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:


($ in millions)	June 30, 2022		December 31, 2021
Loans and leases held for sale:
Commercial and industrial loans	$	3	7
Commercial mortgage loans	—		13

Commercial leases	1		1
Residential mortgage loans	2,538		4,394
Total loans and leases held for sale	$	2,542	4,415
Portfolio loans and leases:
Commercial and industrial loans(a)	$	56,095	51,659
Commercial mortgage loans	10,748		10,316
Commercial construction loans	5,357		5,241
Commercial leases	2,850		3,052
Total commercial loans and leases	$	75,050	70,268
Residential mortgage loans	$	17,566	16,397
Home equity	3,906		4,084
Indirect secured consumer loans	17,017		16,783
Credit card	1,763		1,766
Other consumer loans	3,521		2,752
Total consumer loans	$	43,773	41,782
Total portfolio loans and leases	$	118,823	112,050

Portfolio loans and leases are recorded net of unearned income, which totaled $242 million and $244 million as of June 30, 2022 and December 31, 2021, 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 $452 million and $498 million as of June 30, 2022 and December 31, 2021, respectively. The amortized cost basis of loans and leases excludes accrued interest receivable of $356 million and $332 million at June 30, 2022 and December 31, 2021, respectively, which is presented as a component of other assets in the Condensed Consolidated Balance Sheets.

The Bancorp’s FHLB and FRB borrowings are primarily secured by loans. The Bancorp had loans of $16.6 billion and $15.3 billion as of June 30, 2022 and December 31, 2021, respectively, pledged at the FHLB, and loans of $55.8 billion and $50.9 billion at June 30, 2022 and December 31, 2021, respectively, pledged at the FRB.


	Carrying Value			90 Days Past Due and Still Accruing(a)
($ in millions)	June 30, 2022		December 31, 2021	June 30, 2022	December 31, 2021
Commercial and industrial loans	$	56,098	51,666	6	17
Commercial mortgage loans	10,748		10,329	—	1
Commercial construction loans	5,357		5,241	—	1
Commercial leases	2,851		3,053	1	—
Residential mortgage loans	20,104		20,791	8	72
Home equity	3,906		4,084	2	1
Indirect secured consumer loans	17,017		16,783	8	9
Credit card	1,763		1,766	13	15
Other consumer loans	3,521		2,752	1	1
Total loans and leases	$	121,365	116,465	39	117
Less: Loans and leases held for sale	2,542		4,415
Total portfolio loans and leases	$	118,823	112,050


	For the three months ended June 30,			For the six months ended June 30,
($ in millions)	2022		2021	2022	2021
Commercial and industrial loans	$	33	13	42	40
Commercial mortgage loans	—		6	(1)	8
Commercial construction loans	3		—	3	—
Commercial leases	—		(2)	—	(2)
Residential mortgage loans	(1)		—	(1)	(1)
Home equity	—		(1)	(1)	(1)
Indirect secured consumer loans	5		—	13	9
Credit card	14		20	27	45
Other consumer loans	8		8	14	17
Total net charge-offs	$	62	44	96	115

The Bancorp engages in commercial lease products primarily related to the financing of commercial equipment. Leases are classified as sales-type if the Bancorp transfers control of the underlying asset to the lessee. The Bancorp classifies leases that do not meet any of the criteria for a sales-type lease as a direct financing lease if the present value of the sum of the lease payments and any residual value guaranteed by the lessee and/or any other third party equals or exceeds substantially all of the fair value of the underlying asset and the collection of the lease payments and residual value guarantee is probable.


($ in millions)(a)	June 30, 2022		December 31, 2021
Net investment in direct financing leases:
Lease payment receivable (present value)	$	718	886
Unguaranteed residual assets (present value)	135		147
Net premium on acquired leases	1		1
Net investment in sales-type leases:
Lease payment receivable (present value)	1,688		1,678
Unguaranteed residual assets (present value)	62		55

Interest income recognized in the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2022 was $7 million and $15 million, respectively, for direct financing leases and $12 million and $23 million, respectively, for sales-type leases. For the

three and six months ended June 30, 2021, interest income recognized was $11 million and $23 million, respectively, for direct financing leases and $10 million and $20 million, respectively, for sales-type leases.

The following table presents undiscounted cash flows for both direct financing and sales-type leases for the remainder of 2022 through 2027 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease receivables as follows:


As of June 30, 2022 ($ in millions)	Direct Financing Leases		Sales-Type Leases
Remainder of 2022	$	118	266
2023	212		452
2024	152		363
2025	111		305
2026	83		172
2027	45		123
Thereafter	44		131
Total undiscounted cash flows	$	765	1,812
Less: Difference between undiscounted cash flows and discounted cash flows	47		124
Present value of lease payments (recognized as lease receivables)	$	718	1,688

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 at both June 30, 2022 and December 31, 2021 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.