Loans and Leases

12 Months Ended

Dec. 31, 2022

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)	2022		2021
Loans and leases held for sale:
Commercial and industrial loans	$	73	7
Commercial mortgage loans	—		13
Commercial leases	—		1
Residential mortgage loans	934		4,394
Total loans and leases held for sale	$	1,007	4,415
Portfolio loans and leases:
Commercial and industrial loans(a)	$	57,232	51,659
Commercial mortgage loans	11,020		10,316
Commercial construction loans	5,433		5,241
Commercial leases	2,704		3,052
Total commercial loans and leases	$	76,389	70,268
Residential mortgage loans	$	17,628	16,397
Home equity	4,039		4,084
Indirect secured consumer loans	16,552		16,783
Credit card	1,874		1,766
Other consumer loans	4,998		2,752
Total consumer loans	$	45,091	41,782
Total portfolio loans and leases	$	121,480	112,050

(a)Includes $94 million and $1.3 billion as of December 31, 2022 and 2021, respectively, related to the SBA’s Paycheck Protection Program.

Portfolio loans and leases are recorded net of unearned income, which totaled $238 million and $244 million as of December 31, 2022 and 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 $146 million and $498 million as of December 31, 2022 and 2021, respectively. The amortized cost basis of loans and leases excludes accrued interest receivable of $518 million and $332 million at December 31, 2022 and 2021, 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 $15.9 billion and $15.3 billion at December 31, 2022 and 2021, respectively, pledged to the FHLB, and loans of $57.1 billion and $50.9 billion at December 31, 2022 and 2021, respectively, pledged to 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)	2022		2021	2022	2021	2022	2021
Commercial and industrial loans	$	57,305	51,666	11	17	96	60
Commercial mortgage loans	11,020		10,329	—	1	(1)	8
Commercial construction loans	5,433		5,241	—	1	2	—
Commercial leases	2,704		3,053	2	—	4	(1)
Residential mortgage loans	18,562		20,791	7	72	(2)	(4)
Home equity	4,039		4,084	1	1	(2)	(4)
Indirect secured consumer loans	16,552		16,783	—	9	36	14
Credit card	1,874		1,766	18	15	52	70
Other consumer loans	4,998		2,752	1	1	42	31
Total loans and leases	$	122,487	116,465	40	117	227	174
Less: Loans and leases held for sale	1,007		4,415
Total portfolio loans and leases	$	121,480	112,050

(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)	2022		2021
Net investment in direct financing leases:
Lease payment receivable (present value)	$	570	886
Unguaranteed residual assets (present value)	107		147
Net premium on acquired leases	—		1
Net investment in sales-type leases:
Lease payment receivable (present value)	1,704		1,678
Unguaranteed residual assets (present value)	76		55

(a)Excludes $247 and $285 of leveraged leases at December 31, 2022 and 2021, respectively.

Interest income recognized in the Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020 was $29 million, $42 million and $64 million, respectively, for direct financing leases and $50 million, $42 million and $28 million, respectively, for sales-type leases.

The following table presents undiscounted cash flows for both direct financing and sales-type leases for 2023 through 2027 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease receivables as follows:


As of December 31, 2022 ($ in millions)	Direct Financing Leases		Sales-Type Leases
2023	$	188	502
2024	148		440
2025	100		376
2026	83		211
2027	44		156
Thereafter	44		155
Total undiscounted cash flows	$	607	1,840
Less: Difference between undiscounted cash flows and discounted cash flows	37		136
Present value of lease payments (recognized as lease receivables)	$	570	1,704

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 December 31, 2022 and 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 lease residual value. Refer to Note 6 for additional information on credit quality and the ALLL.