$	1,538	$	2,551					$	14,859
720 to 779	2,268		820		220		340		335		818						4,801
660 to 719	252		161		76		98		92		475						1,154
Less than 660	40		48		33		31		41		485						678
No FICO score available	4		2		2		3		6		129						146
Government insured or guaranteed loans	7		28		27		38		57		765						922
Total residential real estate	$	7,996	$	4,158	$	1,172	$	1,942	$	2,069	$	5,223					$	22,560

Automobile, Credit Card, Education and Other Consumer

The following table presents credit quality indicators for the automobile, credit card, education and other consumer loan classes:

Table 44: Credit Quality Indicators for Automobile, Credit Card, Education and Other Consumer Loan Classes


	Term Loans by Origination Year
March 31, 2021 - In millions	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Updated FICO Scores
Automobile
FICO score greater than or equal to 780	$	775	$	1,545	$	1,701	$	688	$	362	$	216					$	5,287
720 to 779	242		1,067		1,380		678		320		157						3,844
660 to 719	63		591		1,076		590		240		106						2,666
Less than 660	4		228		723		535		208		89						1,787
Total automobile	$	1,084	$	3,431	$	4,880	$	2,491	$	1,130	$	568					$	13,584
Credit card
FICO score greater than or equal to 780													$	1,513	$	3	$	1,516
720 to 779													1,541		11		1,552
660 to 719													1,621		25		1,646
Less than 660													817		46		863
No FICO score available or required (a)													94		4		98
Total credit card													$	5,586	$	89	$	5,675
Education
FICO score greater than or equal to 780	$	1	$	64	$	86	$	70	$	55	$	450					$	726
720 to 779	4		34		44		37		27		202						348
660 to 719	4		10		14		14		8		90						140
Less than 660	1		1		3		2		2		35						44
No FICO score available or required (a)	3		12		9		5		3		1						33
Education loans using FICO credit metric	13		121		156		128		95		778						1,291
Other internal credit metrics											1,551						1,551
Total education	$	13	$	121	$	156	$	128	$	95	$	2,329					$	2,842
Other consumer
FICO score greater than or equal to 780	$	31	$	135	$	150	$	49	$	15	$	40	$	73	$	1	$	494
720 to 779	33		169		206		65		16		23		109				621
660 to 719	27		111		185		68		13		14		107				525
Less than 660	1		34		81		34		7		7		47		1		212
Other consumer loans using FICO credit metric	92		449		622		216		51		84		336		2		1,852
Other internal credit metrics	32		29		28		29		26		126		2,365		8		2,643
Total other consumer	$	124	$	478	$	650	$	245	$	77	$	210	$	2,701	$	10	$	4,495


	Term Loans by Origination Year
December 31, 2020 - In millions	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Updated FICO Scores
Automobile
FICO score greater than or equal to 780	$	1,807	$	1,915	$	807	$	452	$	246	$	58					$	5,285
720 to 779	1,098		1,581		789		381		167		44						4,060
660 to 719	617		1,222		684		288		109		31						2,951
Less than 660	192		776		598		240		87		29						1,922
Total automobile	$	3,714	$	5,494	$	2,878	$	1,361	$	609	$	162					$	14,218
Credit card
FICO score greater than or equal to 780													$	1,635	$	3	$	1,638
720 to 779													1,724		11		1,735
660 to 719													1,765		26		1,791
Less than 660													902		51		953
No FICO score available or required (a)													94		4		98
Total credit card													$	6,120	$	95	$	6,215
Education
FICO score greater than or equal to 780	$	34	$	90	$	74	$	59	$	50	$	428					$	735
720 to 779	24		46		38		28		20		190						346
660 to 719	15		15		14		9		6		90						149
Less than 660	3		2		3		2		2		37						49
No FICO score available or required (a)	16		10		6		3				1						36
Education loans using FICO credit metric	92		163		135		101		78		746						1,315
Other internal credit metrics											1,631						1,631
Total education	$	92	$	163	$	135	$	101	$	78	$	2,377					$	2,946
Other consumer
FICO score greater than or equal to 780	$	162	$	187	$	63	$	21	$	5	$	42	$	86	$	1	$	567
720 to 779	197		247		82		22		5		22		123				698
660 to 719	127		210		81		17		3		14		117		1		570
Less than 660	28		86		41		9		2		8		53		1		228
Other consumer loans using FICO credit metric	514		730		267		69		15		86		379		3		2,063
Other internal credit metrics	67		33		37		26		60		75		2,334		3		2,635
Total other consumer	$	581	$	763	$	304	$	95	$	75	$	161	$	2,713	$	6	$	4,698

(a)Loans with no FICO score available or required generally refers to new accounts issued to borrowers with limited credit history, accounts for which we cannot obtain an updated FICO score (e.g., recent profile changes), cards issued with a business name and/or cards secured by collateral. Management proactively assesses the risk and size of this loan category and, when necessary, takes actions to mitigate the credit risk.

Troubled Debt Restructurings

Table 45 quantifies the number of loans that were classified as TDRs as well as the change in the loans’ balance as a result of becoming a TDR during the three months ended March 31, 2021 and March 31, 2020. Additionally, the table provides information about the types of TDR concessions. See Note 1 Accounting Policies and Note 4 Loans and Related Allowance for Credit Losses included in Item 8 of our 2020 Form 10-K for additional discussion of TDRs.

Table 45: Financial Impact and TDRs by Concession Type (a)


			Pre-TDR Amortized Cost Basis (b)		Post-TDR Amortized Cost Basis (c)
During the three months ended March 31, 2021 Dollars in millions	Number of Loans				Principal Forgiveness		Rate Reduction		Other		Total
Commercial		19	$	93					$	94	$	94
Consumer		2,096	32				$	16	12		28
Total TDRs		2,115	$	125			$	16	$	106	$	122
During the three months ended March 31, 2020 Dollars in millions
Commercial		13	$	62	$	6			$	37	$	43
Consumer		3,567	36				$	22	10		32
Total TDRs		3,580	$	98	$	6	$	22	$	47	$	75

(a) Impact of partial charge-offs at TDR date is included in this table.

(b) Represents the amortized cost basis of the loans as of the quarter end prior to TDR designation.

After a loan is determined to be a TDR, we continue to track its performance under its most recent restructured terms. We consider a TDR to have subsequently defaulted when it becomes 60 days past due after the most recent date the loan was restructured. Loans that were both (i) classified as TDRs within the last twelve months from the balance sheet date, and (ii) subsequently defaulted during the the three months ended March 31, 2021 and March 31, 2020 totaled $15 million and $29 million, respectively.

Allowance for Credit Losses

We maintain the ACL related to loans at levels that we believe to be appropriate to absorb expected credit losses in the portfolios as of the balance sheet date. See Note 1 Accounting Policies included in Item 8 of our 2020 Form 10-K for a discussion of the methodologies used to determine this allowance. A rollforward of the ACL related to loans follows:

Table 46: Rollforward of Allowance for Credit Losses (a)


	Three months ended March 31, 2021						Three Months Ended March 31, 2020
In millions	Commercial		Consumer		Total		Commercial		Consumer		Total
Allowance for loan and lease losses
Beginning balance	$	3,337	$	2,024	$	5,361	$	1,812	$	930	$	2,742
Adoption of ASU 2016-13 (b)							(304)		767		463
Beginning balance, adjusted	3,337		2,024		5,361		1,508		1,697		3,205
Charge-offs	(69)		(174)		(243)		(83)		(221)		(304)
Recoveries	18		79		97		24		68		92
Net (charge-offs)	(51)		(95)		(146)		(59)		(153)		(212)
Provision for (recapture of) credit losses	(204)		(298)		(502)		531		421		952
Other	1				1		(1)				(1)
Ending balance	$	3,083	$	1,631	$	4,714	$	1,979	$	1,965	$	3,944
Allowance for unfunded lending related commitments (c)
Beginning balance	$	485	$	99	$	584	$	316	$	2	$	318
Adoption of ASU 2016-13 (b)							53		126		179
Beginning balance, adjusted	485		99		584		369		128		497
Provision for (recapture of) credit losses	(82)		5		(77)		(25)		(22)		(47)
Ending balance	$	403	$	104	$	507	$	344	$	106	$	450
Allowance for credit losses at March 31	$	3,486	$	1,735	$	5,221	$	2,323	$	2,071	$	4,394
Allowance for credit losses at December 31	$	3,822	$	2,123	$	5,945	$	2,128	$	932	$	3,060

(a) Excludes allowances for investment securities and other financial assets, which together totaled $136 million and $21 million at March 31, 2021 and March 31, 2020, respectively.

(b) Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2020 and our transition from an incurred loss methodology for our reserves to an expected credit loss methodology.

The ACL at March 31, 2021 totaled $5.2 billion, a $0.7 billion decrease compared to December 31, 2020. This decrease in reserves was primarily attributable to the improved economic outlook and portfolio changes, partially offset by increases in qualitative factor reserves due to portfolio sensitivity from specific customers and segments still impacted by the pandemic. The following summarizes the changes in these factors that influenced the current ACL:

•The economic scenarios used for the period ended March 31, 2021 were designed to reflect an improved near-term economic outlook in comparison to the scenarios used for the period ended December 31, 2020. This improvement was the result of declining COVID-19 cases, more rapid vaccine distribution, the passage of the American Rescue Plan stimulus package and economic momentum fueled by increased consumer spending.

•Portfolio changes primarily reflecting decreases in both commercial and consumer loan balances drove reserve declines at March 31, 2021. Declines were attributable to lower utilization of loan commitments and softer loan production in the commercial portfolio and paydowns outpacing new originations in the consumer portfolio.

•Increases in qualitative factor reserves at March 31, 2021 were attributable to the considerable uncertainty that remains regarding overall lifetime loss content for both our commercial and consumer portfolios, specifically as it relates to our customers that are less likely to benefit from the economic recovery currently underway. For commercial borrowers, there are concerns around industries that are dependent on in-person gatherings, hospitality and tourism. For consumer borrowers, payment behavior once the government stimulus wanes is also difficult to predict.

The ACL at March 31, 2020 totaled $4.4 billion, a $1.3 billion increase in reserves compared to December 31, 2019. This increase reflected the day-one CECL transition adjustment along with the significantly adverse economic impacts of the pandemic and its resulting effects on credit quality and loan growth in the first quarter of 2020.