The loan and lease portfolio categories were generally unchanged with the CECL adoption. Accrued interest receivable on loans and leases, which totaled $62.9 million at December 31, 2020, is excluded from the estimate of credit losses and recorded separately in other assets in the Consolidated Balance Sheets for both periods and not included in the tables below. Upon adoption of CECL, PCD assets were adjusted to reflect the addition of a $50.3 million ACL and a remaining noncredit discount of $110.0 million included in the amortized cost. At December 31, 2020, the remaining noncredit discount was $50.9 million.


December 31	2020		2019
(in millions)
Commercial real estate	$	9,731	$	8,960
Commercial and industrial	7,214		5,308
Commercial leases	485		432
Other	40		21
Total commercial loans and leases	17,470		14,721
Direct installment	2,020		1,821
Residential mortgages	3,433		3,374
Indirect installment	1,218		1,922
Consumer lines of credit	1,318		1,451
Total consumer loans	7,989		8,568
Total loans and leases, net of unearned income	$	25,459	$	23,289

•Commercial real estate includes both owner-occupied and non-owner-occupied loans secured by commercial properties where operational cash flows on owner-occupied properties or rents received by our borrowers from their tenant(s) on both a property and global basis are the primary default risk drivers, including rents paid by stand-alone business customers for owner-occupied properties;

•Commercial and industrial includes loans to businesses that are not secured by real estate where the borrower's leverage and cash flows from operations are the primary default risk drivers. PPP loans are included in the commercial and industrial category and comprise $2.2 billion of this category's outstanding balance at December 31, 2020. The PPP loans are 100% guaranteed by the SBA, which provides a reduced risk of loss to us on these loans;

•Direct installment is comprised of fixed-rate, closed-end consumer loans for personal, family or household use, such as home equity loans and automobile loans where the primary default risk driver is the borrower's employment status and income;

•Indirect installment is comprised of loans originated by approved third parties and underwritten by us, primarily automobile loans where the primary default risk driver is the borrower's employment status and income; and

•Consumer lines of credit include home equity lines of credit and consumer lines of credit that are either unsecured or secured by collateral other than home equity where the primary default risk driver is the borrower's employment status and income.

The loans and leases portfolio consists principally of loans to individuals and small- and medium-sized businesses within our primary market in seven states and the District of Columbia. Our primary market coverage spans several major metropolitan areas including: Pittsburgh, Pennsylvania; Baltimore, Maryland; Cleveland, Ohio; Washington, D.C.; and Charlotte, Raleigh, Durham and the Piedmont Triad (Winston-Salem, Greensboro and High Point) in North Carolina. During the fourth quarter of 2020, we sold $0.5 billion of indirect installment loans that were previously transferred to loans held for sale.

We have extended credit to certain directors and executive officers and their related interests. These related-party loans were made in the ordinary course of business under normal credit terms and do not involve more than a normal risk of collection.

Management monitors the credit quality of our loan portfolio using several performance measures based on payment activity and borrower performance. We use an internal risk rating assigned to a commercial loan or lease, summarized below.


Rating Category						Definition
Pass						in general, the condition of the borrower and the performance of the loan is satisfactory or better
Special Mention						in general, the condition of the borrower has deteriorated, requiring an increased level of monitoring
Substandard						in general, the condition of the borrower has significantly deteriorated and the performance of the loan could further deteriorate if deficiencies are not corrected
Doubtful						in general, the condition of the borrower has significantly deteriorated and the collection in full of both principal and interest is highly questionable or improbable

The use of these internally assigned credit quality categories within the commercial loan and lease portfolio permits management’s use of transition matrices to establish the basis for the R&S forecast portion of the credit risk. Our internal credit risk grading system is based on past experiences with similarly graded loans and leases and conforms to regulatory categories. In general, loan and lease risk ratings within each category are reviewed on an ongoing basis according to our policy for each class of loans and leases. Each quarter, management analyzes the resulting ratings, as well as other external statistics and factors such as delinquency, to track the migration performance of the commercial loan and lease portfolio. Loans and leases within the

Pass credit category or that migrate toward the Pass credit category generally have a lower risk of loss compared to loans and leases that migrate toward the Substandard or Doubtful credit categories. Accordingly, management applies higher risk factors to Substandard and Doubtful credit categories.


December 31, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Total
(in millions)
COMMERCIAL
Commercial Real Estate:
Risk Rating:
Pass	$	1,879	$	1,854	$	1,135	$	927	$	888	$	1,911	$	163	$	8,757
Special Mention	9		30		80		158		70		163		4		514
Substandard	4		32		29		81		116		192		6		460

Total commercial real estate	1,892		1,916		1,244		1,166		1,074		2,266		173		9,731
Commercial and Industrial:
Risk Rating:
Pass	3,286		1,007		590		304		120		311		1,095		6,713
Special Mention	30		23		13		28		10		35		79		218
Substandard	8		26		65		44		6		37		97		283

Total commercial and industrial	3,324		1,056		668		376		136		383		1,271		7,214
Commercial Leases:
Risk Rating:
Pass	178		134		83		56		5		3		—		459
Special Mention	1		1		4		4		1		2		—		13
Substandard	7		2		2		1		1		—		—		13

Total commercial leases	186		137		89		61		7		5		—		485
Other Commercial:
Risk Rating:
Pass	—		—		—		—		—		4		35		39

Substandard	—		—		—		—		—		1		—		1

Total other commercial	—		—		—		—		—		5		35		40
Total commercial	5,402		3,109		2,001		1,603		1,217		2,659		1,479		17,470


December 31, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Total
(in millions)
CONSUMER
Direct Installment:
Current	706		337		200		143		171		442		1		2,000
Past due	—		1		2		1		2		14		—		20
Total direct installment	706		338		202		144		173		456		1		2,020
Residential Mortgages:
Current	1,079		707		283		378		330		603		1		3,381
Past due	1		5		7		4		6		29		—		52
Total residential mortgages	1,080		712		290		382		336		632		1		3,433
Indirect Installment:
Current	372		260		332		147		67		27		—		1,205
Past due	1		3		4		2		2		1		—		13
Total indirect installment	373		263		336		149		69		28		—		1,218
Consumer Lines of Credit:
Current	4		7		8		3		5		127		1,146		1,300
Past due	—		—		—		—		—		15		3		18
Total consumer lines of credit	4		7		8		3		5		142		1,149		1,318
Total consumer	2,163		1,320		836		678		583		1,258		1,151		7,989
Total loans and leases	$	7,565	$	4,429	$	2,837	$	2,281	$	1,800	$	3,917	$	2,630	$	25,459

We use delinquency transition matrices within the consumer and other loan classes to establish the basis for the R&S forecast portion of the credit risk. Each month, management analyzes payment and volume activity, FICO scores and Debt-to-Income (DTI) scores and other external factors such as unemployment, to determine how consumer loans are performing.

The following tables present the December 31, 2019 summary of our commercial loans and leases by credit quality category segregated by loans and leases originated and loans acquired, prior to the adoption of CECL:


	Commercial Loan and Lease Credit Quality Categories
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Originated Loans and Leases
December 31, 2019
Commercial real estate	$	6,821	$	171	$	121	$	1	$	7,114
Commercial and industrial	4,768		149		144		2		5,063
Commercial leases	423		3		6		—		432
Other	20		—		1		—		21
Total originated commercial loans and leases	$	12,032	$	323	$	272	$	3	$	12,630
Loans Acquired in a Business Combination
December 31, 2019
Commercial real estate	$	1,603	$	116	$	127	$	—	$	1,846
Commercial and industrial	201		19		25		—		245
Total commercial loans acquired in a business combination	$	1,804	$	135	$	152	$	—	$	2,091


	Consumer Loan Credit Quality by Payment Status
(in millions)	Performing		Non-Performing		Total
Originated Loans
December 31, 2019
Direct installment	$	1,745	$	13	$	1,758
Residential mortgages	2,978		17		2,995
Indirect installment	1,919		3		1,922
Consumer lines of credit	1,086		6		1,092
Total originated consumer loans	$	7,728	$	39	$	7,767
Loans Acquired in a Business Combination
December 31, 2019
Direct installment	$	63	$	—	$	63
Residential mortgages	379		—		379

Consumer lines of credit	358		1		359
Total consumer loans acquired in a business combination	$	800	$	1	$	801


(in millions)	30-89 Days Past Due		≥ 90 Days Past Due and Still Accruing		Non- Accrual		Total Past Due		Current		Total Loans and Leases		Non-accrual with No ACL
Loans and Leases
December 31, 2020
Commercial real estate	$	13	$	—	$	85	$	98	$	9,633	$	9,731	$	36
Commercial and industrial	8		—		44		52		7,162		7,214		16
Commercial leases	2		—		2		4		481		485		—
Other	—		—		1		1		39		40		—
Total commercial loans and leases	23		—		132		155		17,315		17,470		52
Direct installment	7		2		11		20		2,000		2,020		—
Residential mortgages	23		11		18		52		3,381		3,433		—
Indirect installment	10		1		2		13		1,205		1,218		—
Consumer lines of credit	9		2		7		18		1,300		1,318		—
Total consumer loans	49		16		38		103		7,886		7,989		—
Total loans and leases	$	72	$	16	$	170	$	258	$	25,201	$	25,459	$	52


(in millions)	30-89 Days Past Due		> 90 Days Past Due and Still Accruing		Non- Accrual		Total Past Due		Current		Total Loans and Leases
Originated Loans and Leases
December 31, 2019
Commercial real estate	$	10	$	—	$	26	$	36	$	7,078	$	7,114
Commercial and industrial	9		—		28		37		5,026		5,063
Commercial leases	5		—		1		6		426		432
Other	—		—		1		1		20		21
Total commercial loans and leases	24		—		56		80		12,550		12,630
Direct installment	7		1		7		15		1,743		1,758
Residential mortgages	12		2		8		22		2,973		2,995
Indirect installment	15		1		3		19		1,903		1,922
Consumer lines of credit	5		1		3		9		1,083		1,092
Total consumer loans	39		5		21		65		7,702		7,767
Total originated loans and leases	$	63	$	5	$	77	$	145	$	20,252	$	20,397


(in millions)	30-89 Days Past Due		≥ 90 Days Past Due and Still Accruing		Non- Accrual		Total Past Due (1) (2)		Current		(Discount)/ Premium		Total Loans
Loans Acquired in a Business Combination
December 31, 2019
Commercial real estate	$	12	$	28	$	3	$	43	$	1,942	$	(139)	$	1,846
Commercial and industrial	2		3		—		5		259		(19)		245
Total commercial loans	14		31		3		48		2,201		(158)		2,091
Direct installment	3		—		—		3		60		—		63
Residential mortgages	8		4		—		12		382		(15)		379

Consumer lines of credit	7		2		1		10		357		(8)		359
Total consumer loans	18		6		1		25		799		(23)		801
Total loans acquired in a business combination	$	32	$	37	$	4	$	73	$	3,000	$	(181)	$	2,892

(1)Prior to the adoption of CECL on January 1, 2020, loans acquired in a business combination were considered performing upon acquisition, regardless of whether the customer was contractually delinquent, if we could reasonably estimate the timing and amount of expected cash flows on such loans. In these instances, we did not consider acquired contractually delinquent loans to be non-accrual or non-performing and continued to recognize interest income on these loans using the accretion method. After the adoption of CECL on January 1, 2020 loans acquired in a business combination are considered non-accrual or non-performing when, due to credit deterioration or other factors, we determine we are no longer able to reasonably estimate the timing and amount of expected cash flows on such loans. We do not recognize interest income on loans acquired in a business combination considered non-accrual or non-performing.


December 31	2020			2019
(dollars in millions)
Non-accrual loans	$	170		$	81
Troubled debt restructurings	—			22
Total non-performing loans	170			103
Other real estate owned	10			26
Total non-performing assets	$	180		$	129
Asset quality ratios:
Non-performing loans / total loans and leases	0.67		%	0.44		%
Non-performing loans assets + 90 days past due + OREO / total loans and leases + OREO	0.77			0.73

The carrying value of residential-secured consumer OREO held as a result of obtaining physical possession upon completion of a foreclosure or through completion of a deed in lieu of foreclosure amounted to $2.5 million at December 31, 2020 and $3.3 million at December 31, 2019. The recorded investment of residential-secured consumer OREO for which formal foreclosure proceedings are in process at December 31, 2020 and December 31, 2019 totaled $8.2 million and $9.2 million, respectively. During 2020, we extended the residential mortgage foreclosure moratorium beyond the requirements for government-backed loans, under the CARES Act, to all residential mortgage loan customers.

Approximately $91.4 million of commercial loans are collateral dependent at December 31, 2020. Repayment is expected to be substantially through the operation or sale of the collateral on the loan. These loans are primarily secured by business assets or commercial real estate.

TDRs are loans whose contractual terms have been modified in a manner that grants a concession to a borrower experiencing financial difficulties. TDRs typically result from loss mitigation activities and could include the extension of a maturity date, interest rate reduction, principal forgiveness, deferral or decrease in payments for a period of time and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of collateral. Consistent with the CARES Act and interagency bank regulatory guidance which allows temporary relief for current borrowers affected by COVID-19, we are working with borrowers and granting certain modifications through programs related to COVID-19 relief. As of December 31, 2020, we had $397 million in loans that have been granted short-term modifications as a result of financial disruptions associated with the COVID-19 pandemic. Also, consistent with the CARES Act and the interagency bank regulatory guidelines, such modifications are not included in our TDR totals.

TDRs that are accruing and performing include loans that met the criteria for non-accrual of interest prior to restructuring for which we can reasonably estimate the timing and amount of the expected cash flows on such loans and for which we expect to fully collect the new carrying value of the loans. During 2020, we returned to accruing status $7.7 million in restructured residential mortgage loans that have consistently met their modified obligations for more than six months. TDRs that are on non-accrual are not placed on accruing status until all delinquent principal and interest have been paid and the ultimate collectability of the remaining principal and interest is reasonably assured. Some loan modifications classified as TDRs may not ultimately result in the full collection of principal and interest, as modified, and may result in potential incremental losses which are factored into the ACL.

Commercial loans over $1.0 million whose terms have been modified in a TDR are generally placed on non-accrual, individually analyzed and measured based on the fair value of the underlying collateral. Our ACL includes specific reserves for commercial TDRs of $2.8 million at December 31, 2020, compared to less than $0.5 million at December 31, 2019, and pooled reserves for individual loans of $2.5 million and $0.8 million for those same periods, respectively, based on loan segment LGD. Upon default, the amount of the recorded investment in the TDR in excess of the fair value of the collateral, less estimated selling costs, is generally considered a confirmed loss and is charged-off against the ACL.

All other classes of loans whose terms have been modified in a TDR are pooled and measured based on the loan segment LGD. Our ACL included pooled reserves for these classes of loans of $4.1 million for both December 31, 2020 and 2019. Upon default of an individual loan, our charge-off policy is followed for that class of loan.


Year Ended December 31	2020					2019
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial real estate	30	$	18	$	8	20	$	5	$	5
Commercial and industrial	19	2		1		23	5		3
Other	1	—		—		—	—		—
Total commercial loans	50	20		9		43	10		8
Direct installment	68	4		4		65	3		3
Residential mortgages	24	3		3		18	3		3

Consumer lines of credit	45	2		1		27	2		1
Total consumer loans	137	9		8		110	8		7
Total	187	$	29	$	17	153	$	18	$	15

Following is a summary of TDRs, by class, for which there was a payment default, excluding loans that have been paid off and/or sold. Default occurs when a loan is 90 days or more past due and is within 12 months of restructuring.


Year Ended December 31	2020
(dollars in millions)	Number of Contracts	Recorded Investment
Commercial real estate	8	$	3
Commercial and industrial	2	—
Total commercial loans	10	3
Direct installment	12	—
Residential mortgages	4	—

Consumer lines of credit	4	—
Total consumer loans	20	—
Total	30	$	3


Year Ended December 31	2019
(dollars in millions)	Number of Contracts	Recorded Investment
Commercial real estate	5	$	1
Commercial and industrial	1	—
Total commercial loans	6	1
Direct installment	5	—
Residential mortgages	2	—

Consumer lines of credit	1	—
Total consumer loans	8	—
Total	14	$	1

Prior to January 1, 2020, all loans acquired in a business combination were initially recorded at fair value at the acquisition date with no associated ACL. Refer to the Loans Acquired in a Business Combination section in Note 1 to the Consolidated Financial Statements.