Outstanding Loans and Leases and Allowance for Credit Losses |
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| Outstanding Loans and Leases and Allowance for Credit Losses |
Outstanding Loans and Leases and Allowance for Credit Losses The following tables present total outstanding loans and leases and an aging analysis for the Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments, by class of financing receivables, at March 31, 2025 and December 31, 2024.
(1)Consumer real estate loans 30-59 days past due includes fully-insured loans of $167 million and nonperforming loans of $166 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $60 million and nonperforming loans of $92 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $234 million and nonperforming loans of $673 million. Consumer real estate loans current or less than 30 days past due includes $1.5 billion, and direct/indirect consumer includes $52 million of nonperforming loans.
(2)Total outstandings primarily includes auto and specialty lending loans and leases of $54.1 billion, U.S. securities-based lending loans of $49.3 billion and non-U.S. consumer loans of $2.8 billion.
(3)Consumer loans accounted for under the fair value option includes residential mortgage loans of $60 million and home equity loans of $161 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $4.0 billion and non-U.S. commercial loans of $1.2 billion. For more information, see Note 14 – Fair Value Measurements and Note 15 – Fair Value Option.
(4)Total outstandings includes U.S. commercial real estate loans of $59.7 billion and non-U.S. commercial real estate loans of $5.8 billion.
(5)Total outstandings includes loans and leases pledged as collateral of $26.5 billion. The Corporation also pledged $310.3 billion of loans with no related outstanding borrowings to secure potential borrowing capacity with the Federal Reserve Bank and Federal Home Loan Bank.
(1)Consumer real estate loans 30-59 days past due includes fully-insured loans of $188 million and nonperforming loans of $174 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $71 million and nonperforming loans of $107 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $229 million and nonperforming loans of $686 million. Consumer real estate loans current or less than 30 days past due includes $1.5 billion, and direct/indirect consumer includes $54 million of nonperforming loans.
(2)Total outstandings primarily includes auto and specialty lending loans and leases of $54.9 billion, U.S. securities-based lending loans of $48.7 billion and non-U.S. consumer loans of $2.8 billion.
(3)Consumer loans accounted for under the fair value option includes residential mortgage loans of $59 million and home equity loans of $162 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $2.8 billion and non-U.S. commercial loans of $1.3 billion. For more information, see Note 14 – Fair Value Measurements and Note 15 – Fair Value Option.
(4)Total outstandings includes U.S. commercial real estate loans of $59.6 billion and non-U.S. commercial real estate loans of $6.1 billion.
(5)Total outstandings includes loans and leases pledged as collateral of $26.8 billion. The Corporation also pledged $305.2 billion of loans with no related outstanding borrowings to secure potential borrowing capacity with the Federal Reserve Bank and Federal Home Loan Bank.
The Corporation has entered into long-term credit protection agreements with FNMA and FHLMC on loans totaling $7.8 billion and $8.0 billion at March 31, 2025 and December 31, 2024, providing full credit protection on residential mortgage loans that become severely delinquent. All of these loans are individually insured, and therefore the Corporation does not record an allowance for credit losses related to these loans.
Nonperforming Loans and Leases
Nonperforming loans were $6.1 billion and $6.0 billion at March 31, 2025 and December 31, 2024. Commercial nonperforming loans were $3.5 billion and $3.3 billion at March 31, 2025 and December 31, 2024, primarily comprised of commercial real estate and U.S. commercial. Consumer
nonperforming loans were $2.6 billion at both March 31, 2025 and December 31, 2024, primarily comprised of residential mortgage.
The following table presents the Corporation’s nonperforming loans and leases and loans accruing past due 90 days or more at March 31, 2025 and December 31, 2024. Nonperforming loans held-for-sale (LHFS) are excluded from nonperforming loans and leases as they are recorded at either fair value or the lower of cost or fair value. For more information on the criteria for classification as nonperforming, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2024 Annual Report on Form 10-K.
(1)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At March 31, 2025 and December 31, 2024 residential mortgage included $124 million and $119 million of loans on which interest had been curtailed by the Federal Housing Administration (FHA), and therefore were no longer accruing interest, although principal was still insured, and $110 million for both periods of loans on which interest was still accruing.
(2)Primarily relates to loans for which the estimated fair value of the underlying collateral less any costs to sell is greater than the amortized cost of the loans as of the reporting date.
n/a = not applicable
Credit Quality Indicators
The Corporation monitors credit quality within its Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments based on primary credit quality indicators. For more information on the portfolio segments, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2024 Annual Report on Form 10-K. Within the Consumer Real Estate portfolio segment, the primary credit quality indicators are refreshed loan-to-value (LTV) and refreshed Fair Isaac Corporation (FICO) score. Refreshed LTV measures the carrying value of the loan as a percentage of the value of the property securing the loan, refreshed quarterly. Home equity loans are evaluated using combined loan-to-value (CLTV), which measures the carrying value of the Corporation’s loan and available line of credit combined with any outstanding senior liens against the property as a percentage of the value of the property securing the loan, refreshed quarterly. FICO score measures the creditworthiness of the borrower based on the financial obligations of the borrower and the borrower’s credit history. FICO scores are typically refreshed quarterly or more frequently. Certain borrowers (e.g., borrowers that have had debts discharged in a
bankruptcy proceeding) may not have their FICO scores updated. FICO scores are also a primary credit quality indicator for the Credit Card and Other Consumer portfolio segment and the business card portfolio within U.S. small business commercial. Within the Commercial portfolio segment, loans are evaluated using the internal classifications of pass rated or reservable criticized as the primary credit quality indicators. The term reservable criticized refers to those commercial loans that are internally classified or listed by the Corporation as Special Mention, Substandard or Doubtful, which are asset quality categories defined by regulatory authorities. These assets have an elevated level of risk and may have a high probability of default or total loss. Pass rated refers to all loans not considered reservable criticized. In addition to these primary credit quality indicators, the Corporation uses other credit quality indicators for certain types of loans.
The following tables present certain credit quality indicators and gross charge-offs for the Corporation's Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments by year of origination, except for revolving loans and revolving loans that were modified into term loans, which are shown on an aggregate basis at March 31, 2025.
(1)Includes reverse mortgages of $488 million and home equity loans of $276 million, which are no longer originated.
(1)Represents loans that were modified into term loans.
(2)Other internal credit metrics may include delinquency status, geography or other factors.
(3)Direct/indirect consumer includes $52.1 billion of securities-based lending, which is typically supported by highly liquid collateral with market value greater than or equal to the outstanding loan balance and therefore has minimal credit risk at March 31, 2025.
(1)Excludes $5.2 billion of loans accounted for under the fair value option at March 31, 2025.
(2)Excludes U.S. Small Business Card loans of $11.0 billion. Refreshed FICO scores for this portfolio are $740 million for less than 620; $617 million for greater than or equal to 620 and less than 660; $3.6 billion for greater than or equal to 660 and less than 740; and $6.0 billion greater than or equal to 740. Excludes U.S. Small Business Card loans gross charge-offs of $138 million.
The following tables present certain credit quality indicators for the Corporation's Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments by year of origination, except for revolving loans and revolving loans that were modified into term loans, which are shown on an aggregate basis at December 31, 2024.
(1)Includes reverse mortgages of $500 million and home equity loans of $287 million, which are no longer originated.
(1)Represents loans that were modified into term loans.
(2)Other internal credit metrics may include delinquency status, geography or other factors.
(3)Direct/indirect consumer includes $51.4 billion of securities-based lending, which is typically supported by highly liquid collateral with market value greater than or equal to the outstanding loan balance and therefore has minimal credit risk at December 31, 2024.
(1) Excludes $4.0 billion of loans accounted for under the fair value option at December 31, 2024.
(2) Excludes U.S. Small Business Card loans of $10.6 billion. Refreshed FICO scores for this portfolio are $699 million for less than 620; $600 million for greater than or equal to 620 and less than 660; $3.6 billion for greater than or equal to 660 and less than 740; and $5.8 billion greater than or equal to 740. Excludes U.S. Small Business Card loans gross charge-offs of $489 million.
During the three months ended March 31, 2025, commercial reservable criticized utilized exposure increased to $27.7 billion at March 31, 2025 from $26.5 billion (to 4.12 percent from 4.01 percent of total commercial reservable utilized exposure) at December 31, 2024, primarily driven by commercial real estateLoan Modifications to Borrowers in Financial Difficulty
As part of its credit risk management, the Corporation may modify a loan agreement with a borrower experiencing financial difficulties through a refinancing or restructuring of the borrower’s loan agreement (modification programs).
Consumer Real Estate
The following modification programs are offered for consumer real estate loans to borrowers experiencing financial difficulties.
Forbearance and Other Payment Plans: Forbearance plans generally consist of the Corporation suspending the borrower’s payments for a defined period, with those payments then due over a defined period of time or at the conclusion of the forbearance period. The aging status of a loan is generally frozen when it enters into a forbearance plan. If a borrower is unable to fulfill their obligations under the forbearance plans, they may be offered a trial offer or permanent modification.
Trial Offer and Permanent Modifications: Trial offer for modification plans generally consist of the Corporation offering a borrower modified loan terms that reduce their contractual payments temporarily over a -to-four-month trial period. If the customer successfully makes the modified payments during the trial period and formally accepts the modified terms, the modified loan terms become permanent. Some borrowers may enter into permanent modifications without a trial period. In a permanent modification, the borrower’s payment terms are typically modified in more than one manner, but generally include a term extension and an interest rate reduction. At times, the permanent modification may also include principal forgiveness and/or a deferral of past due principal and interest amounts to the end of the loan term. The combinations utilized are based on modifying the terms that give the borrower an improved ability to meet the contractual obligations. The term extensions granted for residential mortgage and home equity permanent modifications vary widely and can be up to 30 years, but most are in the range of 1 to 20 years. Principal forgiveness and payment deferrals were insignificant during the three months ended March 31, 2025 and 2024.
The table below provides the ending amortized cost of the Corporation’s consumer real estate loans modified during the three months ended March 31, 2025 and 2024.
The table below presents the financial effect of modified consumer real estate loans.
n/m = not meaningful
For consumer real estate borrowers in financial difficulty that received a forbearance, trial or permanent modification, there were no commitments to lend additional funds at March 31, 2025 and 2024.
The Corporation tracks the performance of modified loans to assess effectiveness of modification programs. During the three months ended March 31, 2025 and 2024, defaults of residential and home equity loans that had been modified within
12 months were insignificant. The table below provides aging information as of March 31, 2025 and 2024 for consumer real estate loans that were modified over the last 12 months.
Consumer real estate foreclosed properties totaled $56 million and $60 million at March 31, 2025 and December 31, 2024. The carrying value of consumer real estate loans, including fully-insured loans, for which formal foreclosure proceedings were in process at March 31, 2025 and December 31, 2024, was $467 million and $633 million. During the three months ended March 31, 2025 and 2024, the Corporation reclassified $12 million and $30 million of consumer real estate loans to foreclosed properties or, for properties acquired upon foreclosure of certain government-guaranteed loans (principally FHA-insured loans), to other assets. The reclassifications represent non-cash investing activities and, accordingly, are not reflected in the Consolidated Statement of Cash Flows.
Credit Card and Other Consumer
Credit card and other consumer loans are primarily modified by placing the customer on a fixed payment plan with a significantly reduced fixed interest rate, with terms ranging from 6 months to 72 months, most of which had a 60-month term at March 31, 2025. In certain circumstances, the Corporation will forgive a portion of the outstanding balance if the borrower makes payments up to a set amount. The Corporation makes modifications directly with borrowers for loans held by the Corporation (internal programs) as well as through third-party renegotiation agencies that provide solutions to customers’ entire unsecured debt structures (external programs). The March 31, 2025 amortized cost of credit card and other consumer loans that were modified through these programs during the three months ended March 31, 2025 and 2024 and was $217 million and $231 million. The financial effect of modifications resulted in a weighted-average interest rate reduction of 18.37 percent compared to 19.80 percent and, principal forgiveness of $25 million and $28 million during the three months ended March 31, 2025 and 2024.
The Corporation tracks the performance of modified loans to assess effectiveness of modification programs. As of March 31, 2025 and 2024, defaults of credit card and other consumer loans that had been modified within 12 months were insignificant. At March 31, 2025, modified credit card and other consumer loans to borrowers experiencing financial difficulty over the last 12 months totaled $632 million, of which $530 million were current, $54 million were 30-89 days past due, and $48 million were greater than 90 days past due. At March 31, 2024, modified credit card and other consumer loans to borrowers experiencing financial difficulty over the last 12 months totaled $658 million, of which $537 million were current, $62 million were 30-89 days past due, and $59 million were greater than 90 days past due.
Commercial Loans
Modifications of loans to commercial borrowers experiencing financial difficulty are designed to reduce the Corporation’s loss exposure while providing borrowers with an opportunity to work through financial difficulties, often to avoid foreclosure or bankruptcy. Each modification is unique, reflects the borrower’s individual circumstances and is designed to benefit the borrower while mitigating the Corporation’s risk exposure. Commercial modifications are primarily term extensions and payment forbearances. Payment forbearances involve the Corporation forbearing its contractual right to collect certain payments or payment in full (maturity forbearance) for a defined period of time. Reductions in interest rates and principal forgiveness occur infrequently for commercial borrowers. Principal forgiveness may occur in connection with foreclosure, short sales or other settlement agreements, leading to termination or sale of the loan. The following table provides the ending amortized cost of commercial loans modified during the three months ended March 31, 2025 and 2024.
Term extensions granted increased the weighted-average life of the impacted loans by 1.6 years and 1.3 years for the three months ended March 31, 2025 and 2024. The weighted-average duration of loan payments deferred under the Corporation’s commercial loan forbearance program was 8 months and 10 months during the three months ended March 31, 2025 and 2024. The deferral period for loan payments can vary, but are mostly in the range of 8 months to 24 months. Modifications of loans to troubled borrowers for Commercial Lease Financing and U.S. Small Business Commercial were not significant during the three months ended March 31, 2025 and 2024.
The Corporation tracks the performance of modified loans to assess effectiveness of modification programs. During the three months ended March 31, 2025, defaults of commercial loans that had been modified within the last 12 months were $444 million. During the three months ended March 31, 2024, defaults of commercial loans that had been modified within the last 12 months were insignificant. The table below provides aging information as of March 31, 2025 and 2024 for commercial loans that were modified over the last 12 months.
For the three months ended March 31, 2025 and 2024, the Corporation had commitments to lend $86 million and $717 million to commercial borrowers experiencing financial difficulty whose loans were modified during the period.
Loans Held-for-sale
The Corporation had LHFS of $6.9 billion and $9.5 billion at March 31, 2025 and December 31, 2024. Cash and non-cash proceeds from sales and paydowns of loans originally classified as LHFS were $13.9 billion and $3.3 billion for the three months ended March 31, 2025 and 2024. Cash used for originations and purchases of LHFS totaled $10.5 billion and $5.8 billion for the three months ended March 31, 2025 and 2024. For the three months ended March 31, 2025 and 2024, non-cash net transfers into LHFS were insignificant.
Accrued Interest Receivable
Accrued interest receivable for loans and leases and loans held-for-sale was $4.3 billion at both March 31, 2025 and December 31, 2024 and is reported in on the Consolidated Balance Sheet.
Outstanding credit card loan balances include unpaid principal, interest and fees. Credit card loans are not classified
as nonperforming but are charged off no later than the end of the month in which the account becomes 180 days past due, within 60 days after receipt of notification of death or bankruptcy, or upon confirmation of fraud. During the three months ended March 31, 2025 and 2024 the Corporation reversed $231 million and $205 million of interest and fee income against the income statement line item in which it was originally recorded upon charge-off of the principal balance of the loan.
For the outstanding residential mortgage, home equity, direct/indirect consumer and commercial loan balances classified as nonperforming during the three months ended March 31, 2025 and 2024, interest and fee income reversed at the time the loans were classified as nonperforming was not significant. For more information on the Corporation's nonperforming loan policies, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2024 Annual Report on Form 10-K.
Allowance for Credit Losses
The allowance for credit losses is estimated using quantitative and qualitative methods that consider a variety of factors, such
as historical loss experience, the current credit quality of the portfolio and an economic outlook over the life of the loan. Qualitative reserves cover losses that are expected but, in the Corporation's assessment, may not adequately be reflected in the quantitative methods or the economic assumptions. The Corporation incorporates forward-looking information through the use of several macroeconomic scenarios in determining the weighted economic outlook over the forecasted life of the assets. These scenarios include key macroeconomic variables such as gross domestic product, unemployment rate, real estate prices and corporate bond spreads. The scenarios that are chosen each quarter and the weighting given to each scenario depend on a variety of factors including recent economic events, leading economic indicators, internal and third-party economist views, and industry trends. For more information on the Corporation's credit loss accounting policies including the allowance for credit losses, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2024 Annual Report on Form 10-K.
The March 31, 2025 estimate for allowance for credit losses was based on various economic scenarios, including a baseline scenario derived from consensus estimates, an adverse scenario reflecting an extended moderate recession, a downside scenario reflecting continued inflation and interest rates with minimal rate cuts, a tail risk scenario similar to the severely adverse scenario used in stress testing and an upside scenario that considers the potential for improvement above the baseline scenario. The overall weighted economic outlook of the above scenarios has deteriorated modestly compared to the weighted economic outlook estimated as of December 31, 2024. The weighted economic outlook for the Corporation’s modeled reserves assumes that the U.S. average unemployment rate will be just below five percent in the fourth quarter of 2025 and will remain near this level through the fourth quarter of 2026. The weighted economic outlook assumes steady growth with U.S. real gross domestic product forecasted to grow at 1.0 percent and 1.7 percent year-over-year
in the fourth quarters of 2025 and 2026. The above factors are used in the Corporation’s modeled reserves. As previously disclosed, the allowance for credit losses is determined using a combination of quantitative (i.e., modeled reserves) and qualitative methods (i.e., imprecision and judgmental reserves). The qualitative methods, which comprise a portion of the total allowance for credit losses, incorporate those risks that are not fully captured in the modeled reserves. For example, as of March 31, 2025, the risks captured in the qualitative adjustments have the equivalent impact of a 100 basis point level shift in the Corporation’s weighted-average unemployment rate. There were no significant changes to the qualitative reserves at March 31, 2025 and December 31, 2024.
The allowance for credit losses increased $30 million from December 31, 2024 to $14.4 billion at March 31, 2025. The change in the allowance for credit losses was comprised of a net increase of $16 million in the allowance for loan and lease losses and an increase of $14 million in the reserve for unfunded lending commitments. The increase in the allowance for credit losses was attributed to increases in the commercial portfolio of $48 million and the consumer real estate portfolio of $47 million, partially offset by a decrease in the credit card and other consumer portfolios of $65 million. The provision for credit losses increased $161 million to $1.5 billion for the three months ended March 31, 2025 compared to the same period in 2024. The provision for credit losses for the three months ended March 31, 2025 was primarily driven by credit card loans.
Outstanding loans and leases excluding loans accounted for under the fair value option increased $13.7 billion during the three months ended March 31, 2025 driven by commercial, which increased $10.6 billion due to broad-based growth, and consumer driven by a $7.0 billion increase in residential mortgage primarily due to a loan portfolio acquisition, partially offset by a $3.8 billion seasonal decline in credit card.
The changes in the allowance for credit losses, including net charge-offs and provision for loan and lease losses, are detailed in the table below.
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