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Credit Quality and the Allowance for Loan and Lease Losses

12 Months Ended

Dec. 31, 2023

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:


2023 ($ in millions)	Commercial		Residential Mortgage	Consumer	Total
Balance, beginning of period	$	1,127	245	822	2,194
Impact of adoption of ASU 2022-02	4		(36)	(17)	(49)
Losses charged off(a)	(170)		(4)	(348)	(522)
Recoveries of losses previously charged off(a)	17		4	113	134
Provision for (benefit from) loan and lease losses	152		(64)	477	565
Balance, end of period	$	1,130	145	1,047	2,322

(a)The Bancorp recorded $35 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.


2022 ($ in millions)	Commercial		Residential Mortgage	Consumer	Total
Balance, beginning of period	$	1,102	235	555	1,892
Losses charged off(a)	(131)		(3)	(228)	(362)
Recoveries of losses previously charged off(a)	30		5	100	135
Provision for loan and lease losses	126		8	395	529
Balance, end of period	$	1,127	245	822	2,194

(a)The Bancorp recorded $32 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.


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.

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


As of December 31, 2023 ($ in millions)	Commercial		Residential Mortgage	Consumer	Total
ALLL:(a)
Individually evaluated	$	90	—	6	96
Collectively evaluated	1,040		145	1,041	2,226
Total ALLL	$	1,130	145	1,047	2,322
Portfolio loans and leases:(b)
Individually evaluated	$	281	126	69	476
Collectively evaluated	72,465		16,784	27,393	116,642
Total portfolio loans and leases	$	72,746	16,910	27,462	117,118

(a)Includes $2 related to commercial leveraged leases at December 31, 2023.

(b)Excludes $116 of residential mortgage loans measured at fair value and includes $249 of commercial leveraged leases, net of unearned income, at December 31, 2023.


As of December 31, 2022 ($ in millions)	Commercial		Residential Mortgage	Consumer	Total
ALLL:(a)
Individually evaluated	$	30	47	45	122
Collectively evaluated	1,097		198	777	2,072
Total ALLL	$	1,127	245	822	2,194
Portfolio loans and leases:(b)
Individually evaluated	$	531	560	297	1,388
Collectively evaluated	75,858		16,945	27,166	119,969
Total portfolio loans and leases	$	76,389	17,505	27,463	121,357

(a)Includes $2 related to commercial leveraged leases at December 31, 2022.

(b)Excludes $123 of residential mortgage loans measured at fair value and includes $247 of commercial leveraged leases, net of unearned income, at December 31, 2022.

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 ratings: 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 with this rating 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 for an ACL, 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. For more 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, refer to Note 1.

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


As of December 31, 2023 ($ in millions)	Term Loans and Leases by Origination Year							Revolving Loans	Revolving Loans Converted to Term Loans
	2023		2022	2021	2020	2019	Prior			Total
Commercial and industrial loans:
Pass	$	2,124	3,434	1,814	580	263	321	40,889	—	49,425
Special mention	16		100	60	33	6	105	1,756	—	2,076
Substandard	105		103	28	18	39	73	1,397	—	1,763
Doubtful	—		—	—	—	—	—	6	—	6
Total commercial and industrial loans	$	2,245	3,637	1,902	631	308	499	44,048	—	53,270
Commercial mortgage owner-occupied loans:
Pass	$	870	1,078	746	408	219	260	1,279	—	4,860
Special mention	30		23	18	—	6	—	20	—	97
Substandard	31		22	11	10	45	10	114	—	243
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial mortgage owner-occupied loans	$	931	1,123	775	418	270	270	1,413	—	5,200
Commercial mortgage nonowner-occupied loans:
Pass	$	886	825	261	348	293	243	2,724	—	5,580
Special mention	111		166	—	2	—	2	81	—	362
Substandard	81		1	8	—	—	2	42	—	134
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial mortgage nonowner-occupied loans	$	1,078	992	269	350	293	247	2,847	—	6,076
Commercial construction loans:
Pass	$	171	36	45	41	70	6	4,818	—	5,187
Special mention	—		—	—	—	—	—	199	—	199
Substandard	61		—	33	—	—	—	141	—	235
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial construction loans	$	232	36	78	41	70	6	5,158	—	5,621
Commercial leases:
Pass	$	598	386	462	202	145	664	—	—	2,457
Special mention	1		9	12	3	8	14	—	—	47
Substandard	20		14	1	5	5	30	—	—	75
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial leases	$	619	409	475	210	158	708	—	—	2,579
Total commercial loans and leases:
Pass	$	4,649	5,759	3,328	1,579	990	1,494	49,710	—	67,509
Special mention	158		298	90	38	20	121	2,056	—	2,781
Substandard	298		140	81	33	89	115	1,694	—	2,450
Doubtful	—		—	—	—	—	—	6	—	6
Total commercial loans and leases	$	5,105	6,197	3,499	1,650	1,099	1,730	53,466	—	72,746


As of December 31, 2022 ($ in millions)	Term Loans and Leases by Origination Year							Revolving Loans	Revolving Loans Converted to Term Loans
	2022		2021	2020	2019	2018	Prior			Total
Commercial and industrial loans:
Pass	$	3,825	3,098	994	445	269	488	44,521	—	53,640
Special mention	65		24	15	36	10	24	1,221	—	1,395
Substandard	150		77	233	26	7	107	1,597	—	2,197
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial and industrial loans	$	4,040	3,199	1,242	507	286	619	47,339	—	57,232
Commercial mortgage owner-occupied loans:
Pass	$	1,177	826	522	257	160	264	1,624	—	4,830
Special mention	17		15	13	12	13	2	56	—	128
Substandard	51		14	20	73	11	25	106	—	300
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial mortgage owner-occupied loans	$	1,245	855	555	342	184	291	1,786	—	5,258
Commercial mortgage nonowner-occupied loans:
Pass	$	1,127	462	490	397	220	170	2,453	—	5,319
Special mention	1		84	26	—	—	23	88	—	222
Substandard	65		19	18	1	1	17	100	—	221
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial mortgage nonowner-occupied loans	$	1,193	565	534	398	221	210	2,641	—	5,762
Commercial construction loans:
Pass	$	82	31	93	8	35	7	4,684	—	4,940
Special mention	—		—	—	—	—	—	293	—	293
Substandard	53		—	—	—	—	2	145	—	200
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial construction loans	$	135	31	93	8	35	9	5,122	—	5,433
Commercial leases:
Pass	$	584	664	306	192	146	696	—	—	2,588
Special mention	—		4	2	4	7	19	—	—	36
Substandard	1		20	2	4	21	32	—	—	80
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial leases	$	585	688	310	200	174	747	—	—	2,704
Total commercial loans and leases:
Pass	$	6,795	5,081	2,405	1,299	830	1,625	53,282	—	71,317
Special mention	83		127	56	52	30	68	1,658	—	2,074
Substandard	320		130	273	104	40	183	1,948	—	2,998
Doubtful	—		—	—	—	—	—	—	—	—
Total commercial loans and leases	$	7,198	5,338	2,734	1,455	900	1,876	56,888	—	76,389

The following table summarizes the Bancorp’s gross charge-offs within the commercial portfolio segment, by class and vintage during the year ended December 31:


2023 ($ in millions)	Term Loans and Leases by Origination Year							Revolving Loans	Revolving Loans Converted to Term Loans
	2023		2022	2021	2020	2019	Prior			Total
Commercial loans and leases:
Commercial and industrial loans	$	25	7	12	1	—	11	112	—	168
Commercial mortgage owner-occupied loans	—		—	—	—	—	—	1	—	1

Commercial construction loans	—		—	—	—	—	—	1	—	1

Total commercial loans and leases	$	25	7	12	1	—	11	114	—	170

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, 2023 ($ in millions)			30-89 Days(a)	90 Days or More(a)	Total Past Due
Commercial loans and leases:
Commercial and industrial loans	$	53,107	61	102	163	53,270	8
Commercial mortgage owner-occupied loans	5,196		1	3	4	5,200	—
Commercial mortgage nonowner-occupied loans	6,061		14	1	15	6,076	—
Commercial construction loans	5,621		—	—	—	5,621	—
Commercial leases	2,562		17	—	17	2,579	—
Total portfolio commercial loans and leases	$	72,547	93	106	199	72,746	8

(a)Includes accrual and nonaccrual loans and leases.


	Current Loans and Leases(a)		Past Due			Total Loans and Leases	90 Days Past Due and Still Accruing
As of December 31, 2022 ($ in millions)			30-89 Days(a)	90 Days or More(a)	Total Past Due
Commercial loans and leases:
Commercial and industrial loans	$	57,092	98	42	140	57,232	11
Commercial mortgage owner-occupied loans	5,241		14	3	17	5,258	—
Commercial mortgage nonowner-occupied loans	5,756		6	—	6	5,762	—
Commercial construction loans	5,424		7	2	9	5,433	—
Commercial leases	2,698		4	2	6	2,704	2
Total portfolio commercial loans and leases	$	76,211	129	49	178	76,389	13

(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 are presented in the following tables.

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 especially impactful in the expected credit loss models 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, 2023 ($ in millions)	Term Loans by Origination Year							Revolving Loans	Revolving Loans Converted to Term Loans
	2023		2022	2021	2020	2019	Prior			Total
Residential mortgage loans:
Performing:
Current(a)	$	995	3,139	5,001	2,703	943	3,971	—	—	16,752
30-89 days past due	—		3	6	5	1	14	—	—	29
90 days or more past due	—		1	1	1	1	3	—	—	7
Total performing	995		3,143	5,008	2,709	945	3,988	—	—	16,788
Nonperforming	—		6	6	5	4	101	—	—	122
Total residential mortgage loans(b)	$	995	3,149	5,014	2,714	949	4,089	—	—	16,910
Home equity:
Performing:
Current	$	84	41	2	6	11	92	3,549	46	3,831
30-89 days past due	—		—	—	—	—	2	25	1	28
90 days or more past due	—		—	—	—	—	—	—	—	—
Total performing	84		41	2	6	11	94	3,574	47	3,859
Nonperforming	—		—	—	—	—	6	50	1	57
Total home equity	$	84	41	2	6	11	100	3,624	48	3,916
Indirect secured consumer loans:
Performing:
Current	$	4,126	4,333	3,925	1,527	597	271	—	—	14,779
30-89 days past due	22		49	40	19	12	8	—	—	150
90 days or more past due	—		—	—	—	—	—	—	—	—
Total performing	4,148		4,382	3,965	1,546	609	279	—	—	14,929
Nonperforming	4		11	9	6	3	3	—	—	36
Total indirect secured consumer loans	$	4,152	4,393	3,974	1,552	612	282	—	—	14,965
Credit card:
Performing:
Current	$	—	—	—	—	—	—	1,789	—	1,789
30-89 days past due	—		—	—	—	—	—	21	—	21
90 days or more past due	—		—	—	—	—	—	21	—	21
Total performing	—		—	—	—	—	—	1,831	—	1,831
Nonperforming	—		—	—	—	—	—	34	—	34
Total credit card	$	—	—	—	—	—	—	1,865	—	1,865
Other consumer loans:
Performing:
Current	$	2,926	1,895	330	246	101	195	859	41	6,593
30-89 days past due	17		21	4	2	2	2	2	1	51
90 days or more past due	—		—	—	—	—	—	—	—	—
Total performing	2,943		1,916	334	248	103	197	861	42	6,644
Nonperforming	31		36	1	1	1	1	—	1	72
Total other consumer loans	$	2,974	1,952	335	249	104	198	861	43	6,716
Total residential mortgage and consumer loans:
Performing:
Current	$	8,131	9,408	9,258	4,482	1,652	4,529	6,197	87	43,744
30-89 days past due	39		73	50	26	15	26	48	2	279
90 days or more past due	—		1	1	1	1	3	21	—	28
Total performing	8,170		9,482	9,309	4,509	1,668	4,558	6,266	89	44,051
Nonperforming	35		53	16	12	8	111	84	2	321
Total residential mortgage and consumer loans(b)	$	8,205	9,535	9,325	4,521	1,676	4,669	6,350	91	44,372

(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, 2023, $79 of these loans were 30-89 days past due and $141 were 90 days or more past due. The Bancorp recognized $2 of losses during the year ended December 31, 2023 due to claim denials and curtailments associated with these insured or guaranteed loans.

(b)Excludes $116 of residential mortgage loans measured at fair value at December 31, 2023, including $1 of 30-89 days past due loans and $2 of nonperforming loans.


As of December 31, 2022 ($ in millions)	Term Loans by Origination Year							Revolving Loans	Revolving Loans Converted to Term Loans
	2022		2021	2020	2019	2018	Prior			Total
Residential mortgage loans:
Performing:
Current(a)	$	3,195	5,440	2,981	1,051	344	4,336	—	—	17,347
30-89 days past due	4		4	3	1	2	15	—	—	29
90 days or more past due	—		—	1	—	1	5	—	—	7
Total performing	3,199		5,444	2,985	1,052	347	4,356	—	—	17,383
Nonperforming	—		3	4	4	7	104	—	—	122
Total residential mortgage loans(b)	$	3,199	5,447	2,989	1,056	354	4,460	—	—	17,505
Home equity:
Performing:
Current	$	46	3	7	15	17	94	3,741	18	3,941
30-89 days past due	—		—	—	—	—	2	28	—	30
90 days or more past due	—		—	—	—	—	1	—	—	1
Total performing	46		3	7	15	17	97	3,769	18	3,972
Nonperforming	—		—	—	—	—	8	58	1	67
Total home equity	$	46	3	7	15	17	105	3,827	19	4,039
Indirect secured consumer loans:
Performing:
Current	$	6,034	5,875	2,600	1,217	416	239	—	—	16,381
30-89 days past due	34		42	28	22	11	5	—	—	142
90 days or more past due	—		—	—	—	—	—	—	—	—
Total performing	6,068		5,917	2,628	1,239	427	244	—	—	16,523
Nonperforming	4		6	7	6	4	2	—	—	29
Total indirect secured consumer loans	$	6,072	5,923	2,635	1,245	431	246	—	—	16,552
Credit card:
Performing:
Current	$	—	—	—	—	—	—	1,808	—	1,808
30-89 days past due	—		—	—	—	—	—	21	—	21
90 days or more past due	—		—	—	—	—	—	18	—	18
Total performing	—		—	—	—	—	—	1,847	—	1,847
Nonperforming	—		—	—	—	—	—	27	—	27
Total credit card	$	—	—	—	—	—	—	1,874	—	1,874
Other consumer loans:
Performing:
Current	$	2,704	540	355	169	112	146	908	26	4,960
30-89 days past due	14		6	3	2	2	2	3	—	32
90 days or more past due	—		—	—	—	—	—	1	—	1
Total performing	2,718		546	358	171	114	148	912	26	4,993
Nonperforming	2		1	—	—	—	1	1	—	5
Total other consumer loans	$	2,720	547	358	171	114	149	913	26	4,998
Total residential mortgage and consumer loans:
Performing:
Current	$	11,979	11,858	5,943	2,452	889	4,815	6,457	44	44,437
30-89 days past due	52		52	34	25	15	24	52	—	254
90 days or more past due	—		—	1	—	1	6	19	—	27
Total performing	12,031		11,910	5,978	2,477	905	4,845	6,528	44	44,718
Nonperforming	6		10	11	10	11	115	86	1	250
Total residential mortgage and consumer loans(b)	$	12,037	11,920	5,989	2,487	916	4,960	6,614	45	44,968

(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, 2022, $81 of these loans were 30-89 days past due and $147 were 90 days or more past due. The Bancorp recognized $2 of losses during the year ended December 31, 2022 due to claim denials and curtailments associated with these insured or guaranteed loans.

(b)Excludes $123 of residential mortgage loans measured at fair value at December 31, 2022, including $1 of 30-89 days past due loans and $2 of nonperforming loans.

The following table summarizes the Bancorp’s gross charge-offs within the residential mortgage and consumer portfolio segments, by class and vintage during the year ended December 31:


2023 ($ in millions)	Term Loans by Origination Year							Revolving Loans	Revolving Loans Converted to Term Loans
	2023		2022	2021	2020	2019	Prior			Total
Residential mortgage loans	$	—	—	—	—	—	4	—	—	4
Consumer loans:
Home equity	—		—	—	—	—	1	7	—	8
Indirect secured consumer loans	9		42	27	14	10	8	—	—	110
Credit cards	—		—	—	—	—	—	82	—	82
Other consumer loans	15		53	15	12	7	10	34	2	148
Total residential mortgage and consumer loans	$	24	95	42	26	17	23	123	2	352

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, 2023		December 31, 2022
Commercial loans and leases:
Commercial and industrial loans	$	268	433
Commercial mortgage owner-occupied loans	8		14
Commercial mortgage nonowner-occupied loans	2		27
Commercial construction loans	1		56
Commercial leases	—		1
Total commercial loans and leases	$	279	531
Residential mortgage loans	126		57
Consumer loans:
Home equity	54		46
Indirect secured consumer loans	15		6
Total consumer loans	$	69	52
Total portfolio loans and leases	$	474	640

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 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, 2023				December 31, 2022
($ in millions)	With an ALLL		No Related ALLL	Total	With an ALLL	No Related ALLL	Total
Commercial loans and leases:
Commercial and industrial loans	$	273	31	304	114	101	215
Commercial mortgage owner-occupied loans	11		6	17	9	7	16
Commercial mortgage nonowner-occupied loans	—		3	3	20	4	24
Commercial construction loans	—		1	1	6	2	8
Commercial leases	—		1	1	—	—	—
Total nonaccrual portfolio commercial loans and leases	$	284	42	326	149	114	263
Residential mortgage loans	26		98	124	81	43	124
Consumer loans:
Home equity	21		36	57	45	22	67
Indirect secured consumer loans	32		4	36	26	3	29
Credit card	34		—	34	27	—	27
Other consumer loans	72		—	72	5	—	5
Total nonaccrual portfolio consumer loans	$	159	40	199	103	25	128
Total nonaccrual portfolio loans and leases(a)(b)	$	469	180	649	333	182	515
OREO and other repossessed property	—		39	39	—	24	24
Total nonperforming portfolio assets(a)(b)	$	469	219	688	333	206	539

(a)Excludes $1 and an immaterial amount of nonaccrual loans held for sale as of December 31, 2023 and 2022, respectively.

(b)Includes $19 and $15 of nonaccrual government insured commercial loans whose repayments are insured by the SBA as of December 31, 2023 and 2022, respectively.

The Bancorp recognized an immaterial amount of interest income on nonaccrual loans and leases for both the years ended December 31, 2023 and 2022.

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 $107 million and $154 million as of December 31, 2023 and 2022, respectively.

Modifications to Borrowers Experiencing Financial Difficulty

On January 1, 2023, the Bancorp adopted ASU 2022-02, which eliminated the recognition and measurement guidance for TDRs. The amended accounting and disclosure requirements are applicable to loan modifications to borrowers experiencing financial difficulty which are completed on or after the adoption date. For further information on the adoption of ASU 2022-02, refer to Note 1.

In the course of servicing its loans, the Bancorp works with borrowers who are experiencing financial difficulty to identify solutions that are mutually beneficial to both parties with the objective of mitigating the risk of losses on the loan. These efforts often result in modifications to the payment terms of the loan. The types of modifications offered to borrowers vary by type of loan and may include term extensions, interest rate reductions, payment delays (other than those that are insignificant) or combinations thereof. The Bancorp typically does not provide principal forgiveness except in circumstances where the loan has already been fully or partially charged off.

The Bancorp applies its expected credit loss models consistently to both modified and non-modified loans when estimating the ALLL. For loans which are modified for borrowers experiencing financial difficulty, there is generally not a significant change to the ALLL upon modification because the Bancorp’s ALLL estimation methodologies already consider those borrowers’ financial difficulties and the resulting effects of potential modifications when estimating expected credit losses.

As of December 31, 2023, portfolio loans with an amortized cost basis of $615 million, or 0.52% of total portfolio loans and leases, were modified during the year ended December 31, 2023 for borrowers experiencing financial difficulty, as further discussed in the following sections. This amount excludes $29 million of consumer and residential mortgage loans as of December 31, 2023 which have been granted a concession under provisions of the Federal Bankruptcy Act during the year ended December 31, 2023 and are monitored separately from loans modified under the Bancorp’s loan modification programs. As of December 31, 2023, the Bancorp had commitments of $130 million to

lend additional funds to borrowers experiencing financial difficulty whose terms have been modified during the year ended December 31, 2023.

Commercial portfolio segment

Commercial loan modifications are individually negotiated and may vary depending on the borrower’s financial situation, but the Bancorp most commonly utilizes term extensions for periods of 3 to 12 months. In less common situations and when specifically warranted by the borrower’s situation, the Bancorp may also consider offering commercial borrowers interest rate reductions or payment delays, which may be combined with a term extension.

The following table presents the amortized cost basis as of December 31, 2023 of the Bancorp’s commercial portfolio loans that were modified for borrowers experiencing financial difficulty, by portfolio class and type of modification during the year ended December 31:


2023 ($ in millions)	Term Extension		Interest Rate Reduction	Payment Delay	Term Extension and Interest Rate Reduction	Term Extension and Payment Delay	Total	% of Total Class
Commercial and industrial loans	$	155	1	56	2	31	245	0.46	%
Commercial mortgage owner-occupied loans	27		—	—	—	—	27	0.52
Commercial mortgage nonowner-occupied loans	66		—	—	2	—	68	1.12
Commercial construction loans	113		—	—	—	—	113	2.01
Total commercial portfolio loans	$	361	1	56	4	31	453	0.62	%

Residential mortgage portfolio segment

The Bancorp has established residential mortgage loan modification programs which define the type of modifications available as well as the eligibility criteria for borrowers. The designs of the Bancorp’s modification programs for residential mortgage loans are similar to those utilized by the various GSEs. The most common modification program utilized for residential mortgage loans is a term extension for up to 480 months from the modification date, combined with a change in interest rate to a fixed rate (which may be an increase or decrease from the rate in the original loan). As part of these modifications, the Bancorp may capitalize delinquent amounts due at the time of the modification into the principal balance of the loan when determining its modified payment structure. For loans where the modification results in a new monthly payment amount, borrowers may be required to complete a trial period of three to four months before the loan is permanently modified. The Bancorp also offers payment delay modifications to qualified borrowers which allow either the delay of repayment for delinquent amounts due until maturity or capitalization of delinquent amounts due into the principal balance of the loan. The number of monthly payments delayed varies by borrower but is most commonly within a range of 6 to 12 months.

The following table presents the amortized cost basis as of December 31, 2023 of the Bancorp’s residential mortgage loans that were modified for borrowers experiencing financial difficulty, by type of modification during the year ended December 31:


2023 ($ in millions)	Total		% of Total Class

Payment delay	$	18	0.11	%
Term extension and payment delay	91		0.53

Term extension, interest rate reduction and payment delay	4		0.02
Total residential mortgage portfolio loans	$	113	0.66	%

The Bancorp had $3 million of in-process modifications to residential mortgage loans outstanding as of December 31, 2023 which are excluded from the completed modification activity in the tables above. These in-process modifications will be reported as completed modifications once the borrower satisfies the applicable contingencies in the modification agreement and the loan is contractually modified to make the modified terms permanent.

Consumer portfolio segment

The Bancorp’s modification programs for consumer loans vary based on type of loan. The most common modification program for home equity is a term extension for up to 360 months combined with a delay in repayment of delinquent amounts due until maturity, which may also be combined with an interest rate reduction. Modification programs for credit card typically involve an interest rate reduction and an increase to the minimum monthly payment in order to repay a larger portion of outstanding balances. Modifications for indirect secured consumer loans and other consumer loans are less commonly utilized as part of the Bancorp’s loss mitigation activities and programs vary by specific product type.

The following table presents the amortized cost basis as of December 31, 2023 of the Bancorp’s consumer portfolio loans that were modified for borrowers experiencing financial difficulty, by portfolio class and type of modification during the year ended December 31:


2023 ($ in millions)	Interest Rate Reduction		Payment Delay	Interest Rate Reduction and Payment Delay	Term Extension and Payment Delay	Term Extension, Interest Rate Reduction and Payment Delay	Total	% of Total Class
Home equity	$	4	1	1	2	8	16	0.41	%
Credit card	27		—	—	—	—	27	1.45
Other consumer loans	—		6	—	—	—	6	0.09
Total consumer portfolio loans	$	31	7	1	2	8	49	0.18	%

Financial effects of loan modifications

The following table presents the financial effects of the Bancorp’s significant types of portfolio loan modifications to borrowers experiencing financial difficulty, by portfolio class during the year ended December 31, 2023:


			Financial Effects
Commercial loans:
Commercial and industrial loans			Weighted-average length of term extensions was 11 months and the amount of payment delays represented approximately 5% of the related loan balances.
Commercial mortgage owner-occupied loans			Weighted-average length of term extensions was 15 months.
Commercial mortgage nonowner-occupied loans			Weighted-average length of term extensions was 16 months.
Commercial construction loans			Weighted-average length of term extensions was 12 months.
Residential mortgage loans			Weighted-average length of term extensions was 155 months and the amount of payment delays represented approximately 17% of the related loan balances.
Consumer loans:
Home equity			Weighted-average length of term extensions was 24.2 years, the weighted-average interest rate reduction was from 8.7% to 7.0% and the amount of payment delays represented approximately 5% of the related loan balances.

Credit card			Weighted-average interest rate reduction was from 23.7% to 3.9%.
Other consumer loans			Amount of payment delays represented approximately 6% of the related loan balances.

Credit quality of modified loans

The Bancorp closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table presents the Bancorp’s portfolio loans that were modified to borrowers experiencing financial difficulty, by age and portfolio class during the year ended December 31:


2023 ($ in millions)			Past Due
	Current		30-89 Days	90 Days or More	Total
Commercial loans:
Commercial and industrial loans	$	184	9	52	245
Commercial mortgage owner-occupied loans	26		—	1	27
Commercial mortgage nonowner-occupied loans	68		—	—	68
Commercial construction loans	113		—	—	113
Residential mortgage loans	86		15	12	113
Consumer loans:
Home equity	14		2	—	16

Credit card(a)	19		5	3	27
Other consumer loans	6		—	—	6
Total portfolio loans	$	516	31	68	615

(a)Credit card loans continue to be reported as delinquent after modification as they are not returned to current status until the borrower demonstrates a willingness and ability to repay the loan according to its modified terms.

The Bancorp considers modifications to borrowers experiencing financial difficulty that subsequently become 90 days or more past due under the modified terms as subsequently defaulted. The following table presents the amortized cost basis of the modifications to borrowers experiencing financial difficulty that subsequently defaulted during the year ended December 31, 2023 and were within twelve months of the modification date:


($ in millions)(a)	Amortized Cost Basis
	Term Extension		Interest Rate Reduction	Payment Delay	Term Extension and Payment Delay	Term Extension, Interest Rate Reduction and Payment Delay	Total
Commercial loans:
Commercial and industrial loans	$	51	—	—	—	—	51
Commercial mortgage owner-occupied loans	1		—	—	—	—	1


Residential mortgage loans	—		—	2	11	1	14
Consumer loans:
Home equity	—		1	—	—	—	1

Credit card	—		10	—	—	—	10

Total portfolio loans	$	52	11	2	11	1	77

(a)Excludes loans modified prior to the adoption of ASU 2022-02.

Troubled Debt Restructurings

Prior to the adoption of ASU 2022-02 on January 1, 2023, loans were accounted for as TDRs if the Bancorp, for economic or legal reasons related to the borrower’s financial difficulties, granted a concession to the borrower that it would not otherwise consider. Refer to Note 1 for additional information on the Bancorp’s accounting policies for the identification and measurement of TDRs and the related impact on the ALLL for periods prior to January 1, 2023.

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 $130 million and $60 million, respectively, as of December 31, 2022.

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


2022 ($ 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	89	$	234	3	9
Commercial mortgage owner-occupied loans	12	7		—	—
Commercial mortgage nonowner-occupied loans	7	24		—	—
Commercial construction loans	3	10		(2)	—
Residential mortgage loans	1,073	163		7	—
Consumer loans:
Home equity	231	16		(3)	—
Indirect secured consumer loans	3,394	63		2	—
Credit card	5,282	28		12	—
Total portfolio loans	10,091	$	545	19	9

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


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.

The Bancorp considered TDRs that became 90 days or more past due under the modified terms as subsequently defaulted. The following tables provide a summary of TDRs that subsequently defaulted during the years ended December 31, 2022 and 2021 and were within 12 months of the restructuring date:


December 31, 2022 ($ in millions)(a)	Number of Contracts	Amortized Cost Basis
Commercial loans:
Commercial and industrial loans	8	$	—
Commercial mortgage owner-occupied loans	2	—
Commercial mortgage nonowner-occupied loans	1	—
Commercial construction loans	1	2
Residential mortgage loans	247	33
Consumer loans:
Home equity	24	1
Indirect secured consumer loans	157	3
Credit card	356	1
Total portfolio loans	796	$	40

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


December 31, 2021 ($ in millions)(a)	Number of Contracts	Amortized Cost Basis
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.