Asset Quality

6 Months Ended

Jun. 30, 2021

Credit Loss [Abstract]

Asset Quality

4. Asset Quality

ALLL

We estimate the appropriate level of the ALLL on at least a quarterly basis. The methodology is described in Note 1 ("Summary of Significant Accounting Policies") under the heading "Allowance for Loan and Lease Losses" beginning on page 110 of our 2020 Form 10-K.

The ALLL at June 30, 2021, represents our current estimate of lifetime credit losses inherent in the loan portfolio at that date. The changes in the ALLL by loan category for the periods indicated are as follows:

Three months ended June 30, 2021:

in millions	March 31, 2021		Provision			Charge-offs		Recoveries		June 30, 2021
Commercial and Industrial	$	596	$	(88)		$	(41)	$	32	$	499
Commercial real estate:
Real estate — commercial mortgage	256		(31)			(4)		6		227
Real estate — construction	45		(10)			—		—		35
Total commercial real estate loans	301		(41)			(4)		6		262
Commercial lease financing	40		(6)			—		—		34
Total commercial loans	937		(135)			(45)		38		795
Real estate — residential mortgage	100		(13)			(1)		—		86
Home equity loans	157		(18)			(4)		1		136
Consumer direct loans	126		(6)			(7)		2		115
Credit cards	80		(6)			(9)		3		68
Consumer indirect loans	38		(18)			(5)		5		20
Total consumer loans	501		(61)			(26)		11		425
Total ALLL — continuing operations	1,438		(196)		(a)	(71)		49		1,220
Discontinued operations	33		(2)			(1)		—		30
Total ALLL — including discontinued operations	$	1,471	$	(198)		$	(72)	$	49	$	1,250

(a)Excludes a credit for losses on lending-related commitments of $26 million.

Three months ended June 30, 2020:

in millions	March 31, 2020		Provision			Charge-offs		Recoveries		June 30, 2020
Commercial and Industrial	$	542	$	249		$	(71)	$	5	$	725
Commercial real estate:
Real estate — commercial mortgage	207		87			(2)		—		292
Real estate — construction	25		16			—		—		41
Total commercial real estate loans	232		103			(2)		—		333
Commercial lease financing	44		14			(4)		1		55
Total commercial loans	818		366			(77)		6		1,113
Real estate — residential mortgage	89		14			(2)		—		101
Home equity loans	184		14			(2)		1		197
Consumer direct loans	116		22			(10)		2		130
Credit cards	104		13			(12)		2		107
Consumer indirect loans	48		16			(7)		3		60
Total consumer loans	541		79			(33)		8		595
Total ALLL — continuing operations	1,359		445		(a)	(110)		14		1,708
Discontinued operations	43		—			(2)		2		43
Total ALLL — including discontinued operations	$	1,402	$	445		$	(112)	$	16	$	1,751

(a)Excludes a provision for losses on lending-related commitments of $37 million.

Six months ended June 30, 2021

in millions	December 31, 2020		Provision			Charge-offs		Recoveries		June 30, 2021
Commercial and Industrial	$	678	$	(105)		$	(114)	$	40	$	499
Commercial real estate:
Real estate — commercial mortgage	327		(68)			(39)		7		227
Real estate — construction	47		(12)			—		—		35
Total commercial real estate loans	374		(80)			—		—		262
Commercial lease financing	47		(10)			(4)		1		34
Total commercial loans	1,099		(195)			(157)		48		795
Real estate — residential mortgage	102		(16)			(1)		1		86
Home equity loans	171		(31)			(6)		2		136
Consumer direct loans	128		(2)			(15)		4		115
Credit cards	87		(9)			(15)		5		68
Consumer indirect loans	39		(17)			(12)		10		20
Total consumer loans	527		(75)			(49)		22		425
Total ALLL — continuing operations	1,626		(270)		(a)	(206)		70		1,220
Discontinued operations	36		(5)			(2)		1		30
Total ALLL — including discontinued operations	$	1,662	$	(275)		$	(208)	$	71	$	1,250

(a)Excludes a credit for losses on lending-related commitments of $45 million

Six months ended June 30, 2020

in millions	Pre-ASC 326 Adoption December 31, 2019		Impact of ASC 326 Adoption		January 1, 2020		Provision			Charge-offs		Recoveries		June 30, 2020
Commercial and Industrial	$	551	$	(141)	$	410	$	436		$	(131)	$	10	$	725
Commercial real estate:
Real estate — commercial mortgage	143		16		159		137			(5)		1		292
Real estate — construction	22		(7)		15		26			—		—		41
Total commercial real estate loans	165		9		174		163			(5)		1		333
Commercial lease financing	35		8		43		17			(6)		1		55
Total commercial loans	751		(124)		627		616			(142)		12		1,113
Real estate — residential mortgage	7		77		84		19			(2)		—		101
Home equity loans	31		147		178		22			(6)		3		197
Consumer direct loans	34		63		97		51			(22)		4		130
Credit cards	47		35		82		44			(23)		4		107
Consumer indirect loans	30		6		36		32			(16)		8		60
Total consumer loans	149		328		477		168			(69)		19		595
Total ALLL — continuing operations	900		204		1,104		784		(a)	(211)		31		1,708
Discontinued operations	10		31		41		3			(4)		3		43
Total ALLL — including discontinued operations	$	910	$	235	$	1,145	$	787		$	(215)	$	34	$	1,751

(a)Excludes a provision for losses on lending-related commitments of $57 million.

As described in Note 1 ("Summary of Significant Accounting Policies"), under the heading “Allowance for Loan and Lease Losses” beginning on page 110 of our 2020 Form 10-K, we estimate the ALLL using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. In our estimation of expected credit losses, we use a two year reasonable and supportable period across all products. Following this two year period in which supportable forecasts can be generated, for all modeled loan portfolios, we revert expected credit losses to a level that is consistent with our historical information by reverting the macroeconomic variables (model inputs) to their long run average. We revert to historical loss rates for less complex estimation methods for smaller portfolios. A 20 year fixed length look back period is used to calculate the long run average of the macroeconomic variables. A four quarter reversion period is used where the macroeconomic variables linearly revert to their long run average following the two year reasonable and supportable period.

We develop our reasonable and supportable forecasts using relevant data including, but not limited to, changes in economic output, unemployment rates, property values, and other factors associated with the credit losses on financial assets. Some macroeconomic variables apply to all portfolio segments, while others are more portfolio specific. The following table discloses key macroeconomic variables for each loan portfolio.

Segment	Portfolio	Key Macroeconomic Variables (a)
Commercial	Commercial and industrial	BBB corporate bond rate (spread), GDP, industrial production, and unemployment rate
	Commercial real estate	BBB corporate bond rate (spread), property and real estate price indices, and unemployment rate
	Commercial lease financing	BBB corporate bond rate (spread), GDP, and unemployment rate
Consumer	Real estate — residential mortgage	GDP, home price index, unemployment rate, and 30 year mortgage rate
	Home equity	Home price index, unemployment rate, and 30 year mortgage rate
	Consumer direct	Unemployment rate and U.S. household income
	Consumer indirect	New vehicle sales, used vehicle prices, and unemployment rate
	Credit cards	Unemployment rate and U.S. household income
	Discontinued operations	Unemployment rate

(a)Variables include all transformations and interactions with other risk drivers. Additionally, variables may have varying impacts at different points in the economic cycle.

In addition to macroeconomic drivers, portfolio attributes such as remaining term, outstanding balance, risk ratings, FICO, LTV, and delinquency also drive ALLL changes. Our ALLL models were designed to capture the correlation between economic and portfolio changes. As such, evaluating shifts in individual portfolio attributes and macroeconomic variables in isolation may not be indicative of past or future performance.

Economic Outlook

As of June 30, 2021, the economic prospects continue to improve at a more accelerated pace than in the first quarter of 2021, but the continuation of the COVID-19 pandemic and the wind-down of various governmental assistance programs still creates much uncertainty. We utilized the Moody’s May 2021 Consensus forecast to estimate our expected credit losses as of June 30, 2021. We determined such forecast to be a reasonable view of the outlook for the economy given all available information at quarter end.

The baseline scenario reflects moderate economic growth over the next two years in markets in which we operate. U.S. GDP continues to rebound with a projected 10.6% annualized growth rate in the second quarter of 2021 and an overall growth rate of approximately 7% expected for the year. The national unemployment rate forecast is 5.9% in the second quarter of 2021, and is expected to decline to 4.7% by the fourth quarter of 2021.

To the extent we identified credit risk considerations that were not captured by the third-party economic forecast, we addressed the risk through management’s qualitative adjustments to the ALLL.

As a result of the unprecedented economic uncertainty caused by the COVID-19 pandemic, our future loss estimates may vary considerably from our June 30, 2021 assumptions.

Commercial Loan Portfolio

The ALLL from continuing operations for the commercial segment decreased by $142 million, or 15.2%, from March 31, 2021. The overall decrease in the allowance is driven by improvements in economic forecasts, a slight decline in loan balances, and improving asset quality.

The changes to the economic forecast primarily reflect improvements in economic drivers used in our models. The unemployment and GDP positive growth outlook contributes to the overall commercial segment reserve decrease. Expected improvements in real estate price indices lead to a reduction in reserve in our commercial real estate book. Risk rating migrations are driving a modest decrease in ALLL levels for the commercial and industrial portfolio. The ALLL results also reflect incremental credit risk considerations as a result of the future economic uncertainties which are addressed through qualitative adjustments.

As of June 30, 2021, we concluded that no ALLL is necessary for $5.7 billion in outstanding PPP loans as they are 100% guaranteed by the SBA.

Consumer Loan Portfolio

The ALLL from continuing operations for the consumer segment decreased by $76 million, or 15.2%, from March 31, 2021. The overall decrease in the allowance is driven by updated economic forecasts that capture an improving outlook for several drivers and strong portfolio performance, partially offset by growth in consumer real estate.

The most meaningful changes to the economic forecast contributing to the reduction in reserves include improvement in the unemployment rate outlook, which impacts all consumer portfolios. In addition, the housing market and HPI outlook continue to display strength, which impacts the residential mortgage and home equity segments. The unprecedented increase in used vehicle prices and favorable outlook are the main driver for the reserve reduction in the indirect auto loan portfolio. As it relates to the decline in the ALLL due to portfolio factors, shifts are largely driven by attrition activity, targeted portfolio growth and overall strong credit drivers. The ALLL results also reflect incremental credit risk considerations as a result of the economic stress and related borrower assistance programs, which are addressed through qualitative adjustments.

Credit Risk Profile

The prevalent risk characteristic for both commercial and consumer loans is the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms. Evaluation of this risk is stratified and monitored by the loan risk rating grades assigned for the commercial loan portfolios and the refreshed FICO score assigned for the consumer loan portfolios. The internal risk grades assigned to loans follow our definitions of Pass and Criticized, which are consistent with published definitions of regulatory risk classifications. Loans with a pass rating represent those loans not classified on our rating scale for problem credits, as minimal credit risk has been identified. Criticized loans are those loans that either have a potential weakness deserving management's close attention or have a well-defined weakness that may put full collection of contractual cash flows at risk. Borrower FICO scores provide information about the credit quality of our consumer loan portfolio as they provide an indication as to the likelihood that a debtor will repay its debts. The scores are obtained from a nationally recognized consumer rating agency and are presented in the tables below at the dates indicated.

Most extensions of credit are subject to loan grading or scoring. Loan grades are assigned at the time of origination, verified by credit risk management, and periodically re-evaluated thereafter. This risk rating methodology blends our judgment with quantitative modeling. Commercial loans generally are assigned two internal risk ratings. The first rating reflects the probability that the borrower will default on an obligation; the second rating reflects expected recovery rates on the credit facility. Default probability is determined based on, among other factors, the financial strength of the borrower, an assessment of the borrower’s management, the borrower’s competitive position within its industry sector, and our view of industry risk in the context of the general economic outlook. Types of exposure, transaction structure, and collateral, including credit risk mitigants, affect the expected recovery assessment.

Commercial Credit Exposure

Credit Risk Profile by Creditworthiness Category and Vintage (a)

As of June 30, 2021	Term Loans												Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost Basis
	Amortized Cost Basis by Origination Year and Internal Risk Rating
in millions	2021		2020		2019		2018		2017		Prior						Total
Commercial and Industrial
Risk Rating:
Pass	$	6,763	$	8,185	$	4,542	$	3,382	$	2,124	$	3,974	$	19,061	$	104	$	48,135
Criticized (Accruing)	30		118		232		242		208		236		1,086		30		2,182
Criticized (Nonaccruing)	1		7		17		52		7		48		221		2		355
Total commercial and industrial	6,794		8,310		4,791		3,676		2,339		4,258		20,368		136		50,672
Real estate — commercial mortgage
Risk Rating:
Pass	1,678		1,415		2,703		1,371		786		3,254		716		46		11,969
Criticized (Accruing)	12		25		156		152		142		330		111		2		930
Criticized (Nonaccruing)	—		—		4		1		16		41		4		—		66
Total real estate — commercial mortgage	1,690		1,440		2,863		1,524		944		3,625		831		48		12,965
Real estate — construction
Risk Rating:
Pass	177		555		700		365		152		36		28		9		2,022
Criticized (Accruing)	—		4		14		54		22		14		2		—		110
Criticized (Nonaccruing)	—		—		—		—		—		—		—		—		—
Total real estate — construction	177		559		714		419		174		50		30		9		2,132
Commercial lease financing
Risk Rating:
Pass	409		880		825		416		380		1,037		—		—		3,947
Criticized (Accruing)	—		19		40		17		23		8		—		—		107
Criticized (Nonaccruing)	—		—		2		1		2		2		—		—		7
Total commercial lease financing	409		899		867		434		405		1,047				—		4,061
Total commercial loans	$	9,070	$	11,208	$	9,235	$	6,053	$	3,862	$	8,980	$	21,229	$	193	$	69,830

As of December 31, 2020	Term Loans												Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost Basis
	Amortized Cost Basis by Origination Year and Internal Risk Rating
in millions	2020		2019		2018		2017		2016		Prior						Total
Commercial and Industrial
Risk Rating:
Pass	$	13,100	$	5,487	$	4,040	$	2,617	$	1,967	$	2,709	$	19,832	$	118	$	49,870
Criticized (Accruing)	66		198		174		236		150		279		1,527		22		2,652
Criticized (Nonaccruing)	8		27		71		28		17		7		226		1		385
Total commercial and industrial	13,174		5,712		4,285		2,881		2,134		2,995		21,585		141		52,907
Real estate — commercial mortgage
Risk Rating:
Pass	1,591		2,937		1,737		867		765		3,027		885		43		11,852
Criticized (Accruing)	12		142		81		145		72		255		22		2		731
Criticized (Nonaccruing)	—		1		4		4		2		88		5		—		104
Total real estate — commercial mortgage	1,603		3,080		1,822		1,016		839		3,370		912		45		12,687
Real estate — construction
Risk Rating:
Pass	367		764		510		188		27		22		31		5		1,914
Criticized (Accruing)	—		14		38		18		—		2		1		—		73
Criticized (Nonaccruing)	—		—		—		—		—		—		—		—		—
Total real estate — construction	367		778		548		206		27		24		32		5		1,987
Commercial lease financing
Risk Rating:
Pass	1,076		1,050		534		504		228		901		—		—		4,293
Criticized (Accruing)	10		35		15		26		7		4		—		—		97
Criticized (Nonaccruing)	—		2		2		2		2		1		—		—		9
Total commercial lease financing	1,086		1,087		551		532		237		906		—		—		4,399
Total commercial loans	$	16,230	$	10,657	$	7,206	$	4,635	$	3,237	$	7,295	$	22,529	$	191	$	71,980

(a)Accrued interest of $127 million and $140 million as of June 30, 2021 and December 31, 2020, respectively, presented in Other Assets on the Consolidated Balance Sheets, was excluded from the amortized cost basis disclosed in these tables.

Consumer Credit Exposure

Credit Risk Profile by FICO Score and Vintage (a)

As of June 30, 2021	Term Loans												Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost Basis
	Amortized Cost Basis by Origination Year and FICO Score
in millions	2021		2020		2019		2018		2017		Prior						Total
Real estate — residential mortgage
FICO Score:
750 and above	$	3,871	$	3,348	$	1,106	$	129	$	173	$	1,353	—		—		$	9,980
660 to 749	743		462		201		54		37		363		—		—		1,860
Less than 660	10		14		17		18		9		157		—		—		225
No Score	18		1		2		2		4		39		—		—		66
Total real estate — residential mortgage	4,642		3,825		1,326		203		223		1,912		—		—		12,131
Home equity loans
FICO Score:
750 and above	799		911		321		128		160		818		$	2,426	$	508	6,071
660 to 749	262		335		147		56		55		247		1,087		172		2,361
Less than 660	14		28		21		15		15		106		353		51		603
No Score	—		2		2		1		—		2		4		1		12
Total home equity loans	1,075		1,276		491		200		230		1,173		3,870		732		9,047
Consumer direct loans
FICO Score:
750 and above	867		1,457		688		90		24		120		112		—		3,358
660 to 749	251		383		220		58		15		48		224		—		1,199
Less than 660	10		20		28		14		4		12		64		—		152
No Score	31		44		36		14		12		22		181		—		340
Total consumer direct loans	1,159		1,904		972		176		55		202		581		—		5,049
Credit cards
FICO Score:
750 and above	—		—		—		—		—		—		472		—		472
660 to 749	—		—		—		—		—		—		372		—		372
Less than 660	—		—		—		—		—		—		77		—		77
No Score	—		—		—		—		—		—		2		—		2
Total credit cards	—		—		—		—		—		—		923		—		923
Consumer indirect loans
FICO Score:
750 and above	115		821		770		286		130		81		—		—		2,203
660 to 749	—		496		416		163		63		54		—		—		1,192
Less than 660	—		102		116		70		35		32		—		—		355
No Score	—		—		—		—		—		—		—		—		—
Total consumer indirect loans	115		1,419		1,302		519		228		167		—		—		3,750
Total consumer loans	$	6,991	$	8,424	$	4,091	$	1,098	$	736	$	3,454	$	5,374	$	732	$	30,900

As of December 31, 2020	Term Loans												Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost Basis
	Amortized Cost Basis by Origination Year and FICO Score
in millions	2020		2019		2018		2017		2016		Prior						Total
Real estate — residential mortgage
FICO Score:
750 and above	$	3,595	$	1,620	$	194	$	254	$	537	$	1,211	—		—		$	7,411
660 to 749	710		284		76		48		100		332		—		—		1,550
Less than 660	16		28		21		10		26		170		—		—		271
No Score	1		2		2		7		2		52		—		—		66
Total real estate — residential mortgage	4,322		1,934		293		319		665		1,765		—		—		9,298
Home equity loans
FICO Score:
750 and above	1,043		404		168		202		190		839		$	2,689	$	590	6,125
660 to 749	385		198		82		77		69		253		1,237		206		2,507
Less than 660	27		30		18		20		20		113		426		61		715
No Score	2		2		1		—		—		2		5		1		13
Total home equity loans	1,457		634		269		299		279		1,207		4,357		858		9,360
Consumer direct loans
FICO Score:
750 and above	1,840		883		115		32		16		57		119		—		3,062
660 to 749	479		268		80		22		14		33		254		1		1,151
Less than 660	23		37		21		8		5		10		81		—		185
No Score	65		35		21		21		10		11		153		—		316
Total consumer direct loans	2,407		1,223		237		83		45		111		607		1		4,714
Credit cards
FICO Score:
750 and above	—		—		—		—		—		—		488		—		488
660 to 749	—		—		—		—		—		—		407		—		407
Less than 660	—		—		—		—		—		—		93		—		93
No Score	—		—		—		—		—		—		1		—		1
Total credit cards	—		—		—		—		—		—		989		—		989
Consumer indirect loans
FICO Score:
750 and above	1,092		924		369		188		69		66		—		—		2,708
660 to 749	653		558		232		97		36		47		—		—		1,623
Less than 660	143		163		99		54		25		28		—		—		512
No Score	1		—		—		—		—		—		—		—		1
Total consumer indirect loans	1,889		1,645		700		339		130		141		—		—		4,844
Total consumer loans	$	10,075	$	5,436	$	1,499	$	1,040	$	1,119	$	3,224	$	5,953	$	859	$	29,205

(a)Accrued interest of $97 million and $101 million as of June 30, 2021 and December 31, 2020, respectively, presented in Other Assets on the Consolidated Balance Sheets, was excluded from the amortized cost basis disclosed in this table.

Nonperforming and Past Due Loans

Our policies for determining past due loans, placing loans on nonaccrual, applying payments on nonaccrual loans, and resuming accrual of interest for our commercial and consumer loan portfolios are disclosed in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Nonperforming Loans” beginning on page 108 of our 2020 Form 10-K.

Under the CARES Act as well as banking regulator interagency guidance, certain loan modifications to borrowers experiencing financial distress as a result of the economic impacts created by the COVID-19 pandemic may not be required to be reported as past due. For COVID-19 related loan modifications which occurred from March 1, 2020, through June 30, 2021, and met the loan modification criteria under either the CARES Act or the criteria specified by the regulatory agencies, we have elected to re-age to current status all commercial loans and consumer loans that are not secured by real-estate and freeze the delinquency status of consumer real estate secured loans as of the modification or forbearance grant date. At June 30, 2021, the portfolio loans and leases in active deferral or forebearance as part of our COVID-19 hardship relief programs totaled $259 million, of which $209 million of loan modifications and forbearances made under the criteria of either the CARES Act, banking regulator interagency guidance, or short-term forbearance policies were not reported as nonperforming.

The following aging analysis of past due and current loans as of June 30, 2021, and December 31, 2020, provides further information regarding Key’s credit exposure.

Aging Analysis of Loan Portfolio(a)

June 30, 2021	Current		30-59 Days Past Due (b)		60-89 Days Past Due (b)		90 and Greater Days Past Due (b)		Non-performing Loans		Total Past Due and Non-performing Loans		Total Loans (c)
in millions
LOAN TYPE
Commercial and industrial	$	50,188	$	71	$	19	$	39	$	355	$	484	$	50,672
Commercial real estate:
Commercial mortgage	12,865		12		7		15		66		100		12,965
Construction	2,131		—		1		—		—		1		2,132
Total commercial real estate loans	14,996		12		8		15		66		101		15,097
Commercial lease financing	4,043		7		1		3		7		18		4,061
Total commercial loans	$	69,227	$	90	$	28	$	57	$	428	$	603	$	69,830
Real estate — residential mortgage	$	12,023	$	7	$	2	$	—	$	99	$	108	$	12,131
Home equity loans	8,861		23		10		7		146		186		9,047
Consumer direct loans	5,035		5		2		3		4		14		5,049
Credit cards	909		3		2		6		3		14		923
Consumer indirect loans	3,717		14		4		1		14		33		3,750
Total consumer loans	$	30,545	$	52	$	20	$	17	$	266	$	355	$	30,900
Total loans	$	99,772	$	142	$	48	$	74	$	694	$	958	$	100,730

(a)Amounts in table represent amortized cost and exclude loans held for sale.

(b)Accrued interest of $225 million presented in Other Assets on the Consolidated Balance Sheets is excluded from the amortized cost basis disclosed in this table.

(c)Net of unearned income, net of deferred fees and costs, and unamortized discounts and premiums.

December 31, 2020	Current		30-59 Days Past Due (b)		60-89 Days Past Due (b)		90 and Greater Days Past Due (b)		Non-performing Loans		Total Past Due and Non-performing Loans		Total Loans (c)
in millions
LOAN TYPE
Commercial and industrial	$	52,396	$	36	$	50	$	40	$	385	$	511	$	52,907
Commercial real estate:
Commercial mortgage	12,548		9		5		21		104		139		12,687
Construction	1,986		—		—		1		—		1		1,987
Total commercial real estate loans	14,534		9		5		22		104		140		14,674
Commercial lease financing	4,369		21		1		—		8		30		4,399
Total commercial loans	$	71,299	$	66	$	56	$	62	$	497	$	681	$	71,980
Real estate — residential mortgage	$	9,173	$	11	$	3	$	1	$	110	$	125	$	9,298
Home equity loans	9,143		34		20		9		154		217		9,360
Consumer direct loans	4,694		7		4		4		5		20		4,714
Credit cards	972		5		3		7		2		17		989
Consumer indirect loans	4,792		25		7		3		17		52		4,844
Total consumer loans	$	28,774	$	82	$	37	$	24	$	288	$	431	$	29,205
Total loans	$	100,073	$	148	$	93	$	86	$	785	$	1,112	$	101,185

(a)Amounts in table represent amortized cost and exclude loans held for sale.

(b)Accrued interest of $241 million presented in Other Assets on the Consolidated Balance Sheets is excluded from the amortized cost basis disclosed in this table.

(c)Net of unearned income, net of deferred fees and costs, and unamortized discounts and premiums.

At June 30, 2021, the approximate carrying amount of our commercial nonperforming loans outstanding represented 69% of their original contractual amount owed, total nonperforming loans outstanding represented 76% of their original contractual amount owed, and nonperforming assets in total were carried at 81% of their original contractual amount owed.

Nonperforming loans reduced expected interest income by $7 million and $14 million for the three and six months ended June 30, 2021,respectively, and $7 million and $13 million for the three and six months ended June 30, 2020, respectively.

The amortized cost basis of nonperforming loans on nonaccrual status for which there is no related allowance for credit losses was $474 million at June 30, 2021.

Collateral-dependent Financial Assets

We classify financial assets as collateral-dependent when our borrower is experiencing financial difficulty, and we expect repayment to be provided substantially through the operation or sale of the collateral. Our commercial loans have collateral that includes commercial machinery, commercial properties, and commercial real estate construction projects. Our consumer loans have collateral that includes residential real estate, automobiles, boats, and RVs.

There were no significant changes in the extent to which collateral secures our collateral-dependent financial assets during the three months ended June 30, 2021.

TDRs

We classify loan modifications as TDRs when a borrower is experiencing financial difficulties and we have granted a concession without commensurate financial, structural, or legal consideration. Our loan modifications are handled on a case-by-case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet the borrower’s financial needs. Under the CARES Act as well as banking regulator interagency guidance, certain loan modifications to borrowers experiencing financial distress as a result of the economic impacts created by the COVID-19 pandemic may not be required to be treated as TDRs under U.S. GAAP.  As of June 30, 2021, the outstanding balance of loans that underwent COVID-19 related loan modifications for which we elected to suspend TDR accounting as such loan modifications met the criteria under either the CARES Act or banking regulator interagency guidance totaled $209 million. 

Commitments outstanding to lend additional funds to borrowers whose loan terms have been modified in TDRs were $30 million and $1 million at June 30, 2021, and December 31, 2020, respectively.

The consumer TDR other concession category in the table below primarily includes those borrowers’ debts that are discharged through Chapter 7 bankruptcy and have not been formally re-affirmed. At June 30, 2021, and December 31, 2020, the recorded investment of consumer residential mortgage loans in the process of foreclosure was approximately $78 million and $92 million, respectively.

The following table shows the post-modification outstanding recorded investment by concession type for our commercial and consumer accruing and nonaccruing TDRs that occurred during the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
in millions	2021		2020		2021		2020
Commercial loans:
Extension of Maturity Date	—		$	8	$	26	$	8
Payment or Covenant Modification/Deferment	$	16	—		23		—
Bankruptcy Plan Modification	—		—		—		—
Increase in new commitment or new money	—		4		—		4
Total	$	16	$	12	$	49	$	12
Consumer loans:
Interest rate reduction	$	2	$	1	$	4	$	9
Other	4		5		7		13
Total	$	6	$	6	$	11	$	22
Total TDRs	$	22	$	18	$	60	$	34

The following table summarizes the change in the post-modification outstanding recorded investment of our accruing and nonaccruing TDRs during the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
in millions	2021		2020		2021		2020
Balance at beginning of the period	$	376	$	340	$	363	$	347
Additions	22		22		81		39
Payments	(60)		(35)		(81)		(53)
Charge-offs	(4)		(17)		(29)		(23)
Balance at end of period	$	334	$	310	$	334	$	310

A further breakdown of TDRs included in nonperforming loans by loan category for the periods indicated are as follows:

	June 30, 2021					December 31, 2020
	Number of Loans	Pre-modification Outstanding Recorded Investment		Post-modification Outstanding Recorded Investment		Number of Loans	Pre-modification Outstanding Recorded Investment		Post-modification Outstanding Recorded Investment
dollars in millions
LOAN TYPE
Nonperforming:
Commercial and industrial	41	$	112	$	65	66	$	136	$	92
Commercial real estate:
Commercial mortgage	4	66		45		7	62		50
Total commercial real estate loans	4	66		45		7	62		50
Total commercial loans	45	178		110		73	198		142
Real estate — residential mortgage	214	25		23		258	35		34
Home equity loans	532	35		30		630	41		37
Consumer direct loans	200	3		3		212	3		3
Credit cards	291	2		2		356	2		2
Consumer indirect loans	735	13		9		861	15		11
Total consumer loans	1,972	78		67		2,317	96		87
Total nonperforming TDRs	2,017	256		177		2,390	294		229
Prior-year accruing:(a)
Commercial and industrial	13	26		25		3	5		—
Commercial real estate
Commercial mortgage	—	—		—		—	—		—
Total commercial real estate loans	—	—		—		—	—		—
Total commercial loans	13	26		25		3	5		—
Real estate — residential mortgage	480	40		34		485	37		31
Home equity loans	1,717	103		81		1,781	106		83
Consumer direct loans	200	5		2		163	4		3
Credit cards	598	4		1		536	3		1
Consumer indirect loans	705	26		14		775	29		16
Total consumer loans	3,700	178		132		3,740	179		134
Total prior-year accruing TDRs	3,713	204		157		3,743	184		134
Total TDRs	5,730	$	460	$	334	6,133	$	478	$	363

(a)All TDRs that were restructured prior to January 1, 2021, and January 1, 2020, are fully accruing.

Commercial loan TDRs are considered defaulted when principal and interest payments are 90 days past due. Consumer loan TDRs are considered defaulted when principal and interest payments are more than 60 days past due. During the three months ended June 30, 2021, there was one commercial loan TDR and 29 consumer loan TDRs with a combined recorded investment of $1 million that experienced payment defaults after modifications resulting in TDR status during 2020. During the three months ended June 30, 2020, there were no commercial loan TDRs and 43 consumer loan TDRs with a combined recorded investment of $1 million that experienced payment defaults after modifications resulting in TDR status during 2019.

During the six months ended June 30, 2021, there were three commercial loan TDRs and 65 consumer loan TDRs with a combined recorded investment of $2 million that experienced payment defaults after modifications resulting in TDR status during 2020. During the six months ended June 30, 2020, there were no commercial loan TDRs and 127 consumer loan TDRs with a combined recorded investment of $3 million that experienced payment defaults after modifications resulting in TDR status during 2019.

Liability for Credit Losses on Off Balance Sheet Exposures

The liability for credit losses inherent in unfunded lending-related commitments, such as letters of credit and unfunded loan commitments, and certain financial guarantees is included in “accrued expense and other liabilities” on the balance sheet.

Changes in the liability for credit losses on off balance sheet exposures are summarized as follows:

	Three months ended June 30,				Six months ended June 30,
in millions	2021		2020		2021		2020
Balance at the end of the prior period	$	178	$	161	$	197	$	68
Liability for credit losses on contingent guarantees at the end of the prior period	—		—		—		7
Cumulative effect from change in accounting principle (a), (b)	—		—		—		66
Balance at beginning of period	178		161		197		141
Provision (credit) for losses on off balance sheet exposures	(26)		37		(45)		57
Balance at end of period	$	152	$	198	$	152	$	198

(a)The cumulative effect from change in accounting principle relates to the January 1, 2020, adoption of ASU 2016-13.

(b)The six months ended June 30, 2020, amount excludes $4 million related to the provision for other financial assets.