Asset Quality

6 Months Ended

Jun. 30, 2020

Credit Loss [Abstract]

Asset Quality

4. Asset Quality

ALLL

We estimate the appropriate level of the ALLL on at least a quarterly basis. The methodology is described in Note 1 ("Basis of Presentation and Accounting Policies") under the heading "Allowance for Loan and Lease Losses" of this report.

The ALLL at June 30, 2020, represents our current estimate of lifetime credit losses inherent in the loan portfolio at that date. The changes in the ALLL by loan category for the periods indicated are as follows:

Three months ended June 30, 2020:

in millions	March 31, 2020		Provision			Charge-offs			Recoveries		June 30, 2020
Commercial and Industrial	$	542	$	249		$	(71	)	$	5	$	725
Commercial real estate:
Real estate — commercial mortgage	207		87			(2		)	—		292
Real estate — construction	25		16			—			—		41
Total commercial real estate loans	232		103			(2		)	—		333
Commercial lease financing	44		14			(4		)	1		55
Total commercial loans	818		366			(77		)	6		1,113
Real estate — residential mortgage	89		14			(2		)	—		101
Home equity loans	184		14			(2		)	1		197
Consumer direct loans	116		22			(10		)	2		130
Credit cards	104		13			(12		)	2		107
Consumer indirect loans	48		16			(7		)	3		60
Total consumer loans	541		79			(33		)	8		595
Total ALLL — continuing operations	1,359		445		(a)	(110		)	14		1,708
Discontinued operations	43		—			(2		)	2		43
Total ALLL — including discontinued operations	$	1,402	$	445		$	(112	)	$	16	$	1,751

(a) Excludes a provision for losses on lending-related commitments of $37 million.

Three months ended June 30, 2019:

in millions	March 31, 2019		Provision				Charge-offs			Recoveries		June 30, 2019
Commercial and Industrial	$	530	$	43			$	(30	)	$	6	$	549
Commercial real estate:
Real estate — commercial mortgage	144		(5		)		(1		)	1		139
Real estate — construction	28		(4		)		—			—		24
Total commercial real estate loans	172		(9		)		(1		)	1		163
Commercial lease financing	35		14				(16		)	2		35
Total commercial loans	737		48				(47		)	9		747
Real estate — residential mortgage	8		—				(1		)	—		7
Home equity loans	36		4				(6		)	2		36
Consumer direct loans	33		7				(10		)	2		32
Credit cards	47		7				(12		)	2		44
Consumer indirect loans	22		6				(8		)	4		24
Total consumer loans	146		24				(37		)	10		143
Total ALLL — continuing operations	883		72			(a)	(84		)	19		890
Discontinued operations	13		2				(4		)	1		12
Total ALLL — including discontinued operations	$	896	$	74			$	(88	)	$	20	$	902

(a) Excludes a provision for losses on lending-related commitments of $2 million.

Six months ended June 30, 2020:

in millions	December 31, 2019		Impact of ASC 326 Adoption			January 1, 2020		Provision			Charge-offs			Recoveries		June 30, 2020
Commercial and Industrial	$	551	$	(141	)	$	410	$	436		$	(131	)	$	10	$	725
Commercial real estate:
Real estate — commercial mortgage	143		16			159		137			(5		)	1		292
Real estate — construction	22		(7		)	15		26			—			—		41
Total commercial real estate loans	165		9			174		163			(5		)	1		333
Commercial lease financing	35		8			43		17			(6		)	1		55
Total commercial loans	751		(124		)	627		616			(142		)	12		1,113
Real estate — residential mortgage	7		77			84		19			(2		)	—		101
Home equity loans	31		147			178		22			(6		)	3		197
Consumer direct loans	34		63			97		51			(22		)	4		130
Credit cards	47		35			82		44			(23		)	4		107
Consumer indirect loans	30		6			36		32			(16		)	8		60
Total consumer loans	149		328			477		168			(69		)	19		595
Total ALLL — continuing operations	900		204			1,104		784		(a)	(211		)	31		1,708
Discontinued operations	10		31			41		3			(4		)	3		43
Total ALLL — including discontinued operations	$	910	$	235		$	1,145	$	787		$	(215	)	$	34	$	1,751

(a) Excludes a provision for losses on lending-related commitments of $57 million.

Six months ended June 30, 2019:

in millions	December 31, 2018		Provision			Charge-offs			Recoveries		June 30, 2019
Commercial and Industrial	$	532	$	67		$	(131	)	$	10	$	549
Commercial real estate:
Real estate — commercial mortgage	142		1			(5		)	1		139
Real estate — construction	33		(5		)	—			—		24
Total commercial real estate loans	175		(4		)	(5		)	1		163
Commercial lease financing	36		20			(6		)	1		35
Total commercial loans	743		83			(142		)	12		747
Real estate — residential mortgage	7		1			(2		)	—		7
Home equity loans	35		7			(6		)	3		36
Consumer direct loans	30		19			(22		)	4		32
Credit cards	48		15			(23		)	4		44
Consumer indirect loans	20		11			(16		)	8		24
Total consumer loans	140		53			(69		)	19		143
Total ALLL — continuing operations	883		136			(211		)	31		890
Discontinued operations	14		4			(4		)	3		12
Total ALLL — including discontinued operations	$	897	$	140		$	(215	)	$	34	$	902

As described in Note 1 ("Basis of Presentation and Accounting Policies"), we estimate the ALLL using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. In our estimation of expected credit losses, we use a two year reasonable and supportable period across all products. Following this two year period in which supportable forecasts can be generated, for all modeled loan portfolios, we revert expected credit losses to a level that is consistent with our historical information by reverting the macroeconomic variables (model inputs) to their long run average. We revert to historical loss rates for less complex estimation methods for smaller portfolios. A 20 year fixed length look back period is used to calculate the long run average of the macroeconomic variables. A four quarter reversion period is used where the macroeconomic variables linearly revert to their long run average following the two year reasonable and supportable period.

We develop our reasonable and supportable forecasts using relevant data including, but not limited to, changes in economic output, unemployment rates, property values, and other factors associated with the credit losses on financial assets. Some macroeconomic variables apply to all portfolio segments, while others are more portfolio specific. The following table discloses key macroeconomic variables for each loan portfolio.

Segment	Portfolio	Key Macroeconomic Variables (a)
Commercial	Commercial and industrial	BBB corporate bond rate (spread), GDP, industrial production, and unemployment rate
	Commercial real estate	BBB corporate bond rate (spread), property and real estate price indices, and unemployment rate
	Commercial lease financing	BBB corporate bond rate (spread), GDP, and unemployment rate
Consumer	Real estate — residential mortgage	GDP, home price index, unemployment rate, and 30 year mortgage rate
	Home equity	Home price index, unemployment rate, and 30 year mortgage rate
	Consumer direct	Unemployment rate and U.S. household income
	Consumer indirect	New vehicle sales and unemployment rate
	Credit cards	Unemployment rate and U.S. household income
	Discontinued operations	Unemployment rate

(a) Variables include all transformations and interactions with other risk drivers. Additionally, variables may have varying impacts at different points in the economic cycle.

In addition to macroeconomic drivers, portfolio attributes such as remaining term, outstanding balance, risk ratings, FICO, LTV, and delinquency also drive ALLL changes. Our ALLL models were designed to capture the correlation between economic and portfolio changes. As such, evaluating shifts in individual portfolio attributes and macroeconomic variables in isolation may not be indicative of past or future performance.

Economic Outlook

As of June 30, 2020, the COVID-19 pandemic has continued to create unprecedented economic stress and uncertainty in the U.S. and globally. We leveraged the Moody’s May 2020 Consensus forecast to estimate our expected credit losses as of June 30, 2020. This forecast considered the global economic fallout from the ongoing pandemic as well as the United States' monetary and fiscal response. We determined such forecast to be a reasonable view of the outlook for the global economy given the available information at current quarter end.

The baseline scenario reflects a notable economic slowdown over the next two years in markets in which we operate. U.S. GDP was forecasted to decline 34% at an annualized rate in the second quarter of 2020 but improves in the second half of the year to decline approximately 5% in all of 2020. GDP is not expected to return to pre-pandemic levels until late 2021. The national unemployment rate forecast was adjusted to capture the expected impact from the fiscal stimulus, which had the effect of boosting personal income, partially offsetting the impact of job loss. The adjusted unemployment rate forecast peaks at 10.5% in the third quarter of 2020 and is expected to remain in the upper-single digits throughout 2021.

While cognizant of potentially more adverse economic outlooks, we also considered that the government’s stimulus efforts and programs instituted by the Federal Reserve will partially offset the economic contraction, as evidenced by the temporary disconnect between employment and personal income during the second quarter of 2020. As such, the scenario selected reasonably captured the ultimate expected loss experience for our portfolio as of June 30, 2020. To the extent we identified credit risk considerations that were not captured by the third-party economic forecast, we addressed the risk through management’s qualitative adjustments to the ALLL.

As a result of the unprecedented economic uncertainty caused by the COVID-19 pandemic, our future loss estimates may vary considerably from our June 30, 2020, assumptions.

Commercial Loan Portfolio

The ALLL from continuing operations for the commercial segment increased by $486 million, or 77.5%, from March 31, 2020. The overall increase in the allowance is driven by updated economic forecasts that capture additional deterioration triggered by the global COVID-19 pandemic.

The primary drivers in changes to the economic forecast are (1) an increase in unemployment levels, which impacts all commercial portfolios; and (2) real estate price indices, which predominately impact our commercial real estate portfolio. We continue to closely monitor oil & gas price forecasts and made several downgrades during the quarter aligning with the semi-annual borrowing base re-determination process.

As of June 30, 2020, we concluded that no ALLL is necessary for $8.0 billion in outstanding PPP loans as they are 100% guaranteed by the SBA.

Consumer Loan Portfolio

The ALLL from continuing operations for the consumer segment increased by $118 million, or 24.7%, from March 31, 2020. The overall increase in the allowance is driven by updated economic forecasts that capture additional deterioration triggered by the global COVID-19 pandemic.

The main driver in the change in the economic forecast is an increase in unemployment levels, which is most impactful for our credit card and indirect loan portfolios. Deterioration in the HPI outlook is also contributing to the ALLL increase for the residential mortgage and home equity segments. Incremental credit risk considerations as a result of the economic stress and related borrower assistance programs are addressed through qualitative adjustments in cases where these are not already captured by the economic scenarios and quantitative estimates. As it relates to changes in the ALLL due to portfolio factors, minimal shifts are largely driven by targeted portfolio growth across several segments and ongoing portfolio seasoning activity.

Credit Risk Profile

The prevalent risk characteristic for both commercial and consumer loans is the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms. Evaluation of this risk is stratified and monitored by the loan risk rating grades assigned for the commercial loan portfolios and the refreshed FICO score assigned for the consumer loan portfolios. The internal risk grades assigned to loans follow our definitions of Pass and Criticized, which are consistent with published definitions of regulatory risk classifications. Loans with a pass rating represent those loans not classified on our rating scale for problem credits, as minimal credit risk has been identified. Criticized loans are those loans that either have a potential weakness deserving management's close attention or have a well-defined weakness that may put full collection of contractual cash flows at risk. Borrower FICO scores provide information about the credit quality of our consumer loan portfolio as they provide an indication as to the likelihood that a debtor will repay its debts. The scores are obtained from a nationally recognized consumer rating agency and are presented in the tables below at the dates indicated.

Most extensions of credit are subject to loan grading or scoring. Loan grades are assigned at the time of origination, verified by credit risk management, and periodically re-evaluated thereafter. This risk rating methodology blends our judgment with quantitative modeling. Commercial loans generally are assigned two internal risk ratings. The first rating reflects the probability that the borrower will default on an obligation; the second rating reflects expected recovery rates on the credit facility. Default probability is determined based on, among other factors, the financial strength of the borrower, an assessment of the borrower’s management, the borrower’s competitive position within its industry sector, and our view of industry risk in the context of the general economic outlook. Types of exposure, transaction structure, and collateral, including credit risk mitigants, affect the expected recovery assessment.

Commercial Credit Exposure

Credit Risk Profile by Creditworthiness Category and Vintage ^(a) 

As of June 30, 2020	Term Loans												Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost Basis
	Amortized Cost Basis by Origination Year and Internal Risk Rating
in millions	2020		2019		2018		2017		2016		Prior						Total
Commercial and Industrial
Risk Rating:
Pass	$	12,011	$	6,386	$	5,004	$	3,290	$	2,393	$	3,996	$	22,395	$	141	$	55,616
Criticized (Accruing)	24		60		164		164		70		169		1,608		18		2,277
Criticized (Nonaccruing)	3		12		28		31		38		58		234		—		404
Total commercial and industrial	12,038		6,458		5,196		3,485		2,501		4,223		24,237		159		58,297
Real estate — commercial mortgage
Risk Rating:
Pass	1,087		3,303		1,955		1,040		963		3,600		1,039		37		13,024
Criticized (Accruing)	—		8		29		65		34		193		16		5		350
Criticized (Nonaccruing)	—		—		1		3		4		78		4		1		91
Total real estate — commercial mortgage	1,087		3,311		1,985		1,108		1,001		3,871		1,059		43		13,465
Real estate — construction
Risk Rating:
Pass	205		603		721		239		68		21		18		3		1,878
Criticized (Accruing)	—		4		8		—		24		3		1		—		40
Criticized (Nonaccruing)	—		—		—		—				1		—		—		1
Total real estate — construction	205		607		729		239		92		25		19		3		1,919
Commercial lease financing
Risk Rating:
Pass	503		1,275		702		640		307		1,030		—		—		4,457
Criticized (Accruing)	6		8		12		11		10		11		—		—		58
Criticized (Nonaccruing)	—		—		2		3		4		—		—		—		9
Total commercial lease financing	509		1,283		716		654		321		1,041				—		4,524
Total commercial loans	$	13,839	$	11,659	$	8,626	$	5,486	$	3,915	$	9,160	$	25,315	$	205	$	78,205

(a) Accrued interest of $121 million, presented in Other Assets on the Consolidated Balance Sheets, was excluded from the amortized cost basis disclosed in this table.

Consumer Credit Exposure

Credit Risk Profile by FICO Score and Vintage ^(a) 

As of June 30, 2020	Term Loans												Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost Basis
	Amortized Cost Basis by Origination Year and FICO Score
in millions	2020		2019		2018		2017		2016		Prior						Total
Real estate — residential mortgage
FICO Score:
750 and above	$	1,681	$	1,878	$	294	$	320	$	648	$	1,523	—		—		$	6,344
660 to 749	348		398		96		67		115		402		—		—		1,426
Less than 660	17		30		24		12		32		193		—		—		308
No Score	—		2		3		7		2		57		—		—		71
Total real estate — residential mortgage	2,046		2,308		417		406		797		2,175		—		—		8,149
Home equity loans
FICO Score:
750 and above	386		450		190		217		206		901		$	2,809	$	406	5,565
660 to 749	176		275		125		129		106		428		1,760		196		3,195
Less than 660	19		54		32		32		37		164		604		65		1,007
No Score	2		2		1		—		—		3		5		2		15
Total home equity loans	583		781		348		378		349		1,496		5,178		669		9,782
Consumer direct loans
FICO Score:
750 and above	1,113		1,214		146		44		24		69		127		—		2,737
660 to 749	274		351		101		32		18		39		270		—		1,085
Less than 660	10		43		28		11		7		13		98		—		210
No Score	23		49		26		17		9		13		158		—		295
Total consumer direct loans	1,420		1,657		301		104		58		134		653		—		4,327
Credit cards
FICO Score:
750 and above	—		—		—		—		—		—		450		—		450
660 to 749	—		—		—		—		—		—		416		—		416
Less than 660	—		—		—		—		—		—		107		—		107
No Score	—		—		—		—		—		—		1		—		1
Total credit cards	—		—		—		—		—		—		974		—		974
Consumer indirect loans
FICO Score:
750 and above	557		1,056		457		254		107		97		—		—		2,528
660 to 749	336		717		303		137		57		73		—		—		1,623
Less than 660	69		208		129		74		37		39		—		—		556
No Score	15		—		—		—		—		—		—		—		15
Total consumer indirect loans	977		1,981		889		465		201		209		—		—		4,722
Total consumer loans	$	5,026	$	6,727	$	1,955	$	1,353	$	1,405	$	4,014	$	6,805	$	669	$	27,954

(a) Accrued interest of $104 million, presented in Other Assets on the Consolidated Balance Sheets, was excluded from the amortized cost basis disclosed in this table.

Nonperforming and Past Due Loans

Our policies for determining past due loans, placing loans on nonaccrual, applying payments on nonaccrual loans, and resuming accrual of interest for our commercial and consumer loan portfolios are disclosed in Note 1 (”Basis of Presentation and Accounting Policies”) and Note 1 (“Summary of Significant Accounting Policies”) under the heading “Nonperforming Loans” beginning on page 101 of our 2019 Form 10-K.

Under the CARES Act as well as banking regulator interagency guidance, certain loan modifications to borrowers experiencing financial distress as a result of the economic impacts created by the COVID-19 pandemic may not be required to be reported as past due and nonperforming. For COVID-19 related loan modifications which occurred from March 1, 2020, through June 30, 2020, and met the loan modification criteria under either the CARES Act or the criteria specified by the regulatory agencies, we have elected to re-age to current status all commercial loans and consumer loans that are not secured by real-estate and freeze the delinquency status of consumer real estate secured loans as of the modification or forbearance grant date. At June 30, 2020, $3.9 billion of loan modifications and forbearances made under the criteria of either the CARES Act or banking regulator interagency guidance were not reported as nonperforming.

The following aging analysis of past due and current loans as of June 30, 2020, and December 31, 2019, provides further information regarding Key’s credit exposure.

Aging Analysis of Loan Portfolio^(a) 

June 30, 2020	Current		30-59 Days Past Due (b)		60-89 Days Past Due (b)		90 and Greater Days Past Due (b)		Non-performing Loans (c)		Total Past Due and Non-performing Loans (c)		Total Loans (d)
in millions
LOAN TYPE
Commercial and industrial	$	57,659	$	116	$	71	$	47	$	404	$	638	$	58,297
Commercial real estate:
Commercial mortgage	13,269		52		41		12		91		196		13,465
Construction	1,916		—		—		2		1		3		1,919
Total commercial real estate loans	15,185		52		41		14		92		199		15,384
Commercial lease financing	4,472		40		—		3		9		52		4,524
Total commercial loans	$	77,316	$	208	$	112	$	64	$	505	$	889	$	78,205
Real estate — residential mortgage	$	8,039	$	16	$	5	$	—	$	89	$	110	$	8,149
Home equity loans	9,592		31		12		6		141		190		9,782
Consumer direct loans	4,306		9		4		5		3		21		4,327
Credit cards	957		3		3		9		2		17		974
Consumer indirect loans	4,683		13		3		3		20		39		4,722
Total consumer loans	$	27,577	$	72	$	27	$	23	$	255	$	377	$	27,954
Total loans	$	104,893	$	280	$	139	$	87	$	760	$	1,266	$	106,159

(a) Amounts in table represent amortized cost and exclude loans held for sale.

(b) Accrued interest of $225 million presented in “other assets” on the Consolidated Balance Sheets is excluded from the amortized cost basis disclosed in this table.

(c) PCI loans meeting nonperforming criteria were historically excluded from Key's nonperforming disclosures. As a result of CECL implementation on January 1, 2020, PCI loans became PCD loans. PCD loans that met the definition of nonperforming are now included in nonperforming disclosures.

(d) Net of unearned income, net of deferred fees and costs, and unamortized discounts and premiums.

December 31, 2019	Current		30-59 Days Past Due (b)		60-89 Days Past Due (b)		90 and Greater Days Past Due (b)		Non-performing Loans		Total Past Due and Non-performing Loans		Purchased Credit Impaired		Total Loans
in millions
LOAN TYPE
Commercial and industrial	$	47,768	$	110	$	52	$	53	$	264	$	479	48		$	48,295
Commercial real estate:
Commercial mortgage	13,258		8		5		13		83		109		124		13,491
Construction	1,551		3		—		1		2		6		1		1,558
Total commercial real estate loans	14,809		11		5		14		85		115		125		15,049
Commercial lease financing	4,647		22		11		2		6		41		—		4,688
Total commercial loans	$	67,224	$	143	$	68	$	69	$	355	$	635	173		$	68,032
Real estate — residential mortgage	$	6,705	$	7	$	5	$	1	$	48	$	61	$	257	$	7,023
Home equity loans	10,071		30		10		5		145		190		13		10,274
Consumer direct loans	3,484		10		5		7		4		26		3		3,513
Credit cards	1,104		6		5		12		3		26		—		1,130
Consumer indirect loans	4,609		32		8		3		22		65		—		4,674
Total consumer loans	$	25,973	$	85	$	33	$	28	$	222	$	368	$	273	$	26,614
Total loans	$	93,197	$	228	$	101	$	97	$	577	$	1,003	$	446	$	94,646

(a) Amounts in table represent recorded investment and exclude loans held for sale. Recorded investment represents the principal amount of the loan increased or decreased by net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs.

(b) Past due loan amounts exclude PCI, even if contractually past due (or if we do not expect to collect principal or interest in full based on the original contractual terms), as we are currently accreting income over the remaining term of the loans.

At June 30, 2020, the approximate carrying amount of our commercial nonperforming loans outstanding represented 79% of their original contractual amount owed, total nonperforming loans outstanding represented 80% of their original contractual amount owed, and nonperforming assets in total were carried at 88% of their original contractual amount owed.

Nonperforming loans reduced expected interest income by $7 million and $13 million for the three and six months ended June 30, 2020, respectively, and $9 million and $17 million for the three and six months ended June 30, 2019, respectively.

The amortized cost basis of nonperforming loans on nonaccrual status for which there is no related allowance for credit losses was $403 million at June 30, 2020.

Collateral-dependent Financial Assets

We classify financial assets as collateral-dependent when our borrower is experiencing financial difficulty, and we expect repayment to be provided substantially through the operation or sale of the collateral. Our commercial loans have collateral that includes commercial machinery, commercial properties, and commercial real estate construction projects. Our consumer loans have collateral that includes residential real estate, automobiles, boats, and RVs.

There were no significant changes in the extent to which collateral secures our collateral-dependent financial assets during the three months ended June 30, 2020.

TDRs

We classify loan modifications as TDRs when a borrower is experiencing financial difficulties and we have granted a concession without commensurate financial, structural, or legal consideration. Our loan modifications are handled on a case-by-case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet the borrower’s financial needs. Under the CARES Act as well as banking regulator interagency guidance, certain loan modifications to borrowers experiencing financial distress as a result of the economic impacts created by the COVID-19 pandemic may not be required to be treated as TDRs under U.S GAAP.  We elected to suspend TDR accounting for $3.9 billion of COVID-19 related loan modifications as of June 30, 2020 as such loan modifications met the criteria under either the CARES Act or banking regulator interagency guidance. 

Commitments outstanding to lend additional funds to borrowers whose loan terms have been modified in TDRs were $1 million and $5 million at June 30, 2020, and December 31, 2019, respectively.

The consumer TDR other concession category in the table below primarily includes those borrowers’ debts that are discharged through Chapter 7 bankruptcy and have not been formally re-affirmed. At June 30, 2020, and December 31, 2019, the recorded investment of consumer residential mortgage loans in the process of foreclosure was approximately $63 million and $97 million, respectively.

The following table shows the post-modification outstanding recorded investment by concession type for our commercial and consumer accruing and nonaccruing TDRs that occurred during the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
in millions	2020		2019		2020		2019
Commercial loans:
Extension of Maturity Date	8		$	6	$	8	$	6
Payment or Covenant Modification/Deferment	—		18		—		18
Bankruptcy Plan Modification	—		11		—		11
Increase in new commitment or new money	4		—		4		—
Total	12		$	35	$	12	$	35
Consumer loans:
Interest rate reduction	$	1	$	4	$	9	$	8
Other	5		9		13		16
Total	$	6	$	13	$	22	$	24
Total TDRs	$	18	$	48	$	34	$	59

The following table summarizes the change in the post-modification outstanding recorded investment of our accruing and nonaccruing TDRs during the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
in millions	2020			2019			2020			2019
Balance at beginning of the period	$	340		$	365		$	347		$	399
Additions	22			54			39			68
Payments	(35		)	(19		)	(53		)	(58		)
Charge-offs	(17		)	(5		)	(23		)	(14		)
Balance at end of period	$	310		$	395		$	310		$	395

A further breakdown of TDRs included in nonperforming loans by loan category for the periods indicated are as follows:

	June 30, 2020					December 31, 2019
	Number of Loans	Pre-modification Outstanding Recorded Investment		Post-modification Outstanding Recorded Investment		Number of Loans	Pre-modification Outstanding Recorded Investment		Post-modification Outstanding Recorded Investment
dollars in millions
LOAN TYPE
Nonperforming:
Commercial and industrial	50	$	57	$	43	51	$	72	$	53
Commercial real estate:
Commercial mortgage	8	65		58		6	64		58
Total commercial real estate loans	8	65		58		6	64		58
Total commercial loans	58	122		101		57	136		111
Real estate — residential mortgage	191	16		14		181	13		11
Home equity loans	574	36		34		713	42		41
Consumer direct loans	134	2		2		172	2		2
Credit cards	290	2		2		368	2		2
Consumer indirect loans	939	16		13		1,131	19		16
Total consumer loans	2,128	72		65		2,565	78		72
Total nonperforming TDRs	2,186	194		166		2,622	214		183
Prior-year accruing:(a)
Commercial and industrial	3	2		—		6	30		25
Commercial real estate
Commercial mortgage	1	—		—		1	—		—
Total commercial real estate loans	1	—		—		1	—		—
Total commercial loans	4	2		—		7	30		25
Real estate — residential mortgage	487	36		30		493	37		31
Home equity loans	1,872	111		91		1,751	104		84
Consumer direct loans	183	4		3		139	4		3
Credit cards	602	4		2		486	3		1
Consumer indirect loans	820	31		18		714	33		20
Total consumer loans	3,964	186		144		3,583	181		139
Total prior-year accruing TDRs	3,968	188		144		3,590	211		164
Total TDRs	6,154	$	382	$	310	6,212	$	425	$	347

(a) All TDRs that were restructured prior to January 1, 2020, and January 1, 2019, and are fully accruing.

Commercial loan TDRs are considered defaulted when principal and interest payments are 90 days past due. Consumer loan TDRs are considered defaulted when principal and interest payments are more than 60 days past due. During the three months ended June 30, 2020, there were no commercial loan TDRs and 43 consumer loan TDRs with a combined recorded investment of $1 million that experienced payment defaults after modifications resulting in TDR status during 2019. During the three months ended June 30, 2019, there were no commercial loan TDRs and 102 consumer loan TDRs with a combined recorded investment of $2 million that experienced payment defaults after modifications resulting in TDR status during 2018.

During the six months ended June 30, 2020, there were no commercial loan TDRs and 127 consumer loan TDRs with a combined recorded investment of $3 million that experienced payment defaults after modifications resulting in TDR status during 2019. During the six months ended June 30, 2019, there were no commercial loan TDRs and 174 consumer loan TDRs with a combined recorded investment of $4 million that experienced payment defaults after modifications resulting in TDR status during 2018.

Liability for Credit Losses on Off Balance Sheet Exposures

The liability for credit losses inherent in unfunded lending-related commitments, such as letters of credit and unfunded loan commitments, and certain financial guarantees is included in “accrued expense and other liabilities” on the balance sheet.

Changes in the liability for credit losses on off balance sheet exposures are summarized as follows:

	Three months ended June 30,				Six months ended June 30,
in millions	2020		2019		2020		2019
Balance at the end of the prior period	$	161	$	62	$	68	$	64
Liability for credit losses on contingent guarantees at the end of the prior period	—		—		7		—
Cumulative effect from change in accounting principle (a), (b)	—		—		66		—
Balance at beginning of period	161		62		141		64
Provision (credit) for losses on off balance sheet exposures	37		2		57		—
Balance at end of period	$	198	$	64	$	198	$	64

(a) The cumulative effect from change in accounting principle relates to the January 1, 2020, adoption of ASU 2016-13.

(b)

Excludes $4 million related to the provision for other financial assets.