Loans and Leases

12 Months Ended

Dec. 31, 2023

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)	2023		2022
Loans and leases held for sale:
Commercial and industrial loans	$	41	73

Commercial leases	3		—
Residential mortgage loans	334		934
Total loans and leases held for sale	$	378	1,007
Portfolio loans and leases:
Commercial and industrial loans	$	53,270	57,232
Commercial mortgage loans	11,276		11,020
Commercial construction loans	5,621		5,433
Commercial leases	2,579		2,704
Total commercial loans and leases	$	72,746	76,389
Residential mortgage loans	$	17,026	17,628
Home equity	3,916		4,039
Indirect secured consumer loans	14,965		16,552
Credit card	1,865		1,874
Other consumer loans	6,716		4,998
Total consumer loans	$	44,488	45,091
Total portfolio loans and leases	$	117,234	121,480

Portfolio loans and leases are recorded net of unearned income, which totaled $272 million and $238 million as of December 31, 2023 and 2022, 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 discount of $395 million and net premium of $146 million as of December 31, 2023 and 2022, respectively. The amortized cost basis of loans and leases excludes accrued interest receivable of $593 million and $518 million at December 31, 2023 and 2022, 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 $14.5 billion and $15.9 billion at December 31, 2023 and 2022, respectively, pledged to the FHLB, and loans of $49.3 billion and $57.1 billion at December 31, 2023 and 2022, 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)	2023		2022	2023	2022	2023	2022
Commercial and industrial loans	$	53,311	57,305	8	11	155	96
Commercial mortgage loans	11,276		11,020	—	—	(2)	(1)
Commercial construction loans	5,621		5,433	—	—	1	2
Commercial leases	2,582		2,704	—	2	(1)	4
Residential mortgage loans	17,360		18,562	7	7	—	(2)
Home equity	3,916		4,039	—	1	1	(2)
Indirect secured consumer loans	14,965		16,552	—	—	72	36
Credit card	1,865		1,874	21	18	64	52
Other consumer loans	6,716		4,998	—	1	98	42
Total loans and leases	$	117,612	122,487	36	40	388	227
Less: Loans and leases held for sale	378		1,007
Total portfolio loans and leases	$	117,234	121,480

(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)	2023		2022
Net investment in direct financing leases:
Lease payment receivable (present value)	$	556	570
Unguaranteed residual assets (present value)	105		107

Net investment in sales-type leases:
Lease payment receivable (present value)	1,585		1,704
Unguaranteed residual assets (present value)	84		76

(a)Excludes $249 and $247 of leveraged leases at December 31, 2023 and 2022, respectively.

Interest income recognized in the Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021 was $26 million, $29 million and $42 million, respectively, for direct financing leases and $63 million, $50 million and $42 million, respectively, for sales-type leases.

The following table presents undiscounted cash flows for both direct financing and sales-type leases for 2024 through 2028 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease receivables as follows:


As of December 31, 2023 ($ in millions)	Direct Financing Leases		Sales-Type Leases
2024	$	175	493
2025	147		460
2026	114		290
2027	83		221
2028	38		144
Thereafter	51		115
Total undiscounted cash flows	$	608	1,723
Less: Difference between undiscounted cash flows and discounted cash flows	52		138
Present value of lease payments (recognized as lease receivables)	$	556	1,585

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 $13 million and $15 million at December 31, 2023 and 2022, 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.