Quarterly report pursuant to Section 13 or 15(d)

Outstanding Loans and Leases and Allowance for Credit Losses

v3.21.2
Outstanding Loans and Leases and Allowance for Credit Losses
6 Months Ended
Jun. 30, 2021
Receivables [Abstract]  
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 June 30, 2021 and December 31, 2020.
30-59 Days
 Past Due (1)
60-89 Days
 Past Due (1)
90 Days or
More
Past Due (1)
Total Past
Due 30 Days
or More
Total
 Current or
 Less Than
 30 Days
 Past Due (1)
Loans
 Accounted
 for Under
 the Fair
 Value
 Option
Total
Outstandings
(Dollars in millions) June 30, 2021
Consumer real estate            
Residential mortgage $ 1,130  $ 330  $ 1,549  $ 3,009  $ 211,315  $ 214,324 
Home equity 141  70  343  554  29,915  30,469 
Credit card and other consumer
Credit card 266  177  533  976  74,623  75,599 
Direct/Indirect consumer (2)
125  45  17  187  96,716  96,903 
Other consumer         172  172 
Total consumer 1,662  622  2,442  4,726  412,741  417,467 
Consumer loans accounted for under the fair value option (3)
          $ 654  654 
Total consumer loans and leases 1,662  622  2,442  4,726  412,741  654  418,121 
Commercial
U.S. commercial 224  564  349  1,137  289,983  291,120 
Non-U.S. commercial 87  24  107  218  97,932  98,150 
Commercial real estate (4)
107  32  192  331  59,275  59,606 
Commercial lease financing 87  27  53  167  15,601  15,768 
U.S. small business commercial (5)
56  29  71  156  29,711  29,867 
Total commercial 561  676  772  2,009  492,502  494,511 
Commercial loans accounted for under the fair value option (3)
          6,296  6,296 
Total commercial loans and leases 561  676  772  2,009  492,502  6,296  500,807 
Total loans and leases (6)
$ 2,223  $ 1,298  $ 3,214  $ 6,735  $ 905,243  $ 6,950  $ 918,928 
Percentage of outstandings 0.24  % 0.14  % 0.35  % 0.73  % 98.51  % 0.76  % 100.00  %
(1)Consumer real estate loans 30-59 days past due includes fully-insured loans of $213 million and nonperforming loans of $157 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $97 million and nonperforming loans of $129 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $687 million. Consumer real estate loans current or less than 30 days past due includes $1.5 billion and direct/indirect consumer includes $48 million of nonperforming loans. For information on the Corporation's interest accrual policies and delinquency status for loan modifications related to the pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.
(2)Total outstandings primarily includes auto and specialty lending loans and leases of $46.4 billion, U.S. securities-based lending loans of $46.4 billion and non-U.S. consumer loans of $3.0 billion.
(3)Consumer loans accounted for under the fair value option includes residential mortgage loans of $257 million and home equity loans of $397 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $4.4 billion and non-U.S. commercial loans of $1.9 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 $55.8 billion and non-U.S. commercial real estate loans of $3.8 billion.
(5)Includes Paycheck Protection Program loans.
(6)Total outstandings includes loans and leases pledged as collateral of $12.8 billion. The Corporation also pledged $153.0 billion of loans with no related outstanding borrowings to secure potential borrowing capacity with the Federal Reserve Bank and Federal Home Loan Bank.
30-59 Days
Past Due
(1)
60-89 Days
 Past Due (1)
90 Days or
More
Past Due
(1)
Total Past
Due 30 Days
or More
Total
Current or
Less Than
30 Days
Past Due (1)
Loans
Accounted
for Under
the Fair
Value Option
Total Outstandings
(Dollars in millions) December 31, 2020
Consumer real estate            
Residential mortgage $ 1,430  $ 297  $ 1,699  $ 3,426  $ 220,129  $ 223,555 
Home equity 154  78  345  577  33,734  34,311 
Credit card and other consumer          
Credit card 445  341  903  1,689  77,019    78,708 
Direct/Indirect consumer (2)
209  67  37  313  91,050    91,363 
Other consumer  —  —  —  —  124    124 
Total consumer 2,238  783  2,984  6,005  422,056  428,061 
Consumer loans accounted for under the fair value option (3)
$ 735  735 
Total consumer loans and leases 2,238  783  2,984  6,005  422,056  735  428,796 
Commercial              
U.S. commercial 561  214  512  1,287  287,441    288,728 
Non-U.S. commercial 61  44  11  116  90,344    90,460 
Commercial real estate (4)
128  113  226  467  59,897    60,364 
Commercial lease financing 86  20  57  163  16,935    17,098 
U.S. small business commercial (5)
84  56  123  263  36,206    36,469 
Total commercial 920  447  929  2,296  490,823    493,119 
Commercial loans accounted for under the fair value option (3)
5,946  5,946 
Total commercial loans and leases
920  447  929  2,296  490,823  5,946  499,065 
Total loans and leases (6)
$ 3,158  $ 1,230  $ 3,913  $ 8,301  $ 912,879  $ 6,681  $ 927,861 
Percentage of outstandings 0.34  % 0.13  % 0.42  % 0.89  % 98.39  % 0.72  % 100.00  %
(1)Consumer real estate loans 30-59 days past due includes fully-insured loans of $225 million and nonperforming loans of $126 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $103 million and nonperforming loans of $95 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $762 million. Consumer real estate loans current or less than 30 days past due includes $1.2 billion and direct/indirect consumer includes $66 million of nonperforming loans. For information on the Corporation's interest accrual policies and delinquency status for loan modifications related to the pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.
(2)Total outstandings primarily includes auto and specialty lending loans and leases of $46.4 billion, U.S. securities-based lending loans of $41.1 billion and non-U .S. consumer loans of $3.0 billion.
(3)Consumer loans accounted for under the fair value option includes residential mortgage loans of $298 million and home equity loans of $437 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $2.9 billion and non-U.S. commercial loans of $3.0 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 $57.2 billion and non-U.S. commercial real estate loans of $3.2 billion.
(5)Includes Paycheck Protection Program loans.
(6)Total outstandings includes loans and leases pledged as collateral of $15.5 billion. The Corporation also pledged $153.1 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 $10.0 billion and $9.0 billion at June 30, 2021 and December 31, 2020, 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
Commercial nonperforming loans decreased to $1.9 billion at June 30, 2021 from $2.2 billion at December 31, 2020. Consumer nonperforming loans increased to $3.0 billion at June 30, 2021 from $2.7 billion at December 31, 2020 driven by consumer real estate deferral activity.
The following table presents the Corporation’s nonperforming loans and leases including nonperforming troubled debt restructurings (TDRs), and loans accruing past due 90 days or more at June 30, 2021 and December 31, 2020. 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 2020 Annual Report on Form 10-K.
Credit Quality
Nonperforming Loans
and Leases
Accruing Past Due
90 Days or More (1)
(Dollars in millions) June 30
2021
December 31
2020
June 30
2021
December 31
2020
Residential mortgage (2)
$ 2,343  $ 2,005  $ 687  $ 762 
With no related allowance (3)
2,019  1,378    — 
Home equity (2)
651  649    — 
With no related allowance (3)
423  347    — 
Credit Card n/a n/a 533  903 
Direct/indirect consumer 50  71  15  33 
Total consumer 3,044  2,725  1,235  1,698 
U.S. commercial 1,060  1,243  172  228 
Non-U.S. commercial 275  418  19  10 
Commercial real estate 404  404   
Commercial lease financing 81  87  24  25 
U.S. small business commercial 43  75  69  115 
Total commercial 1,863  2,227  284  384 
Total nonperforming loans $ 4,907  $ 4,952  $ 1,519  $ 2,082 
Percentage of outstanding loans and leases
0.54  % 0.54  % 0.17  % 0.23  %
(1)For information on the Corporation's interest accrual policies and delinquency status for loan modifications related to the pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.
(2)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At June 30, 2021 and December 31, 2020 residential mortgage includes $501 million and $537 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 $186 million and $225 million of loans on which interest was still accruing.
(3)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 2020 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 for the Corporation's Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments by class of financing receivables and year of origination for term loan balances at June 30, 2021, including revolving loans that converted to term loans without an additional credit decision after origination or through a TDR.
Residential Mortgage – Credit Quality Indicators By Vintage
Term Loans by Origination Year
(Dollars in millions) Total as of
 June 30,
 2021
2021 2020 2019 2018 2017 Prior
Total Residential Mortgage
Refreshed LTV
     
Less than or equal to 90 percent $ 198,103  $ 44,858  $ 55,361  $ 30,311  $ 9,583  $ 14,423  $ 43,567 
Greater than 90 percent but less than or equal to 100 percent
2,790  1,021  1,238  275  46  33  177 
Greater than 100 percent
912  385  260  84  22  17  144 
Fully-insured loans
12,519  2,134  3,913  1,512  279  280  4,401 
Total Residential Mortgage $ 214,324  $ 48,398  $ 60,772  $ 32,182  $ 9,930  $ 14,753  $ 48,289 
Total Residential Mortgage
Refreshed FICO score
Less than 620 $ 2,539  $ 438  $ 507  $ 152  $ 121  $ 137  $ 1,184 
Greater than or equal to 620 and less than 680
5,002  791  1,277  565  338  333  1,698 
Greater than or equal to 680 and less than 740
23,440  4,246  6,688  3,267  1,398  1,763  6,078 
Greater than or equal to 740
170,824  40,789  48,387  26,686  7,794  12,240  34,928 
Fully-insured loans
12,519  2,134  3,913  1,512  279  280  4,401 
Total Residential Mortgage $ 214,324  $ 48,398  $ 60,772  $ 32,182  $ 9,930  $ 14,753  $ 48,289 
Home Equity - Credit Quality Indicators
Total
Home Equity Loans and Reverse Mortgages (1)
Revolving Loans Revolving Loans Converted to Term Loans
(Dollars in millions) June 30, 2021
Total Home Equity
Refreshed LTV
     
Less than or equal to 90 percent $ 29,884  $ 1,857  $ 20,266  $ 7,761 
Greater than 90 percent but less than or equal to 100 percent
236  98  62  76 
Greater than 100 percent
349  125  86  138 
Total Home Equity $ 30,469  $ 2,080  $ 20,414  $ 7,975 
Total Home Equity
Refreshed FICO score
Less than 620 $ 974  $ 246  $ 217  $ 511 
Greater than or equal to 620 and less than 680
1,574  243  509  822 
Greater than or equal to 680 and less than 740
5,027  517  2,559  1,951 
Greater than or equal to 740
22,894  1,074  17,129  4,691 
Total Home Equity $ 30,469  $ 2,080  $ 20,414  $ 7,975 
(1)Includes reverse mortgages of $1.4 billion and home equity loans of $717 million which are no longer originated.
Credit Card and Direct/Indirect Consumer – Credit Quality Indicators By Vintage
Direct/Indirect
Term Loans by Origination Year Credit Card
(Dollars in millions) Total Direct/
Indirect as of June 30,
 2021
Revolving Loans 2021 2020 2019 2018 2017 Prior Total Credit Card as of June 30,
 2021
Revolving Loans
Revolving Loans Converted to Term Loans (1)
Refreshed FICO score    
Less than 620 $ 704  $ 15  $ 54  $ 107  $ 152  $ 115  $ 149  $ 112  $ 2,859  $ 2,692  $ 167 
Greater than or equal to 620 and less than 680 2,031  16  528  502  402  212  201  170  8,293  8,087  206 
Greater than or equal to 680 and less than 740
7,646  67  2,315  2,145  1,484  693  483  459  26,228  26,024  204 
Greater than or equal to 740 36,196  101  8,352  10,544  8,439  4,046  2,384  2,330  38,219  38,170  49 
Other internal credit
   metrics (2,3)
50,326  49,307  519  79  96  83  65  177    —  — 
Total credit card and other
   consumer
$ 96,903  $ 49,506  $ 11,768  $ 13,377  $ 10,573  $ 5,149  $ 3,282  $ 3,248  $ 75,599  $ 74,973  $ 626 
(1)Represents TDRs that were modified into term loans.
(2)Other internal credit metrics may include delinquency status, geography or other factors.
(3)Direct/indirect consumer includes $49.3 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 June 30, 2021.
Commercial – Credit Quality Indicators By Vintage (1, 2)
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in millions) Total as of
 June 30,
 2021
2021 2020 2019 2018 2017 Prior Revolving Loans
U.S. Commercial
Risk ratings        
Pass rated $ 277,504  $ 25,307  $ 25,782  $ 28,019  $ 13,523  $ 12,219  $ 27,464  $ 145,190 
Reservable criticized 13,616  294  1,342  1,696  2,192  661  1,485  5,946 
Total U.S. Commercial
$ 291,120  $ 25,601  $ 27,124  $ 29,715  $ 15,715  $ 12,880  $ 28,949  $ 151,136 
Non-U.S. Commercial
Risk ratings
Pass rated $ 94,717  $ 11,442  $ 11,854  $ 8,529  $ 5,739  $ 3,445  $ 3,071  $ 50,637 
Reservable criticized 3,433  285  395  644  397  331  367  1,014 
Total Non-U.S. Commercial
$ 98,150  $ 11,727  $ 12,249  $ 9,173  $ 6,136  $ 3,776  $ 3,438  $ 51,651 
Commercial Real Estate
Risk ratings
Pass rated $ 50,781  $ 4,669  $ 7,940  $ 13,339  $ 7,356  $ 4,183  $ 8,528  $ 4,766 
Reservable criticized 8,825  162  1,025  2,403  2,030  1,179  1,481  545 
Total Commercial Real Estate
$ 59,606  $ 4,831  $ 8,965  $ 15,742  $ 9,386  $ 5,362  $ 10,009  $ 5,311 
Commercial Lease Financing
Risk ratings
Pass rated $ 15,035  $ 1,090  $ 2,793  $ 2,896  $ 2,396  $ 2,194  $ 3,666  $ — 
Reservable criticized 733  122  71  155  106  72  207  — 
Total Commercial Lease Financing
$ 15,768  $ 1,212  $ 2,864  $ 3,051  $ 2,502  $ 2,266  $ 3,873  $ — 
U.S. Small Business Commercial (3)
Risk ratings
Pass rated $ 22,235  $ 9,756  $ 8,245  $ 1,124  $ 816  $ 702  $ 1,438  $ 154 
Reservable criticized 696  49  145  131  98  264 
Total U.S. Small Business Commercial
$ 22,931  $ 9,760  $ 8,294  $ 1,269  $ 947  $ 800  $ 1,702  $ 159 
 Total $ 487,575  $ 53,131  $ 59,496  $ 58,950  $ 34,686  $ 25,084  $ 47,971  $ 208,257 
(1) Excludes $6.3 billion of loans accounted for under the fair value option at June 30, 2021.
(2)     Includes $40 million of loans that converted from revolving to term loans.
(3)     Excludes U.S. Small Business Card loans of $6.9 billion. Refreshed FICO scores for this portfolio are $193 million for less than 620; $555 million for greater than or equal to 620 and less than 680; $1.8 billion for greater than or equal to 680 and less than 740; and $4.4 billion greater than or equal to 740.
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 class of financing receivables and year of origination for term loan balances at December 31, 2020, including revolving loans that converted to term loans without an additional credit decision after origination or through a TDR.
Residential Mortgage – Credit Quality Indicators By Vintage
Term Loans by Origination Year
(Dollars in millions) Total as of
 December 31,
 2020
2020 2019 2018 2017 2016 Prior
Total Residential Mortgage
Refreshed LTV
Less than or equal to 90 percent $ 207,389  $ 68,907  $ 43,771  $ 14,658  $ 21,589  $ 22,967  $ 35,497 
Greater than 90 percent but less than or equal to 100 percent
3,138  1,970  684  128  70  96  190 
Greater than 100 percent
1,210  702  174  47  39  37  211 
Fully-insured loans
11,818  3,826  2,014  370  342  1,970  3,296 
Total Residential Mortgage $ 223,555  $ 75,405  $ 46,643  $ 15,203  $ 22,040  $ 25,070  $ 39,194 
Total Residential Mortgage
Refreshed FICO score
Less than 620 $ 2,717  $ 823  $ 177  $ 139  $ 170  $ 150  $ 1,258 
Greater than or equal to 620 and less than 680
5,462  1,804  666  468  385  368  1,771 
Greater than or equal to 680 and less than 740
25,349  8,533  4,679  1,972  2,427  2,307  5,431 
Greater than or equal to 740 178,209  60,419  39,107  12,254  18,716  20,275  27,438 
Fully-insured loans
11,818  3,826  2,014  370  342  1,970  3,296 
Total Residential Mortgage $ 223,555  $ 75,405  $ 46,643  $ 15,203  $ 22,040  $ 25,070  $ 39,194 
Home Equity - Credit Quality Indicators
Total
Home Equity Loans and Reverse Mortgages (1)
Revolving Loans Revolving Loans Converted to Term Loans
(Dollars in millions) December 31, 2020
Total Home Equity
Refreshed LTV
Less than or equal to 90 percent $ 33,447  $ 1,919  $ 22,639  $ 8,889 
Greater than 90 percent but less than or equal to 100 percent
351  126  94  131 
Greater than 100 percent
513  172  118  223 
Total Home Equity $ 34,311  $ 2,217  $ 22,851  $ 9,243 
Total Home Equity
Refreshed FICO score
Less than 620 $ 1,082  $ 250  $ 244  $ 588 
Greater than or equal to 620 and less than 680
1,798  263  568  967 
Greater than or equal to 680 and less than 740
5,762  556  2,905  2,301 
Greater than or equal to 740
25,669  1,148  19,134  5,387 
Total Home Equity $ 34,311  $ 2,217  $ 22,851  $ 9,243 
(1)Includes reverse mortgages of $1.3 billion and home equity loans of $885 million which are no longer originated.
Credit Card and Direct/Indirect Consumer – Credit Quality Indicators By Vintage
Direct/Indirect
Term Loans by Origination Year Credit Card
(Dollars in millions) Total Direct/Indirect as of December 31, 2020 Revolving Loans 2020 2019 2018 2017 2016 Prior Total Credit Card as of December 31, 2020 Revolving Loans
Revolving Loans Converted to Term Loans (1)
Refreshed FICO score
Less than 620 $ 959  $ 19  $ 111  $ 200  $ 175  $ 243  $ 148  $ 63  $ 4,018  $ 3,832  $ 186 
Greater than or equal to 620 and less than 680
2,143  20  653  559  329  301  176  105  9,419  9,201  218 
Greater than or equal to 680 and less than 740
7,431  80  2,848  2,015  1,033  739  400  316  27,585  27,392  193 
Greater than or equal to 740 36,064  120  12,540  10,588  5,869  3,495  1,781  1,671  37,686  37,642  44 
Other internal credit
   metrics (2, 3)
44,766  44,098  74  115  84  67  52  276  —  —  — 
Total credit card and other
   consumer
$ 91,363  $ 44,337  $ 16,226  $ 13,477  $ 7,490  $ 4,845  $ 2,557  $ 2,431  $ 78,708  $ 78,067  $ 641 
(1)Represents TDRs that were modified into term loans.
(2)Other internal credit metrics may include delinquency status, geography or other factors.
(3)Direct/indirect consumer includes $44.1 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 December 31, 2020.

Commercial – Credit Quality Indicators By Vintage (1, 2)
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in millions) Total as of December 31, 2020 2020 2019 2018 2017 2016 Prior Revolving Loans
U.S. Commercial
Risk ratings        
Pass rated $ 268,812  $ 33,456  $ 33,305  $ 17,363  $ 14,102  $ 7,420  $ 21,784  $ 141,382 
Reservable criticized 19,916  2,524  2,542  2,689  854  698  1,402  9,207 
Total U.S. Commercial
$ 288,728  $ 35,980  $ 35,847  $ 20,052  $ 14,956  $ 8,118  $ 23,186  $ 150,589 
Non-U.S. Commercial
Risk ratings
Pass rated $ 85,914  $ 16,301  $ 11,396  $ 7,451  $ 5,037  $ 1,674  $ 2,194  $ 41,861 
Reservable criticized 4,546  914  572  492  436  138  259  1,735 
Total Non-U.S. Commercial
$ 90,460  $ 17,215  $ 11,968  $ 7,943  $ 5,473  $ 1,812  $ 2,453  $ 43,596 
Commercial Real Estate
Risk ratings
Pass rated $ 50,260  $ 8,429  $ 14,126  $ 8,228  $ 4,599  $ 3,299  $ 6,542  $ 5,037 
Reservable criticized 10,104  933  2,558  2,115  1,582  606  1,436  874 
Total Commercial Real Estate
$ 60,364  $ 9,362  $ 16,684  $ 10,343  $ 6,181  $ 3,905  $ 7,978  $ 5,911 
Commercial Lease Financing
Risk ratings
Pass rated $ 16,384  $ 3,083  $ 3,242  $ 2,956  $ 2,532  $ 1,703  $ 2,868  $ — 
Reservable criticized 714  117  117  132  81  88  179  — 
Total Commercial Lease Financing
$ 17,098  $ 3,200  $ 3,359  $ 3,088  $ 2,613  $ 1,791  $ 3,047  $ — 
U.S. Small Business Commercial (3)
Risk ratings
Pass rated $ 28,786  $ 24,539  $ 1,121  $ 837  $ 735  $ 527  $ 855  $ 172 
Reservable criticized 1,148  76  239  210  175  113  322  13 
Total U.S. Small Business Commercial
$ 29,934  $ 24,615  $ 1,360  $ 1,047  $ 910  $ 640  $ 1,177  $ 185 
 Total $ 486,584  $ 90,372  $ 69,218  $ 42,473  $ 30,133  $ 16,266  $ 37,841  $ 200,281 
(1) Excludes $5.9 billion of loans accounted for under the fair value option at December 31, 2020.
(2)     Includes $58 million of loans that converted from revolving to term loans.
(3)     Excludes U.S. Small Business Card loans of $6.5 billion. Refreshed FICO scores for this portfolio are $265 million for less than 620; $582 million for greater than or equal to 620 and less than 680; $1.7 billion for greater than or equal to 680 and less than 740; and $3.9 billion greater than or equal to 740.
During the six months ended June 30, 2021, commercial asset quality showed signs of stabilization as economic recovery gained momentum. Commercial reservable criticized utilized exposure decreased to $28.9 billion at June 30, 2021 from $38.7 billion (to 5.45 percent from 7.31 percent of total commercial reservable utilized exposure) at December 31, 2020, which was broad-based across industries.
Troubled Debt Restructurings
The Corporation has been entering into loan modifications with borrowers in response to the pandemic, most of which are not classified as TDRs, and therefore are not included in the following discussion. For more information on the criteria for classifying loans as TDRs, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K. 
Consumer Real Estate
Modifications of consumer real estate loans are classified as TDRs when the borrower is experiencing financial difficulties and a concession has been granted. Concessions may include reductions in interest rates, capitalization of past due amounts, principal and/or interest forbearance, payment extensions, principal and/or interest forgiveness, or combinations thereof. Prior to permanently modifying a loan, the Corporation may enter into trial modifications with certain borrowers under both government and proprietary programs. Trial modifications generally represent a three- to four-month period during which the borrower makes monthly payments under the anticipated modified payment terms. Upon successful completion of the trial period, the Corporation and the borrower enter into a permanent modification. Binding trial modifications are classified as TDRs when the trial offer is made and continue to be classified as TDRs regardless of whether the borrower enters into a permanent modification.
Consumer real estate loans of $343 million that have been discharged in Chapter 7 bankruptcy with no change in repayment terms and not reaffirmed by the borrower were included in TDRs at June 30, 2021, of which $99 million were classified as nonperforming and $61 million were loans fully insured.
Consumer real estate TDRs are measured primarily based on the net present value of the estimated cash flows discounted at the loan’s original effective interest rate. If the carrying value of a TDR exceeds this amount, a specific allowance is recorded as
a component of the allowance for loan and lease losses. Alternatively, consumer real estate TDRs that are considered to be dependent solely on the collateral for repayment (e.g., due to the lack of income verification) are measured based on the estimated fair value of the collateral, and a charge-off is recorded if the carrying value exceeds the fair value of the collateral. Consumer real estate loans that reach 180 days past due prior to modification are charged off to their net realizable value, less costs to sell, before they are modified as TDRs in accordance with established policy. Subsequent declines in the fair value of the collateral after a loan has reached 180 days past due are recorded as charge-offs. Fully-insured loans are protected against principal loss, and therefore, the Corporation does not record an allowance for loan and lease losses on the outstanding principal balance, even after they have been modified in a TDR.
At June 30, 2021 and December 31, 2020, remaining commitments to lend additional funds to debtors whose terms have been modified in a consumer real estate TDR were not significant. Consumer real estate foreclosed properties totaled $93 million and $123 million at June 30, 2021 and December 31, 2020. The carrying value of consumer real estate loans, including fully-insured loans, for which formal foreclosure proceedings were in process at June 30, 2021 was $1.1 billion. Although the Corporation has continued to pause formal loan foreclosure proceedings and foreclosure sales for occupied properties, during the six months ended June 30, 2021, the Corporation reclassified $20 million of consumer real estate loans completed or which were in process prior to the pause in foreclosures, 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.
The table below presents the June 30, 2021 and 2020 unpaid principal balance, carrying value, and average pre- and post-modification interest rates of consumer real estate loans that were modified in TDRs during the three and six months ended June 30, 2021 and 2020. The following Consumer Real Estate portfolio segment tables include loans that were initially classified as TDRs during the period and also loans that had previously been classified as TDRs and were modified again during the period.
Consumer Real Estate – TDRs Entered into During the Three and Six Months Ended June 30, 2021 and 2020
Unpaid Principal Balance Carrying
Value
Pre-Modification Interest Rate
Post-Modification Interest Rate (1)
Unpaid Principal Balance Carrying
Value
Pre-Modification Interest Rate
Post-Modification Interest Rate (1)
(Dollars in millions) Three Months Ended June 30, 2021 Six Months Ended June 30, 2021
Residential mortgage $ 522  $ 466  3.53  % 3.51  % $ 744  $ 667  3.51  % 3.49  %
Home equity 62  47  3.58  3.61  83  63  3.55  3.58 
Total $ 584  $ 513  3.53  3.52  $ 827  $ 730  3.52  3.50 
Three Months Ended June 30, 2020 Six Months Ended June 30, 2020
Residential mortgage $ 120  $ 103  4.22  % 4.19  % $ 219  $ 185  4.10  % 4.01  %
Home equity 22  18  3.68  3.65  45  38  3.99  3.92 
Total $ 142  $ 121  4.14  4.11  $ 264  $ 223  4.08  3.99 
(1)The post-modification interest rate reflects the interest rate applicable only to permanently completed modifications, which exclude loans that are in a trial modification period.
The table below presents the June 30, 2021 and 2020 carrying value for consumer real estate loans that were modified in a TDR during the three and six months ended June 30, 2021 and 2020, by type of modification.
Consumer Real Estate – Modification Programs
TDRs Entered into During the
Three Months Ended June 30 Six Months Ended June 30
(Dollars in millions) 2021 2020 2021 2020
Modifications under government programs $ 1  $ —  $ 3  $
Modifications under proprietary programs 479  20  665  59 
Loans discharged in Chapter 7 bankruptcy (1)
12  21  22  32 
Trial modifications 21  80  40  129 
Total modifications $ 513  $ 121  $ 730  $ 223 
(1)Includes loans discharged in Chapter 7 bankruptcy with no change in repayment terms that are classified as TDRs.
The table below presents the carrying value of consumer real estate loans that entered into payment default during the three and six months ended June 30, 2021 and 2020 that were modified in a TDR during the 12 months preceding payment default. A payment default for consumer real estate TDRs is recognized when a borrower has missed three monthly payments (not necessarily consecutively) since modification.
Consumer Real Estate – TDRs Entering Payment Default that were Modified During the Preceding 12 Months
Three Months Ended June 30 Six Months Ended June 30
(Dollars in millions) 2021 2020 2021 2020
Modifications under government programs $ 1  $ $ 2  $
Modifications under proprietary programs 33  45  19 
Loans discharged in Chapter 7 bankruptcy (1)
2  5  11 
Trial modifications (2)
6  12  12  30 
Total modifications $ 42  $ 23  $ 64  $ 68 
(1)Includes loans discharged in Chapter 7 bankruptcy with no change in repayment terms that are classified as TDRs.
(2)Includes trial modification offers to which the customer did not respond.
Credit Card and Other Consumer
The Corporation seeks to assist customers that are experiencing financial difficulty by modifying loans while ensuring compliance with federal and local laws and guidelines. Credit card and other consumer loan modifications generally involve reducing the interest rate on the account, placing the customer on a fixed payment plan not exceeding 60 months and canceling the customer’s available line of credit, all of which are considered TDRs. The Corporation makes loan modifications directly with borrowers for debt held only by the Corporation (internal programs). Additionally, the Corporation makes loan modifications for borrowers working with third-party renegotiation
agencies that provide solutions to customers’ entire unsecured debt structures (external programs). The Corporation classifies other secured consumer loans that have been discharged in Chapter 7 bankruptcy as TDRs, which are written down to collateral value and placed on nonaccrual status no later than the time of discharge.
The table below provides information on the Corporation’s Credit Card and Other Consumer TDR portfolio including the June 30, 2021 and 2020 unpaid principal balance, carrying value, and average pre- and post-modification interest rates of loans that were modified in TDRs during the three and six months ended June 30, 2021 and 2020.
Credit Card and Other Consumer – TDRs Entered into During the Three and Six Months Ended June 30, 2021
and 2020
  Unpaid Principal Balance
Carrying
Value (1)
Pre-Modification Interest Rate Post-Modification Interest Rate Unpaid Principal Balance
Carrying
Value
(1)
Pre-Modification Interest Rate Post-Modification Interest Rate
(Dollars in millions) Three Months Ended June 30, 2021 Six Months Ended June 30, 2021
Credit card $ 62  $ 68  18.44  % 4.24  % $ 137  $ 147  18.48  % 4.53  %
Direct/Indirect consumer 6  4  5.64  5.64  11  7  5.62  5.62 
Total $ 68  $ 72  17.75  4.31  $ 148  $ 154  17.87  4.58 
Three Months Ended June 30, 2020 Six Months Ended June 30, 2020
Credit card $ 57  $ 61  18.08  % 5.15  % $ 144  $ 152  18.02  % 5.24  %