Loans, Leases, and Allowance For Credit Losses

12 Months Ended

Dec. 31, 2023

Receivables [Abstract]

LOANS, LEASES, AND ALLOWANCE FOR CREDIT LOSSES

LOANS, LEASES, AND ALLOWANCE FOR CREDIT LOSSES

Loans, Leases, and Loans Held for Sale

Loans and leases are summarized as follows according to major portfolio segment and specific class:

	December 31,
(In millions)	2023		2022
Loans held for sale	$	53	$	8
Commercial:
Commercial and industrial 1	$	16,684	$	16,377
Leasing	383		386
Owner-occupied	9,219		9,371
Municipal	4,302		4,361
Total commercial	30,588		30,495
Commercial real estate:
Construction and land development	2,669		2,513
Term	10,702		10,226
Total commercial real estate	13,371		12,739
Consumer:
Home equity credit line	3,356		3,377
1-4 family residential	8,415		7,286
Construction and other consumer real estate	1,442		1,161
Bankcard and other revolving plans	474		471
Other	133		124
Total consumer	13,820		12,419
Total loans and leases	$	57,779	$	55,653

1 Commercial and industrial loan balances include Paycheck Protection Program (“PPP”) loans of $77 million and $197 million for the respective periods presented.

Loans and leases are measured and presented at their amortized cost basis, which includes net unamortized purchase premiums, discounts, and deferred loan fees and costs totaling $37 million and $49 million at December 31, 2023, and December 31, 2022, respectively. Amortized cost basis does not include accrued interest receivables of $299 million and $247 million at December 31, 2023, and December 31, 2022, respectively. These receivables are included in “Other assets” on the consolidated balance sheet.

Municipal loans generally include loans to state and local governments (“municipalities”) with the debt service being repaid from general funds or pledged revenues of the municipal entity, or to private commercial entities or 501(c)(3) not-for-profit entities utilizing a pass-through municipal entity to achieve favorable tax treatment.

Land acquisition and development loans included in the construction and land development loan portfolio were $219 million at December 31, 2023 and $262 million at December 31, 2022.

Loans with a carrying value of approximately $36.3 billion at December 31, 2023, and $27.6 billion at December 31, 2022, have been pledged at the Federal Reserve and the Federal Home Loan Bank (“FHLB”) of Des Moines as collateral for current and potential borrowings.

At the time of origination, we determine the classification of loans as either held for investment or held for sale. Loans held for sale are measured individually at fair value or the lower of cost or fair value and primarily consist of (1) CRE loans that are sold into securitization entities, and (2) conforming residential mortgages that are generally sold to U.S. government agencies.

The following schedule presents loans added to, or sold from, the held for sale category during the periods presented:

	Twelve Months Ended December 31,
(In millions)	2023		2022		2021
Loans added to held for sale	$	678	$	659	$	1,700
Loans sold from held for sale	632		716		1,683

Occasionally, we have continuing involvement in the sold loans in the form of servicing rights or guarantees. The principal balance of sold loans for which we have retained servicing was approximately $0.4 billion at December 31, 2023, and $3.5 billion at December 31, 2022. During the third quarter of 2023, we sold the servicing rights related to $3.0 billion of mortgage loans. Income from loans sold, excluding servicing, was $16 million in 2023, $14 million in 2022, and $34 million in 2021.

Allowance for Credit Losses

The ACL, which consists of the ALLL and the RULC, represents our estimate of current expected credit losses related to the loan and lease portfolio and unfunded lending commitments as of the balance sheet date. The ACL for AFS and HTM debt securities is estimated separately from loans. For HTM securities, the ACL is assessed consistent with the approach for loans carried at amortized cost. See Note 5 for further discussion on our assessment of expected credit losses on AFS securities and disclosures related to AFS and HTM securities.

The ACL reflects our best estimate of credit losses and is calculated using the loan’s amortized cost basis (principal balance, net of unamortized premiums, discounts, and deferred fees and costs). We do not estimate the ACL for accrued interest receivables because we reverse or write-off uncollectible accrued interest receivable balances in a timely manner, generally within one month.

The methodologies we use to estimate the ACL depend upon the type of loan, the age and contractual term of the loan, expected payments (both contractual and estimated prepayments), credit quality indicators, economic forecasts, and the evaluation method (whether individually or collectively evaluated). Loan extensions or renewals are not considered in the ACL unless they are included in the original or modified loan contract and are not unconditionally cancellable.

Losses are charged to the ACL when recognized. Generally, commercial and CRE loans are charged off or charged down when they are determined to be uncollectible in whole or in part, or when 180 days past due, unless the loan is well-secured and in process of collection. Consumer loans are either charged off or charged down to net realizable value no later than the month in which they become 180 days past due. Closed-end consumer loans that are not secured by residential real estate are either charged off or charged down to net realizable value no later than the month in which they become 120 days past due.

We establish the amount of the ACL by analyzing the portfolio at least quarterly, and we adjust the provision for loan losses and unfunded lending commitments to ensure the ACL is at an appropriate level at the balance sheet date. The ACL is determined based on our review of loans that have similar risk characteristics, which are evaluated on a collective basis, as well as loans that do not have similar risk characteristics, which are evaluated on an individual basis.

For commercial and CRE loans with commitments greater than $1 million, we assign internal risk grades using a comprehensive loan grading system based on financial and statistical models, individual credit analysis, and loan officer experience and judgment. The credit quality indicators described subsequently are based on this grading system. Estimated credit losses on all loan segments, including consumer and small commercial and CRE loans with commitments less than or equal to $1 million that are evaluated on a collective basis, are derived from statistical analyses of our historical default and loss experience since January 2008.

We estimate current expected credit losses for each loan, which includes considerations of historical credit loss experience, current conditions, and reasonable and supportable forecasts about the future. We use the following two types of credit loss estimation models:

•Econometric loss models, which rely on statistical analyses of our historical loss experience dependent upon economic factors and other loan-level characteristics. Statistically relevant economic factors vary depending upon the type of loan, but include variables such as unemployment, real estate price indices, energy prices, gross domestic product (“GDP”), etc. The models use multiple economic scenarios that reflect optimistic, baseline, and stressed economic conditions. The results derived using these economic scenarios are weighted to produce the credit loss estimate. Management may adjust the weights to reflect management’s assessment of current conditions and reasonable and supportable forecasts.

•Loss models that are based on our long-term average historical credit loss experience since 2008, which rely on statistical analyses of our historical loss experience dependent upon loan-level characteristics.

Credit loss estimates for the first 12 months of a loan’s remaining life are derived using econometric loss models. Over a subsequent 12-month reversion period, we blend the estimated credit losses from the two models on a straight-line basis. For the remaining life of the loan, the estimated credit losses are derived from the long-term average historical credit loss models.

For loans that do not share risk characteristics with other loans, we estimate lifetime expected credit losses on an individual basis. These include nonaccrual loans with a balance greater than $1 million. When a loan is individually evaluated for expected credit losses, we estimate a specific reserve for the loan based on either the projected present value of the loan’s future cash flows discounted at the loan’s effective interest rate, the observable market price of the loan, or the fair value of the loan’s underlying collateral.

When we base the specific reserve on the fair value of the loan’s underlying collateral, we generally charge-off the portion of the balance that is greater than fair value. For these loans, subsequent to the charge-off, if the fair value of the loan’s underlying collateral increases according to an updated appraisal, we establish a negative reserve up to the lesser of the amount of the charge-off or the updated fair value.

The methodologies described previously generally rely on historical loss information to help determine our quantitative portion of the ACL. However, we also consider other qualitative and environmental factors related to current conditions and reasonable and supportable forecasts that may indicate current expected credit losses may differ from the historical information reflected in our quantitative models. Thus, after applying historical loss experience, as described above, we review the quantitative portion of ACL for each segment. We monitor various risk factors that influence our judgment regarding the level of the ACL across the portfolio segments. These factors primarily include:

•Actual and expected changes in international, national, regional, and local economic and business conditions and developments;

•The volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans;

•Lending policies and procedures, including changes in underwriting standards and practices for collection, charge-off, and recovery;

•The experience, ability, and depth of lending management and other relevant staff;

•The nature and volume of the portfolio;

•The quality of the credit review function;

•The existence, growth, and effect of any concentration of credit;

•The effect of other external factors such as regulatory, legal, and technological environments; fiscal and monetary actions; competition; and events such as natural disasters and pandemics.

The magnitude of the impact of these factors on our qualitative assessment of the ACL changes from quarter to quarter according to changes made by management in its assessment of these factors, the extent these factors are

already reflected in quantitative loss estimates, and the extent changes in these factors diverge from one to another. We also consider the uncertainty and imprecision inherent in the estimation process when evaluating the ACL.

Off-balance Sheet Credit Exposures

As previously mentioned, we estimate current expected credit losses for off-balance sheet loan commitments, including letters of credit that are not unconditionally cancellable. This estimate uses the same procedures and methodologies described previously for loans and is calculated by taking the difference between the estimated current expected credit loss and the funded balance, if greater than zero.

Changes in the Allowance for Credit Losses

Changes in the ACL are summarized as follows:

	December 31, 2023
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan and lease losses
Balance at December 31, 2022	$	300	$	156	$	119	$	575
Adjustment for change in accounting standard	—		(4)		1		(3)
Balance at beginning of year	$	300	$	152	$	120	$	572
Provision for loan losses	27		92		29		148
Gross loan and lease charge-offs	45		3		14		62
Recoveries	20		—		6		26
Net loan and lease charge-offs (recoveries)	25		3		8		36
Balance at end of year	$	302	$	241	$	141	$	684
Reserve for unfunded lending commitments
Balance at beginning of year	$	16	$	33	$	12	$	61
Provision for unfunded lending commitments	3		(16)		(3)		(16)
Balance at end of year	$	19	$	17	$	9	$	45
Total allowance for credit losses
Allowance for loan and lease losses	$	302	$	241	$	141	$	684
Reserve for unfunded lending commitments	19		17		9		45
Total allowance for credit losses	$	321	$	258	$	150	$	729

	December 31, 2022
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan and lease losses
Balance at beginning of year	$	311	$	107	$	95	$	513
Provision for loan losses	29		49		23		101
Gross loan and lease charge-offs	72		—		10		82
Recoveries	32		—		11		43
Net loan and lease charge-offs (recoveries)	40		—		(1)		39
Balance at end of year	$	300	$	156	$	119	$	575
Reserve for unfunded lending commitments
Balance at beginning of year	$	19	$	11	$	10	$	40
Provision for unfunded lending commitments	(3)		22		2		21
Balance at end of year	$	16	$	33	$	12	$	61
Total allowance for credit losses
Allowance for loan and lease losses	$	300	$	156	$	119	$	575
Reserve for unfunded lending commitments	16		33		12		61
Total allowance for credit losses	$	316	$	189	$	131	$	636

Nonaccrual Loans

Loans are generally placed on nonaccrual status when payment in full of principal and interest is not expected, or the loan is 90 days or more past due as to principal or interest, unless the loan is both well-secured and in the process of collection. Factors we consider in determining whether a loan is placed on nonaccrual include delinquency status, collateral value, borrower or guarantor financial statement information, bankruptcy status, and other information which would indicate that the full and timely collection of interest and principal is uncertain.

A nonaccrual loan may be returned to accrual status when (1) all delinquent interest and principal become current in accordance with the terms of the loan agreement; (2) the loan, if secured, is well-secured; (3) the borrower has paid according to the contractual terms for a minimum of six months; and (4) an analysis of the borrower indicates a reasonable assurance of the borrower’s ability and willingness to maintain payments. The amortized cost basis of loans on nonaccrual status is summarized as follows:

	December 31, 2023
	Amortized cost basis				Total amortized cost basis
(In millions)	with no allowance		with allowance				Related allowance
Commercial:
Commercial and industrial	$	11	$	71	$	82	$	30
Leasing	—		2		2		1
Owner-occupied	12		8		20		1
Total commercial	23		81		104		32
Commercial real estate:
Construction and land development	22		—		22		—
Term	37		2		39		1
Total commercial real estate	59		2		61		1
Consumer:
Home equity credit line	1		16		17		5
1-4 family residential	8		32		40		5
Total consumer loans	9		48		57		10
Total	$	91	$	131	$	222	$	43

	December 31, 2022
	Amortized cost basis				Total amortized cost basis
(In millions)	with no allowance		with allowance				Related allowance
Commercial:
Commercial and industrial	$	8	$	55	$	63	$	27
Owner-occupied	13		11		24		1
Total commercial	21		66		87		28
Commercial real estate:
Term	—		14		14		2
Total commercial real estate	—		14		14		2
Consumer:
Home equity credit line	1		10		11		2
1-4 family residential	9		28		37		3
Total consumer loans	10		38		48		5
Total	$	31	$	118	$	149	$	35

For accruing loans, interest is accrued and interest payments are recognized into interest income according to the contractual loan agreement. For nonaccruing loans, the accrual of interest is discontinued, any uncollected or accrued interest is reversed from interest income in a timely manner (generally within one month), and any payments received on these loans are not recognized into interest income, but are applied as a reduction to the principal outstanding. When the collectibility of the amortized cost basis for a nonaccrual loan is no longer in doubt, then interest payments may be recognized in interest income on a cash basis. For 2023 and 2022, there was no interest income recognized on a cash basis during the period the loans were on nonaccrual.

The amount of accrued interest receivables reversed from interest income during the periods presented is summarized by loan portfolio segment as follows:

	Twelve Months Ended December 31,
(In millions)	2023		2022		2021
Commercial	$	10	$	12	$	15
Commercial real estate	3		1		2
Consumer	2		—		—
Total	$	15	$	13	$	17

Past Due Loans

Closed-end loans with payments scheduled monthly are reported as past due when the borrower is in arrears for two or more monthly payments. Similarly, open-end credits, such as bankcard and other revolving credit plans, are reported as past due when the minimum payment has not been made for two or more billing cycles. Other multi-payment obligations (i.e., quarterly, semi-annual, etc.), single payment, and demand notes, are reported as past due when either principal or interest is due and unpaid for a period of 30 days or more.

Past-due loans (accruing and nonaccruing) are summarized as follows:

	December 31, 2023
(In millions)	Current		30-89 days past due		90+ days past due		Total past due		Total loans		Accruing loans 90+ days past due		Nonaccrual loans that are current1
Commercial:
Commercial and industrial	$	16,631	$	38	$	15	$	53	$	16,684	$	1	$	65
Leasing	381		2		—		2		383		—		—
Owner-occupied	9,206		11		2		13		9,219		1		18
Municipal	4,301		1		—		1		4,302		—		—
Total commercial	30,519		52		17		69		30,588		2		83
Commercial real estate:
Construction and land development	2,645		2		22		24		2,669		—		—
Term	10,661		14		27		41		10,702		—		3
Total commercial real estate	13,306		16		49		65		13,371		—		3
Consumer:
Home equity credit line	3,334		17		5		22		3,356		—		9
1-4 family residential	8,375		17		23		40		8,415		—		13
Construction and other consumer real estate	1,442		—		—		—		1,442				—
Bankcard and other revolving plans	468		5		1		6		474		1		—
Other	132		1		—		1		133		—		—
Total consumer loans	13,751		40		29		69		13,820		1		22
Total	$	57,576	$	108	$	95	$	203	$	57,779	$	3	$	108

	December 31, 2022
(In millions)	Current		30-89 days past due		90+ days past due		Total past due		Total loans		Accruing loans 90+ days past due		Nonaccrual loans that are current1
Commercial:
Commercial and industrial	$	16,331	$	24	$	22	$	46	$	16,377	$	4	$	45
Leasing	386		—		—		—		386		—		—
Owner-occupied	9,344		20		7		27		9,371		1		15
Municipal	4,361		—		—		—		4,361		—		—
Total commercial	30,422		44		29		73		30,495		5		60
Commercial real estate:
Construction and land development	2,511		2		—		2		2,513		—		—
Term	10,179		37		10		47		10,226		—		4
Total commercial real estate	12,690		39		10		49		12,739		—		4
Consumer:
Home equity credit line	3,369		5		3		8		3,377		—		6
1-4 family residential	7,258		9		19		28		7,286		—		16
Construction and other consumer real estate	1,161		—		—		—		1,161		—		—
Bankcard and other revolving plans	467		3		1		4		471		1		—
Other	124		—		—		—		124		—		—
Total consumer loans	12,379		17		23		40		12,419		1		22
Total	$	55,491	$	100	$	62	$	162	$	55,653	$	6	$	86

1 Represents nonaccrual loans that are not past due more than 30 days; however, full payment of principal and interest is not expected.

Credit Quality Indicators

In addition to the nonaccrual and past due criteria, we also analyze loans using loan risk-grading systems, which vary based on the size and type of credit risk exposure. The internal risk-grades assigned to loans follow our definitions of Pass, Special Mention, Substandard, and Doubtful, which are consistent with published definitions of regulatory risk classifications.

Definitions of Pass, Special Mention, Substandard, and Doubtful are summarized as follows:

•Pass — A Pass asset is higher-quality and does not fit any of the other categories described below. The likelihood of loss is considered low.

•Special Mention — A Special Mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in our credit position at some future date.

•Substandard — A Substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have well-defined weaknesses and are characterized by the distinct possibility that we may sustain some loss if deficiencies are not corrected.

•Doubtful — A Doubtful asset has all the weaknesses inherent in a Substandard asset with the added characteristics that the weaknesses make collection or liquidation in full highly questionable and improbable.

There were no loans classified as Doubtful at both December 31, 2023, and December 31, 2022.

For commercial and CRE loans with commitments greater than $1 million, we assign one of multiple grades within the Pass classification or one of the risk classifications described previously. We assess our internal risk-grades quarterly, or as soon as we identify information that affects the credit risk of the loan.

For consumer loans and for commercial and CRE loans with commitments less than or equal to $1 million, we generally assign internal risk-grades similar to those described previously based on automated rules that depend on refreshed credit scores, payment performance, and other risk indicators. These are generally assigned either a Pass, Special Mention, or Substandard grade, and are reviewed as we identify information that might warrant a grade change.

The following schedule presents the amortized cost basis of loans and leases categorized by year of origination and by credit quality classifications as monitored by management, as well as year-to-date gross charge-offs:

	December 31, 2023
	Term Loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
	Amortized cost basis by year of origination
(In millions)	2023		2022		2021		2020		2019		Prior						Total
Commercial:
Commercial and industrial
Pass	$	2,654	$	2,420	$	1,204	$	639	$	494	$	598	$	7,973	$	151	$	16,133
Special Mention	8		98		34		2		20		37		103		—		302
Accruing Substandard	11		18		7		2		19		8		99		3		167
Nonaccrual	5		36		1		2		11		1		21		5		82
Total commercial and industrial	2,678		2,572		1,246		645		544		644		8,196		159		16,684
Gross charge-offs	1		10		6		—		—		2		24		2		45
Leasing
Pass	104		125		47		29		45		18		—		—		368
Special Mention	2		9		1		1		—		—		—		—		13
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		2		—		—		—		—		—		—		2
Total leasing	106		136		48		30		45		18		—		—		383
Gross charge-offs	—		—		—		—		—		—		—		—		—
Owner-occupied
Pass	1,080		1,945		2,020		1,002		721		1,907		212		52		8,939
Special Mention	2		5		17		5		17		15		—		—		61
Accruing Substandard	10		31		29		21		16		90		2		—		199
Nonaccrual	—		1		1		7		3		8		—		—		20
Total owner-occupied	1,092		1,982		2,067		1,035		757		2,020		214		52		9,219
Gross charge-offs	—		—		—		—		—		—		—		—		—
Municipal
Pass	601		1,080		1,069		623		382		512		—		3		4,270
Special Mention	7		—		—		—		—		6		—		—		13
Accruing Substandard	8		—		6		3		1		1		—		—		19
Nonaccrual	—		—		—		—		—		—		—		—		—
Total municipal	616		1,080		1,075		626		383		519		—		3		4,302
Gross charge-offs	—		—		—		—		—		—		—		—		—
Total commercial	4,492		5,770		4,436		2,336		1,729		3,201		8,410		214		30,588
Total commercial gross charge-offs	1		10		6		—		—		2		24		2		45
Commercial real estate:
Construction and land development
Pass	553		938		355		56		7		4		518		127		2,558
Special Mention	—		—		29		30		—		—		—		—		59
Accruing Substandard	23		2		—		5		—		—		—		—		30
Nonaccrual	—		—		—		—		21		—		1		—		22
Total construction and land development	576		940		384		91		28		4		519		127		2,669
Gross charge-offs	—		—		—		—		1		—		—		—		1
Term
Pass	1,861		2,385		1,833		1,449		804		1,438		238		110		10,118
Special Mention	55		108		65		78		44		6		—		—		356
Accruing Substandard	79		18		12		16		5		24		—		35		189
Nonaccrual	—		26		—		—		3		10		—		—		39
Total term	1,995		2,537		1,910		1,543		856		1,478		238		145		10,702
Gross charge-offs	—		2		—		—		—		—		—		—		2
Total commercial real estate	2,571		3,477		2,294		1,634		884		1,482		757		272		13,371
Total commercial real estate gross charge-offs	—		2		—		—		1		—		—		—		3

	December 31, 2023
	Term Loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
	Amortized cost basis by year of origination
(In millions)	2023		2022		2021		2020		2019		Prior						Total
Consumer:
Home equity credit line
Pass	—		—		—		—		—		—		3,237		97		3,334
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		4		1		5
Nonaccrual	—		—		—		—		—		—		15		2		17
Total home equity credit line	—		—		—		—		—		—		3,256		100		3,356
Gross charge-offs	—		—		—		—		—		—		3		—		3
1-4 family residential
Pass	814		2,264		1,823		988		594		1,891		—		—		8,374
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		1		—		—		1
Nonaccrual	—		3		3		3		4		27		—		—		40
Total 1-4 family residential	814		2,267		1,826		991		598		1,919		—		—		8,415
Gross charge-offs	—		—		—		—		—		2		—		—		2
Construction and other consumer real estate
Pass	212		1,002		200		15		7		6		—		—		1,442
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		—		—		—		—		—		—		—		—
Total construction and other consumer real estate	212		1,002		200		15		7		6		—		—		1,442
Gross charge-offs	—		—		—		—		—		—		—		—		—
Bankcard and other revolving plans
Pass	—		—		—		—		—		—		471		1		472
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		2		—		2
Nonaccrual	—		—		—		—		—		—		—		—		—
Total bankcard and other revolving plans	—		—		—		—		—		—		473		1		474
Gross charge-offs	—		—		—		—		—		—		9		—		9
Other consumer
Pass	66		37		18		6		4		2		—		—		133
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		—		—		—		—		—		—		—		—
Total other consumer	66		37		18		6		4		2		—		—		133
Gross charge-offs	—		—		—		—		—		—		—		—		—
Total consumer	1,092		3,306		2,044		1,012		609		1,927		3,729		101		13,820
Total consumer gross charge-offs	—		—		—		—		—		2		12		—		14
Total loans	$	8,155	$	12,553	$	8,774	$	4,982	$	3,222	$	6,610	$	12,896	$	587	$	57,779
Total gross charge-offs	$	1	$	12	$	6	$	—	$	1	$	4	$	36	$	2	$	62

	December 31, 2022
	Term Loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
	Amortized cost basis by year of origination
(In millions)	2022		2021		2020		2019		2018		Prior						Total
Commercial:
Commercial and industrial
Pass	$	3,363	$	1,874	$	979	$	876	$	293	$	264	$	8,054	$	182	$	15,885
Special Mention	1		2		10		52		1		2		50		—		118
Accruing Substandard	26		7		17		78		30		67		84		2		311
Nonaccrual	—		8		5		11		1		2		32		4		63
Total commercial and industrial	3,390		1,891		1,011		1,017		325		335		8,220		188		16,377
Leasing
Pass	160		71		47		66		18		19		—		—		381
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		5		—		—		5
Nonaccrual	—		—		—		—		—		—		—		—		—
Total leasing	160		71		47		66		18		24		—		—		386
Owner-occupied
Pass	2,157		2,285		1,143		874		654		1,679		187		74		9,053
Special Mention	1		15		5		8		3		16		1		—		49
Accruing Substandard	16		33		48		20		55		64		9		—		245
Nonaccrual	1		1		2		4		5		10		1		—		24
Total owner-occupied	2,175		2,334		1,198		906		717		1,769		198		74		9,371
Municipal
Pass	1,230		1,220		816		441		168		437		8		—		4,320
Special Mention	32		6		—		—		—		—		—		—		38
Accruing Substandard	—		—		—		—		—		3		—		—		3
Nonaccrual	—		—		—		—		—		—		—		—		—
Total municipal	1,262		1,226		816		441		168		440		8		—		4,361
Total commercial	6,987		5,522		3,072		2,430		1,228		2,568		8,426		262		30,495
Commercial real estate:
Construction and land development
Pass	548		671		455		81		2		2		617		96		2,472
Special Mention	1		1		—		—		—		—		—		—		2
Accruing Substandard	17		—		—		22		—		—		—		—		39
Nonaccrual	—		—		—		—		—		—		—		—		—
Total construction and land development	566		672		455		103		2		2		617		96		2,513
Term
Pass	2,861		2,107		1,686		1,012		666		1,229		276		112		9,949
Special Mention	39		21		11		—		4		1		—		—		76
Accruing Substandard	42		2		34		21		53		35		—		—		187
Nonaccrual	—		—		—		4		1		9		—		—		14
Total term	2,942		2,130		1,731		1,037		724		1,274		276		112		10,226
Total commercial real estate	3,508		2,802		2,186		1,140		726		1,276		893		208		12,739

	December 31, 2022
	Term Loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
	Amortized cost basis by year of origination
(In millions)	2022		2021		2020		2019		2018		Prior						Total
Consumer:
Home equity credit line
Pass	—		—		—		—		—		—		3,265		98		3,363
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		3		—		3
Nonaccrual	—		—		—		—		—		—		8		3		11
Total home equity credit line	—		—		—		—		—		—		3,276		101		3,377
1-4 family residential
Pass	1,913		1,503		1,024		638		381		1,788		—		—		7,247
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		2		—		—		2
Nonaccrual	—		2		2		4		3		26		—		—		37
Total 1-4 family residential	1,913		1,505		1,026		642		384		1,816		—		—		7,286
Construction and other consumer real estate
Pass	583		485		64		19		5		5		—		—		1,161
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		—		—		—		—		—		—		—		—
Total construction and other consumer real estate	583		485		64		19		5		5		—		—		1,161
Bankcard and other revolving plans
Pass	—		—		—		—		—		—		468		2		470
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		1		—		1
Nonaccrual	—		—		—		—		—		—		—		—		—
Total bankcard and other revolving plans	—		—		—		—		—		—		469		2		471
Other consumer
Pass	68		30		12		8		4		2		—		—		124
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		—		—		—		—		—		—		—		—
Total other consumer	68		30		12		8		4		2		—		—		124
Total consumer	2,564		2,020		1,102		669		393		1,823		3,745		103		12,419
Total loans	$	13,059	$	10,344	$	6,360	$	4,239	$	2,347	$	5,667	$	13,064	$	573	$	55,653

Loan Modifications

On January 1, 2023, we adopted ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminated the recognition and measurement of TDRs and their related disclosures. As a result, we no longer separately measure an allowance for credit losses for TDRs, relying instead on our credit loss estimation models. The adoption of this guidance did not have a material impact on our financial statements.

ASU 2022-02 requires enhanced disclosures for loan modifications to borrowers experiencing financial difficulty. Loans may be modified in the normal course of business for competitive reasons or to strengthen our collateral position. Loan modifications may also occur when the borrower experiences financial difficulty and needs temporary or permanent relief from the original contractual terms of the loan. For loans that have been modified with a borrower experiencing financial difficulty, we use the same credit loss estimation methods that we use for the rest of the loan portfolio. These methods incorporate the post-modification loan terms, as well as defaults and charge-offs associated with historical modified loans. All nonaccruing loans more than $1 million are evaluated individually, regardless of modification.

We consider many factors in determining whether to agree to a loan modification and we seek a solution that will both minimize potential loss to us and attempt to help the borrower. We evaluate borrowers’ current and forecasted future cash flows, their ability and willingness to make current contractual or proposed modified payments, the value of the underlying collateral (if applicable), the possibility of obtaining additional security or guarantees, and the potential costs related to a repossession or foreclosure and the subsequent sale of the collateral.

A modified loan on nonaccrual will generally remain on nonaccrual until the borrower has proven the ability to perform under the modified structure for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. Performance prior to the modification, or significant events that coincide with the modification, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual at the time of modification or after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains on nonaccrual. There were less than $1 million of loans to borrowers experiencing financial difficulty that had a payment default during the twelve months ended December 31, 2023, which were still in default at period end, and were within 12 months or less of being modified.

The amortized cost of loans to borrowers experiencing financial difficulty that were modified during the period, by loan class and modification type, is summarized in the following schedule:

	Twelve Months Ended December 31, 2023
	Amortized cost associated with the following modification types:
(Dollar amounts in millions)	Interest rate reduction		Maturity or term extension		Principal forgiveness		Payment deferral		Multiple modification types 1		Total 2		Percentage of total loans 3
Commercial:
Commercial and industrial	$	—	$	46	$	—	$	1	$	—	$	47	0.3	%
Owner-occupied	4		9		—		1		—		14		0.2
Municipal	—		8		—		—		—		8		0.2
Total commercial	4		63		—		2		—		69		0.2
Commercial real estate:
Construction and land development	—		27		—		—		—		27		1.0
Term	—		165		—		—		—		165		1.5
Total commercial real estate	—		192		—		—		—		192		1.4
Consumer:
1-4 family residential	—		—		1		—		1		2		—
Bankcard and other revolving plans	—		1		—		—		—		1		0.2
Total consumer loans	—		1		1		—		1		3		—
Total	$	4	$	256	$	1	$	2	$	1	$	264	0.5	%

1 Includes modifications that resulted from a combination of interest rate reduction, maturity or term extension, principal forgiveness, and payment deferral modifications.

2 Unfunded lending commitments related to loans modified to borrowers experiencing financial difficulty totaled $22 million at December 31, 2023.

3 Amounts less than 0.05% are rounded to zero.

The financial impact of loan modifications to borrowers experiencing financial difficulty during the twelve months ended December 31, 2023, is summarized in the following schedule:

	Twelve Months Ended December 31, 2023
	Weighted-average interest rate reduction (in percentage points)		Weighted-average term extension (in months)
Commercial:
Commercial and industrial	—	%	13
Owner-occupied 1	4.4		18
Municipal	—		12
Total commercial	4.4		14
Commercial real estate:
Construction and land development	—		8
Term	—		18
Total commercial real estate	—		16
Consumer: 1
1-4 family residential	—		103
Bankcard and other revolving plans	—		50
Total consumer loans	—		82
Total weighted average financial impact	4.4	%	16

1 Primarily relates to a small number of loans within each respective loan class.

Loan modifications to borrowers experiencing financial difficulty during the twelve months ended December 31, 2023, resulted in less than $1 million of principal forgiveness for the total loan portfolio for the period.

The following schedule presents the aging of loans to borrowers experiencing financial difficulty that were modified on or after January 1, 2023 (the date we adopted ASU 2022-02) through December 31, 2023, presented by portfolio segment and loan class.

	December 31, 2023
(In millions)	Current		30-89 days past due		90+ days past due		Total past due		Total amortized cost of loans
Commercial:
Commercial and industrial	$	44	$	3	$	—	$	3	$	47
Owner-occupied	13		1		—		1		14
Municipal	8		—		—		—		8
Total commercial	65		4		—		4		69
Commercial real estate:
Construction and land development	27		—		—		—		27
Term	156		9		—		9		165
Total commercial real estate	183		9		—		9		192
Consumer:
1-4 family residential	2		—		—		—		2
Bankcard and other revolving plans	1		—		—		—		1
Total consumer loans	3		—		—		—		3
Total	$	251	$	13	$	—	$	13	$	264

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

Loans may be modified in the normal course of business for competitive reasons or to strengthen our collateral position. Loan modifications and restructurings may also occur when the borrower experiences financial difficulty and needs temporary or permanent relief from the original contractual terms of the loan. Loans that have been modified to accommodate a borrower who is experiencing financial difficulties, and for which we have granted a concession that we would not otherwise consider, are reported as TDRs.

Consistent with modifications to troubled borrowers discussed in the previous section, we consider many factors in determining whether to agree to a loan modification involving concessions, and we seek a solution that will both minimize potential loss to us and attempt to help the borrower.

TDRs are classified as either accrual or nonaccrual loans. A loan on nonaccrual and restructured as a TDR will remain on nonaccrual status until the borrower has proven the ability to perform under the modified structure for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. Performance prior to the restructuring, or significant events that coincide with the restructuring, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual at the time of restructuring or after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains classified as a nonaccrual loan. A TDR loan that specifies an interest rate that, at the time of the restructuring, is greater than or equal to the rate we are willing to accept for a new loan with comparable risk may not be reported as a TDR in the calendar years subsequent to the restructuring if it is in compliance with its modified terms.

Loan modifications provided to borrowers experiencing financial difficulties exclusively related to the COVID-19 pandemic, in which we provided certain short-term modifications or payment deferrals, were not classified as TDRs. The TDRs disclosed subsequently do not include these loan modifications. Other loan modifications above and beyond these short-term modifications or payment deferrals were assessed for TDR classification.

Information on TDRs, including their amortized cost on an accruing and nonaccruing basis by loan class, and by modification type, is summarized in the following schedules:

	December 31, 2022
	Amortized cost basis resulting from the following modification types:
(In millions)	Interest rate below market		Maturity or term extension		Principal forgiveness		Payment deferral		Other1		Multiple modification types2		Total
Accruing
Commercial:
Commercial and industrial	$	1	$	12	$	—	$	—	$	9	$	28	$	50
Owner-occupied	—		1		—		2		13		12		28
Total commercial	1		13		—		2		22		40		78
Commercial real estate:
Construction and land development	—		—		—		—		—		8		8
Term	1		27		—		27		28		1		84
Total commercial real estate	1		27		—		27		28		9		92
Consumer:
Home equity credit line	—		1		4		—		—		1		6
1-4 family residential	2		1		2		—		1		15		21
Total consumer loans	2		2		6		—		1		16		27
Total accruing	$	4	$	42	$	6	$	29	$	51	$	65	$	197
Nonaccruing
Commercial:
Commercial and industrial	$	—	$	—	$	—	$	3	$	9	$	3	$	15
Owner-occupied	4		—		—		—		—		4		8
Total commercial	4		—		—		3		9		7		23
Commercial real estate:
Term	—		10		—		—		—		—		10
Total commercial real estate	—		10		—		—		—		—		10
Consumer:
Home equity credit line	—		—		1		—		—		—		1
1-4 family residential	—		1		—		—		1		2		4
Total consumer loans	—		1		1		—		1		2		5
Total nonaccruing	4		11		1		3		10		9		38
Total	$	8	$	53	$	7	$	32	$	61	$	74	$	235

1 Includes TDRs that resulted from other modification types including, but not limited to, a legal judgment awarded on different terms, a bankruptcy plan confirmed on different terms, a settlement that includes the delivery of collateral in exchange for debt reduction, etc.

2 Includes TDRs that resulted from a combination of any of the previous modification types.

Unfunded lending commitments on TDRs totaled $7 million at December 31, 2022.

The total amortized cost of all TDRs in which interest rates were modified below market was $63 million at December 31, 2022. These loans are included in the previous schedule in the columns for interest rate below market and multiple modification types.

The net financial impact on interest income due to interest rate modifications below market for accruing TDRs for the year ended December 31, 2022 was not significant.

On an ongoing basis, we monitor the performance of all TDRs according to their restructured terms. Subsequent payment default is defined in terms of delinquency, when principal or interest payments are past due 90 days or more for commercial loans, or 60 days or more for consumer loans.

The amortized cost of accruing and nonaccruing TDRs that had a payment default during the year ended December 31, 2022, and were still in default at period end, and were within 12 months or less of being modified as TDRs was approximately $10 million.

Collateral-dependent Loans

When a loan is individually evaluated for expected credit losses, we estimate a specific reserve for the loan based on the projected present value of the loan’s future cash flows discounted at the loan’s effective interest rate, the observable market price of the loan, or the fair value of the loan’s underlying collateral.

Select information on loans for which the repayment is expected to be provided substantially through the operation or sale of the underlying collateral and the borrower is experiencing financial difficulties, including the type of collateral and the extent to which the collateral secures the loans, is summarized as follows:

	December 31, 2023
(In millions)	Amortized Cost		Major Types of Collateral	Weighted Average LTV1
Commercial:
Owner-occupied	$	7	Hospital	17%
Commercial real estate:
Construction and land development	22		Office Building	92%
Term	28		Office Building	87%
Total	$	57

	December 31, 2022
(In millions)	Amortized Cost		Major Types of Collateral	Weighted Average LTV1
Commercial:
Owner-occupied	$	2	Land, Warehouse	29%
Commercial real estate:
Term	1		Multi-family	55%
Consumer:
Home equity credit line	1		Single family residential	13%
1-4 family residential	3		Single family residential	41%
Total	$	7

1 The fair value is based on the most recent appraisal or other collateral evaluation.

Foreclosed Residential Real Estate

At December 31, 2023, and December 31, 2022, we did not have any foreclosed residential real estate property. The amortized cost basis of consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure was $11 million and $10 million for the same respective periods.