Loans and Related Allowance for Credit Losses | Note 4: Loans and Related Allowance for Credit Losses Table 4.1 presents total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include unearned income, net deferred loan fees or costs, and unamortized discounts and premiums. These amounts were less than 1% of our total loans outstanding at June 30, 2022, and December 31, 2021. Outstanding balances exclude accrued interest receivable on loans, except for certain revolving loans, such as credit card loans. See Note 7 (Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. During the first half of 2022, we reversed accrued interest receivable of $20 million for our commercial portfolio segment and $65 million for our consumer portfolio segment, compared with $24 million and $104 million, respectively, for the same period a year ago. Table 4.1: Loans Outstanding (in millions) Jun 30, Dec 31, Commercial: Commercial and industrial $ 380,235 350,436 Real estate mortgage 133,411 127,733 Real estate construction 21,743 20,092 Lease financing 14,530 14,859 Total commercial 549,919 513,120 Consumer: Residential mortgage – first lien 252,941 242,270 Residential mortgage – junior lien 14,604 16,618 Credit card 41,222 38,453 Auto 55,658 56,659 Other consumer 29,390 28,274 Total consumer 393,815 382,274 Total loans $ 943,734 895,394 Our non-U.S. loans are reported by respective class of financing receivable in the table above. Substantially all of our non-U.S. loan portfolio is commercial loans. Table 4.2 presents total non-U.S. commercial loans outstanding by class of financing receivable. Table 4.2: Non-U.S. Commercial Loans Outstanding (in millions) Jun 30, Dec 31, Non-U.S. commercial loans: Commercial and industrial $ 82,621 77,365 Real estate mortgage 6,442 7,070 Real estate construction 1,619 1,582 Lease financing 696 680 Total non-U.S. commercial loans $ 91,378 86,697 Loan Purchases, Sales, and Transfers Table 4.3 presents the proceeds paid or received for purchases and sales of loans and transfers from loans held for investment to mortgages/loans held for sale. The table excludes loans for which we have elected the fair value option and government insured/guaranteed residential mortgage – first lien loans because their loan activity normally does not impact the ACL. Table 4.3: Loan Purchases, Sales, and Transfers 2022 2021 (in millions) Commercial Consumer Total Commercial Consumer Total Quarter ended June 30, Purchases $ 276 2 278 134 1 135 Sales (689) — (689) (65) — (65) Transfers (to)/from LHFS (62) (14) (76) (359) (99) (458) Six months ended Purchases $ 376 2 378 182 2 184 Sales (1,271) — (1,271) (338) (188) (526) Transfers (to)/from LHFS (41) (23) (64) (794) (36) (830) Unfunded Credit Commitments Unfunded credit commitments are legally binding agreements to lend to customers with terms covering usage of funds, contractual interest rates, expiration dates, and any required collatera l. Our commercial lending commitments include, but are not limited to, (i) commitments for working capital and general corporate purposes, (ii) financing to customers who warehouse financial assets secured by real estate, consumer, or corporate loans, (iii) financing that is expected to be syndicated or replaced with other forms of long-term financing, and (iv) commercial real estate lending. We also originate multipurpose lending commitments under which commercial customers have the option to draw on the facility in one of several forms, including the issuance of letters of credit, which reduces the unfunded commitment amounts of the facility. The maximum credit risk for these commitments will generally be lower than the contractual amount because these commitments may expire without being used or may be cancelled at the customer’s request. We may reduce or cancel lines of credit in accordance with the contracts and applicable law. Certain commitments either provide us with funding discretion or are subject to loan agreements with covenants regarding the financial performance of the customer or borrowing base formulas that must be met before we are required to fund the commitment. Our credit risk monitoring activities include managing the amount of commitments, both to individual customers and in total, and the size and maturity structure of these commitments. We do not recognize an ACL for commitments that are unconditionally cancellable at our discretion. We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At June 30, 2022, and December 31, 2021, we had $2.2 billion and $1.5 billion, respectively, of outstanding issued commercial letters of credit. See Note 11 (Guarantees and Other Commitments) for additional information on issued standby letters of credit. We may be a fronting bank, whereby we act as a representative for other lenders, and advance funds or provide for the issuance of letters of credit under syndicated loan or letter of credit agreements. Any advances are generally repaid in less than a week and would normally require default of both the customer and another lender to expose us to loss. The unfunded amount of these fronting arrangements totaled approximately $87.6 billion at June 30, 2022. The contractual amount of our unfunded credit commitments, including unissued letters of credit, is summarized in Table 4.4. The table excludes issued letters of credit and is presented net of commitments syndicated to others, including the fronting arrangements described above. Table 4.4: Unfunded Credit Commitments (in millions) Jun 30, Dec 31, Commercial: Commercial and industrial (1) $ 399,216 388,162 Real estate mortgage 9,350 11,515 Real estate construction 21,178 19,943 Total commercial 429,744 419,620 Consumer: Residential mortgage – first lien 24,929 32,992 Residential mortgage – junior lien 24,142 27,447 Credit card 137,789 130,743 Other consumer (1) 67,339 75,919 Total consumer 254,199 267,101 Total unfunded credit commitments $ 683,943 686,721 (1) In second quarter 2022, we reclassified commitments for securities-based loans from commercial and industrial loan commitments to other consumer loan commitments to align all securities-based loan commitments originated by the Wealth and Investment Management operating segment. Prior period balances have been revised to conform with the current period presentation. Allowance for Credit Losses Table 4.5 presents the allowance for credit losses (ACL) for loans, which consists of the allowance for loan losses and the allowance for unfunded credit commitments. The ACL for loans decreased $904 million from December 31, 2021, reflecting reduced uncertainty around the economic impact of the COVID-19 pandemic on our loan portfolio. This decrease was partially offset by increased uncertainty related to the risks of high inflation, as well as loan growth. Table 4.5: Allowance for Credit Losses for Loans Quarter ended June 30, Six months ended June 30, ($ in millions) 2022 2021 2022 2021 Balance, beginning of period $ 12,681 18,043 $ 13,788 19,713 Provision for credit losses 578 (1,239) (197) (2,356) Interest income on certain loans (1) (27) (36) (56) (77) Loan charge-offs: Commercial: Commercial and industrial (68) (149) (124) (308) Real estate mortgage (3) (11) (3) (63) Real estate construction — — — — Lease financing (5) (10) (9) (31) Total commercial (76) (170) (136) (402) Consumer: Residential mortgage – first lien (26) (6) (51) (23) Residential mortgage – junior lien (20) (12) (42) (31) Credit card (287) (357) (554) (692) Auto (151) (128) (316) (257) Other consumer (94) (79) (202) (226) Total consumer (578) (582) (1,165) (1,229) Total loan charge-offs (654) (752) (1,301) (1,631) Loan recoveries: Commercial: Commercial and industrial 41 68 120 139 Real estate mortgage 7 16 12 22 Real estate construction — 1 — 1 Lease financing 5 5 10 11 Total commercial 53 90 142 173 Consumer: Residential mortgage – first lien 29 25 57 66 Residential mortgage – junior lien 33 43 73 81 Credit card 88 101 179 200 Auto 83 83 152 160 Other consumer 24 29 49 57 Total consumer 257 281 510 564 Total loan recoveries 310 371 652 737 Net loan charge-offs (344) (381) (649) (894) Other (4) 4 (2) 5 Balance, end of period $ 12,884 16,391 $ 12,884 16,391 Components: Allowance for loan losses $ 11,786 15,148 $ 11,786 15,148 Allowance for unfunded credit commitments 1,098 1,243 1,098 1,243 Allowance for credit losses $ 12,884 16,391 $ 12,884 16,391 Net loan charge-offs as a percentage of average total loans 0.15 % 0.18 0.14 0.21 Allowance for loan losses as a percentage of total loans 1.25 1.78 1.25 1.78 Allowance for credit losses for loans as a percentage of total loans 1.37 1.92 1.37 1.92 (1) Loans with an allowance measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in allowance attributable to the passage of time as interest income. Table 4.6 summarizes the activity in the ACL by our commercial and consumer portfolio segments. Table 4.6: Allowance for Credit Losses for Loans Activity by Portfolio Segment 2022 2021 (in millions) Commercial Consumer Total Commercial Consumer Total Quarter ended June 30, Balance, beginning of period $ 7,148 5,533 12,681 10,682 7,361 18,043 Provision for credit losses (32) 610 578 (1,021) (218) (1,239) Interest income on certain loans (1) (7) (20) (27) (15) (21) (36) Loan charge-offs (76) (578) (654) (170) (582) (752) Loan recoveries 53 257 310 90 281 371 Net loan charge-offs (23) (321) (344) (80) (301) (381) Other (4) — (4) 4 — 4 Balance, end of period $ 7,082 5,802 12,884 9,570 6,821 16,391 Six months ended June 30, Balance, beginning of period $ 7,791 5,997 13,788 11,516 8,197 19,713 Provision for credit losses (697) 500 (197) (1,688) (668) (2,356) Interest income on certain loans (1) (16) (40) (56) (34) (43) (77) Loan charge-offs (136) (1,165) (1,301) (402) (1,229) (1,631) Loan recoveries 142 510 652 173 564 737 Net loan charge-offs 6 (655) (649) (229) (665) (894) Other (2) — (2) 5 — 5 Balance, end of period $ 7,082 5,802 12,884 9,570 6,821 16,391 (1) Loans with an allowance measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in allowance attributable to the passage of time as interest income. Credit Quality We monitor credit quality by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the ACL for loans. The following sections provide the credit quality indicators we most closely monitor. The credit quality indicators are generally based on information as of our financial statement date. COMMERCIAL CREDIT QUALITY INDICATORS We manage a consistent process for assessing commercial loan credit quality. Commercial loans are generally subject to individual risk assessment using our internal borrower and collateral quality ratings, which is our primary credit quality indicator. Our ratings are aligned to regulatory definitions of pass and criticized categories with the criticized segmented among special mention, substandard, doubtful and loss categories. Table 4.7 provides the outstanding balances of our commercial loan portfolio by risk category and credit quality information by origination year for term loans. Revolving loans may convert to term loans as a result of a contractual provision in the original loan agreement or if modified in a troubled debt restructuring (TDR). At June 30, 2022, we had $526.5 billion and $23.4 billion of pass and criticized commercial loans, respectively. Table 4.7: Commercial Loan Categories by Risk Categories and Vintage Term loans by origination year Revolving loans Revolving loans converted to term loans Total (in millions) 2022 2021 2020 2019 2018 Prior June 30, 2022 Commercial and industrial Pass $ 38,557 37,325 11,983 16,317 5,329 7,622 252,271 777 370,181 Criticized 548 1,464 737 729 793 749 5,034 — 10,054 Total commercial and industrial 39,105 38,789 12,720 17,046 6,122 8,371 257,305 777 380,235 Real estate mortgage Pass 21,684 34,936 14,144 15,869 11,230 19,604 5,355 12 122,834 Criticized 886 2,151 1,011 2,673 1,379 2,224 253 — 10,577 Total real estate mortgage 22,570 37,087 15,155 18,542 12,609 21,828 5,608 12 133,411 Real estate construction Pass 2,445 6,553 3,859 3,919 1,464 550 1,218 — 20,008 Criticized 285 545 174 467 197 67 — — 1,735 Total real estate construction 2,730 7,098 4,033 4,386 1,661 617 1,218 — 21,743 Lease financing Pass 1,941 3,897 2,536 1,938 1,052 2,144 — — 13,508 Criticized 157 259 191 204 127 84 — — 1,022 Total lease financing 2,098 4,156 2,727 2,142 1,179 2,228 — — 14,530 Total commercial loans $ 66,503 87,130 34,635 42,116 21,571 33,044 264,131 789 549,919 Term loans by origination year Revolving loans Revolving loans converted to term loans Total 2021 2020 2019 2018 2017 Prior December 31, 2021 Commercial and industrial Pass $ 65,562 15,193 20,553 7,400 3,797 13,985 211,452 679 338,621 Criticized 1,657 884 1,237 1,256 685 551 5,528 17 11,815 Total commercial and industrial 67,219 16,077 21,790 8,656 4,482 14,536 216,980 696 350,436 Real estate mortgage Pass 38,196 15,929 19,013 12,618 7,451 16,026 5,411 3 114,647 Criticized 3,462 1,119 2,975 1,834 875 2,421 400 — 13,086 Total real estate mortgage 41,658 17,048 21,988 14,452 8,326 18,447 5,811 3 127,733 Real estate construction Pass 5,895 4,058 4,549 2,167 379 329 1,042 2 18,421 Criticized 510 266 586 234 68 7 — — 1,671 Total real estate construction 6,405 4,324 5,135 2,401 447 336 1,042 2 20,092 Lease financing Pass 4,100 3,012 2,547 1,373 838 1,805 — — 13,675 Criticized 284 246 282 184 86 102 — — 1,184 Total lease financing 4,384 3,258 2,829 1,557 924 1,907 — — 14,859 Total commercial loans $ 119,666 40,707 51,742 27,066 14,179 35,226 223,833 701 513,120 Table 4.8 provides past due information for commercial loans, which we monitor as part of our credit risk management practices; however, delinquency is not a primary credit quality indicator for commercial loans. Table 4.8: Commercial Loan Categories by Delinquency Status (in millions) Commercial Real Real Lease Total June 30, 2022 By delinquency status: Current-29 days past due (DPD) and still accruing $ 376,176 132,008 21,510 14,288 543,982 30-89 DPD and still accruing 2,842 421 230 146 3,639 90+ DPD and still accruing 495 84 — — 579 Nonaccrual loans 722 898 3 96 1,719 Total commercial loans $ 380,235 133,411 21,743 14,530 549,919 December 31, 2021 By delinquency status: Current-29 DPD and still accruing $ 348,033 126,184 19,900 14,568 508,685 30-89 DPD and still accruing 1,217 285 179 143 1,824 90+ DPD and still accruing 206 29 — — 235 Nonaccrual loans 980 1,235 13 148 2,376 Total commercial loans $ 350,436 127,733 20,092 14,859 513,120 CONSUMER CREDIT QUALITY INDICATORS We have various classes of consumer loans that present unique credit risks. Loan delinquency, FICO credit scores and loan-to-value (LTV) for residential mortgage loans are the primary credit quality indicators that we monitor and utilize in our evaluation of the appropriateness of the ACL for the consumer loan portfolio segment. Many of our loss estimation techniques used for the ACL for loans rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality in the establishment of our ACL for consumer loans. Table 4.9 provides the outstanding balances of our consumer loan portfolio by delinquency status. Credit quality information is provided with the year of origination for term loans. Revolving loans may convert to term loans as a result of a contractual provision in the original loan agreement or if modified in a TDR. The revolving loans converted to term loans in the credit card loan category represent credit card loans with modified terms that require payment over a specific term. Payment deferral activities in the residential mortgage portfolio instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for residential mortgage customers who otherwise would have moved into past due status. Table 4.9: Consumer Loan Categories by Delinquency Status and Vintage Term loans by origination year Revolving loans Revolving loans converted to term loans (in millions) 2022 2021 2020 2019 2018 Prior Total June 30, 2022 Residential mortgage – first lien By delinquency status: Current-29 DPD $ 36,321 67,320 38,481 21,788 6,533 65,767 4,231 1,919 242,360 30-59 DPD 116 42 27 25 8 459 14 34 725 60-89 DPD 1 6 6 7 2 140 5 16 183 90-119 DPD 2 1 3 2 1 51 3 8 71 120-179 DPD — 7 4 1 4 79 3 16 114 180+ DPD — 3 25 21 26 576 25 134 810 Government insured/guaranteed loans (1) 1 41 128 146 220 8,142 — — 8,678 Total residential mortgage – first lien 36,441 67,420 38,674 21,990 6,794 75,214 4,281 2,127 252,941 Residential mortgage – junior lien By delinquency status: Current-29 DPD 12 31 18 25 22 591 8,856 4,706 14,261 30-59 DPD — — — — — 9 19 50 78 60-89 DPD — — — — — 4 8 22 34 90-119 DPD — — — — — 3 3 11 17 120-179 DPD — — — — — 4 5 16 25 180+ DPD — — — — — 23 35 131 189 Total residential mortgage – junior lien 12 31 18 25 22 634 8,926 4,936 14,604 Credit cards By delinquency status: Current-29 DPD — — — — — — 40,397 201 40,598 30-59 DPD — — — — — — 186 10 196 60-89 DPD — — — — — — 126 8 134 90-119 DPD — — — — — — 97 6 103 120-179 DPD — — — — — — 188 3 191 180+ DPD — — — — — — — — — Total credit cards — — — — — — 40,994 228 41,222 Auto By delinquency status: Current-29 DPD 11,764 23,554 9,625 6,283 2,225 1,024 — — 54,475 30-59 DPD 54 340 182 130 59 56 — — 821 60-89 DPD 15 118 56 42 18 19 — — 268 90-119 DPD 5 45 20 12 5 6 — — 93 120-179 DPD — 1 — — — — — — 1 180+ DPD — — — — — — — — — Total auto 11,838 24,058 9,883 6,467 2,307 1,105 — — 55,658 Other consumer By delinquency status: Current-29 DPD 2,019 1,606 484 439 116 116 24,407 131 29,318 30-59 DPD 2 6 1 2 1 2 7 6 27 60-89 DPD 1 3 1 1 1 1 5 4 17 90-119 DPD — 3 1 1 — — 4 2 11 120-179 DPD — — — 1 — — 6 1 8 180+ DPD — — — — — 1 1 7 9 Total other consumer 2,022 1,618 487 444 118 120 24,430 151 29,390 Total consumer loans $ 50,313 93,127 49,062 28,926 9,241 77,073 78,631 7,442 393,815 (continued on following page) (continued from previous page) Term loans by origination year Revolving loans Revolving loans converted to term loans (in millions) 2021 2020 2019 2018 2017 Prior Total December 31, 2021 Residential mortgage – first lien By delinquency status: Current-29 DPD $ 69,994 41,527 24,887 7,660 13,734 61,576 5,248 1,673 226,299 30-59 DPD 129 27 30 12 24 418 14 29 683 60-89 DPD 10 7 2 — 3 126 7 15 170 90-119 DPD — 1 1 1 5 53 4 9 74 120-179 DPD 1 16 2 2 1 63 4 14 103 180+ DPD — 62 72 71 92 1,294 36 156 1,783 Government insured/guaranteed loans (1) 14 134 209 349 364 12,088 — — 13,158 Total residential mortgage – first lien 70,148 41,774 25,203 8,095 14,223 75,618 5,313 1,896 242,270 Residential mortgage – junior lien By delinquency status: Current-29 DPD 28 20 30 26 21 700 10,883 4,426 16,134 30-59 DPD — — — — 1 10 29 46 86 60-89 DPD — — — — — 4 10 21 35 90-119 DPD — — — 1 — 3 4 12 20 120-179 DPD — — — — — 5 7 14 26 180+ DPD — — 1 — — 40 59 217 317 Total residential mortgage – junior lien 28 20 31 27 22 762 10,992 4,736 16,618 Credit cards By delinquency status: Current-29 DPD — — — — — — 37,686 192 37,878 30-59 DPD — — — — — — 176 7 183 60-89 DPD — — — — — — 118 5 123 90-119 DPD — — — — — — 98 5 103 120-179 DPD — — — — — — 165 1 166 180+ DPD — — — — — — — — — Total credit cards — — — — — — 38,243 210 38,453 Auto By delinquency status: Current-29 DPD 29,246 12,412 8,476 3,271 1,424 714 — — 55,543 30-59 DPD 220 193 165 81 46 57 — — 762 60-89 DPD 69 67 53 25 14 21 — — 249 90-119 DPD 31 27 22 9 6 8 — — 103 120-179 DPD — 1 1 — — — — — 2 180+ DPD — — — — — — — — — Total auto 29,566 12,700 8,717 3,386 1,490 800 — — 56,659 Other consumer By delinquency status: Current-29 DPD 2,221 716 703 203 107 125 23,988 143 28,206 30-59 DPD 3 2 3 1 — 2 10 4 25 60-89 DPD 2 1 2 1 — 1 5 1 13 90-119 DPD 1 1 2 1 — — 4 — 9 120-179 DPD — — — — — — 8 2 10 180+ DPD — — — — — 1 1 9 11 Total other consumer 2,227 720 710 206 107 129 24,016 159 28,274 Total consumer loans $ 101,969 55,214 34,661 11,714 15,842 77,309 78,564 7,001 382,274 (1) Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled $3.0 billion and $5.7 billion at June 30, 2022, and December 31, 2021, respectively. Of the $1.6 billion of consumer loans not government insured/guaranteed that are 90 days or more past due at June 30, 2022, $412 million was accruing, compared with $2.7 billion past due and $424 million accruing at December 31, 2021. We obtain Fair Isaac Corporation (FICO) scores at loan origination and the scores are generally updated at least quarterly, except in limited circumstances, including compliance with the Fair Credit Reporting Act (FCRA). FICO scores are not available for certain loan types or may not be required if we deem it unnecessary due to strong collateral and other borrower attributes. Substantially all loans not requiring a FICO score are securities-based loans originated by our retail brokerage business. Table 4.10 provides the outstanding balances of our consumer loan portfolio by FICO score. Substantially all of the scored consumer portfolio has an updated FICO score of 680 or above. Table 4.10: Consumer Loan Categories by FICO and Vintage Term loans by origination year Revolving loans Revolving loans converted to term loans (in millions) 2022 2021 2020 2019 2018 Prior Total June 30, 2022 By FICO: Residential mortgage – first lien 800+ $ 16,288 41,130 26,393 14,748 4,378 40,390 2,092 591 146,010 760-799 13,513 17,649 8,218 4,503 1,211 11,332 864 319 57,609 720-759 4,643 6,057 2,722 1,726 562 6,408 543 268 22,929 680-719 1,447 1,780 796 546 247 3,585 316 212 8,929 640-679 394 455 207 178 80 1,743 164 148 3,369 600-639 73 113 55 41 28 911 71 80 1,372 < 600 16 25 20 17 19 937 86 126 1,246 No FICO available 66 170 135 85 49 1,766 145 383 2,799 Government insured/guaranteed loans (1) 1 41 128 146 220 8,142 — — 8,678 Total residential mortgage – first lien 36,441 67,420 38,674 21,990 6,794 75,214 4,281 2,127 252,941 Residential mortgage – junior lien 800+ — — — — — 152 4,562 1,646 6,360 760-799 — — — — — 94 1,808 839 2,741 720-759 — — — — — 109 1,158 784 2,051 680-719 — — — — — 90 667 628 1,385 640-679 — — — — — 49 260 330 639 600-639 — — — — — 30 123 186 339 < 600 — — — — — 36 121 208 365 No FICO available 12 31 18 25 22 74 227 315 724 Total residential mortgage – junior lien 12 31 18 25 22 634 8,926 4,936 14,604 Credit card 800+ — — — — — — 4,726 1 4,727 760-799 — — — — — — 6,527 8 6,535 720-759 — — — — — — 8,940 27 8,967 680-719 — — — — — — 9,635 48 9,683 640-679 — — — — — — 6,279 47 6,326 600-639 — — — — — — 2,472 33 2,505 < 600 — — — — — — 2,216 63 2,279 No FICO available — — — — — — 199 1 200 Total credit card — — — — — — 40,994 228 41,222 Auto 800+ 2,083 3,824 1,656 1,290 484 203 — — 9,540 760-799 2,168 4,115 1,652 1,154 393 149 — — 9,631 720-759 2,054 3,833 1,628 1,103 388 162 — — 9,168 680-719 1,992 3,878 1,702 1,028 347 153 — — 9,100 640-679 1,732 3,456 1,313 720 243 124 — — 7,588 600-639 1,088 2,301 802 443 163 100 — — 4,897 < 600 721 2,606 1,116 709 276 203 — — 5,631 No FICO available — 45 14 20 13 11 — — 103 Total auto 11,838 24,058 9,883 6,467 2,307 1,105 — — 55,658 Other consumer 800+ 413 314 110 81 19 40 1,070 19 2,066 760-799 460 332 91 69 17 18 664 17 1,668 720-759 408 315 104 71 21 18 594 26 1,557 680-719 314 268 63 62 20 15 576 18 1,336 640-679 153 153 32 35 12 8 298 20 711 600-639 38 47 10 13 5 4 113 10 240 < 600 13 36 11 16 7 6 99 12 200 No FICO available 223 153 66 97 17 11 1,074 29 1,670 FICO not required — — — — — — 19,942 — 19,942 Total other consumer 2,022 1,618 487 444 118 120 24,430 151 29,390 Total consumer loans $ 50,313 93,127 49,062 28,926 9,241 77,073 78,631 7,442 393,815 (continued on following page) (continued from previous page) Term loans by origination year Revolving loans Revolving loans converted to term loans (in millions) 2021 2020 2019 2018 2017 Prior Total December 31, 2021 By FICO: Residential mortgage – first lien 800+ $ 35,935 27,396 16,583 5,153 9,430 37,495 2,554 469 135,015 760-799 23,645 9,814 5,412 1,464 2,485 10,509 1,073 265 54,667 720-759 7,842 3,083 1,980 642 1,137 6,277 646 238 21,845 680-719 1,986 876 645 283 501 3,682 393 206 8,572 640-679 449 233 187 89 129 1,851 188 146 3,272 600-639 101 63 46 31 41 1,035 102 89 1,508 < 600 15 13 24 19 41 1,083 114 124 1,433 No FICO available 161 162 117 65 95 1,598 243 359 2,800 Government insured/guaranteed loans (1) 14 134 209 349 364 12,088 — — 13,158 Total residential mortgage – first lien 70,148 41,774 25,203 8,095 14,223 75,618 5,313 1,896 242,270 Residential mortgage – junior lien 800+ — — — — — 188 5,512 1,481 7,181 760-799 — — — — — 110 2,154 828 3,092 720-759 — — — — — 130 1,462 790 2,382 680-719 — — — — — 118 881 633 1,632 640-679 — — — — — 65 325 338 728 600-639 — — — — — 39 160 208 407 < 600 — — — — — 43 164 215 422 No FICO available 28 20 31 27 22 69 334 243 774 Total residential mortgage – junior lien 28 20 31 27 22 762 10,992 4,736 16,618 Credit card 800+ — — — — — — 4,247 1 4,248 760-799 — — — — — — 6,053 7 6,060 720-759 — — — — — — 8,475 26 8,501 680-719 — — — — — — 9,136 50 9,186 640-679 — — — — — — 5,850 47 5,897 600-639 — — — — — — 2,298 31 2,329 < 600 — — — — — — 2,067 47 2,114 No FICO available — — — — — — 117 1 118 Total credit card — — — — — — 38,243 210 38,453 Auto 800+ 4,688 1,983 1,680 690 318 108 — — 9,467 760-799 4,967 2,123 1,586 586 234 87 — — 9,583 720-759 4,789 2,104 1,503 583 241 106 — — 9,326 680-719 5,005 2,282 1,441 526 218 111 — — 9,583 640-679 4,611 1,824 1,025 369 160 99 — — 8,088 600-639 3,118 1,114 617 243 117 92 — — 5,301 < 600 2,372 1,236 853 376 193 187 — — 5,217 No FICO available 16 34 12 13 9 10 — — 94 Total auto 29,566 12,700 8,717 3,386 1,490 800 — — 56,659 Other consumer 800+ 450 162 128 34 8 47 1,343 22 2,194 760-799 502 147 117 33 7 22 819 19 1,666 720-759 461 134 115 38 9 18 714 22 1,511 680-719 349 95 99 37 9 15 630 22 1,256 640-679 170 44 55 21 6 8 328 17 649 600-639 42 13 19 9 3 4 117 9 216 < 600 18 12 22 11 3 5 114 12 197 No FICO available 235 113 155 23 62 10 1,236 36 1,870 FICO not required — — — — — — 18,715 — 18,715 Total other consumer 2,227 720 710 206 107 129 24,016 159 28,274 Total consumer loans $ 101,969 55,214 34,661 11,714 15,842 77,309 78,564 7,001 382,274 (1) Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA. LTV refers to the ratio comparing the loan’s unpaid principal balance to the property’s collateral value. Combined LTV (CLTV) refers to the combination of first lien mortgage and junior lien mortgage (including unused line amounts for credit line products) ratios. We obtain LTVs and CLTVs using a cascade approach which first uses values provided by automated valuation models (AVMs) for the property. If an AVM is not available, then the value is estimated using the original appraised value adjusted by the change in Home Price Index (HPI) for the property location. If an HPI is not available, the original appraised value is used. The HPI value is normally the only method considered for high value properties, generally with an original value of $1 million or more, as the AVM values have proven less accurate for these properties. Generally, we obtain available LTVs and CLTVs on a quarterly basis. Certain loans do not have an LTV or CLTV due to a lack of industry data availability and portfolios acquired from or serviced by other institutions. Table 4.11 shows the most updated LTV and CLTV distribution of the residential mortgage – first lien and residential mortgage – junior lien loan portfolios. Table 4.11: Consumer Loan Categories by LTV/CLTV and Vintage Term loans by origination year Revolving loans Revolving loans converted to term loans (in millions) 2022 2021 2020 2019 2018 Prior Total June 30, 2022 Residential mortgage – first lien By LTV: 0-60% $ 11,784 34,740 29,463 17,236 5,325 62,930 3,859 1,959 167,296 60.01-80% 23,853 31,942 8,858 4,411 1,165 3,773 322 129 74,453 80.01-100% 765 555 124 127 51 125 50 24 1,821 100.01-120% (1) — 16 13 5 2 18 7 2 63 > 120% (1) — 10 4 6 — 16 6 2 44 No LTV available 38 116 84 59 31 210 37 11 586 Government insured/guaranteed loans (2) 1 41 128 146 220 8,142 — — 8,678 Total residential mortgage – first lien 36,441 67,420 38,674 21,990 6,794 75,214 4,281 2,127 252,941 Residential mortgage – junior lien By CLTV: 0-60% — — — — — 458 7,514 4,122 12,094 60.01-80% — — — — — 98 1,173 649 1,920 80.01-100% — — — — — 23 187 116 326 100.01-120% (1) — — — — — 4 26 16 46 > 120% (1) — — — — — 1 9 7 17 No CLTV available 12 31 18 25 22 50 17 26 201 Total residential mortgage – junior lien 12 31 18 25 22 634 8,926 4,936 14,604 Total $ 36,453 67,451 38,692 22,015 6,816 75,848 13,207 7,063 267,545 Term loans by origination year Revolving loans Revolving loans converted to term loans 2021 2020 2019 2018 2017 Prior Total December 31, 2021 Residential mortgage – first lien By LTV: 0-60% $ 26,618 22,882 16,063 5,310 11,030 57,880 4,348 1,644 145,775 60.01-80% 42,893 18,188 8,356 2,234 2,647 5,017 674 188 80,197 80.01-100% 486 437 474 147 134 339 157 42 2,216 100.01-120% (1) 10 31 24 11 7 48 33 8 172 > 120% (1) 5 10 10 4 3 35 14 3 84 No LTV available 122 92 67 40 38 211 87 11 668 Government insured/guaranteed loans (2) 14 134 209 349 364 12,088 — — 13,158 Total residential mortgage – first lien 70,148 41,774 25,203 8,095 14,223 75,618 5,313 1,896 242,270 Residential mortgage – junior lien By CLTV: 0-60% — — — — — 475 7,949 3,588 12,012 60.01-80% — — — — — 172 2,329 823 3,324 80.01-100% — — — — — 55 554 241 850 100.01-120% (1) — — — — — 13 104 42 159 > 120% (1) — — — — — 3 35 13 51 No CLTV available 28 20 31 27 22 44 21 29 222 Total residential mortgage – junior lien 28 20 31 27 22 762 10,992 4,736 16,618 Total $ 70,176 41,794 25,234 8,122 14,245 76,380 16,305 6,632 258,888 (1) Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV. (2) Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA. NONACCRUAL LOANS Table 4.12 provides loans on nonaccrual status. Nonaccrual loans may have an ACL or a negative allowance for credit losses from expected recoveries of amounts previously written off. Customer payment deferral activities in the residential mortgage portfolio instituted in response to the COVID-19 pandemic could continue to delay the recognition of nonaccrual loans for those residential mortgage customers who would have otherwise moved into nonaccrual status. Table 4.12: Nonaccrual Loans Amortized cost Recognized interest income Nonaccrual loans Nonaccrual loans without related allowance for credit losses (1) Six months ended June 30, (in millions) Jun 30, Dec 31, Jun 30, Dec 31, 2022 2021 Commercial: Commercial and industrial $ 722 980 212 190 41 45 Real estate mortgage 898 1,235 39 66 28 33 Real estate construction 3 13 1 5 — 1 Lease financing 96 148 — 9 — — Total commercial 1,719 2,376 252 270 69 79 Consumer: Residential mortgage- first lien 3,322 3,803 2,380 2,722 83 56 Residential mortgage- junior lien 729 801 509 497 28 25 Auto 188 198 — — 14 17 Other consumer 35 34 — — 2 1 Total consumer 4,274 4,836 2,889 3,219 127 99 Total nonaccrual loans $ 5,993 7,212 3,141 3,489 196 178 (1) Nonaccrual loans may not have an allowance for credit losses if the loss expectations are zero given solid collateral value. LOANS IN PROCESS OF FORECLOSURE Our recorded investment in consumer mortgage loans collateralized by residential real estate property that are in process of foreclosure was $946 million and $694 million at June 30, 2022, and December 31, 2021, respectively, which included $781 million and $583 million, respectively, of loans that are government insured/guaranteed. Under the Consumer Financial Protection Bureau guidelines, we do not commence the foreclosure process on residential mortgage loans until after the loan is 120 days delinquent. Foreclosure procedures and timelines vary depending on whether the property address resides in a judicial or non-judicial state. Judicial states require the foreclosure to be processed through the state’s courts while non-judicial states are processed without court intervention. Foreclosure timelines vary according to stat |