Quarterly report pursuant to Section 13 or 15(d)

Outstanding Loans and Leases and Allowance for Credit Losses

v3.23.2
Outstanding Loans and Leases and Allowance for Credit Losses
6 Months Ended
Jun. 30, 2023
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, 2023 and December 31, 2022.
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, 2023
Consumer real estate            
Residential mortgage $ 1,120  $ 278  $ 804  $ 2,202  $ 226,713  $ 228,915 
Home equity 90  40  179  309  25,227  25,536 
Credit card and other consumer
Credit card 547  368  896  1,811  95,198  97,009 
Direct/Indirect consumer (2)
228  61  63  352  104,060  104,412 
Other consumer         132  132 
Total consumer 1,985  747  1,942  4,674  451,330  456,004 
Consumer loans accounted for under the fair value option (3)
$ 266  266 
Total consumer loans and leases 1,985  747  1,942  4,674  451,330  266  456,270 
Commercial
U.S. commercial 744  150  275  1,169  359,627  360,796 
Non-U.S. commercial 73  15  75  163  123,355  123,518 
Commercial real estate (4)
128  73  173  374  73,916  74,290 
Commercial lease financing 16  6  5  27  13,466  13,493 
U.S. small business commercial (5)
133  74  201  408  18,388  18,796 
Total commercial 1,094  318  729  2,141  588,752  590,893 
Commercial loans accounted for under the fair value option (3)
4,061  4,061 
Total commercial loans and leases 1,094  318  729  2,141  588,752  4,061  594,954 
Total loans and leases (6)
$ 3,079  $ 1,065  $ 2,671  $ 6,815  $ 1,040,082  $ 4,327  $ 1,051,224 
Percentage of outstandings 0.29  % 0.10  % 0.26  % 0.65  % 98.94  % 0.41  % 100.00  %
(1)Consumer real estate loans 30-59 days past due includes fully-insured loans of $166 million and nonperforming loans of $192 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $70 million and nonperforming loans of $109 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $288 million and nonperforming loans of $695 million. Consumer real estate loans current or less than 30 days past due includes $1.6 billion, and direct/indirect consumer includes $31 million of nonperforming loans.
(2)Total outstandings primarily includes auto and specialty lending loans and leases of $53.3 billion, U.S. securities-based lending loans of $47.3 billion and non-U.S. consumer loans of $2.9 billion.
(3)Consumer loans accounted for under the fair value option includes residential mortgage loans of $69 million and home equity loans of $197 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $2.3 billion and non-U.S. commercial loans of $1.8 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 $68.1 billion and non-U.S. commercial real estate loans of $6.2 billion.
(5)Includes Paycheck Protection Program loans.
(6)Total outstandings includes loans and leases pledged as collateral of $25.6 billion. The Corporation also pledged $253.5 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, 2022
Consumer real estate            
Residential mortgage $ 1,077  $ 245  $ 945  $ 2,267  $ 227,403  $ 229,670 
Home equity 88  32  211  331  26,232  26,563 
Credit card and other consumer          
Credit card 466  322  717  1,505  91,916    93,421 
Direct/Indirect consumer (2)
204  59  45  308  105,928    106,236 
Other consumer  —  —  —  —  156    156 
Total consumer 1,835  658  1,918  4,411  451,635  456,046 
Consumer loans accounted for under the fair value option (3)
$ 339  339 
Total consumer loans and leases 1,835  658  1,918  4,411  451,635  339  456,385 
Commercial              
U.S. commercial 827  288  330  1,445  357,036    358,481 
Non-U.S. commercial 317  59  144  520  123,959    124,479 
Commercial real estate (4)
409  81  77  567  69,199    69,766 
Commercial lease financing 49  11  69  13,575    13,644 
U.S. small business commercial (5)
107  63  356  526  17,034    17,560 
Total commercial 1,709  500  918  3,127  580,803    583,930 
Commercial loans accounted for under the fair value option (3)
5,432  5,432 
Total commercial loans and leases
1,709  500  918  3,127  580,803  5,432  589,362 
Total loans and leases (6)
$ 3,544  $ 1,158  $ 2,836  $ 7,538  $ 1,032,438  $ 5,771  $ 1,045,747 
Percentage of outstandings 0.34  % 0.11  % 0.27  % 0.72  % 98.73  % 0.55  % 100.00  %
(1)Consumer real estate loans 30-59 days past due includes fully-insured loans of $184 million and nonperforming loans of $155 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $75 million and nonperforming loans of $88 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $368 million and nonperforming loans of $788 million. Consumer real estate loans current or less than 30 days past due includes $1.6 billion, and direct/indirect consumer includes $27 million of nonperforming loans.
(2)Total outstandings primarily includes auto and specialty lending loans and leases of $51.8 billion, U.S. securities-based lending loans of $50.4 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 $71 million and home equity loans of $268 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 $2.5 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 $64.9 billion and non-U.S. commercial real estate loans of $4.8 billion.
(5)Includes Paycheck Protection Program loans.
(6)Total outstandings includes loans and leases pledged as collateral of $18.5 billion. The Corporation also pledged $163.6 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 $9.1 billion and $9.5 billion at June 30, 2023 and December 31, 2022, 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 increased to $1.4 billion at June 30, 2023 from $1.1 billion at December 31, 2022, driven by the commercial real estate office property type. Consumer
nonperforming loans decreased to $2.7 billion at June 30, 2023 from $2.8 billion at December 31, 2022.
The following table presents the Corporation’s nonperforming loans and leases and loans accruing past due 90 days or more at June 30, 2023 and December 31, 2022. Nonperforming 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 2022 Annual Report on Form 10-K.
Credit Quality
Nonperforming Loans
and Leases
Accruing Past Due
90 Days or More
(Dollars in millions) June 30
2023
December 31
2022
June 30
2023
December 31
2022
Residential mortgage (1)
$ 2,140  $ 2,167  $ 288  $ 368 
With no related allowance (2)
1,958  1,973    — 
Home equity (1)
482  510    — 
With no related allowance (2)
400  393    — 
Credit Card                      n/a                     n/a 896  717 
Direct/indirect consumer 107  77  1 
Total consumer 2,729  2,754  1,185  1,087 
U.S. commercial 476  553  132  190 
Non-U.S. commercial 84  212  13  25 
Commercial real estate 816  271  7  46 
Commercial lease financing 6  2 
U.S. small business commercial 15  14  201  355 
Total commercial 1,397  1,054  355  624 
Total nonperforming loans $ 4,126  $ 3,808  $ 1,540  $ 1,711 
Percentage of outstanding loans and leases
0.39  % 0.37  % 0.15  % 0.16  %
(1)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At June 30, 2023 and December 31, 2022 residential mortgage included $198 million and $260 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 $90 million and $108 million 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 2022 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 June 30, 2023.
Residential Mortgage – Credit Quality Indicators By Vintage
Term Loans by Origination Year
(Dollars in millions) Total as of
June 30,
 2023
2023 2022 2021 2020 2019 Prior
Residential Mortgage
Refreshed LTV
     
Less than or equal to 90 percent $ 213,891  $ 7,727  $ 37,772  $ 79,232  $ 35,641  $ 18,151  $ 35,368 
Greater than 90 percent but less than or equal to 100 percent
2,765  455  1,656  522  78  17  37 
Greater than 100 percent
1,089  202  596  190  39  16  46 
Fully-insured loans
11,170  185  437  3,528  2,955  896  3,169 
Total Residential Mortgage $ 228,915  $ 8,569  $ 40,461  $ 83,472  $ 38,713  $ 19,080  $ 38,620 
Residential Mortgage
Refreshed FICO score
Less than 620 $ 2,114  $ 53  $ 398  $ 510  $ 362  $ 110  $ 681 
Greater than or equal to 620 and less than 680
4,730  188  957  1,240  764  317  1,264 
Greater than or equal to 680 and less than 740
23,609  796  5,132  7,273  3,892  1,974  4,542 
Greater than or equal to 740
187,292  7,347  33,537  70,921  30,740  15,783  28,964 
Fully-insured loans
11,170  185  437  3,528  2,955  896  3,169 
Total Residential Mortgage $ 228,915  $ 8,569  $ 40,461  $ 83,472  $ 38,713  $ 19,080  $ 38,620 
Gross charge-offs for the six months ended June 30, 2023 $ 18  $ —  $ $ $ $ —  $
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, 2023
Home Equity
Refreshed LTV
     
Less than or equal to 90 percent $ 25,360  $ 1,163  $ 19,658  $ 4,539 
Greater than 90 percent but less than or equal to 100 percent
76  17  45  14 
Greater than 100 percent
100  37  36  27 
Total Home Equity $ 25,536  $ 1,217  $ 19,739  $ 4,580 
Home Equity
Refreshed FICO score
Less than 620 $ 635  $ 138  $ 204  $ 293 
Greater than or equal to 620 and less than 680
1,105  133  516  456 
Greater than or equal to 680 and less than 740
4,182  273  2,810  1,099 
Greater than or equal to 740
19,614  673  16,209  2,732 
Total Home Equity $ 25,536  $ 1,217  $ 19,739  $ 4,580 
Gross charge-offs for the six months ended June 30, 2023 $ 11  $ 1  $ 5  $ 5 
(1)Includes reverse mortgages of $834 million and home equity loans of $383 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,
2023
Revolving Loans 2023 2022 2021 2020 2019 Prior Total Credit Card as of June 30,
2023
Revolving Loans
Revolving Loans Converted to Term Loans (1)
Refreshed FICO score    
Less than 620 $ 996  $ 11  $ 87  $ 346  $ 320  $ 101  $ 66  $ 65  $ 4,445  $ 4,207  $ 238 
Greater than or equal to 620 and less than 680 2,459  11  506  930  617  185  103  107  11,008  10,781  227 
Greater than or equal to 680 and less than 740
8,701  48  2,044  3,166  2,085  668  354  336  33,158  32,957  201 
Greater than or equal to 740 41,303  75  9,426  14,020  9,572  4,044  2,110  2,056  48,398  48,350  48 
Other internal credit
   metrics (2,3)
50,953  50,209  76  213  167  54  58  176    —  — 
Total credit card and other
   consumer
$ 104,412  $ 50,354  $ 12,139  $ 18,675  $ 12,761  $ 5,052  $ 2,691  $ 2,740  $ 97,009  $ 96,295  $ 714 
Gross charge-offs for the six
   months ended June 30, 2023
$ 96  $ $ $ 41  $ 24  $ $ $ 12  $ 1,406  $ 1,359  $ 47 
(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 $50.2 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, 2023.
Commercial – Credit Quality Indicators By Vintage (1)
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in millions) Total as of
June 30,
2023
2023 2022 2021 2020 2019 Prior Revolving Loans
U.S. Commercial
Risk ratings        
Pass rated $ 349,832  $ 20,818  $ 51,623  $ 31,412  $ 15,530  $ 13,882  $ 34,328  $ 182,239 
Reservable criticized 10,964  100  784  748  494  699  1,768  6,371 
Total U.S. Commercial
$ 360,796  $ 20,918  $ 52,407  $ 32,160  $ 16,024  $ 14,581  $ 36,096  $ 188,610 
Gross charge-offs for the six months ended
   June 30, 2023
$ 81  $ $ $ 20  $ —  $ $ $ 47 
Non-U.S. Commercial
Risk ratings
Pass rated $ 121,523  $ 8,681  $ 18,591  $ 17,621  $ 3,250  $ 3,326  $ 6,455  $ 63,599 
Reservable criticized 1,995  —  147  214  231  247  155  1,001 
Total Non-U.S. Commercial
$ 123,518  $ 8,681  $ 18,738  $ 17,835  $ 3,481  $ 3,573  $ 6,610  $ 64,600 
Gross charge-offs for the six months ended
   June 30, 2023
$ 31  $ —  $ —  $ $ $ $ —  $ 15 
Commercial Real Estate
Risk ratings
Pass rated $ 67,398  $ 2,967  $ 16,461  $ 13,291  $ 4,701  $ 8,125  $ 11,711  $ 10,142 
Reservable criticized 6,892  65  334  884  556  2,047  2,619  387 
Total Commercial Real Estate
$ 74,290  $ 3,032  $ 16,795  $ 14,175  $ 5,257  $ 10,172  $ 14,330  $ 10,529 
Gross charge-offs for the six months ended
   June 30, 2023
$ 95  $ $ —  $ —  $ —  $ 32  $ 61  $ — 
Commercial Lease Financing
Risk ratings
Pass rated $ 13,285  $ 1,583  $ 3,183  $ 2,462  $ 1,561  $ 1,342  $ 3,154  $ — 
Reservable criticized 208  21  40  23  34  88  — 
Total Commercial Lease Financing
$ 13,493  $ 1,585  $ 3,204  $ 2,502  $ 1,584  $ 1,376  $ 3,242  $ — 
Gross charge-offs for the six months ended
   June 30, 2023
$   $ —  $ —  $ —  $ —  $ —  $ —  $ — 
U.S. Small Business Commercial (2)
Risk ratings
Pass rated $ 8,711  $ 936  $ 1,872  $ 1,734  $ 1,050  $ 833  $ 2,162  $ 124 
Reservable criticized 369  40  67  47  70  141 
Total U.S. Small Business Commercial
$ 9,080  $ 937  $ 1,912  $ 1,801  $ 1,097  $ 903  $ 2,303  $ 127 
Gross charge-offs for the six months ended
   June 30, 2023
$ 20  $ —  $ $ $ 10  $ $ $
Total $ 581,177  $ 35,153  $ 93,056  $ 68,473  $ 27,443  $ 30,605  $ 62,581  $ 263,866 
Total gross charge-offs for the six months ended
    June 30, 2023
$ 227  $ $ $ 29  $ 17  $ 36  $ 69  $ 65 
(1)Excludes $4.1 billion of loans accounted for under the fair value option at June 30, 2023.
(2)Excludes U.S. Small Business Card loans of $9.7 billion. Refreshed FICO scores for this portfolio are $407 million for less than 620; $1.0 billion for greater than or equal to 620 and less than 680; $2.7 billion for greater than or equal to 680 and less than 740; and $5.6 billion greater than or equal to 740. Excludes U.S. Small Business Card loans gross charge-offs of $139 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, 2022.
Residential Mortgage – Credit Quality Indicators By Vintage
Term Loans by Origination Year
(Dollars in millions) Total as of
 December 31,
 2022
2022 2021 2020 2019 2018 Prior
Residential Mortgage
Refreshed LTV
Less than or equal to 90 percent $ 215,713  $ 39,625  $ 81,437  $ 37,228  $ 18,980  $ 5,734  $ 32,709 
Greater than 90 percent but less than or equal to 100 percent
1,615  950  530  93  15  19 
Greater than 100 percent
648  374  169  43  15  39 
Fully-insured loans
11,694  580  3,667  3,102  949  156  3,240 
Total Residential Mortgage $ 229,670  $ 41,529  $ 85,803  $ 40,466  $ 19,959  $ 5,906  $ 36,007 
Residential Mortgage
Refreshed FICO score
Less than 620 $ 2,156  $ 377  $ 518  $ 373  $ 124  $ 84  $ 680 
Greater than or equal to 620 and less than 680
4,978  1,011  1,382  840  329  233  1,183 
Greater than or equal to 680 and less than 740
25,444  5,411  8,290  4,369  2,187  830  4,357 
Greater than or equal to 740 185,398  34,150  71,946  31,782  16,370  4,603  26,547 
Fully-insured loans
11,694  580  3,667  3,102  949  156  3,240 
Total Residential Mortgage $ 229,670  $ 41,529  $ 85,803  $ 40,466  $ 19,959  $ 5,906  $ 36,007 
Gross charge-offs for the year ended December 31, 2022 $ 161  $ —  $ $ $ $ $ 143 
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, 2022
Home Equity
Refreshed LTV
Less than or equal to 90 percent $ 26,395  $ 1,304  $ 19,960  $ 5,131 
Greater than 90 percent but less than or equal to 100 percent
62  20  24  18 
Greater than 100 percent
106  37  35  34 
Total Home Equity $ 26,563  $ 1,361  $ 20,019  $ 5,183 
Home Equity
Refreshed FICO score
Less than 620 $ 683  $ 166  $ 189  $ 328 
Greater than or equal to 620 and less than 680
1,190  152  507  531 
Greater than or equal to 680 and less than 740
4,321  312  2,747  1,262 
Greater than or equal to 740
20,369  731  16,576  3,062 
Total Home Equity $ 26,563  $ 1,361  $ 20,019  $ 5,183 
Gross charge-offs for the year ended December 31, 2022 $ 45  $ $ 24  $ 16 
(1)Includes reverse mortgages of $937 million and home equity loans of $424 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, 2022 Revolving Loans 2022 2021 2020 2019 2018 Prior Total Credit Card as of December 31, 2022 Revolving Loans
Revolving Loans Converted to Term Loans (1)
Refreshed FICO score
Less than 620 $ 847  $ 12  $ 237  $ 301  $ 113  $ 84  $ 43  $ 57  $ 4,056  $ 3,866  $ 190 
Greater than or equal to 620 and less than 680
2,521  12  1,108  816  269  150  69  97  10,994  10,805  189 
Greater than or equal to 680 and less than 740
8,895  52  4,091  2,730  992  520  214  296  32,186  32,017  169 
Greater than or equal to 740 39,679  83  16,663  11,392  5,630  2,992  1,236  1,683  46,185  46,142  43 
Other internal credit
   metrics (2, 3)
54,294  53,404  259  305  70  57  40  159  —  —  — 
Total credit card and other
   consumer
$ 106,236  $ 53,563  $ 22,358  $ 15,544  $ 7,074  $ 3,803  $ 1,602  $ 2,292  $ 93,421  $ 92,830  $ 591 
Gross charge-offs for the year
   ended December 31, 2022
$ 232  $ $ 31  $ 79  $ 34  $ 27  $ 14  $ 40  $ 1,985  $ 1,909  $ 76 
(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 $53.4 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, 2022.
Commercial – Credit Quality Indicators By Vintage (1)
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in millions) Total as of December 31, 2022 2022 2021 2020 2019 2018 Prior Revolving Loans
U.S. Commercial
Risk ratings        
Pass rated $ 348,447  $ 61,200  $ 39,717  $ 18,609  $ 16,566  $ 8,749  $ 30,282  $ 173,324 
Reservable criticized 10,034  278  794  697  884  1,202  856  5,323 
Total U.S. Commercial
$ 358,481  $ 61,478  $ 40,511  $ 19,306  $ 17,450  $ 9,951  $ 31,138  $ 178,647 
Gross charge-offs for the year ended
   December 31, 2022
$ 151  $ $ 24  $ 24  $ $ $ 13  $ 73 
Non-U.S. Commercial
Risk ratings
Pass rated $ 121,890  $ 24,839  $ 19,098  $ 5,183  $ 3,882  $ 2,423  $ 4,697  $ 61,768 
Reservable criticized 2,589  45  395  331  325  98  475  920 
Total Non-U.S. Commercial
$ 124,479  $ 24,884  $ 19,493  $ 5,514  $ 4,207  $ 2,521  $ 5,172  $ 62,688 
Gross charge-offs for the year ended
   December 31, 2022
$ 41  $ —  $ $ $ —  $ 37  $ —  $ — 
Commercial Real Estate
Risk ratings
Pass rated $ 64,619  $ 15,290  $ 13,089  $ 5,756  $ 9,013  $ 4,384  $ 8,606  $ 8,481 
Reservable criticized 5,147  11  837  545  1,501  1,151  1,017  85 
Total Commercial Real Estate
$ 69,766  $ 15,301  $ 13,926  $ 6,301  $ 10,514  $ 5,535  $ 9,623  $ 8,566 
Gross charge-offs for the year ended
   December 31, 2022
$ 75  $ —  $ —  $ $ —  $ 26  $ 43  $ — 
Commercial Lease Financing
Risk ratings
Pass rated $ 13,404  $ 3,255  $ 2,757  $ 1,955  $ 1,578  $ 1,301  $ 2,558  $ — 
Reservable criticized 240  35  12  71  50  63  — 
Total Commercial Lease Financing
$ 13,644  $ 3,264  $ 2,792  $ 1,967  $ 1,649  $ 1,351  $ 2,621  $ — 
Gross charge-offs for the year ended
   December 31, 2022
$ $ —  $ $ —  $ $ —  $ —  $ — 
U.S. Small Business Commercial (2)
Risk ratings
Pass rated $ 8,726  $ 1,825  $ 1,953  $ 1,408  $ 864  $ 624  $ 1,925  $ 127 
Reservable criticized 329  11  35  48  76  51  105 
Total U.S. Small Business Commercial
$ 9,055  $ 1,836  $ 1,988  $ 1,456  $ 940  $ 675  $ 2,030  $ 130 
Gross charge-offs for the year ended
   December 31, 2022
$ 31  $ —  $ $ 11  $ $ $ $
 Total $ 575,425  $ 106,763  $ 78,710  $ 34,544  $ 34,760  $ 20,033  $ 50,584  $ 250,031 
Total gross charge-offs for the year ended
   December 31, 2022
$ 306  $ $ 32  $ 42  $ 17  $ 70  $ 62  $ 81 
(1) Excludes $5.4 billion of loans accounted for under the fair value option at December 31, 2022.
(2) Excludes U.S. Small Business Card loans of $8.5 billion. Refreshed FICO scores for this portfolio are $297 million for less than 620; $859 million for greater than or equal to 620 and less than 680; $2.4 billion for greater than or equal to 680 and less than 740; and $5.0 billion greater than or equal to 740. Excludes U.S. Small Business Card loans gross charge-offs of $172 million.
During the six months ended June 30, 2023, commercial reservable criticized utilized exposure increased to $21.5 billion at June 30, 2023 from $19.3 billion (to 3.44 percent from 3.12 percent of total commercial reservable utilized exposure) at December 31, 2022, primarily driven by commercial real estate and U.S. Commercial.
Loan 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. These modifications represented 0.19 percent and 0.28 percent of outstanding residential mortgage and home equity loans at June 30, 2023.
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 at the conclusion of the forbearance period. The aging status of a loan is generally frozen when it enters into a forbearance plan. Alternatively, the Corporation may offer the borrower a payment plan, which allows the borrower to repay past due amounts through payments over a defined period. At June 30, 2023, the amortized cost of residential mortgage loans that were modified through these plans during the three and six months ended June 30, 2023 was $276 million and $348 million. The amortized cost of home equity loans that were modified through these plans during the same periods was $41 million and $53 million. The weighted-average duration of residential mortgage loan modifications was approximately 6 months and 8 months for the three and six months ended June 30, 2023. For the same periods, the weighted-average duration for home equity loan modifications was approximately 6 months and 9 months. The total forborne payments for residential mortgage loan modifications was $9 million and $15 million for the three and six months ended June 30, 2023. For the same periods, the total forborne payments for home equity modifications was $3 million and $5 million. If a borrower is unable to fulfill their obligations under the forbearance plans, they may be offered a trial or permanent modification.
Trial Modifications: Trial modification plans generally consist of the Corporation offering a borrower modified loan terms that reduce their contractual payments temporarily over a three-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. At June 30, 2023, the amortized cost of residential mortgage loans entering trial modifications during the three and six months ended June 30, 2023 was $27 million and $49 million. The amortized cost of home equity loans entering trial modifications during the same periods was $14 million and $22 million.
Permanent Modifications: Permanent modifications include borrowers that have completed a trial modification and have had their contractual payment terms permanently modified, as well as borrowers that proceed directly to a permanent modification 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. At June 30, 2023, the amortized cost of residential mortgage loans that were granted a permanent modification during the three and six months ended June 30, 2023 was $44 million and $88 million. The amortized cost of home equity loans that were granted a permanent modification during the same periods was $9 million and $18 million. The term extensions granted for residential mortgage and home equity permanent modifications vary widely and can be up to 30 years, but are mostly in the range of 1 to 20 years for both residential mortgage and home equity loans. The weighted-average term extension of permanent modifications for residential mortgage loans was 10.2 years and 8.6 years for the three and six months ended June 30, 2023, while the weighted-average interest rate reduction was 1.62 percent and 1.57 percent. For the same periods, the weighted-average term extension of permanent modifications for home equity loans was 16.9 years and 15.2 years, while the weighted-average interest rate reduction was 2.96 percent and 2.69 percent. Principal forgiveness and payment deferrals were insignificant for the three and six months ended June 30, 2023.
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 June 30, 2023. Borrowers with a home equity line of credit that received a forbearance plan could have all or a portion of their lines reinstated in the future if they cure their payment default and meet certain Bank conditions.
Chapter 7 Discharges: If a borrower’s consumer real estate obligation is discharged in a Chapter 7 bankruptcy proceeding, the contractual payment terms of the loan are not modified, although they can no longer be enforced against the individual borrower. The Corporation’s ability to collect amounts due on the loan is limited to enforcement against the property through the foreclosure and sale of the collateral. The Corporation will only pursue foreclosure upon default by the borrower, and otherwise will recover pursuant to the loan terms or at the time of a sale. Residential mortgage and home equity loans that were granted a Chapter 7 discharge were insignificant for the three and six months ended June 30, 2023.
The Corporation tracks the performance of modified loans to assess effectiveness of modification programs. Defaults of modified consumer real estate loans since January 1, 2023 were insignificant during the three and six months ended June 30, 2023. The table below provides aging information as of June 30, 2023 for consumer real estate loans modified since January 1, 2023.
Consumer Real Estate - Payment Status of Modifications to Borrowers in Financial Difficulty (1)
Current 30–89 Days
Past Due
90+ Days
Past Due
Total
(Dollars in millions) June 30, 2023
Residential mortgage $ 248  $ 105  $ 83  $ 436
Home equity 42  12  17  71
Total $ 290  $ 117  $ 100  $ 507
(1)Excludes trial modifications and Chapter 7 discharges
Consumer real estate foreclosed properties totaled $97 million and $121 million at June 30, 2023 and December 31, 2022. The carrying value of consumer real estate loans, including fully-insured loans, for which formal foreclosure proceedings were in process at June 30, 2023 and December 31, 2022 was $724 million and $871 million. During the six months ended June 30, 2023 and 2022, the Corporation reclassified $68 million and $99 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 fixed interest rate. As of June 30, 2023, substantially all payment plans provided to customers had a 60-month term. 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 June 30, 2023 amortized cost of credit card and other consumer loans that were modified through these programs during the three and six months ended June 30, 2023 was $168 million and $303 million. The financial effect of modifications resulted in a weighted-average interest rate reduction of 19.02 percent and 18.82 percent and principal forgiveness of $14 million and $25 million during the three and six months ended June 30, 2023.
The Corporation tracks the performance of modified loans to assess the effectiveness of modification programs. Defaults of modified credit card and other consumer loans since January 1, 2023 were insignificant during the three and six months ended June 30, 2023. Of the $303 million in modified credit card and other consumer loans to borrowers experiencing financial difficulty as of June 30, 2023, $237 million were current, $35 million were 30-89 days past due, and $31 million were greater than 90 days past due. These modifications represented 0.15 percent of outstanding credit card and other consumer loans at June 30, 2023.
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 Bank 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 table below provides the ending amortized cost of commercial loans modified during the three and six months ended June 30, 2023.

Commercial Loans - Modifications to Borrowers in Financial Difficulty
Term Extension Forbearances Total
(Dollars in millions) Three Months Ended June 30, 2023
U.S. Commercial $ 325  $ 5  $ 330 
Non-U.S. Commercial 121    121 
Commercial Real Estate 266  96  362 
Total $ 712  $ 101  $ 813 
Six Months Ended June 30, 2023
U.S. Commercial $ 503  $ 64  $ 567 
Non-U.S. Commercial 132    132 
Commercial Real Estate 519  96  615 
Total $ 1,154  $ 160  $ 1,314 
Term extensions granted increased the weighted-average life of the impacted loans by 1.6 years at both the three and six months ended June 30, 2023. The weighted-average duration of loan payments deferred under the Corporation’s commercial
loan forbearance program was 11 months for both the three and six months ended June 30, 2023. The deferral period for loan payments can vary, but are mostly in the range of 9 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 and six months ended June 30, 2023.
The Corporation tracks the performance of modified loans to assess effectiveness of modification programs. Defaults of
modified Commercial loans since January 1, 2023 were insignificant during the six months ended June 30, 2023. The table below provides aging information as of June 30, 2023 for commercial loans modified since January 1, 2023.
Commercial - Payment Status of Modified Loans to Borrowers in Financial Difficulty
Current 30–89 Days
Past Due
90+ Days
Past Due
Total % of Total Class of Financing Receivable
(Dollars in millions) June 30, 2023
U.S. Commercial $ 497  $ 41  $ 29  $ 567 0.16  %
Non-U.S. Commercial 132      132 0.11 
Commercial Real Estate 567    48  615 0.83 
Total $ 1,196  $ 41  $ 77  $ 1,314 0.24 
For the six months ended June 30, 2023, the Corporation had commitments to lend $687 million to commercial borrowers experiencing financial difficulty whose loans were modified during the period.
Prior-period Troubled Debt Restructuring Disclosures
Prior to adopting the new accounting standard on loan modifications, the Corporation accounted for modifications of loans to borrowers experiencing financial difficulty as TDRs, when the modification resulted in a concession. The following discussion reflects loans that were considered TDRs prior to January 1, 2023. For more information on TDR accounting policies, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K.
Consumer Real Estate
The table below presents the June 30, 2022 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, 2022. 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 modi