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Loans, Leases, and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2024

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 loan class:


(In millions)	June 30, 2024		December 31, 2023

Loans held for sale	$	112	$	53
Commercial:
Commercial and industrial	$	16,622	$	16,684
Leasing	390		383
Owner-occupied	9,236		9,219
Municipal	4,263		4,302
Total commercial	30,511		30,588
Commercial real estate:
Construction and land development	2,725		2,669
Term	10,824		10,702
Total commercial real estate	13,549		13,371
Consumer:
Home equity credit line	3,468		3,356
1-4 family residential	9,153		8,415
Construction and other consumer real estate	1,139		1,442
Bankcard and other revolving plans	466		474
Other	129		133
Total consumer	14,355		13,820

Total loans and leases	$	58,415	$	57,779

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 $29 million and $37 million at June 30, 2024 and December 31, 2023, respectively. Amortized cost basis does not include accrued interest receivables of $301 million and $299 million at June 30, 2024 and December 31, 2023, 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 $224 million at June 30, 2024 and $219 million at December 31, 2023.

Loans with a carrying value of $39.3 billion at June 30, 2024 and $36.3 billion at December 31, 2023 have been pledged at the Federal Reserve (“FRB”) 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 at fair value or the lower of cost or fair value and primarily consist of (1) commercial real estate 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:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2024		2023		2024		2023

Loans added to held for sale	$	270	$	220	$	399	$	306
Loans sold from held for sale	171		188		341		277

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 retain servicing was $0.5 billion and $0.4 billion at June 30, 2024 and December 31, 2023, respectively. Income from sold loans, excluding servicing, was $2 million and $3 million for the three and six months ended June 30, 2024, and $2 million and $7 million for the three and six months ended June 30, 2023, respectively. Other income from loans sold includes fair value adjustments on loans that are included in “Capital markets fees” on the consolidated statement of income.

Allowance for Credit Losses

The allowance for credit losses (“ACL”), which consists of the allowance for loan and lease losses (“ALLL”) and the reserve for unfunded lending commitments (“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. For additional information regarding our policies and methodologies used to estimate the ACL, see Note 6 of our 2023 Form 10-K.

The ACL for AFS and HTM debt securities is estimated separately from loans. For HTM securities, the ACL is estimated consistent with the approach for loans measured at amortized cost. See Note 5 of our 2023 Form 10-K for further discussion of our methodology used to estimate the ACL on AFS and HTM debt securities.

Changes in the ACL are summarized as follows:


	Three Months Ended June 30, 2024
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses


Balance at beginning of period	$	296	$	299	$	104	$	699
Provision for loan losses	10		12		(10)		12
Gross loan and lease charge-offs	8		11		2		21
Recoveries	4		—		2		6
Net loan and lease charge-offs (recoveries)	4		11		—		15
Balance at end of period	$	302	$	300	$	94	$	696
Reserve for unfunded lending commitments
Balance at beginning of period	$	19	$	10	$	8	$	37
Provision for unfunded lending commitments	(3)		(3)		(1)		(7)
Balance at end of period	$	16	$	7	$	7	$	30
Total allowance for credit losses at end of period
Allowance for loan losses	$	302	$	300	$	94	$	696
Reserve for unfunded lending commitments	16		7		7		30
Total allowance for credit losses	$	318	$	307	$	101	$	726


	Six Months Ended June 30, 2024
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses
Balance at December 31, 2023	$	302	$	241	$	141	$	684
Provision for loan losses	8		69		(44)		33
Gross loan and lease charge-offs	18		11		6		35
Recoveries	10		1		3		14
Net loan and lease charge-offs (recoveries)	8		10		3		21
Balance at end of period	$	302	$	300	$	94	$	696
Reserve for unfunded lending commitments
Balance at beginning of period	$	19	$	17	$	9	$	45
Provision for unfunded lending commitments	(3)		(10)		(2)		(15)
Balance at end of period	$	16	$	7	$	7	$	30
Total allowance for credit losses at end of period
Allowance for loan losses	$	302	$	300	$	94	$	696
Reserve for unfunded lending commitments	16		7		7		30
Total allowance for credit losses	$	318	$	307	$	101	$	726


	Three Months Ended June 30, 2023
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses
Balance at beginning of period	$	313	$	160	$	145	$	618
Provision for loan losses	24		21		1		46
Gross loan and lease charge-offs	20		—		2		22
Recoveries	6		—		3		9
Net loan and lease charge-offs (recoveries)	14		—		(1)		13
Balance at end of period	$	323	$	181	$	147	$	651
Reserve for unfunded lending commitments


Balance at beginning of period	$	19	$	28	$	13	$	60
Provision for unfunded lending commitments	1		1		(2)		—
Balance at end of period	$	20	$	29	$	11	$	60
Total allowance for credit losses at end of period
Allowance for loan losses	$	323	$	181	$	147	$	651
Reserve for unfunded lending commitments	20		29		11		60
Total allowance for credit losses	$	343	$	210	$	158	$	711


	Six Months Ended June 30, 2023
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses
Balance at December 31, 2022	$	300	$	156	$	119	$	575
Adjustment for change in accounting standard	—		(4)		1		(3)
Balance at beginning of period	$	300	$	152	$	120	$	572
Provision for loan losses	34		29		29		92
Gross loan and lease charge-offs	23		—		6		29
Recoveries	12		—		4		16
Net loan and lease charge-offs (recoveries)	11		—		2		13
Balance at end of period	$	323	$	181	$	147	$	651
Reserve for unfunded lending commitments
Balance at beginning of period	$	16	$	33	$	12	$	61
Provision for unfunded lending commitments	4		(4)		(1)		(1)
Balance at end of period	$	20	$	29	$	11	$	60
Total allowance for credit losses at end of period
Allowance for loan losses	$	323	$	181	$	147	$	651
Reserve for unfunded lending commitments	20		29		11		60
Total allowance for credit losses	$	343	$	210	$	158	$	711

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 nonaccrual loans is summarized as follows:


	June 30, 2024
	Amortized cost basis				Total amortized cost basis
(In millions)	with no allowance		with allowance				Related allowance


Commercial:
Commercial and industrial	$	23	$	88	$	111	$	38
Leasing	—		2		2		1
Owner-occupied	10		18		28		2
Municipal	3		3		6		—
Total commercial	36		111		147		41
Commercial real estate:
Construction and land development	—		2		2		—
Term	33		2		35		1
Total commercial real estate	33		4		37		1
Consumer:
Home equity credit line	5		24		29		5
1-4 family residential	9		37		46		4

Bankcard and other revolving plans	—		1		1		1
Other	—		1		1		—
Total consumer	14		63		77		10
Total	$	83	$	178	$	261	$	52


	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	9		48		57		10
Total	$	91	$	131	$	222	$	43

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 collectability 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 the three and six months ended June 30, 2024 and 2023, 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:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2024		2023		2024		2023

Commercial	$	4	$	3	$	6	$	5
Commercial real estate	1		—		3		—
Consumer	1		1		2		1
Total	$	6	$	4	$	11	$	6

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:


	June 30, 2024
(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 current 1

Commercial:
Commercial and industrial	$	16,577	$	30	$	15	$	45	$	16,622	$	4	$	98
Leasing	388		—		2		2		390		—		—
Owner-occupied	9,223		10		3		13		9,236		1		22
Municipal	4,248		15		—		15		4,263		—		6
Total commercial	30,436		55		20		75		30,511		5		126
Commercial real estate:
Construction and land development	2,723		—		2		2		2,725		—		—
Term	10,761		38		25		63		10,824		—		10
Total commercial real estate	13,484		38		27		65		13,549		—		10
Consumer:
Home equity credit line	3,440		18		10		28		3,468		—		13
1-4 family residential	9,112		17		24		41		9,153		—		17
Construction and other consumer real estate	1,139		—		—		—		1,139		—		—
Bankcard and other revolving plans	463		2		1		3		466		1		1
Other	128		1		—		1		129		—		1
Total consumer	14,282		38		35		73		14,355		1		32
Total	$	58,202	$	131	$	82	$	213	$	58,415	$	6	$	168


	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 current 1

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	13,751		40		29		69		13,820		1		22
Total	$	57,576	$	108	$	95	$	203	$	57,779	$	3	$	108

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 definition of Pass, Special Mention, Substandard, and Doubtful, which are consistent with published definitions of regulatory risk classifications.

•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 June 30, 2024 and December 31, 2023. For consumer loans and for CRE loans with commitments greater than $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 classification as monitored by management. The schedule also presents the current quarter gross charge-offs by year of origination.


	June 30, 2024
	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)	2024		2023		2022		2021		2020		Prior						Total
Commercial:
Commercial and industrial
Pass	$	943	$	2,411	$	1,938	$	1,014	$	524	$	854	$	8,172	$	150	$	16,006
Special Mention	1		14		54		19		3		3		34		2		130
Accruing Substandard	27		57		85		32		3		23		145		3		375
Nonaccrual	—		16		34		1		2		11		42		5		111
Total commercial and industrial	971		2,498		2,111		1,066		532		891		8,393		160		16,622
Gross charge-offs	—		1		1		1		—		3		2		—		8
Leasing
Pass	63		89		110		37		23		51		—		—		373
Special Mention	—		2		8		1		1		—		—		—		12
Accruing Substandard	1		1		—		1		—		—		—		—		3
Nonaccrual	—		—		2		—		—		—		—		—		2
Total leasing	64		92		120		39		24		51		—		—		390
Gross charge-offs	—		—		—		—		—		—		—		—		—
Owner-occupied
Pass	543		1,115		1,770		1,852		956		2,350		213		50		8,849
Special Mention	5		3		16		15		1		24		11		—		75
Accruing Substandard	1		25		55		40		30		124		4		5		284
Nonaccrual	4		—		2		1		—		15		6		—		28
Total owner-occupied	553		1,143		1,843		1,908		987		2,513		234		55		9,236
Gross charge-offs	—		—		—		—		—		—		—		—		—
Municipal
Pass	207		552		1,048		959		592		831		1		48		4,238
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		13		—		6		—		—		—		—		19
Nonaccrual	3		—		—		—		—		3		—		—		6
Total municipal	210		565		1,048		965		592		834		1		48		4,263
Gross charge-offs	—		—		—		—		—		—		—		—		—
Total commercial	1,798		4,298		5,122		3,978		2,135		4,289		8,628		263		30,511
Total commercial gross charge-offs	—		1		1		1		—		3		2		—		8
Commercial real estate:
Construction and land development
Pass	247		660		838		142		36		10		590		57		2,580
Special Mention	—		—		44		74		—		—		—		—		118
Accruing Substandard	1		19		—		5		—		—		—		—		25
Nonaccrual	—		—		—		—		—		—		2		—		2
Total construction and land development	248		679		882		221		36		10		592		57		2,725
Gross charge-offs	—		—		—		—		—		—		—		—		—
Term
Pass	783		1,576		2,276		1,601		1,180		1,973		308		183		9,880
Special Mention	134		19		253		98		81		26		—		—		611
Accruing Substandard	44		65		80		19		17		29		—		44		298
Nonaccrual	—		2		22		—		—		11		—		—		35
Total term	961		1,662		2,631		1,718		1,278		2,039		308		227		10,824
Gross charge-offs	—		7		4		—		—		—		—		—		11
Total commercial real estate	1,209		2,341		3,513		1,939		1,314		2,049		900		284		13,549
Total commercial real estate gross charge-offs	—		7		4		—		—		—		—		—		11


	June 30, 2024
	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)	2024		2023		2022		2021		2020		Prior						Total














Consumer:
Home equity credit line
Pass	—		—		—		—		—		—		3,336		96		3,432
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		6		1		7
Nonaccrual	—		—		—		—		—		—		23		6		29
Total home equity credit line	—		—		—		—		—		—		3,365		103		3,468
Gross charge-offs	—		—		—		—		—		—		—		—		—
1-4 family residential
Pass	439		820		2,659		1,898		956		2,335		—		—		9,107
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		1		7		6		2		30		—		—		46
Total 1-4 family residential	439		821		2,666		1,904		958		2,365		—		—		9,153
Gross charge-offs	—		—		—		—		—		—		—		—		—
Construction and other consumer real estate
Pass	38		280		727		77		9		8		—		—		1,139
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		—		—		—		—		—		—		—		—
Total construction and other consumer real estate	38		280		727		77		9		8		—		—		1,139
Gross charge-offs	—		—		—		—		—		—		—		—		—
Bankcard and other revolving plans
Pass	—		—		—		—		—		—		463		1		464
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		1		—		1
Nonaccrual	—		—		—		—		—		—		—		1		1
Total bankcard and other revolving plans	—		—		—		—		—		—		464		2		466
Gross charge-offs	—		—		—		—		—		—		2		—		2
Other consumer
Pass	36		44		29		12		4		3		—		—		128
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		1		—		—		—		—		—		—		1
Total other consumer	36		45		29		12		4		3		—		—		129
Gross charge-offs	—		—		—		—		—		—		—		—		—
Total consumer	513		1,146		3,422		1,993		971		2,376		3,829		105		14,355
Total consumer gross charge-offs	—		—		—		—		—		—		2		—		2
Total loans	$	3,520	$	7,785	$	12,057	$	7,910	$	4,420	$	8,714	$	13,357	$	652	$	58,415
Total gross charge-offs	$	—	$	8	$	5	$	1	$	—	$	3	$	4	$	—	$	21


	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

Loan Modifications

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.

On an ongoing basis, we monitor the performance of all modified loans according to their modified terms. The amortized cost of modified loans that had a payment default during the three and six months ended June 30, 2024, which were still in default at period end, and were within 12 months or less of being modified was approximately $3 million and $27 million, respectively, primarily commercial real estate loans, and zero for both the three and six months ended June 30, 2023, respectively.

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:


	Three Months Ended June 30, 2024
	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	$	—	$	27	$	—	$	—	$	1	$	28	0.2	%
Owner-occupied	—		2		—		—		—		2		—

Total commercial	—		29		—		—		1		30		0.1
Commercial real estate:

Term	—		16		—		—		—		16		0.1
Total commercial real estate	—		16		—		—		—		16		0.1
Consumer:

1-4 family residential	—		—		1		—		—		1		—



Total consumer	—		—		1		—		—		1		—
Total	$	—	$	45	$	1	$	—	$	1	$	47	0.1	%


	Six Months Ended June 30, 2024
	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	$	—	$	55	$	—	$	1	$	4	$	60	0.4	%
Owner-occupied	—		2		—		—		2		4		—
Municipal	—		3		—		—		—		3		0.1
Total commercial	—		60		—		1		6		67		0.2
Commercial real estate:
Construction and land development	—		2		—		—		—		2		0.1
Term	—		103		—		—		—		103		1.0
Total commercial real estate	—		105		—		—		—		105		0.8
Consumer:
Home equity credit line	—		—		—		—		1		1		—
1-4 family residential	—		—		2		—		2		4		—



Total consumer	—		—		2		—		3		5		—
Total	$	—	$	165	$	2	$	1	9		$	177	0.3	%


	Three Months Ended June 30, 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	$	1	$	27	$	—	$	—	$	—	$	28	0.2	%
Owner-occupied	—		20		—		—		—		20		0.2

Total commercial	1		47		—		—		—		48		0.2
Commercial real estate:
Construction and land development	—		18		—		—		—		18		0.7
Term	—		34		—		—		—		34		0.3
Total commercial real estate	—		52		—		—		—		52		0.4
Consumer:

1-4 family residential	—		—		1		—		1		2		—

Bankcard and other revolving plans	—		1		—		—		—		1		0.2

Total consumer	—		1		1		—		1		3		—
Total	$	1	$	100	$	1	$	—	$	1	$	103	0.2	%


	Six Months Ended June 30, 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	$	1	$	42	$	—	$	—	$	—	$	43	0.3	%
Owner-occupied	4		22		—		—		—		26		0.3

Total commercial	5		64		—		—		—		69		0.2
Commercial real estate:
Construction and land development	—		18		—		—		—		18		0.7
Term	—		58		—		—		—		58		0.6
Total commercial real estate	—		76		—		—		—		76		0.6
Consumer:

1-4 family residential	—		—		1		—		1		2		—

Bankcard and other revolving plans	—		1		—		—		—		1		0.2

Total consumer	—		1		1		—		1		3		—
Total	$	5	$	141	$	1	$	—	1		$	148	0.3	%

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 $10 million at both June 30, 2024 and June 30, 2023.

3 Amounts less than 0.05% are rounded to zero.

The financial impact of loan modifications to borrowers experiencing financial difficulty is summarized in the following schedules:


	Three Months Ended June 30, 2024			Six Months Ended June 30, 2024
	Weighted-average interest rate reduction (in percentage points)		Weighted-average term extension (in months)		Weighted-average interest rate reduction (in percentage points)		Weighted-average term extension (in months)
Commercial:
Commercial and industrial	0.6	%	3		0.1	%	8

Owner-occupied	—		1		0.1		4
Municipal	—		0		—		61
Total commercial	0.6		3		0.1		10
Commercial real estate:
Construction and land development	—		5		—		14
Term	—		3		—		11
Total commercial real estate	—		3		—		11
Consumer:
Home equity credit line	—		0		6.8		42
1-4 family residential	—		0		1.3		78


Other	—		0		—		71
Total consumer	—		0		4.8		67
Total weighted average financial impact	0.6	%	3		1.0	%	12


	Three Months Ended June 30, 2023			Six Months Ended June 30, 2023
	Weighted-average interest rate reduction (in percentage points)		Weighted-average term extension (in months)		Weighted-average interest rate reduction (in percentage points)		Weighted-average term extension (in months)
Commercial:
Commercial and industrial	1.0	%	8		1.0	%	9

Owner-occupied	—		7		4.4		7

Total commercial	1.0		8		3.7		8
Commercial real estate:
Construction and land development	—		6		—		6
Term	—		18		—		17
Total commercial real estate	—		14		—		15
Consumer: 1

1-4 family residential	1.3		110		1.3		110

Bankcard and other revolving plans	—		65		—		61

Total consumer	1.3		87		1.3		87
Total weighted average financial impact	1.1	%	12		3.4	%	13

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

Loan modifications to borrowers experiencing financial difficulty during the three and six months ended June 30, 2024 and 2023 resulted in less than $1 million of principal forgiveness for each respective period.

The following schedule presents the aging of loans to borrowers experiencing financial difficulty that were modified on or after July 1, 2023 through June 30, 2024, presented by portfolio segment and loan class:


	June 30, 2024
(In millions)	Current		30-89 days past due		90+ days past due		Total past due		Total amortized cost of loans

Commercial:
Commercial and industrial	$	83	$	1	$	4	$	5	$	88

Owner-occupied	8		—		—		—		8
Municipal	11		—		—		—		11
Total commercial	102		1		4		5		107
Commercial real estate:
Construction and land development	19		—		2		2		21
Term	156		26		2		28		184
Total commercial real estate	175		26		4		30		205
Consumer:
Home equity credit line	1		—		—		—		1
1-4 family residential	4		—		—		—		4


Other	1		—		—		—		1
Total consumer	6		—		—		—		6
Total	$	283	$	27	$	8	$	35	$	318

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 June 30, 2023, presented by portfolio segment and loan class:


	June 30, 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	$	40	$	3	$	—	$	3	$	43

Owner-occupied	25		—		1		1		26

Total commercial	65		3		1		4		69
Commercial real estate:
Construction and land development	18		—		—		—		18
Term	58		—		—		—		58
Total commercial real estate	76		—		—		—		76
Consumer:

1-4 family residential	2		—		—		—		2

Bankcard and other revolving plans	1		—		—		—		1

Total consumer	3		—		—		—		3
Total	$	144	$	3	$	1	$	4	$	148

Collateral-Dependent Loans

When a loan is individually evaluated for expected credit losses, we estimate a specific reserve for the loan based on (1) the projected present value of the loan’s future cash flows discounted at the loan’s effective interest rate, (2) the observable market price of the loan, or (3) the fair value of the loan’s underlying collateral.

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


	June 30, 2024
(Dollar amounts in millions)	Amortized cost		Major types of collateral	Weighted average LTV 1






Commercial real estate:
Construction and land development	$	2	Lots / Homes	128%
Term	25		Office Building	82%
Total commercial real estate	27
Consumer:
Home equity credit line	7		Single Family Residential	56%
1-4 family residential	3		Single Family Residential	35%
Total consumer	10
Total	$	37


	December 31, 2023
(Dollar amounts in millions)	Amortized cost		Major types of collateral	Weighted average LTV 1
Commercial:


Owner-occupied	$	7	Hospital	17%


Commercial real estate:
Construction and land development	22		Office Building	92%
Term	28		Office Building	87%
Total commercial real estate	50







Total	$	57

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

Foreclosed Residential Real Estate

The balance of foreclosed residential real estate property was $3 million at June 30, 2024, compared with zero at December 31, 2023. The amortized cost basis of consumer mortgage loans collateralized by residential real estate property that were in the process of foreclosure was $8 million and $11 million for the same periods, respectively.