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)	September 30, 2022		December 31, 2021
Loans and leases held for sale:
Commercial and industrial loans	$	68	7
Commercial mortgage loans	—		13

Commercial leases	1		1
Residential mortgage loans	1,871		4,394
Total loans and leases held for sale	$	1,940	4,415
Portfolio loans and leases:
Commercial and industrial loans(a)	$	56,437	51,659
Commercial mortgage loans	10,947		10,316
Commercial construction loans	5,573		5,241
Commercial leases	2,821		3,052
Total commercial loans and leases	$	75,778	70,268
Residential mortgage loans	$	17,600	16,397
Home equity	4,000		4,084
Indirect secured consumer loans	16,646		16,783
Credit card	1,770		1,766
Other consumer loans	4,205		2,752
Total consumer loans	$	44,221	41,782
Total portfolio loans and leases	$	119,999	112,050

Portfolio loans and leases are recorded net of unearned income, which totaled $241 million and $244 million as of September 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 $355 million and $498 million as of September 30, 2022 and December 31, 2021, respectively. The amortized cost basis of loans and leases excludes accrued interest receivable of $403 million and $332 million at September 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 $16.7 billion and $15.3 billion as of September 30, 2022 and December 31, 2021, respectively, pledged at the FHLB, and loans of $56.6 billion and $50.9 billion at September 30, 2022 and December 31, 2021, respectively, pledged at the FRB.


	Carrying Value			90 Days Past Due and Still Accruing(a)
($ in millions)	September 30, 2022		December 31, 2021	September 30, 2022	December 31, 2021
Commercial and industrial loans	$	56,505	51,666	16	17
Commercial mortgage loans	10,947		10,329	—	1
Commercial construction loans	5,573		5,241	—	1
Commercial leases	2,822		3,053	10	—
Residential mortgage loans	19,471		20,791	7	72
Home equity	4,000		4,084	1	1
Indirect secured consumer loans	16,646		16,783	10	9
Credit card	1,770		1,766	14	15
Other consumer loans	4,205		2,752	1	1
Total loans and leases	$	121,939	116,465	59	117
Less: Loans and leases held for sale	1,940		4,415
Total portfolio loans and leases	$	119,999	112,050


	For the three months ended September 30,			For the nine months ended September 30,
($ in millions)	2022		2021	2022	2021
Commercial and industrial loans	$	34	5	76	45
Commercial mortgage loans	—		(1)	(1)	8
Commercial construction loans	(1)		—	2	—
Commercial leases	(1)		—	(1)	(2)
Residential mortgage loans	(1)		(1)	(2)	(2)
Home equity	(1)		(1)	(2)	(2)
Indirect secured consumer loans	10		(1)	23	8
Credit card	12		12	39	57
Other consumer loans	10		8	25	24
Total net charge-offs	$	62	21	159	136

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)	September 30, 2022		December 31, 2021
Net investment in direct financing leases:
Lease payment receivable (present value)	$	655	886
Unguaranteed residual assets (present value)	129		147
Net premium on acquired leases	1		1
Net investment in sales-type leases:
Lease payment receivable (present value)	1,721		1,678
Unguaranteed residual assets (present value)	67		55

Interest income recognized in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2022 was $7 million and $22 million, respectively, for direct financing leases and $13 million and $36 million, respectively, for sales-type leases.

For the three and nine months ended September 30, 2021, interest income recognized was $10 million and $33 million, respectively, for direct financing leases and $11 million and $31 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 September 30, 2022 ($ in millions)	Direct Financing Leases		Sales-Type Leases
Remainder of 2022	$	52	139
2023	211		494
2024	152		407
2025	111		342
2026	83		189
2027	44		137
Thereafter	44		141
Total undiscounted cash flows	$	697	1,849
Less: Difference between undiscounted cash flows and discounted cash flows	42		128
Present value of lease payments (recognized as lease receivables)	$	655	1,721

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 $16 million and $15 million at September 30, 2022 and December 31, 2021, 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 lease residual value. Refer to Note 6 for additional information on credit quality and the ALLL.