Loans and Leases

12 Months Ended

Dec. 31, 2021

The Bancorp diversifies its loan and lease portfolio by offering a variety of loan and lease products with various payment terms and rate structures. The Bancorp’s commercial loan and lease portfolio consists of lending to various industry types. Management periodically reviews the performance of its loan and lease products to evaluate whether they are performing within acceptable interest rate and credit risk levels and changes are made to underwriting policies and procedures as needed. The Bancorp maintains an allowance to absorb loan and lease losses that are expected to be incurred over the remaining contractual terms of the related loans and leases. For further information on credit quality and the ALLL, refer to Note 6.

The following table provides a summary of commercial loans and leases classified by primary purpose and consumer loans classified based upon product or collateral as of December 31:


($ in millions)	2021		2020
Loans and leases held for sale:
Commercial and industrial loans	$	7	230
Commercial mortgage loans	13		7
Commercial leases	1		39
Residential mortgage loans	4,394		4,465
Total loans and leases held for sale	$	4,415	4,741
Portfolio loans and leases:
Commercial and industrial loans(a)	$	51,659	49,665
Commercial mortgage loans	10,316		10,602
Commercial construction loans	5,241		5,815
Commercial leases	3,052		2,915
Total commercial loans and leases	70,268		68,997
Residential mortgage loans(b)	16,397		15,928
Home equity	4,084		5,183
Indirect secured consumer loans	16,783		13,653
Credit card	1,766		2,007
Other consumer loans	2,752		3,014
Total consumer loans	41,782		39,785
Total portfolio loans and leases	$	112,050	108,782

(a)Includes $1.3 billion and $4.8 billion as of December 31, 2021 and 2020, respectively, related to the SBA’s Paycheck Protection Program.

(b)Includes $39, as of December 31, 2020, of residential mortgage loans previously sold to GNMA for which the Bancorp was deemed to have regained effective control over under ASC Topic 860, but did not exercise its option to repurchase. Refer to Note 16 for further information.

Portfolio loans and leases are recorded net of unearned income, which totaled $244 million and $280 million as of December 31, 2021 and 2020, respectively. Additionally, portfolio loans and leases are recorded net of unamortized premiums and discounts, deferred direct loan origination fees and costs and fair value adjustments (associated with acquired loans or loans designated as fair value upon origination) which totaled a net premium of $498 million and $251 million as of December 31, 2021 and 2020, respectively. The amortized cost basis of loans and leases excludes accrued interest receivable of $332 million and $350 million at December 31, 2021 and 2020, respectively, which is presented as a component of other assets in the Consolidated Balance Sheets.

The Bancorp’s FHLB and FRB borrowings are primarily secured by loans. The Bancorp had loans of $15.3 billion and $15.5 billion at December 31, 2021 and 2020, respectively, pledged at the FHLB, and loans of $50.9 billion and $37.8 billion at December 31, 2021 and 2020, respectively, pledged at the FRB.

The following table presents a summary of the total loans and leases owned by the Bancorp and net charge-offs (recoveries) as of and for the years ended December 31:


	Carrying Value			90 Days Past Due and Still Accruing(a)		Net Charge-Offs (Recoveries)
($ in millions)	2021		2020	2021	2020	2021	2020
Commercial and industrial loans	$	51,666	49,895	17	39	60	198
Commercial mortgage loans	10,329		10,609	1	8	8	45
Commercial construction loans	5,241		5,815	1	—	—	—
Commercial leases	3,053		2,954	—	1	(1)	23
Residential mortgage loans	20,791		20,393	72	70	(4)	2
Home equity	4,084		5,183	1	2	(4)	5
Indirect secured consumer loans	16,783		13,653	9	10	14	32
Credit card	1,766		2,007	15	31	70	126
Other consumer loans	2,752		3,014	1	2	31	40
Total loans and leases	$	116,465	113,523	117	163	174	471
Less: Loans and leases held for sale	$	4,415	4,741
Total portfolio loans and leases	$	112,050	108,782

(a)Excludes government guaranteed residential mortgage loans.

The following table presents the components of the net investment in portfolio leases as of December 31:


($ in millions)(a)	2021		2020
Net investment in direct financing leases:
Lease payment receivable (present value)	$	886	1,400
Unguaranteed residual assets (present value)	147		181
Net premium (discount) on acquired leases	1		(1)
Net investment in sales-type leases:
Lease payment receivable (present value)	1,678		976
Unguaranteed residual assets (present value)	55		36

(a)Excludes $285 and $323 of leveraged leases at December 31, 2021 and 2020, respectively.

Interest income recognized in the Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019 was $42 million, $64 million and $88 million, respectively, for direct financing leases and $42 million, $28 million and $13 million, respectively, for sales-type leases.

The following table presents undiscounted cash flows for both direct financing and sales-type leases for 2022 through 2026 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease receivables as follows:


As of December 31, 2021 ($ in millions)	Direct Financing Leases		Sales-Type Leases
2022	$	294	548
2023	215		385
2024	155		301
2025	111		242
2026	82		116
Thereafter	86		194
Total undiscounted cash flows	$	943	1,786
Less: Difference between undiscounted cash flows and discounted cash flows	57		108
Present value of lease payments (recognized as lease receivables)	$	886	1,678

The lease residual value represents the present value of the estimated fair value of the leased equipment at the end of the lease. The Bancorp performs quarterly reviews of residual values associated with its leasing portfolio considering factors such as the subject equipment, structure of the transaction, industry, prior experience with the lessee and other factors that impact the residual value to assess for impairment. The Bancorp maintained an allowance of $15 million and $29 million at December 31, 2021 and 2020, respectively, to cover the losses that are expected to be incurred over the remaining contractual terms of the related leases, including the potential losses related to the residual value, in the net investment in leases. Refer to Note 6 for additional information on credit quality and the ALLL.