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Loans and Related Allowance for Credit Losses

9 Months Ended

Sep. 30, 2021

LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

Loan Portfolio

Our loan portfolio consists of two portfolio segments – Commercial and Consumer. Each of these segments comprises multiple loan classes. Classes are characterized by similarities in risk attributes and the manner in which we monitor and assess credit risk.


Commercial						Consumer

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

See Note 1 Accounting Policies included in Item 8 of our 2020 Form 10-K for additional information on our loan related policies.

Credit Quality

We closely monitor economic conditions and loan performance trends to manage and evaluate our exposure to credit risk within the loan portfolio based on our defined loan classes. In doing so, we use several credit quality indicators, including trends in delinquency rates, nonperforming status, analysis of PD and LGD ratings, updated credit scores, and originated and updated LTV ratios.

The measurement of delinquency status is based on the contractual terms of each loan. Loans that are 30 days or more past due in terms of payment are considered delinquent. Loan delinquencies include government insured or guaranteed loans, loans accounted for under the fair value option and PCD loans.

Table 47 presents the composition and delinquency status of our loan portfolio at September 30, 2021 and December 31, 2020. Pursuant to the interagency guidance issued in April 2020 and in connection with the credit reporting rules from the CARES Act, the delinquency status of loans modified due to COVID-19 related hardships aligns with the rules set forth for banks to report delinquency status to the credit agencies. These rules require that COVID-19 related loan modifications be reported as follows:

•if current at the time of modification, the loan remains current throughout the modification period,

•if delinquent at the time of modification and the borrower was not made current as part of the modification, the loan maintains its reported delinquent status during the modification period, or

•if delinquent at the time of modification and the borrower was made current as part of the modification or became current during the modification period, the loan is reported as current.

As a result, certain loans modified due to COVID-19 related hardships are not being reported as past due as of September 30, 2021 and December 31, 2020 based on the contractual terms of the loan, even where borrowers may not be making payments on their loans during the modification period. Loan modifications due to COVID-19 related hardships that permanently reduce either the contractual interest rate or the principal balance of a loan do not qualify for TDR relief under the CARES Act or the interagency guidance.

Table 47: Analysis of Loan Portfolio (a) (b)


	Accruing
Dollars in millions	Current or Less Than 30 Days Past Due			30-59 Days Past Due			60-89 Days Past Due			90 Days Or More Past Due			Total Past Due (c)				Nonperforming Loans			Fair Value Option Nonaccrual Loans (d)			Total Loans (e)(f)
September 30, 2021
Commercial
Commercial and industrial	$	151,703		$	97		$	50		$	56		$	203			$	829					$	152,735
Commercial real estate	35,749			68			2			11			81				365						36,195
Equipment lease financing	6,238			5			4						9				10						6,257
Total commercial	193,690			170			56			67			293				1,204						195,187
Consumer
Residential real estate	36,504			209			80			296			585			(c)	533			$	592		38,214
Home equity	23,719			45			18						63				592			105			24,479
Automobile	16,940			114			23			4			141				184						17,265
Credit card	6,337			42			27			53			122				7						6,466
Education	2,521			45			26			61			132			(c)							2,653
Other consumer	5,898			34			15			11			60				8						5,966
Total consumer	91,919			489			189			425			1,103				1,324			697			95,043
Total	$	285,609		$	659		$	245		$	492		$	1,396			$	2,528		$	697		$	290,230
Percentage of total loans	98.41		%	0.23		%	0.08		%	0.17		%	0.48		%		0.87		%	0.24		%	100.00		%
December 31, 2020
Commercial
Commercial and industrial	$	131,245		$	106		$	26		$	30		$	162			$	666					$	132,073
Commercial real estate	28,485			6			1						7				224						28,716
Equipment lease financing	6,345			31			5						36				33						6,414
Total commercial	166,075			143			32			30			205				923						167,203
Consumer
Residential real estate	20,945			181			78			319			578			(c)	528			$	509		22,560
Home equity	23,318			50			21						71				645			54			24,088
Automobile	13,863			134			34			12			180				175						14,218
Credit card	6,074			43			30			60			133				8						6,215
Education	2,785			55			29			77			161			(c)							2,946
Other consumer	4,656			14			10			11			35				7						4,698
Total consumer	71,641			477			202			479			1,158				1,363			563			74,725
Total	$	237,716		$	620		$	234		$	509		$	1,363			$	2,286		$	563		$	241,928
Percentage of total loans	98.27		%	0.26		%	0.10		%	0.21		%	0.56		%		0.94		%	0.23		%	100.00		%

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

(b)The accrued interest associated with our loan portfolio totaled $0.8 billion and $0.7 billion at September 30, 2021 and December 31, 2020, respectively. These amounts are included in Other assets on the Consolidated Balance Sheet.

(c)Past due loan amounts include government insured or guaranteed Residential real estate loans and Education loans totaling $0.4 billion and $0.1 billion at September 30, 2021. Comparable amounts at December 31, 2020 were $0.4 billion and $0.2 billion.

(d)Consumer loans accounted for under the fair value option for which we do not expect to collect substantially all principal and interest are subject to nonaccrual accounting and classification upon meeting any of our nonaccrual policies. Given that these loans are not accounted for at amortized cost, these loans have been excluded from the nonperforming loan population.

(e)Includes unearned income, unamortized deferred fees and costs on originated loans, and premiums or discounts on purchased loans totaling $0.9 billion and $1.3 billion at September 30, 2021 and December 31, 2020, respectively.

(f)Collateral dependent loans totaled $1.7 billion and $1.5 billion at September 30, 2021 and December 31, 2020, respectively.

At September 30, 2021, we pledged $25.6 billion of commercial and other loans to the Federal Reserve Bank and $77.8 billion of residential real estate and other loans to the FHLB as collateral for the ability to borrow, if necessary. The comparable amounts at December 31, 2020 were $30.1 billion and $69.0 billion, respectively. Amounts pledged reflect the unpaid principal balances.

Nonperforming Assets

Nonperforming assets include nonperforming loans and leases, OREO and foreclosed assets. Nonperforming loans are those loans accounted for at amortized cost whose credit quality has deteriorated to the extent that full collection of contractual principal and interest is not probable and include nonperforming TDRs and PCD loans. Interest income is not recognized on these loans. Loans accounted for under the fair value option are reported as performing loans, however, when nonaccrual criteria is met interest income is not recognized on these loans. Additionally, certain government insured or guaranteed loans for which we expect to collect

substantially all principal and interest are not reported as nonperforming loans and continue to accrue interest. See Note 1 Accounting Policies included in Item 8 of our 2020 Form 10-K for additional information on our nonperforming loan and lease policies.

The following table presents our nonperforming assets as of September 30, 2021 and December 31, 2020 , respectively:

Table 48: Nonperforming Assets


Dollars in millions	September 30 2021			December 31 2020
Nonperforming loans
Commercial	$	1,204		$	923
Consumer (a)	1,324			1,363
Total nonperforming loans (b)	2,528			2,286
OREO and foreclosed assets	31			51
Total nonperforming assets	$	2,559		$	2,337
Nonperforming loans to total loans	0.87		%	0.94		%
Nonperforming assets to total loans, OREO and foreclosed assets	0.88		%	0.97		%
Nonperforming assets to total assets	0.46		%	0.50		%

(a)Excludes most unsecured consumer loans and lines of credit, which are charged off after 120 to 180 days past due and are not placed on nonperforming status.

(b)Nonperforming loans for which there is no related ALLL totaled $1.0 billion at September 30, 2021 and primarily include loans with a fair value of collateral that exceeds the amortized cost basis. The comparable amount at December 31, 2020 was $0.8 billion.

Nonperforming loans include certain loans whose terms have been restructured in a manner that grants a concession to a borrower experiencing financial difficulties. In accordance with applicable accounting guidance, these loans are considered TDRs. See Note 1 Accounting Policies included in Item 8 of our 2020 Form 10-K and the Troubled Debt Restructurings section of this Note 4 for additional information on TDRs.

Total nonperforming loans in Table 48 include TDRs of $0.8 billion and $0.9 billion at September 30, 2021 and December 31, 2020, respectively. TDRs that are performing, including consumer credit card TDR loans, are excluded from nonperforming loans and totaled $0.7 billion at both September 30, 2021 and December 31, 2020.

Additional Credit Quality Indicators by Loan Class

Commercial Loan Classes

See Note 4 Loans and Related Allowance for Credit Losses included in Item 8 of our 2020 Form 10-K for additional information related to these loan classes, including discussion around the credit quality indicators that we use to monitor and manage the credit risk associated with each loan class.

The following table presents credit quality indicators for the commercial loan classes:

Table 49: Commercial Credit Quality Indicators (a)


	Term Loans by Origination Year
September 30, 2021 - In millions	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Commercial and industrial
Pass Rated	$	23,953	$	13,493	$	12,681	$	7,612	$	7,144	$	13,065	$	66,452	$	93	$	144,493
Criticized	254		487		878		906		517		997		4,176		27		8,242
Total commercial and industrial	24,207		13,980		13,559		8,518		7,661		14,062		70,628		120		152,735
Commercial real estate
Pass Rated	2,704		4,531		7,545		4,956		3,006		8,375		429				31,546
Criticized	160		287		1,000		710		657		1,812		23				4,649
Total commercial real estate	2,864		4,818		8,545		5,666		3,663		10,187		452				36,195
Equipment lease financing
Pass Rated	885		1,257		1,026		777		570		1,551						6,066
Criticized	26		59		44		33		23		6						191
Total equipment lease financing	911		1,316		1,070		810		593		1,557						6,257
Total commercial	$	27,982	$	20,114	$	23,174	$	14,994	$	11,917	$	25,806	$	71,080	$	120	$	195,187


	Term Loans by Origination Year
December 31, 2020 - In millions	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Commercial and industrial
Pass Rated	$	31,680	$	13,340	$	8,209	$	5,956	$	4,242	$	7,141	$	54,775	$	53	$	125,396
Criticized	339		702		578		334		224		351		4,130		19		6,677
Total commercial and industrial	32,019		14,042		8,787		6,290		4,466		7,492		58,905		72		132,073
Commercial real estate
Pass Rated	3,709		6,268		3,426		2,841		2,341		6,792		218				25,595
Criticized	319		548		148		423		400		1,159		124				3,121
Total commercial real estate	4,028		6,816		3,574		3,264		2,741		7,951		342				28,716
Equipment lease financing
Pass Rated	1,429		1,202		942		738		405		1,350						6,066
Criticized	78		92		86		39		22		31						348
Total equipment lease financing	1,507		1,294		1,028		777		427		1,381						6,414
Total commercial	$	37,554	$	22,152	$	13,389	$	10,331	$	7,634	$	16,824	$	59,247	$	72	$	167,203

(a)Loans in our commercial portfolio are classified as Pass Rated or Criticized based on the regulatory definitions, which are driven by the PD and LGD ratings that we assign. The Criticized classification includes loans that were rated special mention, substandard or doubtful as of September 30, 2021 and December 31, 2020.

Consumer Loan Classes

associated with each loan class.

Residential Real Estate and Home Equity

The following table presents credit quality indicators for the residential real estate loan class:

Table 50: Residential Real Estate Credit Quality Indicators


	Term Loans by Origination Year
September 30, 2021 - In millions	2021		2020		2019		2018		2017		Prior		Total Loans

PNC legacy
Current estimated LTV ratios
Greater than 100%	$	1	$	9	$	12	$	2	$	4	$	71	$	99
Greater than or equal to 80% to 100%	711		143		107		30		34		165		1,190
Less than 80%	9,359		5,802		2,193		638		1,179		4,356		23,527
Government insured or guaranteed loans	1		11		24		21		30		688		775
Total PNC legacy portfolio	10,072		5,965		2,336		691		1,247		5,280		25,591
Acquired loans
Estimated LTV ratios (a)
Greater than 100%	13		23		2		2		4		18		62
Greater than or equal to 80% to 100%	847		1,225		488		241		243		534		3,578
Less than 80%	1,689		1,941		728		287		369		3,248		8,262
No LTV ratio available	207		320		93		26		1				647
Government insured or guaranteed loans			4		14		11		10		35		74
Total acquired loans	2,756		3,513		1,325		567		627		3,835		12,623
Total residential real estate	$	12,828	$	9,478	$	3,661	$	1,258	$	1,874	$	9,115	$	38,214
Updated FICO scores
Greater than or equal to 780	$	7,778	$	6,577	$	2,405	$	701	$	1,170	$	4,549	$	23,180
720 to 779	3,957		1,917		733		250		372		1,670		8,899
660 to 719	498		464		292		145		144		821		2,364
Less than 660	52		123		92		80		85		805		1,237
No FICO score available	542		382		101		50		63		547		1,685
Government insured or guaranteed loans	1		15		38		32		40		723		849
Total residential real estate	$	12,828	$	9,478	$	3,661	$	1,258	$	1,874	$	9,115	$	38,214


	Term Loans by Origination Year
December 31, 2020 - In millions	2020		2019		2018		2017		2016		Prior		Total Loans

Current estimated LTV ratios
Greater than 100%	$	3	$	52	$	26	$	42	$	41	$	160	$	324
Greater than or equal to 80% to 100%	495		422		127		156		124		307		1,631
Less than 80%	7,491		3,656		992		1,706		1,847		3,991		19,683
Government insured or guaranteed loans	7		28		27		38		57		765		922
Total residential real estate	$	7,996	$	4,158	$	1,172	$	1,942	$	2,069	$	5,223	$	22,560
Updated FICO scores
Greater than or equal to 780	$	5,425	$	3,099	$	814	$	1,432	$	1,538	$	2,551	$	14,859
720 to 779	2,268		820		220		340		335		818		4,801
660 to 719	252		161		76		98		92		475		1,154
Less than 660	40		48		33		31		41		485		678
No FICO score available	4		2		2		3		6		129		146
Government insured or guaranteed loans	7		28		27		38		57		765		922
Total residential real estate	$	7,996	$	4,158	$	1,172	$	1,942	$	2,069	$	5,223	$	22,560

(a) LTV ratios, inclusive of CLTV for first lien and certain subordinate lien positions, in the BBVA loan portfolio are calculated on a quarterly basis utilizing the real estate collateral values available at origination. These calculations will be refreshed for our 2021 Form 10-K to update the property values of real estate collateral and calculate an updated current estimated LTV ratio in connection with the conversion of bank systems, which occurred as of October 12, 2021. See Note 4 Loans and Related Allowance for Credit Losses included in Item 8 of our 2020 Form 10-K for additional information on how current estimated LTV ratios are calculated in the PNC legacy portfolio.

The following table presents credit quality indicators for the home equity loan class:

Table 51: Home Equity Credit Quality Indicators


	Term Loans by Origination Year
September 30, 2021 - In millions	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans

PNC legacy
Current estimated LTV ratios
Greater than 100%	$	1	$	16	$	15	$	2	$	2	$	30	$	270	$	91	$	427
Greater than or equal to 80% to 100%	17		97		87		18		13		78		847		570		1,727
Less than 80%	201		2,704		1,315		401		600		3,427		6,473		4,834		19,955
Total PNC legacy portfolio	219		2,817		1,417		421		615		3,535		7,590		5,495		22,109
Acquired loans
Estimated LTV ratios (a)
Greater than 100%											3		68				71
Greater than or equal to 80% to 100%	4		4		2		2		1		14		567		1		595
Less than 80%	7		4		5		5		3		80		1,575		1		1,680
No LTV ratio available	1										4		19				24
Total acquired loans	12		8		7		7		4		101		2,229		2		2,370
Total home equity	$	231	$	2,825	$	1,424	$	428	$	619	$	3,636	$	9,819	$	5,497	$	24,479
Updated FICO scores
Greater than or equal to 780	$	129	$	1,756	$	787	$	221	$	403	$	2,237	$	5,812	$	2,706	$	14,051
720 to 779	69		745		385		107		125		712		2,403		1,405		5,951
660 to 719	24		270		192		65		59		370		1,140		741		2,861
Less than 660	3		52		59		34		31		305		411		561		1,456
No FICO score available	6		2		1		1		1		12		53		84		160
Total home equity	$	231	$	2,825	$	1,424	$	428	$	619	$	3,636	$	9,819	$	5,497	$	24,479


	Term Loans by Origination Year
December 31, 2020 - In millions	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans

Current estimated LTV ratios																	.
Greater than 100%	$	8	$	44	$	18	$	15	$	9	$	88	$	580	$	279	$	1,041
Greater than or equal to 80% to 100%	517		320		59		42		25		158		1,781		591		3,493
Less than 80%	2,909		1,636		513		773		660		3,754		6,433		2,876		19,554
Total home equity	$	3,434	$	2,000	$	590	$	830	$	694	$	4,000	$	8,794	$	3,746	$	24,088
Updated FICO scores
Greater than or equal to 780	$	2,019	$	1,094	$	311	$	525	$	449	$	2,467	$	5,382	$	1,480	$	13,727
720 to 779	1,028		558		153		181		145		777		2,137		941		5,920
660 to 719	334		273		86		84		66		402		985		625		2,855
Less than 660	52		74		39		39		33		345		277		620		1,479
No FICO score available	1		1		1		1		1		9		13		80		107
Total home equity	$	3,434	$	2,000	$	590	$	830	$	694	$	4,000	$	8,794	$	3,746	$	24,088

Automobile, Credit Card, Education and Other Consumer

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

Table 52: Credit Quality Indicators for Automobile, Credit Card, Education and Other Consumer Loan Classes


	Term Loans by Origination Year
September 30, 2021 - In millions	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Updated FICO Scores
Automobile
FICO score greater than or equal to 780	$	2,828	$	1,638	$	1,551	$	624	$	281	$	116					$	7,038
720 to 779	1,694		1,157		1,225		595		248		91						5,010
660 to 719	730		705		913		505		195		65						3,113
Less than 660	220		349		658		504		198		79						2,008
No FICO score available or required (a)	45		29		13		6		3								96
Total automobile	$	5,517	$	3,878	$	4,360	$	2,234	$	925	$	351					$	17,265
Credit card
FICO score greater than or equal to 780													$	1,718	$	2	$	1,720
720 to 779													1,796		10		1,806
660 to 719													1,836		22		1,858
Less than 660													925		33		958
No FICO score available or required (a)													121		3		124
Total credit card													$	6,396	$	70	$	6,466
Education
FICO score greater than or equal to 780	$	12	$	63	$	81	$	66	$	51	$	412					$	685
720 to 779	11		31		39		31		22		175						309
660 to 719	8		9		12		12		7		75						123
Less than 660	2		1		2		2		2		27						36
No FICO score available or required (a)	12		11		9		4		1		1						38
Education loans using FICO credit metric	45		115		143		115		83		690						1,191
Other internal credit metrics											1,462						1,462
Total education	$	45	$	115	$	143	$	115	$	83	$	2,152					$	2,653
Other consumer
FICO score greater than or equal to 780	$	181	$	172	$	162	$	62	$	18	$	38	$	203	$	2	$	838
720 to 779	229		209		209		85		21		23		200				976
660 to 719	179		170		201		105		21		14		144		1		835
Less than 660	47		73		96		67		14		9		57		1		364
No FICO score available or required (a)	20		7		1		1				1		24				54
Other consumer loans using FICO credit metric	656		631		669		320		74		85		628		4		3,067
Other internal credit metrics	64		16		26		19		22		108		2,617		27		2,899
Total other consumer	$	720	$	647	$	695	$	339	$	96	$	193	$	3,245	$	31	$	5,966


	Term Loans by Origination Year
December 31, 2020 - In millions	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Updated FICO Scores
Automobile
FICO score greater than or equal to 780	$	1,807	$	1,915	$	807	$	452	$	246	$	58					$	5,285
720 to 779	1,098		1,581		789		381		167		44						4,060
660 to 719	617		1,222		684		288		109		31						2,951
Less than 660	192		776		598		240		87		29						1,922
Total automobile	$	3,714	$	5,494	$	2,878	$	1,361	$	609	$	162					$	14,218
Credit card
FICO score greater than or equal to 780													$	1,635	$	3	$	1,638
720 to 779													1,724		11		1,735
660 to 719													1,765		26		1,791
Less than 660													902		51		953
No FICO score available or required (a)													94		4		98
Total credit card													$	6,120	$	95	$	6,215
Education
FICO score greater than or equal to 780	$	34	$	90	$	74	$	59	$	50	$	428					$	735
720 to 779	24		46		38		28		20		190						346
660 to 719	15		15		14		9		6		90						149
Less than 660	3		2		3		2		2		37						49
No FICO score available or required (a)	16		10		6		3				1						36
Education loans using FICO credit metric	92		163		135		101		78		746						1,315
Other internal credit metrics											1,631						1,631
Total education	$	92	$	163	$	135	$	101	$	78	$	2,377					$	2,946
Other consumer
FICO score greater than or equal to 780	$	162	$	187	$	63	$	21	$	5	$	42	$	86	$	1	$	567
720 to 779	197		247		82		22		5		22		123				698
660 to 719	127		210		81		17		3		14		117		1		570
Less than 660	28		86		41		9		2		8		53		1		228
Other consumer loans using FICO credit metric	514		730		267		69		15		86		379		3		2,063
Other internal credit metrics	67		33		37		26		60		75		2,334		3		2,635
Total other consumer	$	581	$	763	$	304	$	95	$	75	$	161	$	2,713	$	6	$	4,698

(a)Loans with no FICO score available or required generally refers to new accounts issued to borrowers with limited credit history, accounts for which we cannot obtain an updated FICO score (e.g., recent profile changes), cards issued with a business name and/or cards secured by collateral. Management proactively assesses the risk and size of this loan category and, when necessary, takes actions to mitigate the credit risk.

Troubled Debt Restructurings

Table 53 quantifies the number of loans that were classified as TDRs as well as the change in the loans’ balance as a result of becoming a TDR during the three and nine months ended September 30, 2021 and September 30, 2020. Additionally, the table provides information about the types of TDR concessions. See Note 1 Accounting Policies and Note 4 Loans and Related Allowance for Credit Losses included in Item 8 of our 2020 Form 10-K for additional discussion of TDRs.

Table 53: Financial Impact and TDRs by Concession Type (a)


			Pre-TDR Amortized Cost Basis (b)		Post-TDR Amortized Cost Basis (c)
Three months ended September 30 Dollars in millions	Number of Loans				Principal Forgiveness	Rate Reduction		Other		Total
2021
Commercial		13	$	123				$	139	$	139
Consumer		1,340	31			$	21	7		28
Total TDRs		1,353	$	154		$	21	$	146	$	167
2020
Commercial		16	$	95		$	10	$	69	$	79
Consumer		2,769	46			26		14		40
Total TDRs		2,785	$	141		$	36	$	83	$	119


			Pre-TDR Amortized Cost Basis (b)		Post-TDR Amortized Cost Basis (c)
Nine months ended September 30 Dollars in millions	Number of Loans				Principal Forgiveness		Rate Reduction		Other		Total
2021
Commercial		43	$	320					$	315	$	315
Consumer		4,822	86				$	49	28		77
Total TDRs		4,865	$	406			$	49	$	343	$	392
2020
Commercial		58	$	304	$	39	$	10	$	231	$	280
Consumer		9,925	139				67		59		126
Total TDRs		9,983	$	443	$	39	$	77	$	290	$	406

(a) Impact of partial charge-offs at TDR date is included in this table.

(b) Represents the amortized cost basis of the loans as of the quarter end prior to TDR designation.

After a loan is determined to be a TDR, we continue to track its performance under its most recent restructured terms. We consider a TDR to have subsequently defaulted when it becomes 60 days past due after the most recent date the loan was restructured. The following table provides a summary of TDRs that subsequently defaulted during the periods presented and were classified as TDRs during the applicable 12-month period preceding September 30, 2021 and September 30, 2020:

Table 54: Subsequently Defaulted TDRs


In millions	2021		2020
Three months ended September 30	$	6	$	26
Nine months ended September 30	$	25	$	46

Allowance for Credit Losses

We maintain the ACL related to loans at levels that we believe to be appropriate to absorb expected credit losses in the portfolios as of the balance sheet date. See Note 1 Accounting Policies included in Item 8 of our 2020 Form 10-K for a discussion of the methodologies used to determine this allowance. A rollforward of the ACL related to loans follows:

Table 55: Rollforward of Allowance for Credit Losses


	Three months ended September 30												Nine months ended September 30
	2021						2020						2021						2020
In millions	Commercial		Consumer		Total		Commercial		Consumer		Total		Commercial		Consumer		Total		Commercial		Consumer		Total
Allowance for loan and lease losses
Beginning balance	$	3,812	$	1,918	$	5,730	$	3,380	$	2,548	$	5,928	$	3,337	$	2,024	$	5,361	$	1,812	$	930	$	2,742
Adoption of ASU 2016-13 (a)																			(304)		767		463
Beginning balance, adjusted	3,812		1,918		5,730		3,380		2,548		5,928		3,337		2,024		5,361		1,508		1,697		3,205
Acquisition PCD reserves	(54)		(5)		(59)								774		282		1,056
Charge-offs	(50)		(156)		(206)		(64)		(183)		(247)		(393)		(484)		(877)		(269)		(596)		(865)
Recoveries	29		96		125		26		66		92		81		263		344		65		197		262
Net (charge-offs) (b)	(21)		(60)		(81)		(38)		(117)		(155)		(312)		(221)		(533)		(204)		(399)		(603)
Provision for (recapture of) credit losses	(129)		(100)		(229)		185		(208)		(23)		(193)		(332)		(525)		2,224		925		3,149
Other	(5)		(1)		(6)		1				1		(3)		$	(1)	(4)
Ending balance	$	3,603	$	1,752	$	5,355	$	3,528	$	2,223	$	5,751	$	3,603	$	1,752	$	5,355	$	3,528	$	2,223	$	5,751
Allowance for unfunded lending related commitments (c)
Beginning balance	$	533	$	112	$	645	$	548	$	114	$	662	$	485	$	99	$	584	$	316	$	2	$	318
Adoption of ASU 2016-13 (a)																			53		126		179
Beginning balance, adjusted	533		112		645		548		114		662		485		99		584		369		128		497
Acquisition PCD reserves													43		3		46
Provision for (recapture of) credit losses	2		(1)		1		34		(7)		27		7		9		16		213		(21)		192
Ending balance	$	535	$	111	$	646	$	582	$	107	$	689	$	535	$	111	$	646	$	582	$	107	$	689
Allowance for credit losses at September 30 (d)	$	4,138	$	1,863	$	6,001	$	4,110	$	2,330	$	6,440	$	4,138	$	1,863	$	6,001	$	4,110	$	2,330	$	6,440

(a) Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2020 and our transition from an incurred loss methodology for our reserves to an expected credit loss methodology.

(b) Amounts for the nine months ended September 30, 2021 include amounts attributable to BBVA, primarily related to commercial loans, which were largely the result of required purchase accounting treatment for the BBVA acquisition.

(d) Represents the ALLL plus allowance for unfunded lending related commitments and excludes allowances for investment securities and other financial assets, which together totaled $162 million and $98 million at September 30, 2021 and 2020, respectively.

The ACL at September 30, 2021 totaled $6.0 billion, an increase of $0.1 billion since December 31, 2020. This increase was primarily attributable to the addition of reserves related to the BBVA acquisition, partially offset by declines due to portfolio changes and an improved economic outlook. The following summarizes the changes in these factors that influenced the current ACL during the nine months ended September 30, 2021:

•Reserves in the current period include expected credit losses on the acquired BBVA loan portfolio.

•Portfolio changes that drove reserve declines included improvements in credit quality along with changes in portfolio composition reflecting both shifts in the portfolio mix and declines in certain legacy PNC loan balances.

•The economic scenarios used for the period ended September 30, 2021 reflect an improved near-term economic outlook compared to the scenarios used for the period ended December 31, 2020. The overall improvement in the comparison was driven largely by improvements in both the outlook for consumer spending and the labor market, along with the impact from continued vaccine distribution, while also considering the lingering effects of COVID-19 that slowed the momentum of economic recovery in recent months, as the Delta variant continued to drive increased COVID-19 cases throughout the U.S. and abroad.