| LOANS, LEASES, AND ALLOWANCE FOR CREDIT LOSSES | LOANS, LEASES, AND ALLOWANCE FOR CREDIT LOSSES Loans, Leases, and Loans Held for Sale Loans and leases are summarized as follows according to major portfolio segment and specific loan class: (In millions) June 30, December 31, Loans held for sale $ 112 $ 53 Commercial: Commercial and industrial $ 16,622 $ 16,684 Leasing 390 383 Owner-occupied 9,236 9,219 Municipal 4,263 4,302 Total commercial 30,511 30,588 Commercial real estate: Construction and land development 2,725 2,669 Term 10,824 10,702 Total commercial real estate 13,549 13,371 Consumer: Home equity credit line 3,468 3,356 1-4 family residential 9,153 8,415 Construction and other consumer real estate 1,139 1,442 Bankcard and other revolving plans 466 474 Other 129 133 Total consumer 14,355 13,820 Total loans and leases $ 58,415 $ 57,779 Loans and leases are measured and presented at their amortized cost basis, which includes net unamortized purchase premiums, discounts, and deferred loan fees and costs totaling $29 million and $37 million at June 30, 2024 and December 31, 2023, respectively. Amortized cost basis does not include accrued interest receivables of $301 million and $299 million at June 30, 2024 and December 31, 2023, respectively. These receivables are included in “ Other assets Municipal loans generally include loans to state and local governments (“municipalities”) with the debt service being repaid from general funds or pledged revenues of the municipal entity, or to private commercial entities or 501(c)(3) not-for-profit entities utilizing a pass-through municipal entity to achieve favorable tax treatment. Land acquisition and development loans included in the construction and land development loan portfolio were $224 million at June 30, 2024 and $219 million at December 31, 2023. Loans with a carrying value of $39.3 billion at June 30, 2024 and $36.3 billion at December 31, 2023 have been pledged at the Federal Reserve (“FRB”) and the Federal Home Loan Bank (“FHLB”) of Des Moines as collateral for current and potential borrowings. At the time of origination, we determine the classification of loans as either held for investment or held for sale. Loans held for sale are measured at fair value or the lower of cost or fair value and primarily consist of (1) commercial real estate loans that are sold into securitization entities, and (2) conforming residential mortgages that are generally sold to U.S. government agencies. The following schedule presents loans added to, or sold from, the held for sale category during the periods presented: Three Months Ended Six Months Ended (In millions) 2024 2023 2024 2023 Loans added to held for sale $ 270 $ 220 $ 399 $ 306 Loans sold from held for sale 171 188 341 277 Occasionally, we have continuing involvement in the sold loans in the form of servicing rights or guarantees. The principal balance of sold loans for which we retain servicing was $0.5 billion and $0.4 billion at June 30, 2024 and December 31, 2023, respectively. Income from sold loans, excluding servicing, was $2 million and $3 million for the three and six months ended June 30, 2024, and $2 million and $7 million for the three and six months ended June 30, 2023, respectively. Other income from loans sold includes fair value adjustments on loans that are included in “Capital markets fees” on the consolidated statement of income. Allowance for Credit Losses The allowance for credit losses (“ACL”), which consists of the allowance for loan and lease losses (“ALLL”) and the reserve for unfunded lending commitments (“RULC”), represents our estimate of current expected credit losses related to the loan and lease portfolio and unfunded lending commitments as of the balance sheet date. For additional information regarding our policies and methodologies used to estimate the ACL, see Note 6 of our 2023 Form 10-K. The ACL for AFS and HTM debt securities is estimated separately from loans. For HTM securities, the ACL is estimated consistent with the approach for loans measured at amortized cost. See Note 5 of our 2023 Form 10-K for further discussion of our methodology used to estimate the ACL on AFS and HTM debt securities. Changes in the ACL are summarized as follows: Three Months Ended June 30, 2024 (In millions) Commercial Commercial Consumer Total Allowance for loan losses Balance at beginning of period $ 296 $ 299 $ 104 $ 699 Provision for loan losses 10 12 (10) 12 Gross loan and lease charge-offs 8 11 2 21 Recoveries 4 — 2 6 Net loan and lease charge-offs (recoveries) 4 11 — 15 Balance at end of period $ 302 $ 300 $ 94 $ 696 Reserve for unfunded lending commitments Balance at beginning of period $ 19 $ 10 $ 8 $ 37 Provision for unfunded lending commitments (3) (3) (1) (7) Balance at end of period $ 16 $ 7 $ 7 $ 30 Total allowance for credit losses at end of period Allowance for loan losses $ 302 $ 300 $ 94 $ 696 Reserve for unfunded lending commitments 16 7 7 30 Total allowance for credit losses $ 318 $ 307 $ 101 $ 726 Six Months Ended June 30, 2024 (In millions) Commercial Commercial Consumer Total Allowance for loan losses Balance at December 31, 2023 $ 302 $ 241 $ 141 $ 684 Provision for loan losses 8 69 (44) 33 Gross loan and lease charge-offs 18 11 6 35 Recoveries 10 1 3 14 Net loan and lease charge-offs (recoveries) 8 10 3 21 Balance at end of period $ 302 $ 300 $ 94 $ 696 Reserve for unfunded lending commitments Balance at beginning of period $ 19 $ 17 $ 9 $ 45 Provision for unfunded lending commitments (3) (10) (2) (15) Balance at end of period $ 16 $ 7 $ 7 $ 30 Total allowance for credit losses at end of period Allowance for loan losses $ 302 $ 300 $ 94 $ 696 Reserve for unfunded lending commitments 16 7 7 30 Total allowance for credit losses $ 318 $ 307 $ 101 $ 726 Three Months Ended June 30, 2023 (In millions) Commercial Commercial real estate Consumer Total Allowance for loan losses Balance at beginning of period $ 313 $ 160 $ 145 $ 618 Provision for loan losses 24 21 1 46 Gross loan and lease charge-offs 20 — 2 22 Recoveries 6 — 3 9 Net loan and lease charge-offs (recoveries) 14 — (1) 13 Balance at end of period $ 323 $ 181 $ 147 $ 651 Reserve for unfunded lending commitments Balance at beginning of period $ 19 $ 28 $ 13 $ 60 Provision for unfunded lending commitments 1 1 (2) — Balance at end of period $ 20 $ 29 $ 11 $ 60 Total allowance for credit losses at end of period Allowance for loan losses $ 323 $ 181 $ 147 $ 651 Reserve for unfunded lending commitments 20 29 11 60 Total allowance for credit losses $ 343 $ 210 $ 158 $ 711 Six Months Ended June 30, 2023 (In millions) Commercial Commercial Consumer Total Allowance for loan losses Balance at December 31, 2022 $ 300 $ 156 $ 119 $ 575 Adjustment for change in accounting standard — (4) 1 (3) Balance at beginning of period $ 300 $ 152 $ 120 $ 572 Provision for loan losses 34 29 29 92 Gross loan and lease charge-offs 23 — 6 29 Recoveries 12 — 4 16 Net loan and lease charge-offs (recoveries) 11 — 2 13 Balance at end of period $ 323 $ 181 $ 147 $ 651 Reserve for unfunded lending commitments Balance at beginning of period $ 16 $ 33 $ 12 $ 61 Provision for unfunded lending commitments 4 (4) (1) (1) Balance at end of period $ 20 $ 29 $ 11 $ 60 Total allowance for credit losses at end of period Allowance for loan losses $ 323 $ 181 $ 147 $ 651 Reserve for unfunded lending commitments 20 29 11 60 Total allowance for credit losses $ 343 $ 210 $ 158 $ 711 Nonaccrual Loans Loans are generally placed on nonaccrual status when payment in full of principal and interest is not expected, or the loan is 90 days or more past due as to principal or interest, unless the loan is both well-secured and in the process of collection. Factors we consider in determining whether a loan is placed on nonaccrual include delinquency status, collateral value, borrower or guarantor financial statement information, bankruptcy status, and other information which would indicate that the full and timely collection of interest and principal is uncertain. A nonaccrual loan may be returned to accrual status when (1) all delinquent interest and principal become current in accordance with the terms of the loan agreement, (2) the loan, if secured, is well-secured, (3) the borrower has paid according to the contractual terms for a minimum of six months, and (4) an analysis of the borrower indicates a reasonable assurance of the borrower's ability and willingness to maintain payments. The amortized cost basis of nonaccrual loans is summarized as follows: June 30, 2024 Amortized cost basis Total amortized cost basis (In millions) with no allowance with allowance Related allowance Commercial: Commercial and industrial $ 23 $ 88 $ 111 $ 38 Leasing — 2 2 1 Owner-occupied 10 18 28 2 Municipal 3 3 6 — Total commercial 36 111 147 41 Commercial real estate: Construction and land development — 2 2 — Term 33 2 35 1 Total commercial real estate 33 4 37 1 Consumer: Home equity credit line 5 24 29 5 1-4 family residential 9 37 46 4 Bankcard and other revolving plans — 1 1 1 Other — 1 1 — Total consumer 14 63 77 10 Total $ 83 $ 178 $ 261 $ 52 December 31, 2023 Amortized cost basis Total amortized cost basis (In millions) with no allowance with allowance Related allowance Commercial: Commercial and industrial $ 11 $ 71 $ 82 $ 30 Leasing — 2 2 1 Owner-occupied 12 8 20 1 Total commercial 23 81 104 32 Commercial real estate: Construction and land development 22 — 22 — Term 37 2 39 1 Total commercial real estate 59 2 61 1 Consumer: Home equity credit line 1 16 17 5 1-4 family residential 8 32 40 5 Total consumer 9 48 57 10 Total $ 91 $ 131 $ 222 $ 43 For accruing loans, interest is accrued and interest payments are recognized into interest income according to the contractual loan agreement. For nonaccruing loans, the accrual of interest is discontinued, any uncollected or accrued interest is reversed from interest income in a timely manner (generally within one month), and any payments received on these loans are not recognized into interest income, but are applied as a reduction to the principal outstanding. When the collectability of the amortized cost basis for a nonaccrual loan is no longer in doubt, then interest payments may be recognized in interest income on a cash basis. For the three and six months ended June 30, 2024 and 2023, there was no interest income recognized on a cash basis during the period the loans were on nonaccrual. The amount of accrued interest receivables reversed from interest income during the periods presented is summarized by loan portfolio segment as follows: Three Months Ended Six Months Ended (In millions) 2024 2023 2024 2023 Commercial $ 4 $ 3 $ 6 $ 5 Commercial real estate 1 — 3 — Consumer 1 1 2 1 Total $ 6 $ 4 $ 11 $ 6 Past Due Loans Closed-end loans with payments scheduled monthly are reported as past due when the borrower is in arrears for two or more monthly payments. Similarly, open-end credits, such as bankcard and other revolving credit plans, are reported as past due when the minimum payment has not been made for two or more billing cycles. Other multi-payment obligations (i.e., quarterly, semi-annual, etc.), single payment, and demand notes, are reported as past due when either principal or interest is due and unpaid for a period of 30 days or more. Past due loans (accruing and nonaccruing) are summarized as follows: June 30, 2024 (In millions) Current 30-89 days 90+ days Total Total Accruing Nonaccrual loans that are current 1 Commercial: Commercial and industrial $ 16,577 $ 30 $ 15 $ 45 $ 16,622 $ 4 $ 98 Leasing 388 — 2 2 390 — — Owner-occupied 9,223 10 3 13 9,236 1 22 Municipal 4,248 15 — 15 4,263 — 6 Total commercial 30,436 55 20 75 30,511 5 126 Commercial real estate: Construction and land development 2,723 — 2 2 2,725 — — Term 10,761 38 25 63 10,824 — 10 Total commercial real estate 13,484 38 27 65 13,549 — 10 Consumer: Home equity credit line 3,440 18 10 28 3,468 — 13 1-4 family residential 9,112 17 24 41 9,153 — 17 Construction and other consumer real estate 1,139 — — — 1,139 — — Bankcard and other revolving plans 463 2 1 3 466 1 1 Other 128 1 — 1 129 — 1 Total consumer 14,282 38 35 73 14,355 1 32 Total $ 58,202 $ 131 $ 82 $ 213 $ 58,415 $ 6 $ 168 December 31, 2023 (In millions) Current 30-89 days 90+ days Total Total Accruing Nonaccrual loans that are current 1 Commercial: Commercial and industrial $ 16,631 $ 38 $ 15 $ 53 $ 16,684 $ 1 $ 65 Leasing 381 2 — 2 383 — — Owner-occupied 9,206 11 2 13 9,219 1 18 Municipal 4,301 1 — 1 4,302 — — Total commercial 30,519 52 17 69 30,588 2 83 Commercial real estate: Construction and land development 2,645 2 22 24 2,669 — — Term 10,661 14 27 41 10,702 — 3 Total commercial real estate 13,306 16 49 65 13,371 — 3 Consumer: Home equity credit line 3,334 17 5 22 3,356 — 9 1-4 family residential 8,375 17 23 40 8,415 — 13 Construction and other consumer real estate 1,442 — — — 1,442 — — Bankcard and other revolving plans 468 5 1 6 474 1 — Other 132 1 — 1 133 — — Total consumer 13,751 40 29 69 13,820 1 22 Total $ 57,576 $ 108 $ 95 $ 203 $ 57,779 $ 3 $ 108 1 Represents nonaccrual loans that are not past due more than 30 days; however, full payment of principal and interest is not expected. Credit Quality Indicators In addition to the nonaccrual and past due criteria, we also analyze loans using loan risk-grading systems, which vary based on the size and type of credit risk exposure. The internal risk grades assigned to loans follow our definition of Pass, Special Mention, Substandard, and Doubtful, which are consistent with published definitions of regulatory risk classifications. • Pass — A Pass asset is higher-quality and does not fit any of the other categories described below. The likelihood of loss is considered low. • Special Mention — A Special Mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in our credit position at some future date. • Substandard — A Substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have well-defined weaknesses and are characterized by the distinct possibility that we may sustain some loss if deficiencies are not corrected. • Doubtful — A Doubtful asset has all the weaknesses inherent in a Substandard asset with the added characteristics that the weaknesses make collection or liquidation in full highly questionable and improbable. There were no loans classified as Doubtful at both June 30, 2024 and December 31, 2023. For consumer loans and for CRE loans with commitments greater than $1 million, we generally assign internal risk grades similar to those described previously based on automated rules that depend on refreshed credit scores, payment performance, and other risk indicators. These are generally assigned either a Pass, Special Mention, or Substandard grade, and are reviewed as we identify information that might warrant a grade change. The following schedule presents the amortized cost basis of loans and leases categorized by year of origination and by credit quality classification as monitored by management. The schedule also presents the current quarter gross charge-offs by year of origination. June 30, 2024 Term loans Revolving loans amortized cost basis Revolving loans converted to term loans amortized cost basis Amortized cost basis by year of origination (In millions) 2024 2023 2022 2021 2020 Prior Total Commercial: Commercial and industrial Pass $ 943 $ 2,411 $ 1,938 $ 1,014 $ 524 $ 854 $ 8,172 $ 150 $ 16,006 Special Mention 1 14 54 19 3 3 34 2 130 Accruing Substandard 27 57 85 32 3 23 145 3 375 Nonaccrual — 16 34 1 2 11 42 5 111 Total commercial and industrial 971 2,498 2,111 1,066 532 891 8,393 160 16,622 Gross charge-offs — 1 1 1 — 3 2 — 8 Leasing Pass 63 89 110 37 23 51 — — 373 Special Mention — 2 8 1 1 — — — 12 Accruing Substandard 1 1 — 1 — — — — 3 Nonaccrual — — 2 — — — — — 2 Total leasing 64 92 120 39 24 51 — — 390 Gross charge-offs — — — — — — — — — Owner-occupied Pass 543 1,115 1,770 1,852 956 2,350 213 50 8,849 Special Mention 5 3 16 15 1 24 11 — 75 Accruing Substandard 1 25 55 40 30 124 4 5 284 Nonaccrual 4 — 2 1 — 15 6 — 28 Total owner-occupied 553 1,143 1,843 1,908 987 2,513 234 55 9,236 Gross charge-offs — — — — — — — — — Municipal Pass 207 552 1,048 959 592 831 1 48 4,238 Special Mention — — — — — — — — — Accruing Substandard — 13 — 6 — — — — 19 Nonaccrual 3 — — — — 3 — — 6 Total municipal 210 565 1,048 965 592 834 1 48 4,263 Gross charge-offs — — — — — — — — — Total commercial 1,798 4,298 5,122 3,978 2,135 4,289 8,628 263 30,511 Total commercial gross charge-offs — 1 1 1 — 3 2 — 8 Commercial real estate: Construction and land development Pass 247 660 838 142 36 10 590 57 2,580 Special Mention — — 44 74 — — — — 118 Accruing Substandard 1 19 — 5 — — — — 25 Nonaccrual — — — — — — 2 — 2 Total construction and land development 248 679 882 221 36 10 592 57 2,725 Gross charge-offs — — — — — — — — — Term Pass 783 1,576 2,276 1,601 1,180 1,973 308 183 9,880 Special Mention 134 19 253 98 81 26 — — 611 Accruing Substandard 44 65 80 19 17 29 — 44 298 Nonaccrual — 2 22 — — 11 — — 35 Total term 961 1,662 2,631 1,718 1,278 2,039 308 227 10,824 Gross charge-offs — 7 4 — — — — — 11 Total commercial real estate 1,209 2,341 3,513 1,939 1,314 2,049 900 284 13,549 Total commercial real estate gross charge-offs — 7 4 — — — — — 11 June 30, 2024 Term loans Revolving loans amortized cost basis Revolving loans converted to term loans amortized cost basis Amortized cost basis by year of origination (In millions) 2024 2023 2022 2021 2020 Prior Total Consumer: Home equity credit line Pass — — — — — — 3,336 96 3,432 Special Mention — — — — — — — — — Accruing Substandard — — — — — — 6 1 7 Nonaccrual — — — — — — 23 6 29 Total home equity credit line — — — — — — 3,365 103 3,468 Gross charge-offs — — — — — — — — — 1-4 family residential Pass 439 820 2,659 1,898 956 2,335 — — 9,107 Special Mention — — — — — — — — — Accruing Substandard — — — — — — — — — Nonaccrual — 1 7 6 2 30 — — 46 Total 1-4 family residential 439 821 2,666 1,904 958 2,365 — — 9,153 Gross charge-offs — — — — — — — — — Construction and other consumer real estate Pass 38 280 727 77 9 8 — — 1,139 Special Mention — — — — — — — — — Accruing Substandard — — — — — — — — — Nonaccrual — — — — — — — — — Total construction and other consumer real estate 38 280 727 77 9 8 — — 1,139 Gross charge-offs — — — — — — — — — Bankcard and other revolving plans Pass — — — — — — 463 1 464 Special Mention — — — — — — — — — Accruing Substandard — — — — — — 1 — 1 Nonaccrual — — — — — — — 1 1 Total bankcard and other revolving plans — — — — — — 464 2 466 Gross charge-offs — — — — — — 2 — 2 Other consumer Pass 36 44 29 12 4 3 — — 128 Special Mention — — — — — — — — — Accruing Substandard — — — — — — — — — Nonaccrual — 1 — — — — — — 1 Total other consumer 36 45 29 12 4 3 — — 129 Gross charge-offs — — — — — — — — — Total consumer 513 1,146 3,422 1,993 971 2,376 3,829 105 14,355 Total consumer gross charge-offs — — — — — — 2 — 2 Total loans $ 3,520 $ 7,785 $ 12,057 $ 7,910 $ 4,420 $ 8,714 $ 13,357 $ 652 $ 58,415 Total gross charge-offs $ — $ 8 $ 5 $ 1 $ — $ 3 $ 4 $ — $ 21 December 31, 2023 Term loans Revolving loans amortized cost basis Revolving loans converted to term loans amortized cost basis Amortized cost basis by year of origination (In millions) 2023 2022 2021 2020 2019 Prior Total Commercial: Commercial and industrial Pass $ 2,654 $ 2,420 $ 1,204 $ 639 $ 494 $ 598 $ 7,973 $ 151 $ 16,133 Special Mention 8 98 34 2 20 37 103 — 302 Accruing Substandard 11 18 7 2 19 8 99 3 167 Nonaccrual 5 36 1 2 11 1 21 5 82 Total commercial and industrial 2,678 2,572 1,246 645 544 644 8,196 159 16,684 Gross charge-offs 1 10 6 — — 2 24 2 45 Leasing Pass 104 125 47 29 45 18 — — 368 Special Mention 2 9 1 1 — — — — 13 Accruing Substandard — — — — — — — — — Nonaccrual — 2 — — — — — — 2 Total leasing 106 136 48 30 45 18 — — 383 Gross charge-offs — — — — — — — — — Owner-occupied Pass 1,080 1,945 2,020 1,002 721 1,907 212 52 8,939 Special Mention 2 5 17 5 17 15 — — 61 Accruing Substandard 10 31 29 21 16 90 2 — 199 Nonaccrual — 1 1 7 3 8 — — 20 Total owner-occupied 1,092 1,982 2,067 1,035 757 2,020 214 52 9,219 Gross charge-offs — — — — — — — — — Municipal Pass 601 1,080 1,069 623 382 512 — 3 4,270 Special Mention 7 — — — — 6 — — 13 Accruing Substandard 8 — 6 3 1 1 — — 19 Nonaccrual — — — — — — — — — Total municipal 616 1,080 1,075 626 383 519 — 3 4,302 Gross charge-offs — — — — — — — — — Total commercial 4,492 5,770 4,436 2,336 1,729 3,201 8,410 214 30,588 Total commercial gross charge-offs 1 10 6 — — 2 24 2 45 Commercial real estate: Construction and land development Pass 553 938 355 56 7 4 518 127 2,558 Special Mention — — 29 30 — — — — 59 Accruing Substandard 23 2 — 5 — — — — 30 Nonaccrual — — — — 21 — 1 — 22 Total construction and land development 576 940 384 91 28 4 519 127 2,669 Gross charge-offs — — — — 1 — — — 1 Term Pass 1,861 2,385 1,833 1,449 804 1,438 238 110 10,118 Special Mention 55 108 65 78 44 6 — — 356 Accruing Substandard 79 18 12 16 5 24 — 35 189 Nonaccrual — 26 — — 3 10 — — 39 Total term 1,995 2,537 1,910 1,543 856 1,478 238 145 10,702 Gross charge-offs — 2 — — — — — — 2 Total commercial real estate 2,571 3,477 2,294 1,634 884 1,482 757 272 13,371 Total commercial real estate gross charge-offs — 2 — — 1 — — — 3 December 31, 2023 Term loans Revolving loans amortized cost basis Revolving loans converted to term loans amortized cost basis Amortized cost basis by year of origination (In millions) 2023 2022 2021 2020 2019 Prior Total Consumer: Home equity credit line Pass — — — — — — 3,237 97 3,334 Special Mention — — — — — — — — — Accruing Substandard — — — — — — 4 1 5 Nonaccrual — — — — — — 15 2 17 Total home equity credit line — — — — — — 3,256 100 3,356 Gross charge-offs — — — — — — 3 — 3 1-4 family residential Pass 814 2,264 1,823 988 594 1,891 — — 8,374 Special Mention — — — — — — — — — Accruing Substandard — — — — — 1 — — 1 Nonaccrual — 3 3 3 4 27 — — 40 Total 1-4 family residential 814 2,267 1,826 991 598 1,919 — — 8,415 Gross charge-offs — — — — — 2 — — 2 Construction and other consumer real estate Pass 212 1,002 200 15 7 6 — — 1,442 Special Mention — — — — — — — — — Accruing Substandard — — — — — — — — — Nonaccrual — — — — — — — — — Total construction and other consumer real estate 212 1,002 200 15 7 6 — — 1,442 Gross charge-offs — — — — — — — — — Bankcard and other revolving plans Pass — — — — — — 471 1 472 Special Mention — — — — — — — — — Accruing Substandard — — — — — — 2 — 2 Nonaccrual — — — — — — — — — Total bankcard and other revolving plans — — — — — — 473 1 474 Gross charge-offs — — — — — — 9 — 9 Other consumer Pass 66 37 18 6 4 2 — — 133 Special Mention — — — — — — — — — Accruing Substandard — — — — — — — — — Nonaccrual — — — — — — — — — Total other consumer 66 37 18 6 4 2 — — 133 Gross charge-offs — — — — — — — — — Total consumer 1,092 3,306 2,044 1,012 609 1,927 3,729 101 13,820 Total consumer gross charge-offs — — — — — 2 12 — 14 Total loans $ 8,155 $ 12,553 $ 8,774 $ 4,982 $ 3,222 $ 6,610 $ 12,896 $ 587 $ 57,779 Total gross charge-offs $ 1 $ 12 $ 6 $ — $ 1 $ 4 $ 36 $ 2 $ 62 Loan Modifications Loans may be modified in the normal course of business for competitive reasons or to strengthen our collateral position. Loan modifications may also occur when the borrower experiences financial difficulty and needs temporary or permanent relief from the original contractual terms of the loan. For loans that have been modified with a borrower experiencing financial difficulty, we use the same credit loss estimation methods that we use for the rest of the loan portfolio. These methods incorporate the post-modification loan terms, as well as defaults and charge-offs associated with historical modified loans. All nonaccruing loans more than $1 million are evaluated individually, regardless of modification. We consider many factors in determining whether to agree to a loan modification and we seek a solution that will both minimize potential loss to us and attempt to help the borrower. We evaluate borrowers’ current and forecasted future cash flows, their ability and willingness to make current contractual or proposed modified payments, the value of the underlying collateral (if applicable), the possibility of obtaining additional security or guarantees, and the potential costs related to a repossession or foreclosure and the subsequent sale of the collateral. A modified loan on nonaccrual will generally remain on nonaccrual until the borrower has proven the ability to perform under the modified structure for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. Performance prior to the modification, or significant events that coincide with the modification, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual at the time of modification or after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains on nonaccrual. On an ongoing basis, we monitor the performance of all modified loans according to their modified terms. The amortized cost of modified loans that had a payment default during the three and six months ended June 30, 2024, which were still in default at period end, and were within 12 months or less of being modified was approximately $3 million and $27 million, respectively, primarily commercial real estate loans, and zero for both the three and six months ended June 30, 2023, respectively. The amortized cost of loans to borrowers experiencing financial difficulty that were modified during the period, by loan class and modification type, is summarized in the following schedule: Three Months Ended June 30, 2024 Amortized cost associated with (Dollar amounts in millions) Interest Maturity Principal Payment Multiple modification types 1 Total 2 Percentage of total loans 3 Commercial: Commercial and industrial $ — $ 27 $ — $ — $ 1 $ 28 0.2 % Owner-occupied — 2 — — — 2 — Total commercial — 29 — — 1 30 0.1 Commercial real estate: Term — 16 — — — 16 0.1 Total commercial real estate — 16 — — — 16 0.1 Consumer: 1-4 family residential — — 1 — — 1 — Total consumer — — 1 — — 1 — Total $ — $ 45 $ 1 $ — $ 1 $ 47 0.1 % Six Months Ended June 30, 2024 Amortized cost associated with (Dollar amounts in millions) Interest Maturity Principal Payment Multiple modification types 1 Total 2 Percentage of total loans 3 Commercial: Commercial and industrial $ — $ 55 $ — $ 1 $ 4 $ 60 0.4 % Owner-occupied — 2 — — 2 4 — Municipal — 3 — — — 3 0.1 Total commercial — 60 — 1 6 67 0.2 Commercial real estate: Construction and land development — 2 — — — 2 0.1 Term — 103 — — — 103 1.0 Total commercial real estate — 105 — — — 105 0.8 Consumer: Home equity credit line — — — — 1 1 — 1-4 family residential — — 2 — 2 4 — Total consumer — — 2 — 3 5 — Total $ — $ 165 $ 2 $ 1 9 $ 177 0.3 % Three Months Ended June 30, 2023 Amortized cost associated with (Dollar amounts in millions) Interest Maturity Principal Payment Multiple modification types 1 Total 2 Percentage of total loans 3 Commercial: Commercial and industrial $ 1 $ 27 $ — $ — $ — $ 28 0.2 % Owner-occupied — 20 — — — 20 0.2 Total commercial 1 47 — — — 48 0.2 Commercial real estate: Construction and land development — 18 — — — 18 0.7 Term — 34 — — — 34 0.3 Total commercial real estate — 52 — — — 52 0.4 Consumer: 1-4 family residential — — 1 — 1 2 — Bankcard and other revolving plans — 1 — — — 1 0.2 Total consumer — 1 1 — 1 3 — Total $ 1 $ 100 $ 1 $ — $ 1 $ 103 0.2 % Six Months Ended June 30, 2023 Amortized cost associated with (Dollar amounts in millions) Interest Maturity Principal Payment Multiple modification types 1 Total 2 Percentage of total loans 3 Commercial: Commercial and industrial $ 1 $ 42 $ — $ — $ — $ 43 0.3 % Owner-occupied 4 22 — — — 26 0.3 Total commercial 5 64 — — — 69 0.2 Commercial real estate: Construction and land development — 18 — — — 18 0.7 Term — 58 — — — 58 0.6 Total commercial real estate — 76 — — — 76 0.6 Consumer: 1-4 family residential — — 1 — 1 2 — Bankcard and other revolving plans — 1 — — — 1 0.2 Total consumer — 1 1 — 1 3 — Total $ 5 $ 141 $ 1 $ — 1 $ 148 0.3 % 1 Includes modifications that resulted from a combination of interest rate reduction, maturity or term extension, principal forgiveness, and payment deferral modifications. 2 Unfunded lending commitments related to loans modified to borrowers experiencing financial difficulty totaled $10 million at both June 30, 2024 and June 30, 2023. 3 Amounts less than 0.05% are rounded to zero. The financial impact of loan modifications to borrowers experiencing financial difficulty is summarized in the following schedules: Three Months Ended Six Months Ended Weighted-average interest rate reduction (in percentage points) Weighted-average term extension Weighted-average interest rate reduction (in percentage points) Weighted-average term extension Commercial: Commercial and industrial 0.6 % 3 0.1 % 8 Owner-occupied — 1 0.1 4 Municipal — 0 — 61 Total commercial 0.6 3 0.1 10 Commercial real estate: Construction and land development — 5 — 14 Term — 3 — 11 Total commercial real estate — 3 — 11 Consumer: Home equity credit line — 0 6.8 42 1-4 family residential — 0 1.3 78 Other — 0 — 71 Total consumer — 0 4.8 67 Total weighted average financial impact 0.6 % 3 1.0 % 12 Three Months Ended Six Months Ended Weighted-average interest rate reduction (in percentage points) Weighted-average term extension Weighted-average interest rate reduction (in percentage points) Weighted-average term extension Commercial: Commercial and industrial 1.0 % 8 1.0 % 9 Owner-occupied — 7 4.4 7 Total commercial 1.0 8 3.7 8 Commercial real estate: Construction and land development — 6 — 6 Term — 18 — 17 Total commercial real estate — 14 — 15 Consumer: 1 1-4 family residential 1.3 110 1.3 110 Bankcard and other revolving plans — 65 — 61 Total consumer 1.3 87 1.3 87 Total weighted average financial impact 1.1 % 12 3.4 % 13 1 Primarily relates to a small number of loans within each consumer loan class. Loan modifications to borrowers experiencing financial difficulty during the three and six months ended June 30, 2024 and 2023 resulted in less than $1 million of principal forgiveness for each respective period. The following schedule presents the aging of loans to borrowers experiencing financial difficulty that were modified on or after July 1, 2023 through June 30, 2024, presented by portfolio segment and loan class: June 30, 2024 (In millions) Current 30-89 days 90+ days Total Total Commercial: Commercial and industrial $ 83 $ 1 $ 4 $ 5 $ 88 Owner-occupied 8 — — — 8 Municipal 11 — — — 11 Total commercial 102 1 4 5 107 Commercial real estate: Construction and land development 19 — 2 2 21 Term 156 26 2 28 184 Total commercial real estate 175 26 4 30 205 Consumer: Home equity credit line 1 — — — 1 1-4 family residential 4 — — — 4 Other 1 — — — 1 Total consumer 6 — — — 6 Total $ 283 $ 27 $ 8 $ 35 $ 318 The following schedule presents the aging of loans to borrowers experiencing financial difficulty that were modified on or after January 1, 2023, the date we adopted ASU 2022-02, through June 30, 2023, presented by portfolio segment and loan class: June 30, 2023 (In millions) Current 30-89 days 90+ days Total Total Commercial: Commercial and industrial $ 40 $ 3 $ — $ 3 $ 43 Owner-occupied 25 — 1 1 26 Total commercial 65 3 1 4 69 Commercial real estate: Construction and land development 18 — — — 18 Term 58 — — — 58 Total commercial real estate 76 — — — 76 Consumer: 1-4 family residential 2 — — — 2 Bankcard and other revolving plans 1 — — — 1 Total consumer 3 — — — 3 Total $ 144 $ 3 $ 1 $ 4 $ 148 Collateral-Dependent Loans When a loan is individually evaluated for expected credit losses, we estimate a specific reserve for the loan based on (1) the projected present value of the loan’s future cash flows discounted at the loan’s effective interest rate, (2) the observable market price of the loan, or (3) the fair value of the loan’s underlying collateral. Select information on loans for which the borrower is experiencing financial difficulties and repayment is expected to be provided substantially through the operation or sale of the underlying collateral, including the type of collateral and the extent to which the collateral secures the loans, is summarized as follows: June 30, 2024 (Dollar amounts in millions) Amortized cost Major types of collateral Weighted average LTV 1 Commercial real estate: Construc |
