Loans and Leases

6 Months Ended

Jun. 30, 2024

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)	June 30, 2024		December 31, 2023
Loans and leases held for sale:
Commercial and industrial loans	$	22	41


Commercial leases	3		3
Residential mortgage loans	512		334
Total loans and leases held for sale	$	537	378
Portfolio loans and leases:
Commercial and industrial loans	$	51,840	53,270
Commercial mortgage loans	11,429		11,276
Commercial construction loans	5,806		5,621
Commercial leases	2,708		2,579
Total commercial loans and leases	$	71,783	72,746
Residential mortgage loans	$	17,040	17,026
Home equity	3,969		3,916
Indirect secured consumer loans	15,442		14,965
Credit card	1,733		1,865
Solar energy installation loans	3,951		3,728
Other consumer loans	2,661		2,988
Total consumer loans	$	44,796	44,488
Total portfolio loans and leases	$	116,579	117,234

Portfolio loans and leases are recorded net of unearned income, which totaled $289 million and $272 million as of June 30, 2024 and December 31, 2023, respectively. The amortized cost basis of loans and leases excludes accrued interest receivable of $605 million and $593 million at June 30, 2024 and December 31, 2023, respectively, which is presented as a component of other assets in the Condensed Consolidated Balance Sheets. Additionally, portfolio loans and leases are recorded net of unamortized premiums and discounts, deferred direct loan origination fees and costs and valuation adjustments associated with loans measured at fair value. These items totaled a net discount of $360 million as of June 30, 2024 and $395 million as of December 31, 2023, of which $881 million and $865 million of net discount was related to solar energy installation loans, respectively.

The Bancorp’s FHLB and FRB borrowings are primarily secured by loans. The Bancorp had loans of $14.6 billion and $14.5 billion as of June 30, 2024 and December 31, 2023, respectively, pledged to the FHLB, and loans of $52.9 billion and $49.3 billion at June 30, 2024 and December 31, 2023, respectively, pledged to the FRB.

The following table presents a summary of the total loans and leases owned by the Bancorp as of:


	Carrying Value			90 Days Past Due and Still Accruing(a)
($ in millions)	June 30, 2024		December 31, 2023	June 30, 2024	December 31, 2023
Commercial and industrial loans	$	51,862	53,311	3	8
Commercial mortgage loans	11,429		11,276	1	—
Commercial construction loans	5,806		5,621	—	—
Commercial leases	2,711		2,582	4	—
Residential mortgage loans	17,552		17,360	8	7
Home equity	3,969		3,916	—	—
Indirect secured consumer loans	15,442		14,965	—	—
Credit card	1,733		1,865	17	21
Solar energy installation loans	3,951		3,728	—	—
Other consumer loans	2,661		2,988	—	—
Total loans and leases	$	117,116	117,612	33	36
Less: Loans and leases held for sale	537		378
Total portfolio loans and leases	$	116,579	117,234

(a)Excludes government guaranteed residential mortgage loans.

The following table presents a summary of net charge-offs:


	For the three months ended June 30,			For the six months ended June 30,
($ in millions)	2024		2023	2024	2023
Commercial and industrial loans	$	80	32	115	62

Commercial construction loans	—		—	—	1

Residential mortgage loans	—		—	(1)	—
Home equity	(1)		1	—	—
Indirect secured consumer loans	17		16	42	29
Credit card	17		16	36	31
Solar energy installation loans	12		7	24	9
Other consumer loans	19		18	38	36
Total net charge-offs	$	144	90	254	168

The following table presents the components of the net investment in portfolio leases as of:


($ in millions)(a)	June 30, 2024		December 31, 2023
Net investment in direct financing leases:
Lease payment receivable (present value)	$	602	556
Unguaranteed residual assets (present value)	120		105

Net investment in sales-type leases:
Lease payment receivable (present value)	1,658		1,585
Unguaranteed residual assets (present value)	82		84

(a)Excludes $246 and 249 of leveraged leases at June 30, 2024 and December 31, 2023, respectively.

Interest income recognized in the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2024 was $9 million and $19 million, respectively, for direct financing leases and $19 million and $37 million, respectively, for sales-type leases. For the three and six months ended June 30, 2023, interest income recognized was $7 million and $13 million, respectively, for direct financing leases and $16 million and $31 million, respectively, for sales-type leases.

The following table presents undiscounted cash flows for both direct financing and sales-type portfolio leases for the remainder of 2024 through 2029 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease receivables as follows:


As of June 30, 2024 ($ in millions)	Direct Financing Leases		Sales-Type Leases
Remainder of 2024	$	93	259
2025	177		532
2026	147		366
2027	111		294
2028	59		194
2029	35		78
Thereafter	41		70
Total undiscounted cash flows	$	663	1,793
Less: Difference between undiscounted cash flows and discounted cash flows	61		135
Present value of lease payments (recognized as lease receivables)	$	602	1,658

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 $14 million and $13 million at June 30, 2024 and December 31, 2023, 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.