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Loans and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2024


NOTE 4			Loans and Allowance for Credit Losses

The composition of the loan portfolio, by class and underlying specific portfolio type, was as follows:


	September 30, 2024				December 31, 2023
(Dollars in Millions)	Amount		Percent of Total		Amount		Percent of Total
Commercial
Commercial	$	129,434	34.6	%	$	127,676	34.2	%
Lease financing	4,204		1.1		4,205		1.1
Total commercial	133,638		35.7		131,881		35.3
Commercial Real Estate
Commercial mortgages	39,602		10.6		41,934		11.2
Construction and development	11,017		2.9		11,521		3.1
Total commercial real estate	50,619		13.5		53,455		14.3
Residential Mortgages
Residential mortgages	111,790		29.9		108,605		29.0
Home equity loans, first liens	6,244		1.6		6,925		1.9
Total residential mortgages	118,034		31.5		115,530		30.9
Credit Card	29,037		7.8		28,560		7.6
Other Retail
Retail leasing	4,038		1.1		4,135		1.1
Home equity and second mortgages	13,364		3.6		13,056		3.5
Revolving credit	3,644		1.0		3,668		1.0
Installment	14,482		3.9		13,889		3.7
Automobile	7,308		1.9		9,661		2.6
Total other retail	42,836		11.5		44,409		11.9
Total loans	$	374,164	100.0	%	$	373,835	100.0	%

The Company had loans of $127.4 billion at September 30, 2024, and $123.1 billion at December 31, 2023, pledged at the Federal Home Loan Bank, and loans of $84.4 billion at September 30, 2024, and $82.8 billion at December 31, 2023, pledged at the Federal Reserve Bank.

Originated loans are reported at the principal amount outstanding, net of unearned interest and deferred fees and costs, and any partial charge-offs recorded. Purchased loans are recorded at fair value at the date of purchase. Net unearned interest and deferred fees and costs on originated loans and unamortized premiums and discounts on purchased loans amounted to $2.6 billion and $2.7 billion at September 30, 2024 and December 31, 2023, respectively. The Company evaluates purchased loans for more-than-insignificant deterioration at the date of purchase in accordance with applicable authoritative accounting guidance. Purchased loans that have experienced more-than-insignificant deterioration from origination are considered purchased credit deteriorated loans. All other purchased loans are considered non-purchased credit deteriorated loans.

Allowance for Credit Losses The allowance for credit losses is established for current expected credit losses on the Company’s loan and lease portfolio, including unfunded credit commitments. The allowance considers expected losses for the remaining lives of the applicable assets, inclusive of expected recoveries. The allowance for credit losses is increased through provisions charged to earnings and reduced by net charge-offs. Management evaluates the appropriateness of the allowance for credit losses on a quarterly basis.

Multiple economic scenarios are considered over a three-year reasonable and supportable forecast period, which includes increasing consideration of historical loss experience over years two and three. These economic scenarios are constructed with interrelated projections of multiple economic variables, and loss estimates are produced that consider the historical correlation of those economic variables with credit losses. After the forecast period, the Company fully reverts to long-term historical loss experience, adjusted for prepayments and characteristics of the current loan and lease portfolio, to estimate losses over the remaining life of the portfolio. The economic scenarios are updated at least quarterly and are designed to provide a range of reasonable estimates, from better to worse than current expectations. Scenarios are weighted based on the Company’s expectation of economic conditions for the foreseeable future and reflect significant judgment and consideration of economic forecast uncertainty. Final loss estimates also consider factors affecting credit losses not reflected in the scenarios, due to the unique aspects of current conditions and expectations. These factors may include, but are not limited to, loan servicing practices, regulatory guidance, and/or fiscal and monetary policy actions.

The allowance recorded for credit losses utilizes forward-looking expected loss models to consider a variety of factors affecting lifetime credit losses. These factors include, but are not limited to, macroeconomic variables such as unemployment rates, real estate prices, gross domestic product levels, inflation, interest rates and corporate bonds spreads, as well as loan and borrower characteristics, such as internal risk ratings on commercial loans and consumer credit scores, delinquency status, collateral type and available valuation information, consideration of end-of-term losses on lease residuals, and the remaining term of the loan, adjusted for expected prepayments. For each loan portfolio, including those loans modified under various loan modification programs, model estimates are adjusted as necessary to consider any relevant changes in portfolio composition, lending policies, underwriting standards, risk management practices, economic conditions or other factors that would affect the accuracy of the model. Expected credit loss estimates also include consideration of expected cash recoveries on loans previously charged-off or expected recoveries on collateral dependent loans where recovery is expected through sale of the collateral at fair value less selling costs. Where loans do not exhibit similar risk characteristics, an individual analysis is performed to consider expected credit losses. For loans and leases that do not share similar risk characteristics with a pool of loans, the Company establishes individually assessed reserves. Reserves for individual commercial nonperforming loans greater than $5 million in the commercial lending segment are analyzed utilizing expected cash flows discounted using the original effective interest rate, the observable market price of the loan, or the fair value of the collateral, less selling costs, for collateral-dependent loans as appropriate. For smaller commercial loans collectively evaluated for impairment, historical loss experience is also incorporated into the allowance methodology applied to this category of loans.

The Company’s methodology for determining the appropriate allowance for credit losses also considers the imprecision inherent in the methodologies used and allocated to the various loan portfolios. As a result, amounts determined under the methodologies described above are adjusted by management to consider the potential impact of other qualitative factors not captured in the quantitative model adjustments which include, but are not limited to, the following: model imprecision, imprecision in economic scenario assumptions, and emerging risks related to either changes in the environment that are affecting specific portfolios, or changes in portfolio concentrations over time that may affect model performance. The consideration of these items results in adjustments to allowance amounts included in the Company’s allowance for credit losses for each loan portfolio.

The Company also assesses the credit risk associated with off-balance sheet loan commitments, letters of credit, investment securities and derivatives. Credit risk associated with derivatives is reflected in the fair values recorded for those positions. The liability for off-balance sheet credit exposure related to loan commitments and other credit guarantees is included in other liabilities. Because business processes and credit risks associated with unfunded credit commitments are essentially the same as for loans, the Company utilizes similar processes to estimate its liability for unfunded credit commitments.

The results of the analysis are evaluated quarterly to confirm the estimates are appropriate for each specific loan portfolio, as well as the entire loan portfolio, as the entire allowance for credit losses is available for the entire loan portfolio.

Activity in the allowance for credit losses by portfolio class was as follows:


Three Months Ended September 30 (Dollars in Millions)	Commercial		Commercial Real Estate		Residential Mortgages		Credit Card		Other Retail		Total Loans
2024
Balance at beginning of period	$	2,180	$	1,596	$	836	$	2,498	$	824	$	7,934
Add


Provision for credit losses	155		49		(36)		349		40		557
Deduct
Loans charged-off	165		80		3		347		74		669
Less recoveries of loans charged-off	(18)		(10)		(6)		(48)		(23)		(105)
Net loan charge-offs (recoveries)	147		70		(3)		299		51		564
Balance at end of period	$	2,188	$	1,575	$	803	$	2,548	$	813	$	7,927
2023
Balance at beginning of period	$	2,209	$	1,473	$	899	$	2,185	$	929	$	7,695
Add


Provision for credit losses	(14)		266		(49)		285		27		515
Deduct
Loans charged-off	110		51		1		259		87		508
Less recoveries of loans charged-off	(18)		(2)		(4)		(39)		(25)		(88)
Net loan charge-offs (recoveries)	92		49		(3)		220		62		420
Balance at end of period	$	2,103	$	1,690	$	853	$	2,250	$	894	$	7,790
Nine Months Ended September 30 (Dollars in Millions)	Commercial		Commercial Real Estate		Residential Mortgages		Credit Card		Other Retail		Total Loans
2024
Balance at beginning of period	$	2,119	$	1,620	$	827	$	2,403	$	870	$	7,839
Add


Provision for credit losses	475		82		(31)		1,055		97		1,678
Deduct
Loans charged-off	484		152		10		1,042		228		1,916
Less recoveries of loans charged-off	(78)		(25)		(17)		(132)		(74)		(326)
Net loan charge-offs (recoveries)	406		127		(7)		910		154		1,590
Balance at end of period	$	2,188	$	1,575	$	803	$	2,548	$	813	$	7,927
2023
Balance at beginning of period	$	2,163	$	1,325	$	926	$	2,020	$	970	$	7,404
Add
Change in accounting principle(a)	—		—		(31)		(27)		(4)		(62)
Allowance for acquired credit losses(b)	—		127		—		—		—		127
Provision for credit losses	169		430		68		851		245		1,763
Deduct
Loans charged-off	283		205		126		716		402		1,732
Less recoveries of loans charged-off	(54)		(13)		(16)		(122)		(85)		(290)
Net loan charge-offs (recoveries)	229		192		110		594		317		1,442
Balance at end of period	$	2,103	$	1,690	$	853	$	2,250	$	894	$	7,790

(a)Effective January 1, 2023, the Company adopted accounting guidance which removed the separate recognition and measurement of troubled debt restructurings.

(b)Represents allowance for acquired credit deteriorated and charged-off loans.

The increase in the allowance for credit losses at September 30, 2024, compared with December 31, 2023, was primarily driven by credit migration in consumer and small business cards and portfolio growth.

The following table provides a summary of loans charged-off by portfolio class and year of origination:


Three Months Ended September 30 (Dollars in Millions)	Commercial		Commercial Real Estate		Residential Mortgages		Credit Card(c)		Other Retail		Total Loans
2024
Originated in 2024	$	10	$	39	$	—	$	—	$	4	$	53
Originated in 2023	16		15		—		—		13		44
Originated in 2022	48		23		1		—		11		83
Originated in 2021	8		—		—		—		9		17
Originated in 2020	3		1		—		—		4		8
Originated prior to 2020	10		2		2		—		6		20
Revolving	70		—		—		347		27		444

Total charge-offs	$	165	$	80	$	3	$	347	$	74	$	669

2023
Originated in 2023	$	22	$	20	$	—	$	—	$	5	$	47
Originated in 2022	11		—		—		—		17		28
Originated in 2021	17		27		—		—		13		57
Originated in 2020	4		—		—		—		6		10
Originated in 2019	4		—		—		—		6		10
Originated prior to 2019	10		4		1		—		13		28
Revolving	42		—		—		259		27		328

Total charge-offs	$	110	$	51	$	1	$	259	$	87	$	508
Nine Months Ended September 30 (Dollars in Millions)	Commercial		Commercial Real Estate(a)		Residential Mortgages(b)		Credit Card(c)		Other Retail(d)		Total Loans
2024
Originated in 2024	$	13	$	80	$	—	$	—	$	6	$	99
Originated in 2023	68		21		—		—		34		123
Originated in 2022	132		47		2		—		39		220
Originated in 2021	23		—		—		—		30		53
Originated in 2020	9		1		—		—		17		27
Originated prior to 2020	31		3		8		—		25		67
Revolving	208		—		—		1,042		77		1,327

Total charge-offs	$	484	$	152	$	10	$	1,042	$	228	$	1,916

2023
Originated in 2023	$	29	$	20	$	—	$	—	$	51	$	100
Originated in 2022	51		88		—		—		116		255
Originated in 2021	25		44		5		—		70		144
Originated in 2020	14		—		8		—		31		53
Originated in 2019	11		3		16		—		26		56
Originated prior to 2019	38		50		97		—		26		211
Revolving	115		—		—		716		54		885
Revolving converted to term	—		—		—		—		28		28
Total charge-offs	$	283	$	205	$	126	$	716	$	402	$	1,732

Note: Year of origination is based on the origination date of a loan, or for existing loans the date when the maturity date, pricing or commitment amount is amended. Predominantly all current year and near term loan origination years for gross charge-offs relate to existing loans that have had recent maturity date, pricing or commitment amount amendments.

(a)Includes $91 million of charge-offs in the first quarter of 2023 related to uncollectible amounts on acquired loans.

(b)Includes $117 million of charge-offs related to balance sheet repositioning and capital management actions taken in the second quarter of 2023.

(c)Predominantly all credit card loans are considered revolving loans. Includes an immaterial amount of charge-offs related to revolving converted to term loans.

(d)Includes $192 million of charge-offs related to balance sheet repositioning and capital management actions taken in the second quarter of 2023.

Credit Quality The credit quality of the Company’s loan portfolios is assessed as a function of net credit losses, levels of nonperforming assets and delinquencies, and credit quality ratings as defined by the Company.

For all loan portfolio classes, loans are considered past due based on the number of days delinquent except for monthly amortizing loans which are classified delinquent based upon the number of contractually required payments not made (for example, two missed payments is considered 30 days delinquent). When a loan is placed on nonaccrual status, unpaid accrued interest is reversed, reducing interest income in the current period.

Commercial lending segment loans are generally placed on nonaccrual status when the collection of principal and interest has become 90 days past due or is otherwise considered doubtful. Commercial lending segment loans are generally fully charged

down if unsecured by collateral or partially charged down to the fair value of the collateral securing the loan, less costs to sell, when the loan is placed on nonaccrual.

Consumer lending segment loans are generally charged-off at a specific number of days or payments past due. Residential mortgages and other retail loans secured by 1-4 family properties are generally charged down to the fair value of the collateral securing the loan, less costs to sell, at 180 days past due. Residential mortgage loans and lines in a first lien position are placed on nonaccrual status in instances where a partial charge-off occurs unless the loan is well secured and in the process of collection. Residential mortgage loans and lines in a junior lien position secured by 1-4 family properties are placed on nonaccrual status at 120 days past due or when they are behind a first lien that has become 180 days or greater past due or placed on nonaccrual status. Any secured consumer lending segment loan whose borrower has had debt discharged through bankruptcy, for which the loan amount exceeds the fair value of the collateral, is charged down to the fair value of the related collateral and the remaining balance is placed on nonaccrual status. Credit card loans continue to accrue interest until the account is charged-off. Credit cards are charged-off at 180 days past due. Other retail loans not secured by 1-4 family properties are charged-off at 120 days past due, and revolving consumer lines are charged-off at 180 days past due. Similar to credit cards, other retail loans are generally not placed on nonaccrual status because of the relative short period of time to charge-off. Certain retail customers having financial difficulties may have the terms of their credit card and other loan agreements modified to require only principal payments and, as such, are reported as nonaccrual.

For all loan classes, interest payments received on nonaccrual loans are generally recorded as a reduction to a loan’s carrying amount while a loan is on nonaccrual and are recognized as interest income upon payoff of the loan. However, interest income may be recognized for interest payments received if the remaining carrying amount of the loan is believed to be collectible. In certain circumstances, loans in any class may be restored to accrual status, such as when a loan has demonstrated sustained repayment performance or no amounts are past due and prospects for future payment are no longer in doubt, or when the loan becomes well secured and is in the process of collection. Loans where there has been a partial charge-off may be returned to accrual status if all principal and interest (including amounts previously charged-off) is expected to be collected and the loan is current.

The following table provides a summary of loans by portfolio class, including the delinquency status of those that continue to accrue interest, and those that are nonperforming:


	Accruing
(Dollars in Millions)	Current		30-89 Days Past Due		90 Days or More Past Due		Nonperforming(b)		Total
September 30, 2024
Commercial	$	132,626	$	335	$	92	$	585	$	133,638
Commercial real estate	49,604		81		9		925		50,619
Residential mortgages(a)	117,530		171		179		154		118,034
Credit card	28,215		426		396		—		29,037
Other retail	42,407		222		62		145		42,836
Total loans	$	370,382	$	1,235	$	738	$	1,809	$	374,164
December 31, 2023
Commercial	$	130,925	$	464	$	116	$	376	$	131,881
Commercial real estate	52,619		55		4		777		53,455
Residential mortgages(a)	115,067		169		136		158		115,530
Credit card	27,779		406		375		—		28,560
Other retail	43,926		278		67		138		44,409
Total loans	$	370,316	$	1,372	$	698	$	1,449	$	373,835

(a)At September 30, 2024, $607 million of loans 30–89 days past due and $2.0 billion of loans 90 days or more past due purchased and that could be purchased from GNMA mortgage pools under delinquent loan repurchase options whose repayments are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs, were classified as current, compared with $595 million and $2.0 billion at December 31, 2023, respectively.

(b)Substantially all nonperforming loans at September 30, 2024 and December 31, 2023, had an associated allowance for credit losses. The Company recognized interest income on nonperforming loans of $5 million for both the three months ended September 30, 2024 and 2023, respectively, and $16 million and $12 million for the nine months ended September 30, 2024 and 2023, respectively.

At September 30, 2024, the amount of foreclosed residential real estate held by the Company, and included in OREO, was $21 million, compared with $26 million at December 31, 2023. These amounts excluded $47 million at both September 30, 2024 and December 31, 2023, respectively, of foreclosed residential real estate related to mortgage loans whose payments are primarily insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs. In addition, the amount of residential mortgage loans secured by residential real estate in the process of foreclosure at September 30, 2024 and December 31, 2023, was $587 million and $728 million, respectively, of which $363 million and $487 million, respectively, related to loans purchased and that could be purchased from GNMA mortgage pools under delinquent loan repurchase options whose repayments are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs.

The Company classifies its loan portfolio classes using internal credit quality ratings on a quarterly basis. These ratings include pass, special mention and classified, and are an important part of the Company’s overall credit risk management process and evaluation of the allowance for credit losses. Loans with a pass rating represent those loans not classified on the Company’s rating scale for problem credits, as minimal credit risk has been identified. Special mention loans are those loans that have a potential weakness deserving management’s close attention. Classified loans are those loans where a well-defined weakness has been identified that may put full collection of contractual cash flows at risk. It is possible that others, given the same information, may reach different reasonable conclusions regarding the credit quality rating classification of specific loans.

The following table provides a summary of loans by portfolio class and the Company’s internal credit quality rating:


	September 30, 2024										December 31, 2023
			Criticized										Criticized
(Dollars in Millions)	Pass		Special Mention		Classified(a)		Total Criticized		Total		Pass		Special Mention		Classified(a)		Total Criticized		Total
Commercial
Originated in 2024	$	39,799	$	636	$	806	$	1,442	$	41,241	$	—	$	—	$	—	$	—	$	—
Originated in 2023	23,359		276		671		947		24,306		43,023		827		856		1,683		44,706
Originated in 2022	23,723		169		697		866		24,589		40,076		274		632		906		40,982
Originated in 2021	5,918		129		100		229		6,147		9,219		117		154		271		9,490
Originated in 2020	2,962		63		77		140		3,102		3,169		92		71		163		3,332
Originated prior to 2020	4,417		13		86		99		4,516		5,303		30		209		239		5,542
Revolving(b)	28,497		263		977		1,240		29,737		26,213		362		1,254		1,616		27,829
Total commercial	128,675		1,549		3,414		4,963		133,638		127,003		1,702		3,176		4,878		131,881
Commercial real estate
Originated in 2024	7,190		260		1,416		1,676		8,866		—		—		—		—		—
Originated in 2023	5,466		102		1,291		1,393		6,859		8,848		465		2,206		2,671		11,519
Originated in 2022	9,964		688		1,339		2,027		11,991		11,831		382		1,141		1,523		13,354
Originated in 2021	7,182		183		505		688		7,870		9,235		500		385		885		10,120
Originated in 2020	3,081		43		119		162		3,243		3,797		51		87		138		3,935
Originated prior to 2020	8,775		124		691		815		9,590		10,759		458		619		1,077		11,836
Revolving	2,144		—		54		54		2,198		2,613		6		70		76		2,689
Revolving converted to term	2		—		—		—		2		2		—		—		—		2
Total commercial real estate	43,804		1,400		5,415		6,815		50,619		47,085		1,862		4,508		6,370		53,455
Residential mortgages(c)
Originated in 2024	7,590		—		1		1		7,591		—		—		—		—		—
Originated in 2023	9,115		—		10		10		9,125		9,734		—		5		5		9,739
Originated in 2022	28,756		—		30		30		28,786		29,146		—		17		17		29,163
Originated in 2021	35,150		—		29		29		35,179		36,365		—		16		16		36,381
Originated in 2020	13,978		—		16		16		13,994		14,773		—		9		9		14,782
Originated prior to 2020	23,105		—		254		254		23,359		25,202		—		262		262		25,464
Revolving	—		—		—		—		—		1		—		—		—		1
Total residential mortgages	117,694		—		340		340		118,034		115,221		—		309		309		115,530
Credit card(d)	28,641		—		396		396		29,037		28,185		—		375		375		28,560
Other retail
Originated in 2024	6,021		—		3		3		6,024		—		—		—		—		—
Originated in 2023	4,251		—		8		8		4,259		5,184		—		4		4		5,188
Originated in 2022	4,455		—		12		12		4,467		5,607		—		12		12		5,619
Originated in 2021	7,415		—		16		16		7,431		10,398		—		15		15		10,413
Originated in 2020	3,031		—		5		5		3,036		4,541		—		9		9		4,550
Originated prior to 2020	3,059		—		16		16		3,075		4,008		—		20		20		4,028
Revolving	13,663		—		112		112		13,775		13,720		—		104		104		13,824
Revolving converted to term	725		—		44		44		769		735		—		52		52		787
Total other retail	42,620		—		216		216		42,836		44,193		—		216		216		44,409
Total loans	$	361,434	$	2,949	$	9,781	$	12,730	$	374,164	$	361,687	$	3,564	$	8,584	$	12,148	$	373,835
Total outstanding commitments	$	770,528	$	4,499	$	11,828	$	16,327	$	786,855	$	762,869	$	5,053	$	10,470	$	15,523	$	778,392

Note: Year of origination is based on the origination date of a loan, or for existing loans the date when the maturity date, pricing or commitment amount is amended. Predominately all current year and near term loan origination years for criticized loans relate to existing loans that have had recent maturity date, pricing or commitment amount amendments.

(a)Classified rating on consumer loans primarily based on delinquency status.

(b)Includes an immaterial amount of revolving converted to term loans.

(c)At September 30, 2024, $2.0 billion of GNMA loans 90 days or more past due and $1.4 billion of modified GNMA loans whose repayments are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs were classified with a pass rating, compared with $2.0 billion and $1.2 billion at December 31, 2023, respectively.

(d)Predominately all credit card loans are considered revolving loans. Includes an immaterial amount of revolving converted to term loans.

Loan Modifications In certain circumstances, the Company may modify the terms of a loan to maximize the collection of amounts due when a borrower is experiencing financial difficulties or is expected to experience difficulties in the near-term. The Company

recognizes interest on modified loans if full collection of contractual principal and interest is expected. The effects of modifications on credit loss expectations, such as improved payment capacity, longer expected lives and other factors, are considered when measuring the allowance for credit losses. Modification performance, including redefault rates and how these compare to historical losses, are also considered. Modifications generally do not result in significant changes to the Company’s allowance for credit losses.

The following table provides a summary of period-end balances of loans modified during the periods presented, by portfolio class and modification granted:


Three Months Ended September 30 (Dollars in Millions)	Interest Rate Reduction		Payment Delay		Term Extension		Multiple Modifications(a)		Total Modifications		Percent of Class Total
2024
Commercial	$	26	$	—	$	292	$	—	$	318	.2	%
Commercial real estate	—		—		401		27		428		.8
Residential mortgages(b)	—		21		3		7		31		—
Credit card	133		2		—		—		135		.5
Other retail	2		—		36		2		40		.1
Total loans, excluding loans purchased from GNMA mortgage pools	161		23		732		36		952		.3
Loans purchased from GNMA mortgage pools(b)	—		391		96		101		588		.5
Total loans	$	161	$	414	$	828	$	137	$	1,540	.4	%
2023
Commercial	$	16	$	—	$	98	$	—	$	114	.1	%
Commercial real estate	—		—		426		9		435		.8
Residential mortgages(b)	—		58		6		1		65		.1
Credit card	117		—		—		—		117		.4
Other retail	2		12		39		—		53		.1
Total loans, excluding loans purchased from GNMA mortgage pools	135		70		569		10		784		.2
Loans purchased from GNMA mortgage pools(b)	—		455		75		127		657		.6
Total loans	$	135	$	525	$	644	$	137	$	1,441	.4	%
Nine Months Ended September 30 (Dollars in Millions)	Interest Rate Reduction		Payment Delay		Term Extension		Multiple Modifications(a)		Total Modifications		Percent of Class Total
2024
Commercial	$	63	$	—	$	603	$	—	$	666	.5	%
Commercial real estate	49		—		761		27		837		1.7
Residential mortgages(b)	—		46		15		16		77		.1
Credit card	330		2		—		—		332		1.1
Other retail	6		2		98		3		109		.3
Total loans, excluding loans purchased from GNMA mortgage pools	448		50		1,477		46		2,021		.5
Loans purchased from GNMA mortgage pools(b)	1		1,101		257		281		1,640		1.4
Total loans	$	449	$	1,151	$	1,734	$	327	$	3,661	1.0	%
2023
Commercial	$	36	$	—	$	213	$	—	$	249	.2	%
Commercial real estate	—		—		527		9		536		1.0
Residential mortgages(b)	—		221		21		17		259		.2
Credit card	268		1		—		—		269		1.0
Other retail	6		20		113		2		141		.3
Total loans, excluding loans purchased from GNMA mortgage pools	310		242		874		28		1,454		.4
Loans purchased from GNMA mortgage pools(b)	—		1,020		211		261		1,492		1.3
Total loans	$	310	$	1,262	$	1,085	$	289	$	2,946	.8	%

(a)Includes $85 million of total loans receiving a payment delay and term extension, $44 million of total loans receiving an interest rate reduction and term extension and $8 million of total loans receiving an interest rate reduction, payment delay and term extension for the three months ended September 30, 2024, compared with $126 million, $9 million and $2 million for the three months ended September 30, 2023, respectively. Includes $251 million of total loans receiving a payment delay and term extension, $56 million of total loans receiving an interest rate reduction and term extension and $20 million of total loans receiving an interest rate reduction, payment delay and term extension for the nine months ended September 30, 2024, compared with $268 million, $14 million and $7 million for the nine months ended September 30, 2023, respectively.

(b)Percent of class total amounts expressed as a percent of total residential mortgage loan balances.

Loan modifications included in the table above exclude trial period arrangements offered to customers and secured loans to consumer borrowers that have had debt discharged through bankruptcy where the borrower has not reaffirmed the debt during the periods presented. At September 30, 2024 the balance of loans modified in trial period arrangements was $142 million, while the balance of secured loans to consumer borrowers that have had debt discharged through bankruptcy was not material.

The following table summarizes the effects of loan modifications made to borrowers on loans modified:


Three Months Ended September 30	Weighted-Average Interest Rate Reduction		Weighted-Average Months of Term Extension
2024
Commercial(a)	20.5	%	9
Commercial real estate	4.4		12
Residential mortgages	1.1		92
Credit card	16.2		—
Other retail	6.4		5
Loans purchased from GNMA mortgage pools	.4		109
2023
Commercial(a)	21.5	%	13
Commercial real estate	—		11
Residential mortgages	.9		99
Credit card	15.4		—
Other retail	9.1		2
Loans purchased from GNMA mortgage pools	.5		121
Nine Months Ended September 30	Weighted-Average Interest Rate Reduction		Weighted-Average Months of Term Extension
2024
Commercial(a)	20.2	%	9
Commercial real estate	3.1		12
Residential mortgages	.9		88
Credit card	16.3		—
Other retail	7.7		5
Loans purchased from GNMA mortgage pools	.5		113
2023
Commercial(a)	21.0	%	10
Commercial real estate	—		10
Residential mortgages	1.3		109
Credit card	15.1		—
Other retail	7.8		4
Loans purchased from GNMA mortgage pools	.6		98

Note: The weighted-average payment deferral for all portfolio classes was less than $1 million for the three and nine months ended September 30, 2024 and 2023. Forbearance payments are required to be paid at the end of the original term loan.

(a)The weighted-average interest rate reduction was primarily driven by commercial cards.

For the commercial lending segment, modifications generally result in the Company working with borrowers on a case-by-case basis. Commercial and commercial real estate modifications generally include extensions of the maturity date and may be accompanied by an increase or decrease to the interest rate. In addition, the Company may work with the borrower in identifying other changes that mitigate loss to the Company, which may include additional collateral or guarantees to support the loan. To a lesser extent, the Company may provide an interest rate reduction.

Modifications for the consumer lending segment are generally part of programs the Company has initiated. The Company modifies residential mortgage loans under Federal Housing Administration, United States Department of Veterans Affairs, or its own internal programs. Under these programs, the Company offers qualifying homeowners the opportunity to permanently modify their loan and achieve more affordable monthly payments. These modifications may include adjustments to interest rates, conversion of adjustable rates to fixed rates, extension of maturity dates or deferrals of payments, capitalization of accrued interest and/or outstanding advances, or in limited situations, partial forgiveness of loan principal. In some instances, participation in residential mortgage loan modification programs requires the customer to complete a short-term trial period. A permanent loan modification is contingent on the customer successfully completing the trial period arrangement, and the loan documents are not modified until that time.

Credit card and other retail loan modifications are generally part of distinct modification programs providing customers experiencing financial difficulty with modifications whereby balances may be amortized up to 60 months, and generally include waiver of fees and reduced interest rates.

Loans that receive a forbearance plan generally remain in default until they are no longer delinquent as the result of the payment of all past due amounts or the borrower receiving a term extension or modification. Therefore, loans only receiving forbearance plans are not included in the table below.

The following table provides a summary of loan balances at September 30, 2024, which were modified during the prior twelve months, by portfolio class and delinquency status:


(Dollars in Millions)	Current		30-89 Days Past Due		90 Days or More Past Due		Total
Commercial	$	556	$	55	$	159	$	770
Commercial real estate	752		2		455		1,209
Residential mortgages(a)	1,487		4		10		1,501
Credit card	298		70		37		405
Other retail	120		17		5		142
Total loans	$	3,213	$	148	$	666	$	4,027

(a)At September 30, 2024, $430 million of loans 30-89 days past due and $265 million of loans 90 days or more past due purchased and that could be purchased from GNMA mortgage pools under delinquent loan repurchase options whose payments are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs, were classified as current.

The following table provides a summary of loan balances at September 30, 2023, which were modified on or after January 1, 2023, the date the Company adopted accounting guidance which removed the separate recognition and measurement of troubled debt restructurings, through September 30, 2023, by portfolio class and delinquency status:


(Dollars in Millions)	Current		30-89 Days Past Due		90 Days or More Past Due		Total
Commercial	$	223	$	11	$	14	$	248
Commercial real estate	347		1		189		537
Residential mortgages(a)	1,089		15		14		1,118
Credit card	192		54		22		268
Other retail	106		15		7		128
Total loans	$	1,957	$	96	$	246	$	2,299

(a)At September 30, 2023, $263 million of loans 30-89 days past due and $64 million of loans 90 days or more past due purchased and that could be purchased from GNMA mortgage pools under delinquent loan repurchase options whose payments are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs, were classified as current.

The following table provides a summary of loans that defaulted (fully or partially charged-off or became 90 days or more past due) that were modified within twelve months prior to default:


(Dollars in Millions)	Interest Rate Reduction		Payment Delay		Term Extension		Multiple Modifications(a)
Three Months Ended September 30, 2024
Commercial	$	8	$	—	$	13	$	—
Commercial real estate	—		—		180		—
Residential mortgages	—		2		—		1
Credit card	33		—		—		—
Other retail	1		—		5		—
Total loans, excluding loans purchased from GNMA mortgage pools	42		2		198		1
Loans purchased from GNMA mortgage pools	—		97		50		54
Total loans	$	42	$	99	$	248	$	55
Nine Months Ended September 30, 2024
Commercial	$	20	$	—	$	13	$	—
Commercial real estate	—		—		204		—
Residential mortgages	—		12		3		4
Credit card	92		—		—		—
Other retail	2		1		15		—
Total loans, excluding loans purchased from GNMA mortgage pools	114		13		235		4
Loans purchased from GNMA mortgage pools	—		154		80		94
Total loans	$	114	$	167	$	315	$	98

(a)Includes $49 million of total loans receiving a payment delay and term extension, $5 million of total loans receiving an interest rate reduction and term extension, and $1 million of total loans receiving an interest rate reduction, payment delay and term extension for the three months ended September 30, 2024. Includes $91 million of total loans receiving a payment delay and term extension, $6 million of total loans receiving an interest rate reduction and term extension and $1 million of total loans receiving an interest rate reduction, payment delay and term extension for the nine months ended September 30, 2024.

The following table provides a summary of loans that defaulted (fully or partially charged-off or became 90 days or more past due) that were modified on or after January 1, 2023, the date the Company adopted accounting guidance which removed the separate recognition and measurement of troubled debt restructurings, through September 30, 2023:


(Dollars in Millions)	Interest Rate Reduction		Payment Delay		Term Extension		Multiple Modifications(a)
Three Months Ended September 30, 2023
Commercial	$	2	$	—	$	—	$	—
Residential mortgages	—		4		1		—
Credit card	10		—		—		—
Other retail	—		—		4		—
Total loans, excluding loans purchased from GNMA mortgage pools	12		4		5		—
Loans purchased from GNMA mortgage pools	—		20		9		6
Total loans	$	12	$	24	$	14	$	6
Nine Months Ended September 30, 2023
Commercial	$	3	$	—	$	—	$	—
Residential mortgages	—		5		1		1
Credit card	15		—		—		—
Other retail	—		—		5		—
Total loans, excluding loans purchased from GNMA mortgage pools	18		5		6		1
Loans purchased from GNMA mortgage pools	—		23		10		7
Total loans	$	18	$	28	$	16	$	8

(a) Represents loans receiving a payment delay and term extension for the three months ended September 30, 2023. Includes $7 million of total loans receiving a payment delay and term extension and $1 million of total loans receiving an interest rate reduction, payment delay and term extension for the nine months ended September 30, 2023.

As of September 30, 2024 the Company had $437 million of commitments to lend additional funds to borrowers whose terms of their outstanding owed balances have been modified.