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Credit Quality and the Allowance for Loan and Lease Losses

12 Months Ended

Dec. 31, 2021

Credit Quality and the Allowance for Loan and Lease Losses

The Bancorp disaggregates ALLL balances and transactions in the ALLL by portfolio segment. Credit quality related disclosures for loans and leases are further disaggregated by class.

Allowance for Loan and Lease Losses

The following tables summarize transactions in the ALLL by portfolio segment for the years ended December 31:


2021 ($ in millions)	Commercial		Residential Mortgage	Consumer	Total
Balance, beginning of period	$	1,456	294	703	2,453
Losses charged-off(a)	(119)		(3)	(222)	(344)
Recoveries of losses previously charged-off(a)	52		7	111	170
Benefit from loan and lease losses	(287)		(63)	(37)	(387)
Balance, end of period	$	1,102	235	555	1,892

(a)The Bancorp recorded $33 in both losses charged-off and recoveries of losses previously charged-off related to customer defaults on point-of-sale consumer loans for which the Bancorp obtained recoveries under third-party credit enhancements.


2020 ($ in millions)	Commercial		Residential Mortgage	Consumer	Unallocated	Total
Balance, beginning of period	$	710	73	298	121	1,202
Impact of adoption of ASU 2016-13(a)	160		196	408	(121)	643
Losses charged-off(b)	(282)		(9)	(320)	—	(611)
Recoveries of losses previously charged-off(b)	16		7	117	—	140
Provision for loan and lease losses	852		27	200	—	1,079
Balance, end of period	$	1,456	294	703	—	2,453

(a)Includes $31, $2 and $1 in Commercial, Residential Mortgage and Consumer, respectively, related to the initial recognition of an ALLL on PCD loans.

(b)The Bancorp recorded $42 in both losses previously charged-off and recoveries of losses charged-off related to customer defaults on point-of-sale consumer loans for which the Bancorp obtained recoveries under third-party credit enhancements.


2019 ($ in millions)	Commercial		Residential Mortgage	Consumer	Unallocated	Total
Balance, beginning of period	$	645	81	267	110	1,103
Losses charged-off(a)	(127)		(9)	(374)	—	(510)
Recoveries of losses previously charged-off(a)	19		5	117	—	141
Provision for (benefit from) loan and lease losses	173		(4)	288	11	468
Balance, end of period	$	710	73	298	121	1,202

(a)The Bancorp recorded $48 in both losses previously charged-off and recoveries of losses charged-off related to customer defaults on point-of-sale consumer loans for which the Bancorp obtained recoveries under third-party credit enhancements.

The following tables provide a summary of the ALLL and related loans and leases classified by portfolio segment:


As of December 31, 2021 ($ in millions)	Commercial		Residential Mortgage	Consumer	Total
ALLL:(a)
Individually evaluated	$	77	46	41	164
Collectively evaluated	1,025		189	514	1,728
Total ALLL	$	1,102	235	555	1,892
Portfolio loans and leases:(b)
Individually evaluated	$	579	460	313	1,352
Collectively evaluated	69,689		15,783	25,072	110,544
Total portfolio loans and leases	$	70,268	16,243	25,385	111,896

(a)Includes $2 related to commercial leveraged leases at December 31, 2021.

(b)Excludes $154 of residential mortgage loans measured at fair value and includes $285 of commercial leveraged leases, net of unearned income, at December 31, 2021.


As of December 31, 2020 ($ in millions)	Commercial		Residential Mortgage	Consumer	Total
ALLL:(a)
Individually evaluated	$	114	68	43	225
Collectively evaluated	1,342		226	660	2,228
Total ALLL	$	1,456	294	703	2,453
Portfolio loans and leases:(b)
Individually evaluated	$	962	628	273	1,863
Collectively evaluated	67,701		15,073	23,569	106,343
Purchased credit deteriorated(c)	334		66	15	415
Total portfolio loans and leases	$	68,997	15,767	23,857	108,621

(a)Includes $3 related to commercial leveraged leases at December 31, 2020.

(b)Excludes $161 of residential mortgage loans measured at fair value and includes $323 of commercial leveraged leases, net of unearned income, at December 31, 2020.

(c)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.

CREDIT RISK PROFILE

Commercial Portfolio Segment

For purposes of monitoring the credit quality and risk characteristics of its commercial portfolio segment, the Bancorp disaggregates the segment into the following classes: commercial and industrial, commercial mortgage owner-occupied, commercial mortgage nonowner-occupied, commercial construction and commercial leases.

To facilitate the monitoring of credit quality within the commercial portfolio segment, the Bancorp utilizes the following categories of credit grades: pass, special mention, substandard, doubtful and loss. The five categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter.

Pass ratings, which are assigned to those borrowers that do not have identified potential or well-defined weaknesses and for which there is a high likelihood of orderly repayment, are updated at least annually based on the size and credit characteristics of the borrower. All other categories are updated on a quarterly basis during the month preceding the end of the calendar quarter.

The Bancorp assigns a special mention rating to loans and leases that have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the loan or lease or the Bancorp’s credit position.

The Bancorp assigns a substandard rating to loans and leases that are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged. Substandard loans and leases have well-defined weaknesses or weaknesses that could jeopardize the orderly repayment of the debt. Loans and leases in this grade also are characterized by the distinct possibility that the Bancorp will sustain some loss if the deficiencies noted are not addressed and corrected.

The Bancorp assigns a doubtful rating to loans and leases that have all the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage of and strengthen the credit quality of the loan or lease, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans.

Loans and leases classified as loss are considered uncollectible and are charged off in the period in which they are determined to be uncollectible. Because loans and leases in this category are fully charged off, they are not included in the following tables.

For loans and leases that are collectively evaluated, the Bancorp utilizes models to forecast expected credit losses over a reasonable and supportable forecast period based on the probability of a loan or lease defaulting, the expected balance at the estimated date of default and the expected loss percentage given a default. For the commercial portfolio segment, the estimates for probability of default are primarily based on internal ratings assigned to each commercial borrower on a 13-point scale and historical observations of how those ratings migrate to a default over time in the context of macroeconomic conditions. For loans with available credit, the estimate of the expected balance at the time of default considers expected utilization rates, which are primarily based on macroeconomic conditions and the utilization history of similar borrowers under those economic conditions. The estimates for loss severity are primarily based on collateral type and coverage levels and the susceptibility of those characteristics to changes in macroeconomic conditions. Refer to Note 1 for additional information about the Bancorp’s processes for developing these models, estimating credit losses for periods beyond the reasonable and supportable forecast period and for estimating credit losses for individually evaluated loans.

The following tables present the amortized cost basis of the Bancorp’s commercial portfolio segment, by class and vintage, disaggregated by credit risk grade:


As of December 31, 2021 ($ in millions)	Term Loans and Leases by Origination Year							Revolving Loans	Revolving Loans Converted to Term Loans
	2021		2020	2019	2018	2017	Prior			Total
Commercial and industrial loans:
Pass	$	4,266	2,291	1,198	552	356	752	39,486	—	48,901
Special mention	37		22	12	29	22	5	665	—	792
Substandard	19		52	36	69	52	115	1,623	—	1,966
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial and industrial loans	$	4,322	2,365	1,246	650	430	872	41,774	—	51,659
Commercial mortgage owner-occupied loans:
Pass	$	1,082	804	471	296	183	331	1,141	—	4,308
Special mention	—		31	46	17	2	40	69	—	205
Substandard	22		38	3	12	3	27	91	—	196
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial mortgage owner-occupied loans	$	1,104	873	520	325	188	398	1,301	—	4,709
Commercial mortgage nonowner-occupied loans:
Pass	$	635	733	595	284	141	302	1,977	—	4,667
Special mention	89		12	11	5	7	9	162	—	295
Substandard	160		78	4	3	9	3	388	—	645
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial mortgage nonowner-occupied loans	$	884	823	610	292	157	314	2,527	—	5,607
Commercial construction loans:
Pass	$	50	69	11	37	—	9	4,488	—	4,664
Special mention	—		39	—	—	—	—	193	—	232
Substandard	17		—	—	—	—	—	328	—	345
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial construction loans	$	67	108	11	37	—	9	5,009	—	5,241
Commercial leases:
Pass	$	1,019	436	284	231	233	776	—	—	2,979
Special mention	4		4	5	9	—	8	—	—	30
Substandard	7		3	8	10	13	2	—	—	43
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial leases	$	1,030	443	297	250	246	786	—	—	3,052
Total commercial loans and leases:
Pass	$	7,052	4,333	2,559	1,400	913	2,170	47,092	—	65,519
Special mention	130		108	74	60	31	62	1,089	—	1,554
Substandard	225		171	51	94	77	147	2,430	—	3,195
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial loans and leases	$	7,407	4,612	2,684	1,554	1,021	2,379	50,611	—	70,268


As of December 31, 2020 ($ in millions)	Term Loans and Leases by Origination Year							Revolving Loans	Revolving Loans Converted to Term Loans
	2020		2019	2018	2017	2016	Prior			Total
Commercial and industrial loans:
Pass	$	7,042	2,144	1,114	700	471	703	31,657	—	43,831
Special mention	66		46	167	46	5	21	2,317	—	2,668
Substandard	119		80	107	60	39	104	2,639	—	3,148
Doubtful	—		2	9	—	—	—	7	—	18
Total commercial and industrial loans	$	7,227	2,272	1,397	806	515	828	36,620	—	49,665
Commercial mortgage owner-occupied loans:
Pass	$	1,047	655	416	288	249	420	1,025	—	4,100
Special mention	58		12	16	7	2	17	64	—	176
Substandard	211		17	33	7	13	30	88	—	399
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial mortgage owner-occupied loans	$	1,316	684	465	302	264	467	1,177	—	4,675
Commercial mortgage nonowner-occupied loans:
Pass	$	902	679	548	247	223	341	1,626	—	4,566
Special mention	252		68	17	8	36	9	416	—	806
Substandard	149		3	49	14	2	25	301	—	543
Doubtful	12		—	—	—	—	—	—	—	12
Total commercial mortgage nonowner-occupied loans	$	1,315	750	614	269	261	375	2,343	—	5,927
Commercial construction loans:
Pass	$	98	49	27	—	9	12	4,721	—	4,916
Special mention	67		—	—	—	—	—	591	—	658
Substandard	8		—	—	—	—	—	233	—	241
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial construction loans	$	173	49	27	—	9	12	5,545	—	5,815
Commercial leases:
Pass	$	622	374	315	369	314	824	—	—	2,818
Special mention	5		16	5	—	—	—	—	—	26
Substandard	7		4	16	21	6	17	—	—	71
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial leases	$	634	394	336	390	320	841	—	—	2,915
Total commercial loans and leases:
Pass	$	9,711	3,901	2,420	1,604	1,266	2,300	39,029	—	60,231
Special mention	448		142	205	61	43	47	3,388	—	4,334
Substandard	494		104	205	102	60	176	3,261	—	4,402
Doubtful	12		2	9	—	—	—	7	—	30
Total commercial loans and leases	$	10,665	4,149	2,839	1,767	1,369	2,523	45,685	—	68,997

Age Analysis of Past Due Commercial Loans and Leases

The following tables summarize the Bancorp’s amortized cost basis in portfolio commercial loans and leases, by age and class:


	Current Loans and Leases(a)		Past Due			Total Loans and Leases	90 Days Past Due and Still Accruing
As of December 31, 2021 ($ in millions)			30-89 Days(a)	90 Days or More(a)	Total Past Due
Commercial loans and leases:
Commercial and industrial loans(b)	$	51,549	61	49	110	51,659	17
Commercial mortgage owner-occupied loans	4,701		4	4	8	4,709	1
Commercial mortgage nonowner-occupied loans	5,606		—	1	1	5,607	—
Commercial construction loans	5,241		—	—	—	5,241	1
Commercial leases	3,035		16	1	17	3,052	—
Total portfolio commercial loans and leases	$	70,132	81	55	136	70,268	19

(a)Includes accrual and nonaccrual loans and leases.

(b)Includes loans related to the SBA’s Paycheck Protection Program, of which $20 were 30-89 days past due and $6 were 90 days or more past due.


	Current Loans and Leases(a)		Past Due			Total Loans and Leases	90 Days Past Due and Still Accruing
As of December 31, 2020 ($ in millions)			30-89 Days(a)	90 Days or More(a)	Total Past Due
Commercial loans and leases:
Commercial and industrial loans	$	49,421	119	125	244	49,665	39
Commercial mortgage owner-occupied loans	4,645		7	23	30	4,675	7
Commercial mortgage nonowner-occupied loans	5,860		31	36	67	5,927	1
Commercial construction loans	5,808		7	—	7	5,815	—
Commercial leases	2,906		7	2	9	2,915	1
Total portfolio commercial loans and leases	$	68,640	171	186	357	68,997	48

(a)Includes accrual and nonaccrual loans and leases.

Residential Mortgage and Consumer Portfolio Segments

For purposes of monitoring the credit quality and risk characteristics of its consumer portfolio segment, the Bancorp disaggregates the segment into the following classes: home equity, indirect secured consumer loans, credit card and other consumer loans. The Bancorp’s residential mortgage portfolio segment is also a separate class.

The Bancorp considers repayment performance as the best indicator of credit quality for residential mortgage and consumer loans, which includes both the delinquency status and performing versus nonperforming status of the loans. The delinquency status of all residential mortgage and consumer loans and the performing versus nonperforming status is presented in the following table. Loans and leases which received payment deferrals or forbearances as part of the Bancorp’s COVID-19 customer relief programs are generally not reported as delinquent during the forbearance or deferral period if the loan or lease was less than 30 days past due at March 1, 2020 (the effective date of the COVID-19 national emergency declaration) unless the loan or lease subsequently becomes delinquent according to its modified terms. Refer to Note 1 for additional information.

For collectively evaluated loans in the consumer and residential mortgage portfolio segments, the Bancorp’s expected credit loss models primarily utilize the borrower’s FICO score and delinquency history in combination with macroeconomic conditions when estimating the probability of default. The estimates for loss severity are primarily based on collateral type and coverage levels and the susceptibility of those characteristics to changes in macroeconomic conditions. The expected balance at the estimated date of default is also particularly significant for portfolio classes which generally have longer terms (such as residential mortgage loans and home equity) and portfolio classes containing a high concentration of loans with revolving privileges (such as home equity). The estimate of the expected balance at the time of default considers expected prepayment and utilization rates where applicable, which are primarily based on macroeconomic conditions and the utilization history of similar borrowers under those economic conditions. Refer to Note 1 for additional information about the Bancorp’s process for developing these models and its process for estimating credit losses for periods beyond the reasonable and supportable forecast period.

The following tables present the amortized cost basis of the Bancorp’s residential mortgage and consumer portfolio segments, by class and vintage, disaggregated by both age and performing versus nonperforming status:


As of December 31, 2021 ($ in millions)	Term Loans by Origination Year							Revolving Loans	Revolving Loans Converted to Term Loans
	2021		2020	2019	2018	2017	Prior			Total
Residential mortgage loans:
Performing:
Current(a)	$	5,886	3,309	1,294	418	954	4,261	—	—	16,122
30-89 days past due	1		1	1	1	1	13	—	—	18
90 days or more past due	—		2	4	3	9	52	—	—	70
Total performing	5,887		3,312	1,299	422	964	4,326	—	—	16,210
Nonperforming	—		—	1	—	2	30	—	—	33
Total residential mortgage loans(b)	$	5,887	3,312	1,300	422	966	4,356	—	—	16,243
Home equity:
Performing:
Current	$	2	6	13	18	2	113	3,815	12	3,981
30-89 days past due	—		—	—	—	—	3	22	—	25
90 days or more past due	—		—	—	—	—	1	—	—	1
Total performing	2		6	13	18	2	117	3,837	12	4,007
Nonperforming	—		—	—	—	—	9	67	1	77
Total home equity	$	2	6	13	18	2	126	3,904	13	4,084
Indirect secured consumer loans:
Performing:
Current	$	8,732	4,206	2,221	902	389	194	—	—	16,644
30-89 days past due	26		24	25	17	8	3	—	—	103
90 days or more past due	2		2	2	2	1	—	—	—	9
Total performing	8,760		4,232	2,248	921	398	197	—	—	16,756
Nonperforming	—		12	5	5	3	2	—	—	27
Total indirect secured consumer loans	$	8,760	4,244	2,253	926	401	199	—	—	16,783
Credit card:
Performing:
Current	$	—	—	—	—	—	—	1,710	—	1,710
30-89 days past due	—		—	—	—	—	—	18	—	18
90 days or more past due	—		—	—	—	—	—	15	—	15
Total performing	—		—	—	—	—	—	1,743	—	1,743
Nonperforming	—		—	—	—	—	—	23	—	23
Total credit card	$	—	—	—	—	—	—	1,766	—	1,766
Other consumer loans:
Performing:
Current	$	692	530	275	174	105	47	913	—	2,736
30-89 days past due	3		2	3	2	1	—	2	1	14
90 days or more past due	—		—	1	—	—	—	—	—	1
Total performing	695		532	279	176	106	47	915	1	2,751
Nonperforming	—		—	—	—	—	—	1	—	1
Total other consumer loans	$	695	532	279	176	106	47	916	1	2,752
Total residential mortgage and consumer loans:
Performing:
Current	$	15,312	8,051	3,803	1,512	1,450	4,615	6,438	12	41,193
30-89 days past due	30		27	29	20	10	19	42	1	178
90 days or more past due	2		4	7	5	10	53	15	—	96
Total performing	15,344		8,082	3,839	1,537	1,470	4,687	6,495	13	41,467
Nonperforming	—		12	6	5	5	41	91	1	161
Total residential mortgage and consumer loans(b)	$	15,344	8,094	3,845	1,542	1,475	4,728	6,586	14	41,628

(a)Information includes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the VA. As of December 31, 2021, $49 of these loans were 30-89 days past due and $139 were 90 days or more past due. The Bancorp recognized $2 of losses during the year ended December 31, 2021 due to claim denials and curtailments associated with these insured or guaranteed loans.

(b)Excludes $154 of residential mortgage loans measured at fair value at December 31, 2021.


As of December 31, 2020 ($ in millions)	Term Loans by Origination Year							Revolving Loans	Revolving Loans Converted to Term Loans
	2020		2019	2018	2017	2016	Prior			Total
Residential mortgage loans:
Performing:
Current(a)	$	4,006	2,128	827	1,635	2,301	4,719	—	—	15,616
30-89 days past due	1		1	3	3	1	12	—	—	21
90 days or more past due	—		6	2	7	7	48	—	—	70
Total performing	4,007		2,135	832	1,645	2,309	4,779	—	—	15,707
Nonperforming	1		—	2	2	3	52	—	—	60
Total residential mortgage loans(b)	$	4,008	2,135	834	1,647	2,312	4,831	—	—	15,767
Home equity:
Performing:
Current	$	11	24	30	4	2	153	4,825	10	5,059
30-89 days past due	—		—	—	—	—	3	33	—	36
90 days or more past due	—		—	—	—	—	2	—	—	2
Total performing	11		24	30	4	2	158	4,858	10	5,097
Nonperforming	—		—	—	—	—	10	75	1	86
Total home equity	$	11	24	30	4	2	168	4,933	11	5,183
Indirect secured consumer loans:
Performing:
Current	$	6,626	3,752	1,678	860	372	214	—	—	13,502
30-89 days past due	25		41	31	17	7	4	—	—	125
90 days or more past due	1		2	3	2	1	1	—	—	10
Total performing	6,652		3,795	1,712	879	380	219	—	—	13,637
Nonperforming	1		5	4	3	2	1	—	—	16
Total indirect secured consumer loans	$	6,653	3,800	1,716	882	382	220	—	—	13,653
Credit card:
Performing:
Current	$	—	—	—	—	—	—	1,914	—	1,914
30-89 days past due	—		—	—	—	—	—	30	—	30
90 days or more past due	—		—	—	—	—	—	31	—	31
Total performing	—		—	—	—	—	—	1,975	—	1,975
Nonperforming	—		—	—	—	—	—	32	—	32
Total credit card	$	—	—	—	—	—	—	2,007	—	2,007
Other consumer loans:
Performing:
Current	$	883	546	437	178	32	40	878	1	2,995
30-89 days past due	2		5	4	2	—	—	2	—	15
90 days or more past due	—		2	—	—	—	—	—	—	2
Total performing	885		553	441	180	32	40	880	1	3,012
Nonperforming	—		—	—	—	—	1	1	—	2
Total other consumer loans	$	885	553	441	180	32	41	881	1	3,014
Total residential mortgage and consumer loans:
Performing:
Current	$	11,526	6,450	2,972	2,677	2,707	5,126	7,617	11	39,086
30-89 days past due	28		47	38	22	8	19	65	—	227
90 days or more past due	1		10	5	9	8	51	31	—	115
Total performing	11,555		6,507	3,015	2,708	2,723	5,196	7,713	11	39,428
Nonperforming	2		5	6	5	5	64	108	1	196
Total residential mortgage and consumer loans(b)	$	11,557	6,512	3,021	2,713	2,728	5,260	7,821	12	39,624

(a)Information includes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the VA. As of December 31, 2020, $103 of these loans were 30-89 days past due and $242 were 90 days or more past due. The Bancorp recognized $3 of losses during the year ended December 31, 2020 due to claim denials and curtailments associated with these insured or guaranteed loans.

(b)Excludes $161 of residential mortgage loans measured at fair value at December 31, 2020.

Collateral-Dependent Loans and Leases

The Bancorp considers a loan or lease to be collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. When a loan or lease is collateral-dependent, its fair value is generally based on the fair value less cost to sell of the underlying collateral.

The following table presents the amortized cost basis of the Bancorp’s collateral-dependent loans and leases, by portfolio class, as of:


($ in millions)	December 31, 2021		December 31, 2020
Commercial loans and leases:
Commercial and industrial loans	$	467	810
Commercial mortgage owner-occupied loans	22		101
Commercial mortgage nonowner-occupied loans	31		82
Commercial construction loans	56		19
Commercial leases	3		6
Total commercial loans and leases	579		1,018
Residential mortgage loans	60		80
Consumer loans:
Home equity	58		71
Indirect secured consumer loans	8		9

Total consumer loans	66		80
Total portfolio loans and leases	$	705	1,178

Nonperforming Assets

Nonperforming assets include nonaccrual loans and leases for which ultimate collectability of the full amount of the principal and/or interest is uncertain; restructured loans which have not yet met the requirements to be returned to accrual status; certain restructured consumer and residential mortgage loans which are 90 days past due based on the restructured terms unless the loan is both well-secured and in the process of collection; and certain other assets, including OREO and other repossessed property.

The following table presents the amortized cost basis of the Bancorp’s nonaccrual loans and leases, by class, and OREO and other repossessed property, as of:


	December 31, 2021				December 31, 2020
($ in millions)	With an ALLL		No Related ALLL	Total	With an ALLL	No Related ALLL	Total
Commercial loans and leases:
Commercial and industrial loans	$	151	128	279	213	260	473
Commercial mortgage owner-occupied loans	10		13	23	20	60	80
Commercial mortgage nonowner-occupied loans	22		3	25	34	43	77
Commercial construction loans	6		—	6	1	—	1
Commercial leases	3		1	4	6	1	7
Total nonaccrual portfolio commercial loans and leases	$	192	145	337	274	364	638
Residential mortgage loans	14		19	33	11	49	60
Consumer loans:
Home equity	53		24	77	55	31	86
Indirect secured consumer loans	21		6	27	8	8	16
Credit card	23		—	23	32	—	32
Other consumer loans	1		—	1	2	—	2
Total nonaccrual portfolio consumer loans	$	98	30	128	97	39	136
Total nonaccrual portfolio loans and leases(a)(b)	$	304	194	498	382	452	834
OREO and other repossessed property	—		29	29	—	30	30
Total nonperforming portfolio assets(a)(b)	$	304	223	527	382	482	864

(a)Excludes $15 and $6 of nonaccrual loans held for sale as of December 31, 2021 and 2020, respectively.

(b)Includes $26 and $29 of nonaccrual government insured commercial loans whose repayments are insured by the SBA as of December 31, 2021 and 2020, respectively, of which $11 and $17 are restructured nonaccrual government insured commercial loans as of December 31, 2021 and 2020, respectively.

The following table presents the interest income recognized on the Bancorp’s nonaccrual loans and leases as of December 31, 2021 and 2020, by class:


	For the years ended December 31,
($ in millions)	2021		2020
Commercial loans and leases:
Commercial and industrial loans	$	6	8

Commercial mortgage nonowner-occupied loans	—		1

Commercial leases	1		1
Total nonaccrual portfolio commercial loans and leases	$	7	10
Residential mortgage loans	24		28
Consumer loans:
Home equity	7		9
Indirect secured consumer loans	2		—
Credit card	3		4

Total nonaccrual portfolio consumer loans	$	12	13
Total nonaccrual portfolio loans and leases	$	43	51

The Bancorp’s amortized cost basis of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction was $84 million and $136 million as of December 31, 2021 and 2020, respectively.

Troubled Debt Restructurings

A loan is accounted for as a TDR if the Bancorp, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. TDRs include concessions granted under reorganization, arrangement or other provisions of the Federal Bankruptcy Act. Within each of the Bancorp’s loan classes, TDRs typically involve either a reduction of the stated interest rate of the loan, an extension of the loan’s maturity date with a stated rate lower than the current market rate for a new loan with similar risk, or in limited circumstances, a reduction of the principal balance of the loan or the loan’s accrued interest. Modifying the terms of a loan may result in an increase or decrease to the ALLL depending upon the terms modified, the method used to measure the ALLL for a loan prior to modification, the extent of collateral, and whether any charge-offs were recorded on the loan before or at the time of modification. Refer to the ALLL section of Note 1 for information on the Bancorp’s ALLL methodology. Upon modification of a loan, the Bancorp measures the expected credit loss as either the difference between the amortized cost of the loan and the fair value of collateral less cost to sell or the difference between the estimated future cash flows expected to be collected on the modified loan, discounted at the original effective yield of the loan, and the carrying value of the loan. The resulting measurement may result in the need for minimal or no allowance regardless of which is used because it is probable that all cash flows will be collected under the modified terms of the loan. In addition, if the stated interest rate was increased in a TDR that is not collateral-dependent, the cash flows on the modified loan, using the pre-modification interest rate as the discount rate, often exceed the amortized cost basis of the loan. Conversely, upon a modification that reduces the stated interest rate on a loan that is not collateral-dependent, the Bancorp recognizes an increase to the ALLL. If a TDR involves a reduction of the principal balance of the loan or the loan’s accrued interest, that amount is charged off to the ALLL. Loans discharged in a Chapter 7 bankruptcy and not reaffirmed by the borrower are treated as nonaccrual collateral-dependent loans with a charge-off recognized to reduce the carrying values of such loans to the fair value of the related collateral less costs to sell. Certain loan modifications which were made in response to the COVID-19 pandemic were not evaluated for classification as a TDR. Refer to the Regulatory Developments Related to the COVID-19 Pandemic section of Note 1 for additional information.

The Bancorp had commitments to lend additional funds to borrowers whose terms have been modified in a TDR, consisting of line of credit and letter of credit commitments of $121 million and $66 million, respectively, as of December 31, 2021 compared with $67 million and $72 million, respectively, as of December 31, 2020.

The following tables provide a summary of portfolio loans, by class, modified in a TDR by the Bancorp during the years ended December 31:


2021 ($ in millions)	Number of Loans Modified in a TDR During the Year(a)	Amortized Cost Basis of Loans Modified in a TDR During the Year		Increase (Decrease) to ALLL Upon Modification	Charge-offs Recognized Upon Modification
Commercial loans:
Commercial and industrial loans	86	$	150	1	—
Commercial mortgage owner-occupied loans	10	8		—	—
Commercial mortgage nonowner-occupied loans	5	29		—	—
Commercial construction loans	1	34		—	—
Residential mortgage loans	519	93		4	—
Consumer loans:
Home equity	206	10		(3)	—
Indirect secured consumer loans	4,567	96		1	—
Credit card	5,488	30		9	1
Total portfolio loans	10,882	$	450	12	1

(a)Represents number of loans post-modification and excludes loans previously modified in a TDR.


2020 ($ in millions)	Number of Loans Modified in a TDR During the Year(a)	Amortized Cost Basis of Loans Modified in a TDR During the Year		Increase (Decrease) to ALLL Upon Modification	Charge-offs Recognized Upon Modification
Commercial loans:
Commercial and industrial loans	124	$	305	26	7
Commercial mortgage owner-occupied loans	43	58		(11)	—
Commercial mortgage nonowner-occupied loans	19	44		(2)	—
Commercial construction loans	3	21		1	—
Residential mortgage loans	424	58		1	—
Consumer loans:
Home equity	147	7		(4)	—
Indirect secured consumer loans	70	—		—	—
Credit card	5,701	32		11	1
Total portfolio loans	6,531	$	525	22	8

(a)Represents number of loans post-modification and excludes loans previously modified in a TDR.


2019 ($ in millions)(a)(b)	Number of Loans Modified in a TDR During the Year(c)	Recorded Investment in Loans Modified in a TDR During the Year		(Decrease) Increase to ALLL Upon Modification	Charge-offs Recognized Upon Modification
Commercial loans:
Commercial and industrial loans	97	$	223	(19)	5
Commercial mortgage owner-occupied loans	15	12		—	—
Commercial mortgage nonowner-occupied loans	1	—		—	—
Residential mortgage loans	722	101		1	—
Consumer loans:
Home equity	80	4		—	—
Indirect secured consumer loans	100	—		—	—
Credit card	6,041	34		8	3
Total portfolio loans	7,056	$	374	(10)	8

(a)Excludes all loans acquired with deteriorated credit quality which were accounted for within a pool.

(b)Excludes loans classified as TDRs as a result of the Bancorp’s conformance to OCC guidance with regard to non-reaffirmed loans included in Chapter 7 bankruptcy filings.

(c)Represents number of loans post-modification and excludes loans previously modified in a TDR.

The Bancorp considers TDRs that become 90 days or more past due under the modified terms as subsequently defaulted. For commercial loans not subject to individual evaluation for an ALLL, the applicable commercial models are applied for purposes of determining the ALLL as well as qualitatively assessing whether those loans are reasonably expected to be further restructured prior to their maturity date and, if so, the impact such a restructuring would have on the remaining contractual life of the loans. When a residential mortgage, home equity, indirect secured consumer or other consumer loan that has been modified in a TDR subsequently defaults, the present value of expected cash flows used in the measurement of the expected credit loss is generally limited to the expected net proceeds from the sale of the loan’s underlying

collateral and any resulting collateral shortfall is reflected as a charge-off or an increase in ALLL. The Bancorp recognizes an ALLL for the entire balance of the credit card loans modified in a TDR that subsequently default.

The following tables provide a summary of TDRs that subsequently defaulted during the years ended December 31, 2021, 2020 and 2019 and were within 12 months of the restructuring date:


December 31, 2021 ($ in millions)(a)	Number of Contracts	Amortized Cost
Commercial loans:
Commercial and industrial loans	7	$	1
Commercial mortgage owner-occupied loans	3	1
Commercial mortgage nonowner-occupied loans	2	25
Residential mortgage loans	82	10
Consumer loans:
Home equity	28	1
Indirect secured consumer loans	130	2
Credit card	215	1
Total portfolio loans	467	$	41

(a)Excludes all loans held for sale and loans acquired with deteriorated credit quality which were accounted for within a pool.


December 31, 2020 ($ in millions)(a)	Number of Contracts	Amortized Cost
Commercial loans:
Commercial and industrial loans	13	$	5
Commercial mortgage owner-occupied loans	8	3
Commercial mortgage nonowner-occupied loans	3	11
Residential mortgage loans	149	23
Consumer loans:
Home equity	6	—
Indirect secured consumer loans	18	—
Credit card	260	1
Total portfolio loans	457	$	43

(a)Excludes all loans held for sale and loans acquired with deteriorated credit quality which were accounted for within a pool.


December 31, 2019 ($ in millions)(a)(b)	Number of Contracts	Recorded Investment
Commercial loans:
Commercial and industrial loans	12	$	20
Commercial mortgage owner-occupied loans	4	1
Commercial mortgage nonowner-occupied loans	1	—
Residential mortgage loans	274	42
Consumer loans:
Home equity	15	—
Credit card	655	3
Total portfolio loans	961	$	66

(a)Excludes all loans held for sale and loans acquired with deteriorated credit quality which were accounted for within a pool.

(b)Excludes loans classified as TDRs as a result of the Bancorp’s conformance to OCC guidance with regard to non-reaffirmed loans included in Chapter 7 bankruptcy filings.