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Loans and Related Allowance for Credit Losses

6 Months Ended

Jun. 30, 2023

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

See Note 1 Accounting Policies 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.

We manage credit risk based on the risk profile of the borrower, repayment sources, underlying collateral and other support given current events, economic conditions and expectations. We refine our practices to meet the changing environment resulting from elevated inflation levels, labor-related supply chain pressures, higher interest rates, and structural and secular changes fostered by the pandemic. To mitigate losses and enhance customer support, we offer loan modifications and collection programs to assist our customers.

Table 41 presents the composition and delinquency status of our loan portfolio at June 30, 2023 and December 31, 2022. Loan delinquencies include government insured or guaranteed loans and loans accounted for under the fair value option.

Table 41: Analysis of Loan Portfolio (a) (b) (c)


	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 (d)				Nonperforming Loans			Fair Value Option Nonaccrual Loans (e)			Total Loans (f)(g)
June 30, 2023
Commercial
Commercial and industrial	$	176,936		$	64		$	47		$	112		$	223			$	470					$	177,629
Commercial real estate	35,568			10									10				350						35,928
Equipment lease financing	6,374			14			5						19				7						6,400
Total commercial	218,878			88			52			112			252				827						219,957
Consumer
Residential real estate	45,374			228			86			174			488			(d)	429			$	543		46,834
Home equity	25,546			56			18						74				506			74			26,200
Automobile	14,823			84			20			5			109				133						15,065
Credit card	6,926			49			36			71			156				10						7,092
Education	1,960			33			17			48			98			(d)							2,058
Other consumer	4,512			17			9			9			35				8						4,555
Total consumer	99,141			467			186			307			960				1,086			617			101,804
Total	$	318,019		$	555		$	238		$	419		$	1,212			$	1,913		$	617		$	321,761
Percentage of total loans	98.84		%	0.17		%	0.07		%	0.13		%	0.38		%		0.59		%	0.19		%	100.00		%
December 31, 2022
Commercial
Commercial and industrial	$	181,223		$	169		$	27		$	137		$	333			$	663					$	182,219
Commercial real estate	36,104			19			4						23				189						36,316
Equipment lease financing	6,484			20			4						24				6						6,514
Total commercial	223,811			208			35			137			380				858						225,049
Consumer
Residential real estate	44,306			281			112			199			592			(d)	424			$	567		45,889
Home equity	25,305			53			20						73				526			79			25,983
Automobile	14,543			106			25			7			138				155						14,836
Credit card	6,906			50			35			70			155				8						7,069
Education	2,058			34			22			59			115			(d)							2,173
Other consumer	4,975			15			12			10			37				14						5,026
Total consumer	98,093			539			226			345			1,110				1,127			646			100,976
Total	$	321,904		$	747		$	261		$	482		$	1,490			$	1,985		$	646		$	326,025
Percentage of total loans	98.73		%	0.23		%	0.08		%	0.15		%	0.46		%		0.61		%	0.20		%	100.00		%

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

(b)Under the CARES Act credit reporting rules, certain loans modified due to pandemic related hardships are not being reported as past due as of June 30, 2023 and December 31, 2022 based on the contractual terms of the loan, even where borrowers may not be making payments on their loans during the modification period. The CARES Act credit reporting rules expire in the third quarter of 2023.

(c)The accrued interest associated with our loan portfolio totaled $1.3 billion and $1.2 billion at June 30, 2023 and December 31, 2022, respectively. These amounts are included in Other assets on the Consolidated Balance Sheet.

(d)Past due loan amounts include government insured or guaranteed Residential real estate loans and Education loans totaling $0.3 billion and $0.1 billion at both June 30, 2023 and December 31, 2022.

(e)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 policy criteria. Given that these loans are not accounted for at amortized cost, they have been excluded from the nonperforming loan population.

(f)Includes unearned income, unamortized deferred fees and costs on originated loans and premiums or discounts on purchased loans totaling $0.8 billion and $0.9 billion at June 30, 2023 and December 31, 2022, respectively.

(g)Collateral dependent loans totaled $1.2 billion and $1.3 billion at June 30, 2023 and December 31, 2022, respectively.

At June 30, 2023, we pledged $48.3 billion of commercial and other loans to the Federal Reserve Bank and $92.5 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, 2022 were $28.1 billion and $90.4 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. See Note 1 Accounting Policies for additional information on our nonperforming loan and lease policies.

The following table presents our nonperforming assets as of June 30, 2023 and December 31, 2022, respectively:

Table 42: Nonperforming Assets


Dollars in millions	June 30, 2023			December 31, 2022
Nonperforming loans (a)
Commercial	$	827		$	858
Consumer (b)	1,086			1,127
Total nonperforming loans (c)	1,913			1,985
OREO and foreclosed assets	36			34
Total nonperforming assets	$	1,949		$	2,019
Nonperforming loans to total loans	0.59		%	0.61		%
Nonperforming assets to total loans, OREO and foreclosed assets	0.61		%	0.62		%
Nonperforming assets to total assets	0.35		%	0.36		%

(a)In connection with the adoption of ASU 2022-02, nonperforming loans as of June 30, 2023 include certain loans where terms were modified as a result of a borrower’s financial difficulty. Prior period amounts included nonperforming TDRs, for which accounting guidance was eliminated effective January 1, 2023. See Note 1 Accounting Policies and the Loan Modifications to Borrowers Experiencing Financial Difficulty section of this Note 3 for more information on our adoption of this ASU.

(b)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.

(c)Nonperforming loans for which there is no related ALLL totaled $0.8 billion at June 30, 2023 and primarily include loans with a fair value of collateral that exceeds the amortized cost basis. The comparable amount at December 31, 2022 was $0.7 billion.

Additional Credit Quality Indicators by Loan Class

Commercial Loan Classes

See Note 4 Loans and Related Allowance for Credit Losses in our 2022 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 our commercial loan classes:

Table 43: Commercial Credit Quality Indicators (a) (b)


	Term Loans by Origination Year
June 30, 2023 In millions	2023			2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans Converted to Term		Total
Commercial and industrial
Pass Rated	$	15,699		$	32,220	$	8,328	$	6,279	$	4,694	$	14,114	$	88,198	$	61	$	169,593
Criticized	102			1,820		556		344		268		819		4,092		35		8,036
Total commercial and industrial loans	$	15,801		$	34,040	$	8,884	$	6,623	$	4,962	$	14,933	$	92,290	$	96	$	177,629
Gross charge-offs	$	10	(c)	$	9	$	27	$	6	$	1	$	14	$	74	$	8	$	149
Commercial real estate
Pass Rated	$	2,589		$	9,428	$	3,773	$	2,513	$	5,139	$	8,571	$	339			$	32,352
Criticized	59			294		253		321		668		1,963		18				3,576
Total commercial real estate loans	$	2,648		$	9,722	$	4,026	$	2,834	$	5,807	$	10,534	$	357			$	35,928
Gross charge-offs										$	12	$	87					$	99
Equipment lease financing
Pass Rated	$	658		$	1,673	$	845	$	819	$	559	$	1,567					$	6,121
Criticized	30			64		50		53		37		45						279
Total equipment lease financing loans	$	688		$	1,737	$	895	$	872	$	596	$	1,612					$	6,400
Gross charge-offs				$	1	$	1	$	3	$	1	$	1					$	7
Total commercial loans	$	19,137		$	45,499	$	13,805	$	10,329	$	11,365	$	27,079	$	92,647	$	96	$	219,957
Total commercial gross charge-offs	$	10		$	10	$	28	$	9	$	14	$	102	$	74	$	8	$	255


	Term Loans by Origination Year
December 31, 2022 In millions	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Commercial and industrial
Pass Rated	$	41,685	$	12,493	$	8,134	$	6,261	$	4,209	$	13,165	$	89,384	$	69	$	175,400
Criticized	1,259		423		277		299		297		551		3,682		31		6,819
Total commercial and industrial	42,944		12,916		8,411		6,560		4,506		13,716		93,066		100		182,219
Commercial real estate
Pass Rated	8,835		4,153		3,266		5,511		3,005		7,454		450				32,674
Criticized	348		37		322		758		807		1,367		3				3,642
Total commercial real estate	9,183		4,190		3,588		6,269		3,812		8,821		453				36,316
Equipment lease financing
Pass Rated	1,797		962		942		670		410		1,495						6,276
Criticized	60		55		56		39		17		11						238
Total equipment lease financing	1,857		1,017		998		709		427		1,506						6,514
Total commercial	$	53,984	$	18,123	$	12,997	$	13,538	$	8,745	$	24,043	$	93,519	$	100	$	225,049

(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 June 30, 2023 and December 31, 2022.

(b)Gross charge-offs are presented on a year-to-date basis, as of the reporting date.

(c)Includes charge-offs of deposit overdrafts.

Consumer Loan Classes

associated with each loan class.

Residential Real Estate and Home Equity

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

Table 44: Credit Quality Indicators for Residential Real Estate and Home Equity Loan Classes (a)


	Term Loans by Origination Year
June 30, 2023 In millions	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans Converted to Term		Total
Residential real estate
Current estimated LTV ratios
Greater than 100%	$	22	$	129	$	122	$	40	$	11	$	38					$	362
Greater than or equal to 80% to 100%	1,191		4,612		1,441		249		79		127						7,699
Less than 80%	1,804		5,571		14,351		6,715		2,232		7,367						38,040
No LTV available	52				13						5						70
Government insured or guaranteed loans	4		16		17		69		38		519						663
Total residential real estate loans	$	3,073	$	10,328	$	15,944	$	7,073	$	2,360	$	8,056					$	46,834
Updated FICO scores
Greater than or equal to 780	$	1,570	$	7,692	$	12,519	$	5,207	$	1,565	$	4,253					$	32,806
720 to 779	1,090		2,033		2,508		1,172		446		1,500						8,749
660 to 719	201		511		691		338		162		786						2,689
Less than 660	81		63		114		110		90		710						1,168
No FICO score available	127		13		95		177		59		288						759
Government insured or guaranteed loans	4		16		17		69		38		519						663
Total residential real estate loans	$	3,073	$	10,328	$	15,944	$	7,073	$	2,360	$	8,056					$	46,834
Gross charge-offs			$	1			$	1			$	3					$	5
Home equity
Current estimated LTV ratios
Greater than 100%					$	3	$	15	$	8	$	16	$	325	$	292	$	659
Greater than or equal to 80% to 100%					6		53		26		32		1,315		2,074		3,506
Less than 80%					163		1,963		895		2,819		6,937		9,258		22,035
Total home equity loans					$	172	$	2,031	$	929	$	2,867	$	8,577	$	11,624	$	26,200
Updated FICO scores
Greater than or equal to 780					$	110	$	1,319	$	522	$	1,770	$	4,854	$	6,020	$	14,595
720 to 779					39		467		230		554		2,230		3,109		6,629
660 to 719					18		188		123		295		1,168		1,656		3,448
Less than 660					5		55		53		239		313		780		1,445
No FICO score available							2		1		9		12		59		83
Total home equity loans					$	172	$	2,031	$	929	$	2,867	$	8,577	$	11,624	$	26,200
Gross charge-offs											$	2			$	9	$	11


(Continued from previous page)	Term Loans by Origination Year
December 31, 2022 In millions	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Residential real estate
Current estimated LTV ratios
Greater than 100%	$	4	$	52	$	20	$	10	$	4	$	41					$	131
Greater than or equal to 80% to 100%	1,185		678		232		84		24		92						2,295
Less than 80%	9,396		15,844		7,074		2,346		822		7,220						42,702
No LTV available			61				3				4						68
Government insured or guaranteed loans	9		15		66		39		28		536						693
Total residential real estate	$	10,594	$	16,650	$	7,392	$	2,482	$	878	$	7,893					$	45,889
Updated FICO scores
Greater than or equal to 780	$	6,825	$	12,596	$	5,276	$	1,623	$	463	$	4,027					$	30,810
720 to 779	3,172		3,024		1,369		476		180		1,457						9,678
660 to 719	514		744		378		189		98		796						2,719
Less than 660	63		108		110		88		71		740						1,180
No FICO score available	11		163		193		67		38		337						809
Government insured or guaranteed loans	9		15		66		39		28		536						693
Total residential real estate	$	10,594	$	16,650	$	7,392	$	2,482	$	878	$	7,893					$	45,889
Home equity
Current estimated LTV ratios
Greater than 100%			$	4	$	14	$	9	$	2	$	15	$	268	$	137	$	449
Greater than or equal to 80% to 100%			4		51		27		4		31		854		1,149		2,120
Less than 80%			172		2,078		961		285		2,851		7,780		9,287		23,414
Total home equity			$	180	$	2,143	$	997	$	291	$	2,897	$	8,902	$	10,573	$	25,983
Updated FICO scores
Greater than or equal to 780			$	110	$	1,357	$	554	$	155	$	1,791	$	5,093	$	5,545	$	14,605
720 to 779			47		515		248		64		567		2,305		2,843		6,589
660 to 719			19		211		140		42		288		1,146		1,449		3,295
Less than 660			4		57		54		29		242		342		671		1,399
No FICO score available					3		1		1		9		16		65		95
Total home equity			$	180	$	2,143	$	997	$	291	$	2,897	$	8,902	$	10,573	$	25,983

(a)Gross charge-offs are presented on a year-to-date basis, as of the reporting date.

Automobile, Credit Card, Education and Other Consumer

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

Table 45: Credit Quality Indicators for Automobile, Credit Card, Education and Other Consumer Loan Classes (a)


	Term Loans by Origination Year
June 30, 2023 In millions	2023			2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans Converted to Term		Total
Automobile
Updated FICO scores
Greater than or equal to 780	$	1,706		$	1,907	$	1,846	$	728	$	554	$	180					$	6,921
720 to 779	1,066			1,426		1,005		411		374		160						4,442
660 to 719	538			766		510		251		275		137						2,477
Less than 660	74			254		260		185		272		180						1,225

Total automobile loans	$	3,384		$	4,353	$	3,621	$	1,575	$	1,475	$	657					$	15,065
Gross charge-offs				$	10	$	12	$	9	$	17	$	13					$	61
Credit card
Updated FICO scores
Greater than or equal to 780														$	1,954	$	1	$	1,955
720 to 779														2,022		5		2,027
660 to 719														1,967		13		1,980
Less than 660														983		38		1,021
No FICO score available or required (b)														106		3		109
Total credit card loans														$	7,032	$	60	$	7,092
Gross charge-offs														$	141	$	13	$	154
Education
Updated FICO scores
Greater than or equal to 780	$	15		$	94	$	50	$	44	$	56	$	373					$	632
720 to 779	14			51		26		22		27		147						287
660 to 719	6			16		7		7		8		59						103
Less than 660	1			3		1		1		2		23						31
No FICO score available or required (b)	4			6		5		5		2		1						23
Total loans using FICO credit metric	40			170		89		79		95		603						1,076
Other internal credit metrics												982						982
Total education loans	$	40		$	170	$	89	$	79	$	95	$	1,585					$	2,058
Gross charge-offs								$	1	$	1	$	7					$	9
Other consumer
Updated FICO scores
Greater than or equal to 780	$	136		$	183	$	69	$	34	$	27	$	19	$	41	$	2	$	511
720 to 779	186			224		85		41		35		19		82		1		673
660 to 719	70			166		80		45		39		19		88		2		509
Less than 660	5			49		39		26		25		14		42		2		202

Total loans using FICO credit metric	397			622		273		146		126		71		253		7		1,895
Other internal credit metrics	21			116		31		19		74		26		2,358		15		2,660
Total other consumer loans	$	418		$	738	$	304	$	165	$	200	$	97	$	2,611	$	22	$	4,555
Gross charge-offs	$	32	(c)	$	9	$	10	$	8	$	9	$	5	$	6	$	1	$	80


(Continued from previous page)	Term Loans by Origination Year
December 31, 2022 In millions	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Updated FICO Scores
Automobile
Greater than or equal to 780	$	2,390	$	2,162	$	922	$	760	$	241	$	75					$	6,550
720 to 779	1,702		1,312		561		538		222		69						4,404
660 to 719	854		660		341		401		187		56						2,499
Less than 660	193		290		230		368		228		74						1,383
Total automobile	$	5,139	$	4,424	$	2,054	$	2,067	$	878	$	274					$	14,836
Credit card
Greater than or equal to 780													$	1,954	$	2	$	1,956
720 to 779													1,994		6		2,000
660 to 719													1,957		13		1,970
Less than 660													1,001		35		1,036
No FICO score available or required (b)													104		3		107
Total credit card													$	7,010	$	59	$	7,069
Education
Greater than or equal to 780	$	42	$	53	$	48	$	61	$	51	$	357					$	612
720 to 779	39		27		24		30		24		143						287
660 to 719	21		8		8		9		8		59						113
Less than 660	4		1		1		2		2		24						34
No FICO score available or required (b)	20		8		7		3				1						39
Education loans using FICO credit metric	126		97		88		105		85		584						1,085
Other internal credit metrics											1,088						1,088
Total education	$	126	$	97	$	88	$	105	$	85	$	1,672					$	2,173
Other consumer
Greater than or equal to 780	$	224	$	97	$	53	$	46	$	14	$	18	$	47	$	2	$	501
720 to 779	302		122		68		62		20		15		89		2		680
660 to 719	229		110		68		66		28		8		95		2		606
Less than 660	32		48		37		40		20		6		44		2		229
Other consumer loans using FICO credit metric	787		377		226		214		82		47		275		8		2,016
Other internal credit metrics	125		43		40		34		7		29		2,720		12		3,010
Total other consumer	$	912	$	420	$	266	$	248	$	89	$	76	$	2,995	$	20	$	5,026

(a)Gross charge-offs are presented on a year-to-date basis, as of the reporting date.

(b)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.

(c)Includes charge-offs of deposit overdrafts.

Loan Modifications to Borrowers Experiencing Financial Difficulty

On January 1, 2023, we adopted ASU 2022-02, which eliminates the accounting guidance for TDRs and enhances the disclosure requirements for certain loan modifications when a borrower is experiencing financial difficulty (FDMs).

FDMs occur as a result of our loss mitigation activities. A variety of solutions are offered to borrowers, including loan modifications that may result in principal forgiveness, interest rate reductions, term extensions, payment delays, repayment plans or combinations thereof:

•Principal forgiveness includes principal and accrued interest forgiveness.

•Interest rate reductions include modifications where the interest rate is reduced and/or interest is deferred.

•Term extensions extend the original contractual maturity date of the loan.

•Payment delays consist of modifications where we expect to collect contractual amounts due, but that result in a delay in the receipt of payments specified under the original loan terms. We generally consider payment delays to be insignificant when the delay is three months or less.

•Repayment plans are offered for some of our credit card and unsecured line of credit products, which provide for a reduced payment and interest rate for a specific period of time.

Additionally, modifications to borrowers experiencing financial difficulty also result from borrowers that have been discharged from personal liability through Chapter 7 bankruptcy and have not formally reaffirmed their obligations to us, and those that enter into trial modifications.

FDMs exclude loans held for sale and loans accounted for under the fair value option. Our disclosed FDM population also excludes government insured or guaranteed education loans as loss mitigation activities for these loans are either required by law or they are considered separate from PNC’s loss mitigation treatments. Commercial loans with an appraised value of collateral that exceeds the loan value, loans with guarantor support, and residential mortgage government insured or guaranteed loans are included in our disclosed population of FDMs when those loan modifications are granted to a borrower experiencing financial difficulty.

Refer to Note 1 Accounting Policies for additional information around our adoption of ASU 2022-02.

The following table presents the amortized cost basis, as of June 30, 2023, of FDMs granted during the three and six months ended June 30, 2023:

Table 46: Loan Modifications Granted to Borrowers Experiencing Financial Difficulty (a)


Three months ended June 30, 2023 Dollars in millions	Principal Forgiveness		Interest Rate Reduction		Term Extension		Payment Delay		Repayment Plan		Interest Rate Reduction and Term Extension		Other (b)		Total		% of Loan Class
Commercial
Commercial and industrial					$	366	$	59					$	87	$	512	0.29	%
Commercial real estate					228								60		288		0.80	%

Total commercial					594		59						147		800		0.36	%
Consumer
Residential real estate			$	1			35				$	1	2		39		0.08	%
Home equity							3				2		5		10		0.04	%

Credit card									$	18					18		0.25	%
Education					1										1		0.05	%
Other consumer									1						1		0.02	%
Total consumer			1		1		38		19		3		7		69		0.07	%
Total			$	1	$	595	$	97	$	19	$	3	$	154	$	869	0.27	%
Six months ended June 30, 2023 Dollars in millions
Commercial
Commercial and industrial	$	1			$	432	$	72					$	91	$	596	0.34	%
Commercial real estate					493								60		553		1.54	%

Total commercial	1				925		72						151		1,149		0.52	%
Consumer
Residential real estate			$	1			72				$	2	3		78		0.17	%
Home equity							4				5		6		15		0.06	%

Credit card									$	30					30		0.42	%
Education					2										2		0.10	%
Other consumer									1						1		0.02	%
Total consumer			1		2		76		31		7		9		126		0.12	%
Total	$	1	$	1	$	927	$	148	$	31	$	7	$	160	$	1,275	0.40	%

(a)At June 30, 2023, there were $0.1 billion of unfunded lending related commitments associated with FDMs.

(b)Includes loans where we have received notification that a borrower has filed for Chapter 7 bankruptcy relief, but specific instructions as to the terms of the relief have not been formally ruled upon by the court. Amounts also include trial modifications.

Table 47 presents the financial effect of FDMs granted during the three and six months ended June 30, 2023:

Table 47: Financial Effect of FDMs (a)


Three months ended June 30, 2023 Dollars in millions	Total Principal Forgiveness		Weighted-Average Interest Rate Reduction		Weighted-Average Term Extension (in Months)	Weighted-Average Payment Delay (in Months)
Commercial
Commercial and industrial					9	10
Commercial real estate					20

Consumer
Residential real estate			1.17	%	123	8
Home equity			1.29	%	66	3


Education					19
Six months ended June 30, 2023 Dollars in millions
Commercial
Commercial and industrial	$	2			10	6
Commercial real estate					17

Consumer
Residential real estate			1.34	%	111	8
Home equity			1.41	%	58	4


Education					17

(a)Excludes the financial effects of modifications for loans that were paid off, charged-off or otherwise liquidated as of period end.

Repayment plans are excluded from Table 47. The terms of these programs, which are offered for certain credit card and unsecured line of credit products, are as follows:

•Short-term programs are granted for periods of 6 and 12 months. These programs are structurally similar such that the interest rate is reduced to a standard rate of 4.99% and the minimum payment percentage is adjusted to 1.90% of the outstanding balance. At the end of the 6 or 12 months, the borrower is returned to the original contractual interest rate and minimum payment amount specified in the original lending agreement.

•Fully-amortized repayment plans are also granted, the most common of which being a 60-month program. In this program, we convert the borrower’s drawn and unpaid balances into a fully-amortized repayment plan consisting of an interest rate of 4.99% and a minimum payment amount of 1.90%. This fully-amortized program is designed in a manner that allows the drawn and unpaid amounts to be recaptured at the end of the 60 months.

After we modify a loan, we continue to track its performance under its most recent modified terms. The following table presents the performance, as of June 30, 2023, of FDMs granted during the six months ended June 30, 2023:

Table 48: Delinquency Status of FDMs (a)


Six months ended June 30, 2023 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		Nonperforming Loans		Total
Commercial
Commercial and industrial	$	494			$	4	$	1	$	97	$	596
Commercial real estate	520								33		553

Total commercial	1,014				4		1		130		1,149
Consumer
Residential real estate	1								77		78
Home equity									15		15

Credit card	20		$	3	3		4				30
Education	2										2
Other consumer									1		1
Total consumer	23		3		3		4		93		126
Total	$	1,037	$	3	$	7	$	5	$	223	$	1,275

(a)Represents amortized cost basis.

We generally consider FDMs to have subsequently defaulted when they become 60 days past due after the most recent date the loan was modified. Loans that were both (i) modified due to a financial difficulty during the period, and (ii) subsequently defaulted during the three and six months ended June 30, 2023 were $46 million and $48 million, respectively.

Troubled Debt Restructuring Disclosures Prior to the Adoption of ASU 2022-02

Table 49 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 and six months ended June 30, 2022. 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 in our 2022 Form 10-K for additional discussion of TDRs.

Table 49: 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 June 30, 2022 Dollars in millions	Number of Loans				Principal Forgiveness		Rate Reduction		Other		Total
Commercial		15	$	35	$	9			$	22	$	31
Consumer		3,025	50				$	40	5		45
Total TDRs		3,040	$	85	$	9	$	40	$	27	$	76
During the six months ended June 30, 2022 Dollars in millions
Commercial		27	$	88	$	9			$	68	$	77
Consumer		5,920	86				$	66	12		78
Total TDRs		5,947	$	174	$	9	$	66	$	80	$	155

(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 was determined to be a TDR, we continued to track its performance under its most recent restructured terms. We considered a TDR to have subsequently defaulted when it became 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 three and six months ended June 30, 2022 totaled $20 million and $27 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 for a discussion of the methodologies used to determine this allowance. A rollforward of the ACL related to loans follows:

Table 50: Rollforward of Allowance for Credit Losses


	Three months ended June 30												Six months ended June 30
	2023						2022						2023						2022
In millions	Commercial		Consumer		Total		Commercial		Consumer		Total		Commercial		Consumer		Total		Commercial		Consumer		Total
Allowance for loan and lease losses
Beginning balance	$	3,046	$	1,695	$	4,741	$	3,003	$	1,555	$	4,558	$	3,114	$	1,627	$	4,741	$	3,185	$	1,683	$	4,868
Adoption of ASU 2022-02 (a)															(35)		(35)
Beginning balance, adjusted	3,046		1,695		4,741		3,003		1,555		4,558		3,114		1,592		4,706		3,185		1,683		4,868
Charge-offs	(135)		(158)		(293)		(37)		(158)		(195)		(255)		(320)		(575)		(89)		(357)		(446)
Recoveries	36		63		99		19		93		112		61		125		186		53		173		226
Net (charge-offs)	(99)		(95)		(194)		(18)		(65)		(83)		(194)		(195)		(389)		(36)		(184)		(220)
Provision for (recapture of) credit losses	195		(6)		189		(45)		35		(10)		220		198		418		(208)		26		(182)
Other			1		1		(3)				(3)		2				2		(4)				(4)
Ending balance	$	3,142	$	1,595	$	4,737	$	2,937	$	1,525	$	4,462	$	3,142	$	1,595	$	4,737	$	2,937	$	1,525	$	4,462
Allowance for unfunded lending related commitments (b)
Beginning balance	$	560	$	112	$	672	$	587	$	52	$	639	$	613	$	81	$	694	$	564	$	98	$	662
Provision for (recapture of) credit losses	(5)		(4)		(9)		43		(1)		42		(58)		27		(31)		66		(47)		19
Ending balance	$	555	$	108	$	663	$	630	$	51	$	681	$	555	$	108	$	663	$	630	$	51	$	681
Allowance for credit losses at June 30 (c)	$	3,697	$	1,703	$	5,400	$	3,567	$	1,576	$	5,143	$	3,697	$	1,703	$	5,400	$	3,567	$	1,576	$	5,143

(a)Represents the impact of adopting ASU 2022-02 on January 1, 2023. As a result of adoption, we eliminated the accounting guidance for TDRs, including the use of a discounted cash flow approach to measure the allowance for TDRs.

(b)See Note 8 Commitments for additional information about the underlying commitments related to this allowance.

(c)Represents the ALLL plus allowance for unfunded lending related commitments and excludes allowances for investment securities and other financial assets, which together totaled $171 million and $163 million at June 30, 2023 and 2022, respectively.

The ACL related to loans totaled $5.4 billion at both June 30, 2023 and December 31, 2022. During the six months ended June 30, 2023, reserves reflected our updated economic outlook and changes in portfolio composition and quality.