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Asset Quality
 3 Months Ended
Mar. 31, 2021
Credit Loss [Abstract]  
Asset Quality
4. Asset Quality

ALLL

We estimate the appropriate level of the ALLL on at least a quarterly basis. The methodology is described in Note 1 ("Summary of Significant Accounting Policies") under the heading "Allowance for Loan and Lease Losses" beginning on page 110 of our 2020 Form 10-K.

The ALLL at March 31, 2021, represents our current estimate of lifetime credit losses inherent in the loan portfolio at that date. The changes in the ALLL by loan category for the periods indicated are as follows:

Three months ended March 31, 2021:
in millionsDecember 31, 2020ProvisionCharge-offsRecoveriesMarch 31, 2021
Commercial and Industrial $678 $(17)$(73)$8 $596 
Commercial real estate:
Real estate — commercial mortgage327 (37)(35)1 256 
Real estate — construction47 (2)— — 45 
Total commercial real estate loans374 (39)(35)1 301 
Commercial lease financing47 (4)(4)1 40 
Total commercial loans1,099 (60)(112)10 937 
Real estate — residential mortgage102 (3)— 1 100 
Home equity loans171 (13)(2)1 157 
Consumer direct loans128 4 (8)2 126 
Credit cards87 (3)(6)2 80 
Consumer indirect loans39 1 (7)5 38 
Total consumer loans527 (14)(23)11 501 
Total ALLL — continuing operations1,626 (74)
(a)
(135)21 1,438 
Discontinued operations36 (3)(1)1 33 
Total ALLL — including discontinued operations$1,662 $(77)$(136)$22 $1,471 
(a)Excludes a credit for losses on lending-related commitments of $19 million.

Three months ended March 31, 2020:
in millionsPre-ASC 326 Adoption December 31, 2019Impact of ASC 326 AdoptionJanuary 1, 2020ProvisionCharge-offsRecoveriesMarch 31, 2020
Commercial and Industrial $551 $(141)$410 $187 $(60)$5 $542 
Commercial real estate:
Real estate — commercial mortgage143 16 159 50 (3)1 207 
Real estate — construction22 (7)15 10 — — 25 
Total commercial real estate loans165 9 174 60 (3)1 232 
Commercial lease financing35 8 43 3 (2)— 44 
Total commercial loans751 (124)627 250 (65)6 818 
Real estate — residential mortgage7 77 84 5 — — 89 
Home equity loans31 147 178 8 (4)2 184 
Consumer direct loans34 63 97 29 (12)2 116 
Credit cards47 35 82 31 (11)2 104 
Consumer indirect loans30 6 36 16 (9)5 48 
Total consumer loans149 328 477 89 (36)11 541 
Total ALLL — continuing operations900 204 1,104 339 
(a)
(101)17 1,359 
Discontinued operations10 31 41 3 (2)1 43 
Total ALLL — including discontinued operations$910 $235 $1,145 $342 $(103)$18 $1,402 
(a)Excludes a provision for losses on lending-related commitments of $20 million.



As described in Note 1 ("Summary of Significant Accounting Policies"), under the heading “Allowance for Loan and Lease Losses” beginning on page 110 of our 2020 Form 10-K, we estimate the ALLL using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. In our estimation of expected credit losses, we use a two year reasonable and supportable period across all products. Following this two year period in which supportable forecasts can be generated, for all modeled loan portfolios, we revert expected credit losses to a level that is consistent with our historical information by reverting the macroeconomic variables (model inputs) to their long run average. We revert to historical loss rates for less complex estimation methods for smaller portfolios. A 20 year fixed length look back period is used to calculate the long run average of the macroeconomic variables. A four quarter reversion period is used where the
macroeconomic variables linearly revert to their long run average following the two year reasonable and supportable period.

We develop our reasonable and supportable forecasts using relevant data including, but not limited to, changes in economic output, unemployment rates, property values, and other factors associated with the credit losses on financial assets. Some macroeconomic variables apply to all portfolio segments, while others are more portfolio specific. The following table discloses key macroeconomic variables for each loan portfolio.
SegmentPortfolio
Key Macroeconomic Variables (a)
CommercialCommercial and industrialBBB corporate bond rate (spread), GDP, industrial production, and unemployment rate
Commercial real estateBBB corporate bond rate (spread), property and real estate price indices, and unemployment rate
Commercial lease financingBBB corporate bond rate (spread), GDP, and unemployment rate
ConsumerReal estate — residential mortgageGDP, home price index, unemployment rate, and 30 year mortgage rate
Home equityHome price index, unemployment rate, and 30 year mortgage rate
Consumer directUnemployment rate and U.S. household income
Consumer indirectNew vehicle sales and unemployment rate
Credit cardsUnemployment rate and U.S. household income
Discontinued operationsUnemployment rate
(a)Variables include all transformations and interactions with other risk drivers. Additionally, variables may have varying impacts at different points in the economic cycle.

In addition to macroeconomic drivers, portfolio attributes such as remaining term, outstanding balance, risk ratings, FICO, LTV, and delinquency also drive ALLL changes. Our ALLL models were designed to capture the correlation between economic and portfolio changes. As such, evaluating shifts in individual portfolio attributes and macroeconomic variables in isolation may not be indicative of past or future performance.

Economic Outlook

As of March 31, 2021, the COVID-19 pandemic has continued to create unprecedented economic uncertainty in the U.S. and globally. We utilized the Moody’s February 2021 Consensus forecast to estimate our expected credit losses as of March 31, 2021. We determined such forecast to be a reasonable view of the outlook for the economy given all available information at quarter end.

The baseline scenario reflects modest economic growth over the next two years in markets in which we operate. U.S. GDP continues to rebound with a projected 3.3% annualized growth rate in the first quarter of 2021 and continues to accelerate during the year, which is anticipated to return to pre-pandemic levels by the fourth quarter of 2021 and an overall growth rate of approximately 5% expected for the year. The national unemployment rate forecast is 6.3% in the first quarter of 2021, and expected to decline to 5.4% by the fourth quarter of 2021.

To the extent we identified credit risk considerations that were not captured by the third-party economic forecast, we addressed the risk through management’s qualitative adjustments to the ALLL.

As a result of the unprecedented economic uncertainty caused by the COVID-19 pandemic, our future loss estimates may vary considerably from our March 31, 2021 assumptions.

Commercial Loan Portfolio

The ALLL from continuing operations for the commercial segment decreased by $162 million, or 14.7%, from December 31, 2020. The overall decrease in the allowance is driven by improvements in economic forecasts, a slight decline in loan balances, and improving asset quality.

The changes to the economic forecast primarily reflect improvements in economic drivers used in our models. The unemployment and GDP positive growth outlook contributes to the overall commercial segment reserve decrease. Expected improvements in real estate price indices lead to a reduction in reserve in our commercial real estate book. Risk rating migrations are driving a modest increase in ALLL levels for the commercial and industrial portfolio. The ALLL results also reflect incremental credit risk considerations as a result of the future economic uncertainties which are addressed through qualitative adjustments.

As of March 31, 2021, we concluded that no ALLL is necessary for $6.5 billion in outstanding PPP loans as they are 100% guaranteed by the SBA.
Consumer Loan Portfolio

The ALLL from continuing operations for the consumer segment decreased by $26 million, or 4.9%, from December 31, 2020. The overall decrease in the allowance is driven by updated economic forecasts that capture an improving outlook for several drivers and strong portfolio performance.

The most meaningful changes to the economic forecast contributing to the reduction in reserves include improvement in the unemployment rate outlook, which impacts all consumer portfolios. In addition, the housing market and HPI outlook continue to display strength, which impacts the residential mortgage and home equity segments. As it relates to the decline in the ALLL due to portfolio factors, shifts are largely driven by attrition activity, targeted portfolio growth and overall strong credit drivers. The ALLL results also reflect incremental credit risk considerations as a result of the economic stress and related borrower assistance programs, which are addressed through qualitative adjustments.

Credit Risk Profile

The prevalent risk characteristic for both commercial and consumer loans is the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms. Evaluation of this risk is stratified and monitored by the loan risk rating grades assigned for the commercial loan portfolios and the refreshed FICO score assigned for the consumer loan portfolios. The internal risk grades assigned to loans follow our definitions of Pass and Criticized, which are consistent with published definitions of regulatory risk classifications. Loans with a pass rating represent those loans not classified on our rating scale for problem credits, as minimal credit risk has been identified. Criticized loans are those loans that either have a potential weakness deserving management's close attention or have a well-defined weakness that may put full collection of contractual cash flows at risk. Borrower FICO scores provide information about the credit quality of our consumer loan portfolio as they provide an indication as to the likelihood that a debtor will repay its debts. The scores are obtained from a nationally recognized consumer rating agency and are presented in the tables below at the dates indicated.

Most extensions of credit are subject to loan grading or scoring. Loan grades are assigned at the time of origination, verified by credit risk management, and periodically re-evaluated thereafter. This risk rating methodology blends our judgment with quantitative modeling. Commercial loans generally are assigned two internal risk ratings. The first rating reflects the probability that the borrower will default on an obligation; the second rating reflects expected recovery rates on the credit facility. Default probability is determined based on, among other factors, the financial strength of the borrower, an assessment of the borrower’s management, the borrower’s competitive position within its industry sector, and our view of industry risk in the context of the general economic outlook. Types of exposure, transaction structure, and collateral, including credit risk mitigants, affect the expected recovery assessment.
Commercial Credit Exposure
Credit Risk Profile by Creditworthiness Category and Vintage (a)
As of March 31, 2021Term LoansRevolving Loans Amortized Cost BasisRevolving Loans Converted to Term Loans Amortized Cost Basis
Amortized Cost Basis by Origination Year and Internal Risk Rating
in millions20212020201920182017PriorTotal
Commercial and Industrial
Risk Rating:
Pass$2,246 $11,524 $5,062 $3,728 $2,360 $5,560 $18,992 $81 $49,553 
Criticized (Accruing)4 96 220 217 223 340 1,426 20 2,546 
Criticized (Nonaccruing)— 8 19 64 13 54 227 2 387 
Total commercial and industrial2,250 11,628 5,301 4,009 2,596 5,954 20,645 103 52,486 
Real estate — commercial mortgage
Risk Rating:
Pass602 1,603 2,916 1,599 819 3,589 695 29 11,852 
Criticized (Accruing)— 14 123 103 159 290 93 2 784 
Criticized (Nonaccruing)— — 2 4 4 51 5 — 66 
Total real estate — commercial mortgage
602 1,617 3,041 1,706 982 3,930 793 31 12,702 
Real estate — construction
Risk Rating:
Pass16 451 798 501 187 49 31 — 2,033 
Criticized (Accruing)— 4 14 51 18 1 1 — 89 
Criticized (Nonaccruing)— — — — — — — — — 
Total real estate — construction16 455 812 552 205 50 32 — 2,122 
Commercial lease financing
Risk Rating:
Pass152 952 931 462 416 1,077 — — 3,990 
Criticized (Accruing)— 21 35 15 26 9 — — 106 
Criticized (Nonaccruing)— — 2 2 2 2 — — 8 
Total commercial lease financing152 973 968 479 444 1,088 — 4,104 
Total commercial loans$3,020 $14,673 $10,122 $6,746 $4,227 $11,022 $21,470 $134 $71,414 

As of December 31, 2020Term LoansRevolving Loans Amortized Cost BasisRevolving Loans Converted to Term Loans Amortized Cost Basis
Amortized Cost Basis by Origination Year and Internal Risk Rating
in millions20202019201820172016PriorTotal
Commercial and Industrial
Risk Rating:
Pass$13,100 $5,487 $4,040 $2,617 $1,967 $2,709 $19,832 $118 $49,870 
Criticized (Accruing)66 198 174 236 150 279 1,527 22 2,652 
Criticized (Nonaccruing)8 27 71 28 17 7 226 1 385 
Total commercial and industrial13,174 5,712 4,285 2,881 2,134 2,995 21,585 141 52,907 
Real estate — commercial mortgage
Risk Rating:
Pass1,591 2,937 1,737 867 765 3,027 885 43 11,852 
Criticized (Accruing)12 142 81 145 72 255 22 2 731 
Criticized (Nonaccruing)— 1 4 4 2 88 5 — 104 
Total real estate — commercial mortgage
1,603 3,080 1,822 1,016 839 3,370 912 45 12,687 
Real estate — construction
Risk Rating:
Pass367 764 510 188 27 22 31 5 1,914 
Criticized (Accruing)— 14 38 18 — 2 1 — 73 
Criticized (Nonaccruing)— — — — — — — — — 
Total real estate — construction367 778 548 206 27 24 32 5 1,987 
Commercial lease financing
Risk Rating:
Pass1,076 1,050 534 504 228 901 — — 4,293 
Criticized (Accruing)10 35 15 26 7 4 — — 97 
Criticized (Nonaccruing)— 2 2 2 2 1 — — 9 
Total commercial lease financing1,086 1,087 551 532 237 906 0— 4,399 
Total commercial loans$16,230 $10,657 $7,206 $4,635 $3,237 $7,295 $22,529 $191 $71,980 
(a)Accrued interest of $143 million and $140 million as of March 31, 2021 and December 31, 2020, respectively, presented in Other Assets on the Consolidated Balance Sheets, was excluded from the amortized cost basis disclosed in these tables.
Consumer Credit Exposure
Credit Risk Profile by FICO Score and Vintage (a)
As of March 31, 2021Term LoansRevolving Loans Amortized Cost BasisRevolving Loans Converted to Term Loans Amortized Cost Basis
Amortized Cost Basis by Origination Year and FICO Score
in millions20212020201920182017PriorTotal
Real estate — residential mortgage
FICO Score:
750 and above$1,684 $3,503 $1,326 $159 $213 $1,525 — — $8,410 
660 to 749300 534 245 63 40 384 — — 1,566 
Less than 6602 19 17 20 9 172 — — 239 
No Score1 1 2 2 6 73 — — 85 
Total real estate — residential mortgage1,987 4,057 1,590 244 268 2,154 — — 10,300 
Home equity loans
FICO Score:
750 and above407 943 367 151 182 926 $2,544 $551 6,071 
660 to 749121 386 172 65 63 280 1,132 186 2,405 
Less than 6607 27 24 17 17 121 400 56 669 
No Score— 2 2 1 — 2 5 1 13 
Total home equity loans535 1,358 565 234 262 1,329 4,081 794 9,158 
Consumer direct loans
FICO Score:
750 and above499 1,636 759 103 29 102 110 — 3,238 
660 to 749120 421 233 67 17 48 231 1 1,138 
Less than 6604 21 31 19 6 14 71 — 166 
No Score10 47 37 18 14 20 174 — 320 
Total consumer direct loans633 2,125 1,060 207 66 184 586 1 4,862 
Credit cards
FICO Score:
750 and above— — — — — — 441 — 441 
660 to 749— — — — — — 379 — 379 
Less than 660— — — — — — 88 — 88 
No Score— — — — — — 1 — 1 
Total credit cards— — — — — — 909 — 909 
Consumer indirect loans
FICO Score:
750 and above135 880 851 329 158 105 — — 2,458 
660 to 749— 566 483 193 79 68 — — 1,389 
Less than 660— 124 140 85 44 42 — — 435 
No Score— — — — — 1 — — 1 
Total consumer indirect loans135 1,570 1,474 607 281 216 — — 4,283 
Total consumer loans$3,290 $9,110 $4,689 $1,292 $877 $3,883 $5,576 $795 $29,512 
As of December 31, 2020Term LoansRevolving Loans Amortized Cost BasisRevolving Loans Converted to Term Loans Amortized Cost Basis
Amortized Cost Basis by Origination Year and FICO Score
in millions20202019201820172016PriorTotal
Real estate — residential mortgage
FICO Score:
750 and above$3,595 $1,620 $194 $254 $537 $1,211 — — $7,411 
660 to 749710 284 76 48 100 332 — — 1,550 
Less than 66016 28 21 10 26 170 — — 271 
No Score1 2 2 7 2 52 — — 66 
Total real estate — residential mortgage4,322 1,934 293 319 665 1,765 — — 9,298 
Home equity loans
FICO Score:
750 and above1,043 404 168 202 190 839 $2,689 $590 6,125 
660 to 749385 198 82 77 69 253 1,237 206 2,507 
Less than 66027 30 18 20 20 113 426 61 715 
No Score2 2 1 — — 2 5 1 13 
Total home equity loans1,457 634 269 299 279 1,207 4,357 858 9,360 
Consumer direct loans
FICO Score:
750 and above1,840 883 115 32 16 57 119 — 3,062 
660 to 749479 268 80 22 14 33 254 1 1,151 
Less than 66023 37 21 8 5 10 81 — 185 
No Score65 35 21 21 10 11 153 — 316 
Total consumer direct loans2,407 1,223 237 83 45 111 607 1 4,714 
Credit cards
FICO Score:
750 and above— — — — — — 488 — 488 
660 to 749— — — — — — 407 — 407 
Less than 660— — — — — — 93 — 93 
No Score— — — — — — 1 — 1 
Total credit cards— — — — — — 989 — 989 
Consumer indirect loans
FICO Score:
750 and above1,092 924 369 188 69 66 — — 2,708 
660 to 749653 558 232 97 36 47 — — 1,623 
Less than 660143 163 99 54 25 28 — — 512 
No Score1 — — — — — — — 1 
Total consumer indirect loans1,889 1,645 700 339 130 141 — — 4,844 
Total consumer loans$10,075 $5,436 $1,499 $1,040 $1,119 $3,224 $5,953 $859 $29,205 
(a)Accrued interest of $98 million and $101 million as of March 31, 2021 and December 31, 2020, respectively, presented in Other Assets on the Consolidated Balance Sheets, was excluded from the amortized cost basis disclosed in this table.


Nonperforming and Past Due Loans

Our policies for determining past due loans, placing loans on nonaccrual, applying payments on nonaccrual loans, and resuming accrual of interest for our commercial and consumer loan portfolios are disclosed in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Nonperforming Loans” beginning on page 108 of our 2020 Form 10-K.

Under the CARES Act as well as banking regulator interagency guidance, certain loan modifications to borrowers experiencing financial distress as a result of the economic impacts created by the COVID-19 pandemic may not be required to be reported as past due. For COVID-19 related loan modifications which occurred from March 1, 2020, through March 31, 2021, and met the loan modification criteria under either the CARES Act or the criteria specified by the regulatory agencies, we have elected to re-age to current status all commercial loans and consumer loans that are not secured by real-estate and freeze the delinquency status of consumer real estate secured loans as of the modification or forbearance grant date. At March 31, 2021, the portfolio loans and leases in active deferral or forebearance as part of our COVID-19 hardship relief programs totaled $384 million, of which $328 million of loan modifications and forbearances made under the criteria of either the CARES Act, banking regulator interagency guidance, or short-term forbearance policies were not reported as nonperforming.
The following aging analysis of past due and current loans as of March 31, 2021, and December 31, 2020, provides further information regarding Key’s credit exposure.

Aging Analysis of Loan Portfolio(a)
March 31, 2021Current
30-59
Days Past
Due (b)
60-89
Days Past
Due (b)
90 and
Greater
Days Past
Due (b)
Non-performing
Loans 		Total Past
Due and
Non-performing
Loans
Total
Loans (c)
in millions
LOAN TYPE
Commercial and industrial$52,000 $42 $16 $41 $387 $486 $52,486 
Commercial real estate:
Commercial mortgage12,580 17 14 25 66 122 12,702 
Construction2,113 8 1 — — 9 2,122 
Total commercial real estate loans14,693 25 15 25 66 131 14,824 
Commercial lease financing4,088 7 1 — 8 16 4,104 
Total commercial loans$70,781 $74 $32 $66 $461 $633 $71,414 
Real estate — residential mortgage$10,190 $9 $4 $2 $95 $110 $10,300 
Home equity loans8,958 31 11 10 148 200 9,158 
Consumer direct loans4,844 4 4 5 5 18 4,862 
Credit cards892 4 3 7 3 17 909 
Consumer indirect loans4,250 12 3 2 16 33 4,283 
Total consumer loans$29,134 $60 $25 $26 $267 $378 $29,512 
Total loans$99,915 $134 $57 $92 $728 $1,011 $100,926 
(a)Amounts in table represent amortized cost and exclude loans held for sale.
(b)Accrued interest of $242 million presented in Other Assets on the Consolidated Balance Sheets is excluded from the amortized cost basis disclosed in this table.
(c)Net of unearned income, net of deferred fees and costs, and unamortized discounts and premiums.

December 31, 2020Current
30-59
Days Past
Due (b)
60-89
Days Past
Due (b)
90 and
Greater
Days Past
Due (b)
Non-performing
Loans
Total Past
Due and
Non-performing
Loans
Total
Loans (c)
in millions
LOAN TYPE
Commercial and industrial$52,396 $36 $50 $40 $385 $511 $52,907 
Commercial real estate:
Commercial mortgage12,548 9 5 21 104 139 12,687 
Construction1,986 — — 1 — 1 1,987 
Total commercial real estate loans14,534 9 5 22 104 140 14,674 
Commercial lease financing4,369 21 1 — 8 30 4,399 
Total commercial loans$71,299 $66 $56 $62 $497 $681 $71,980 
Real estate — residential mortgage$9,173 $11 $3 $1 $110 $125 $9,298 
Home equity loans9,143 34 20 9 154 217 9,360 
Consumer direct loans4,694 7 4 4 5 20 4,714 
Credit cards972 5 3 7 2 17 989 
Consumer indirect loans4,792 25 7 3 17 52 4,844 
Total consumer loans$28,774 $82 $37 $24 $288 $431 $29,205 
Total loans$100,073 $148 $93 $86 $785 $1,112 $101,185 

(a)Amounts in table represent amortized cost and exclude loans held for sale.
(b)Accrued interest of $241 million presented in Other Assets on the Consolidated Balance Sheets is excluded from the amortized cost basis disclosed in this table.
(c)Net of unearned income, net of deferred fees and costs, and unamortized discounts and premiums.


At March 31, 2021, the approximate carrying amount of our commercial nonperforming loans outstanding represented 68% of their original contractual amount owed, total nonperforming loans outstanding represented 75% of their original contractual amount owed, and nonperforming assets in total were carried at 81% of their original contractual amount owed.

Nonperforming loans reduced expected interest income by $7 million for the three months ended March 31, 2021, and $6 million for the three months ended March 31, 2020.

The amortized cost basis of nonperforming loans on nonaccrual status for which there is no related allowance for credit losses was $461 million at March 31, 2021.
Collateral-dependent Financial Assets

We classify financial assets as collateral-dependent when our borrower is experiencing financial difficulty, and we expect repayment to be provided substantially through the operation or sale of the collateral. Our commercial loans have collateral that includes commercial machinery, commercial properties, and commercial real estate construction projects. Our consumer loans have collateral that includes residential real estate, automobiles, boats, and RVs.

There were no significant changes in the extent to which collateral secures our collateral-dependent financial assets during the three months ended March 31, 2021.

TDRs

We classify loan modifications as TDRs when a borrower is experiencing financial difficulties and we have granted a concession without commensurate financial, structural, or legal consideration. Our loan modifications are handled on a case-by-case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet the borrower’s financial needs. Under the CARES Act as well as banking regulator interagency guidance, certain loan modifications to borrowers experiencing financial distress as a result of the economic impacts created by the COVID-19 pandemic may not be required to be treated as TDRs under U.S. GAAP.  We elected to suspend TDR accounting for $328 million of COVID-19 related loan modifications as of March 31, 2021 as such loan modifications met the criteria under either the CARES Act or banking regulator interagency guidance. 

Commitments outstanding to lend additional funds to borrowers whose loan terms have been modified in TDRs were $14 million and $1 million at March 31, 2021, and December 31, 2020, respectively.

The consumer TDR other concession category in the table below primarily includes those borrowers’ debts that are discharged through Chapter 7 bankruptcy and have not been formally re-affirmed. At March 31, 2021, and December 31, 2020, the recorded investment of consumer residential mortgage loans in the process of foreclosure was approximately $83 million and $92 million, respectively.

The following table shows the post-modification outstanding recorded investment by concession type for our commercial and consumer accruing and nonaccruing TDRs that occurred during the periods indicated:
Three Months Ended March 31,
in millions20212020
Commercial loans:
Extension of Maturity Date41 $— 
Payment or Covenant Modification/Deferment10 — 
Total51 $— 
Consumer loans:
Interest rate reduction$2 $9 
Other4 9 
Total$6 $18 
Total TDRs$57 $18 

The following table summarizes the change in the post-modification outstanding recorded investment of our accruing and nonaccruing TDRs during the periods indicated:
Three Months Ended March 31,
in millions20212020
Balance at beginning of the period$363 $347 
Additions59 17 
Payments(21)(18)
Charge-offs(25)(6)
Balance at end of period$376 $340 
A further breakdown of TDRs included in nonperforming loans by loan category for the periods indicated are as follows:
March 31, 2021December 31, 2020
Number of
Loans
Pre-modification
Outstanding
Recorded
Investment
Post-modification
Outstanding
Recorded
Investment
Number of
Loans
Pre-modification
Outstanding
Recorded
Investment
Post-modification
Outstanding
Recorded
Investment
dollars in millions
LOAN TYPE
Nonperforming:
Commercial and industrial57 $128 $87 66 $136 $92 
Commercial real estate:
Commercial mortgage5 62 34 7 62 50 
Total commercial real estate loans5 62 34 7 62 50 
Total commercial loans62 190 121 73 198 142 
Real estate — residential mortgage206 25 24 258 35 34 
Home equity loans564 35 32 630 41 37 
Consumer direct loans203 4 3 212 3 3 
Credit cards265 2 2 356 2 2 
Consumer indirect loans776 14 10 861 15 11 
Total consumer loans2,014 80 71 2,317 96 87 
Total nonperforming TDRs2,076 270 192 2,390 294 229 
Prior-year accruing:(a)
Commercial and industrial12 43 41 3 5 — 
Commercial real estate
Commercial mortgage— — — — — — 
Total commercial real estate loans— — — — — — 
Total commercial loans12 43 41 3 5 — 
Real estate — residential mortgage513 44 39 485 37 31 
Home equity loans1,779 107 84 1,781 106 83 
Consumer direct loans202 5 3 163 4 3 
Credit cards638 4 2 536 3 1 
Consumer indirect loans787 28 15 775 29 16 
Total consumer loans3,919 188 143 3,740 179 134 
Total prior-year accruing TDRs3,931 231 184 3,743 184 134 
Total TDRs6,007 $501 $376 6,133 $478 $363 
(a)All TDRs that were restructured prior to January 1, 2021, and January 1, 2020, and are fully accruing.

Commercial loan TDRs are considered defaulted when principal and interest payments are 90 days past due. Consumer loan TDRs are considered defaulted when principal and interest payments are more than 60 days past due. During the three months ended March 31, 2021, there were two commercial loan TDRs and 36 consumer loan TDRs with a combined recorded investment of $1 million that experienced payment defaults after modifications resulting in TDR status during 2020. During the three months ended March 31, 2020, there were no commercial loan TDRs and 84 consumer loan TDRs with a combined recorded investment of $2 million that experienced payment defaults after modifications resulting in TDR status during 2019.

Liability for Credit Losses on Off Balance Sheet Exposures

The liability for credit losses inherent in unfunded lending-related commitments, such as letters of credit and unfunded loan commitments, and certain financial guarantees is included in “accrued expense and other liabilities” on the balance sheet.

Changes in the liability for credit losses on off balance sheet exposures are summarized as follows:
 Three months ended March 31,
in millions20212020
Balance at the end of the prior period$197 $68 
Liability for credit losses on contingent guarantees at the end of the prior period— 7 
Cumulative effect from change in accounting principle (a), (b)
— 66 
Balance at beginning of period197 141 
Provision (credit) for losses on off balance sheet exposures(19)20 
Balance at end of period$178 $161 
(a)The cumulative effect from change in accounting principle relates to the January 1, 2020, adoption of ASU 2016-13.
(b)The three months ended March 31, 2020, amount excludes $4 million related to the provision for other financial assets.