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Loans and Related Allowance for Credit Losses

3 Months Ended

Mar. 31, 2022

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 2021 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 42 presents the composition and delinquency status of our loan portfolio at March 31, 2022 and December 31, 2021. We manage credit risk based on the risk profile of the borrower, repayment sources, underlying collateral and other support given current events, economic conditions and expectations. We refine our practices to meet the changing environment and the continuing effects of the COVID-19 pandemic. To mitigate losses and enhance customer support, we have customer assistance, loan modification and collection programs that align with the CARES Act and subsequent interagency guidance. As a result, under the CARES Act credit reporting rules, certain loans modified due to COVID-19 related hardships are not being reported as past due as of March 31, 2022 and December 31, 2021 based on the contractual terms of the loan, even where borrowers may not be making payments on their loans during the modification period.

Table 42: 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)
March 31, 2022
Commercial
Commercial and industrial	$	156,860		$	185		$	64		$	105		$	354			$	660					$	157,874
Commercial real estate	33,723			68			41			7			116				332						34,171
Equipment lease financing	6,189			20			1						21				6						6,216
Total commercial	196,772			273			106			112			491				998						198,261
Consumer
Residential real estate	39,738			305			84			273			662			(c)	526			$	640		41,566
Home equity	23,463			41			16						57				576			89			24,185
Automobile	15,677			109			26			8			143				181						16,001
Credit card	6,327			39			28			62			129				8						6,464
Education	2,312			41			24			64			129			(c)							2,441
Other consumer	5,442			47			26			15			88				9						5,539
Total consumer	92,959			582			204			422			1,208				1,300			729			96,196
Total	$	289,731		$	855		$	310		$	534		$	1,699			$	2,298		$	729		$	294,457
Percentage of total loans	98.39		%	0.29		%	0.11		%	0.18		%	0.58		%		0.78		%	0.25		%	100.00		%
December 31, 2021
Commercial
Commercial and industrial	$	151,698		$	235		$	72		$	132		$	439			$	796					$	152,933
Commercial real estate	33,580			46			24			1			71				364						34,015
Equipment lease financing	6,095			25			2						27				8						6,130
Total commercial	191,373			306			98			133			537				1,168						193,078
Consumer
Residential real estate	37,706			379			119			328			826			(c)	517			$	663		39,712
Home equity	23,305			53			18						71				596			89			24,061
Automobile	16,252			146			40			14			200				183						16,635
Credit card	6,475			49			33			62			144				7						6,626
Education	2,400			43			25			65			133			(c)							2,533
Other consumer	5,644			35			22			17			74				9						5,727
Total consumer	91,782			705			257			486			1,448				1,312			752			95,294
Total	$	283,155		$	1,011		$	355		$	619		$	1,985			$	2,480		$	752		$	288,372
Percentage of total loans	98.19		%	0.35		%	0.12		%	0.21		%	0.69		%		0.86		%	0.26		%	100.00		%

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

(b)The accrued interest associated with our loan portfolio totaled $0.7 billion at both March 31, 2022 and December 31, 2021. 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 $0.3 billion and $0.1 billion at March 31, 2022. Comparable amounts at December 31, 2021 were $0.4 billion and $0.1 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 $0.7 billion at both March 31, 2022 and December 31, 2021.

(f)Collateral dependent loans totaled $1.4 billion and $1.7 billion at March 31, 2022 and December 31, 2021, respectively.

At March 31, 2022, we pledged $25.0 billion of commercial and other loans to the Federal Reserve Bank and $87.3 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, 2021 were $25.7 billion and $66.2 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 2021 Form 10-K for additional information on our nonperforming loan and lease policies.

The following table presents our nonperforming assets as of March 31, 2022 and December 31, 2021, respectively:

Table 43: Nonperforming Assets


Dollars in millions	March 31 2022			December 31 2021
Nonperforming loans
Commercial	$	998		$	1,168
Consumer (a)	1,300			1,312
Total nonperforming loans (b)	2,298			2,480
OREO and foreclosed assets	26			26
Total nonperforming assets	$	2,324		$	2,506
Nonperforming loans to total loans	0.78		%	0.86		%
Nonperforming assets to total loans, OREO and foreclosed assets	0.79		%	0.87		%
Nonperforming assets to total assets	0.43		%	0.45		%

(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 $0.9 billion at March 31, 2022 and primarily include loans with a fair value of collateral that exceeds the amortized cost basis. The comparable amount at December 31, 2021 was $1.0 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 2021 Form 10-K and the Troubled Debt Restructurings section of this Note 4 for additional information on TDRs.

Total nonperforming loans in Table 43 include TDRs of $0.9 billion and $1.0 billion at March 31, 2022 and December 31, 2021, respectively. TDRs that are performing, including consumer credit card TDR loans, are excluded from nonperforming loans and totaled $0.6 billion at both March 31, 2022 and December 31, 2021.

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 2021 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 44: Commercial Credit Quality Indicators (a)


	Term Loans by Origination Year
March 31, 2022 In millions	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Commercial and industrial
Pass Rated	$	6,934	$	19,775	$	11,724	$	10,502	$	6,410	$	18,188	$	77,672	$	82	$	151,287
Criticized	79		233		331		840		520		1,229		3,327		28		6,587
Total commercial and industrial	7,013		20,008		12,055		11,342		6,930		19,417		80,999		110		157,874
Commercial real estate
Pass Rated	2,013		3,704		4,025		6,254		3,837		9,318		376				29,527
Criticized	102		158		315		973		990		2,057		49				4,644
Total commercial real estate	2,115		3,862		4,340		7,227		4,827		11,375		425				34,171
Equipment lease financing
Pass Rated	368		1,152		1,128		878		620		1,845						5,991
Criticized	9		52		61		48		30		25						225
Total equipment lease financing	377		1,204		1,189		926		650		1,870						6,216
Total commercial	$	9,505	$	25,074	$	17,584	$	19,495	$	12,407	$	32,662	$	81,424	$	110	$	198,261


	Term Loans by Origination Year
December 31, 2021 In millions	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Commercial and industrial
Pass Rated	$	27,104	$	12,053	$	10,731	$	6,698	$	6,355	$	11,759	$	71,230	$	90	$	146,020
Criticized	283		368		815		649		496		824		3,448		30		6,913
Total commercial and industrial	27,387		12,421		11,546		7,347		6,851		12,583		74,678		120		152,933
Commercial real estate
Pass Rated	4,110		4,109		6,355		4,234		2,634		7,562		436				29,440
Criticized	294		298		999		820		566		1,552		46				4,575
Total commercial real estate	4,404		4,407		7,354		5,054		3,200		9,114		482				34,015
Equipment lease financing
Pass Rated	1,212		1,190		942		682		507		1,410						5,943
Criticized	37		54		41		29		19		7						187
Total equipment lease financing	1,249		1,244		983		711		526		1,417						6,130
Total commercial	$	33,040	$	18,072	$	19,883	$	13,112	$	10,577	$	23,114	$	75,160	$	120	$	193,078

(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 March 31, 2022 and December 31, 2021.

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 and home equity loan classes:

Table 45: Credit Quality Indicators for Residential Real Estate and Home Equity Loan Classes


	Term Loans by Origination Year
March 31, 2022 In millions	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Residential real estate
Current estimated LTV ratios
Greater than 100%			$	30	$	56	$	16	$	10	$	61					$	173
Greater than or equal to 80% to 100%	$	780	659		497		176		75		216						2,403
Less than 80%	2,628		16,282		7,422		2,562		910		8,395						38,199
No LTV available			51		12				1		14						78
Government insured or guaranteed loans			4		35		35		27		612						713
Total residential real estate	$	3,408	$	17,026	$	8,022	$	2,789	$	1,023	$	9,298					$	41,566
Updated FICO scores
Greater than or equal to 780	$	1,551	$	11,744	$	5,524	$	1,780	$	531	$	4,681					$	25,811
720 to 779	1,712		4,217		1,678		566		219		1,820						10,212
660 to 719	142		812		456		226		127		906						2,669
Less than 660	1		113		104		105		75		901						1,299
No FICO score available	2		136		225		77		44		378						862
Government insured or guaranteed loans			4		35		35		27		612						713
Total residential real estate	$	3,408	$	17,026	$	8,022	$	2,789	$	1,023	$	9,298					$	41,566
Home equity
Current estimated LTV ratios
Greater than 100%			$	1	$	19	$	12	$	3	$	25	$	319	$	101	$	480
Greater than or equal to 80% to 100%			6		84		51		9		58		838		830		1,876
Less than 80%			190		2,309		1,097		339		3,441		7,560		6,893		21,829
Total home equity			$	197	$	2,412	$	1,160	$	351	$	3,524	$	8,717	$	7,824	$	24,185
Updated FICO scores
Greater than or equal to 780			$	117	$	1,488	$	622	$	183	$	2,159	$	5,208	$	4,162	$	13,939
720 to 779			54		629		321		81		700		2,160		1,995		5,940
660 to 719			23		236		161		53		360		1,015		983		2,831
Less than 660			3		56		55		33		295		315		608		1,365
No FICO score available					3		1		1		10		19		76		110
Total home equity			$	197	$	2,412	$	1,160	$	351	$	3,524	$	8,717	$	7,824	$	24,185


	Term Loans by Origination Year
December 31, 2021 In millions	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Residential real estate
Current estimated LTV ratios
Greater than 100%	$	10	$	52	$	21	$	12	$	13	$	77					$	185
Greater than or equal to 80% to 100%	1,460		560		221		86		66		190						2,583
Less than 80%	15,213		7,822		2,834		1,004		1,570		7,385						35,828
No LTV available	275		6		1		1				22						305
Government insured or guaranteed loans	3		33		37		30		39		669						811
Total residential real estate	$	16,961	$	8,473	$	3,114	$	1,133	$	1,688	$	8,343					$	39,712
Updated FICO scores
Greater than or equal to 780	$	11,110	$	5,898	$	1,996	$	596	$	1,029	$	4,052					$	24,681
720 to 779	4,921		1,735		643		247		345		1,619						9,510
660 to 719	717		463		255		136		133		796						2,500
Less than 660	83		103		96		75		94		848						1,299
No FICO score available	127		241		87		49		48		359						911
Government insured or guaranteed loans	3		33		37		30		39		669						811
Total residential real estate	$	16,961	$	8,473	$	3,114	$	1,133	$	1,688	$	8,343					$	39,712
Home equity
Current estimated LTV ratios
Greater than 100%	$	1	$	16	$	14	$	3	$	2	$	25	$	329	$	90	$	480
Greater than or equal to 80% to 100%	7		85		62		13		11		66		990		674		1,908
Less than 80%	204		2,487		1,189		370		549		3,200		7,868		5,806		21,673
Total home equity	$	212	$	2,588	$	1,265	$	386	$	562	$	3,291	$	9,187	$	6,570	$	24,061
Updated FICO scores
Greater than or equal to 780	$	124	$	1,619	$	692	$	201	$	364	$	2,035	$	5,490	$	3,320	$	13,845
720 to 779	61		666		348		96		116		642		2,283		1,679		5,891
660 to 719	23		248		167		56		53		327		1,071		872		2,817
Less than 660	4		53		57		32		28		277		325		615		1,391
No FICO score available			2		1		1		1		10		18		84		117
Total home equity	$	212	$	2,588	$	1,265	$	386	$	562	$	3,291	$	9,187	$	6,570	$	24,061

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


	Term Loans by Origination Year
March 31, 2022 In millions	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Updated FICO Scores
Automobile
FICO score greater than or equal to 780	$	920	$	2,682	$	1,302	$	1,160	$	432	$	215					$	6,711
720 to 779	405		1,984		856		879		410		193						4,727
660 to 719	159		974		536		671		347		151						2,838
Less than 660	9		318		306		536		380		176						1,725

Total automobile	$	1,493	$	5,958	$	3,000	$	3,246	$	1,569	$	735					$	16,001
Credit card
FICO score greater than or equal to 780													$	1,797	$	2	$	1,799
720 to 779													1,779		8		1,787
660 to 719													1,793		18		1,811
Less than 660													918		30		948
No FICO score available or required (a)													116		3		119
Total credit card													$	6,403	$	61	$	6,464
Education
FICO score greater than or equal to 780	$	1	$	56	$	55	$	69	$	57	$	404					$	642
720 to 779	4		29		29		36		29		176						303
660 to 719	4		9		9		11		10		75						118
Less than 660	1		1		2		2		2		28						36
No FICO score available or required (a)	4		9		9		6		2		1						31
Education loans using FICO credit metric	14		104		104		124		100		684						1,130
Other internal credit metrics											1,311						1,311
Total education	$	14	$	104	$	104	$	124	$	100	$	1,995					$	2,441
Other consumer
FICO score greater than or equal to 780	$	49	$	166	$	102	$	94	$	34	$	34	$	76			$	555
720 to 779	64		214		136		129		51		27		109				730
660 to 719	64		164		123		136		65		20		107				679
Less than 660			56		56		71		43		12		47				285

Other consumer loans using FICO credit metric	177		600		417		430		193		93		339				2,249
Other internal credit metrics	27		54		24		42		16		60		3,038		29		3,290
Total other consumer	$	204	$	654	$	441	$	472	$	209	$	153	$	3,377	$	29	$	5,539


(Continued from previous page)	Term Loans by Origination Year
December 31, 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	$	3,247	$	1,496	$	1,380	$	533	$	226	$	79					$	6,961
720 to 779	2,119		983		1,030		499		195		62						4,888
660 to 719	969		609		772		413		155		44						2,962
Less than 660	277		315		583		429		162		58						1,824
Total automobile	$	6,612	$	3,403	$	3,765	$	1,874	$	738	$	243					$	16,635
Credit card
FICO score greater than or equal to 780													$	1,815	$	2	$	1,817
720 to 779													1,836		9		1,845
660 to 719													1,856		19		1,875
Less than 660													943		29		972
No FICO score available or required (a)													114		3		117
Total credit card													$	6,564	$	62	$	6,626
Education
FICO score greater than or equal to 780	$	37	$	60	$	77	$	62	$	48	$	392					$	676
720 to 779	20		29		37		30		21		160						297
660 to 719	7		9		11		11		7		73						118
Less than 660	1		1		2		2		2		25						33
No FICO score available or required (a)	11		10		7		2				1						31
Education loans using FICO credit metric	76		109		134		107		78		651						1,155
Other internal credit metrics											1,378						1,378
Total education	$	76	$	109	$	134	$	107	$	78	$	2,029					$	2,533
Other consumer
FICO score greater than or equal to 780	$	199	$	131	$	123	$	47	$	12	$	32	$	95	$	1	$	640
720 to 779	250		172		167		68		15		19		125				816
660 to 719	190		145		165		82		16		11		122				731
Less than 660	50		62		85		54		10		6		50		1		318
Other consumer loans using FICO credit metric	689		510		540		251		53		68		392		2		2,505
Other internal credit metrics	87		31		35		23		22		48		2,955		21		3,222
Total other consumer	$	776	$	541	$	575	$	274	$	75	$	116	$	3,347	$	23	$	5,727

(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 47 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 months ended March 31, 2022 and March 31, 2021. 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 2021 Form 10-K for additional discussion of TDRs.

Table 47: Financial Impact and TDRs by Concession Type (a)


			Pre-TDR Amortized Cost Basis (b)		Post-TDR Amortized Cost Basis (c)
Three months ended March 31 Dollars in millions	Number of Loans				Principal Forgiveness	Rate Reduction		Other		Total
2022
Commercial		12	$	53				$	46	$	46
Consumer		2,895	36			$	26	7		33
Total TDRs		2,907	$	89		$	26	$	53	$	79
2021
Commercial		19	$	93				$	94	$	94
Consumer		2,096	32			$	16	12		28
Total TDRs		2,115	$	125		$	16	$	106	$	122

(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. Loans that were both (i) classified as TDRs within the last twelve months from the balance sheet date, and (ii) subsequently defaulted during the three months ended March 31, 2022 and March 31, 2021 totaled $9 million and $15 million, respectively.

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 2021 Form 10-K for a discussion of the methodologies used to determine this allowance. A rollforward of the ACL related to loans follows:

Table 48: Rollforward of Allowance for Credit Losses


	Three months ended March 31
	2022						2021
In millions	Commercial		Consumer		Total		Commercial		Consumer		Total
Allowance for loan and lease losses
Beginning balance	$	3,185	$	1,683	$	4,868	$	3,337	$	2,024	$	5,361
Charge-offs	(52)		(199)		(251)		(69)		(174)		(243)
Recoveries	34		80		114		18		79		97
Net (charge-offs)	(18)		(119)		(137)		(51)		(95)		(146)
Provision for (recapture of) credit losses	(163)		(9)		(172)		(204)		(298)		(502)
Other	(1)				(1)		1				1
Ending balance	$	3,003	$	1,555	$	4,558	$	3,083	$	1,631	$	4,714
Allowance for unfunded lending related commitments (a)
Beginning balance	$	564	$	98	$	662	$	485	$	99	$	584
Provision for (recapture of) credit losses	23		(46)		(23)		(82)		5		(77)
Ending balance	$	587	$	52	$	639	$	403	$	104	$	507
Allowance for credit losses at March 31 (b)	$	3,590	$	1,607	$	5,197	$	3,486	$	1,735	$	5,221

(a) See Note 8 Commitments for additional information about the underlying commitments related to this allowance.

(b) Represents the ALLL plus allowance for unfunded lending related commitments and excludes allowances for investment securities and other financial assets, which together totaled $158 million and $136 million at March 31, 2022 and 2021, respectively.

The ACL related to loans at March 31, 2022 totaled $5.2 billion, a decrease of $0.3 billion since December 31, 2021. This decline was primarily driven by the impacts from improved COVID-19 related economic conditions. The following summarizes the changes in these factors that influenced the ACL during the three months ended March 31, 2022:

•The improved economic conditions were reflected in the overall reduction of qualitative factor reserves at March 31, 2022 and were attributable to the recovery seen in specific high-risk segments of our commercial and consumer portfolios impacted by the pandemic. This reduction was partially offset by increased reserves that were added to account for the elevated risk associated with supply chain disruptions.