Credit Quality and the Allowance for Loan and Lease Losses

6 Months Ended

Jun. 30, 2024

Receivables [Abstract]

Credit Quality and the Allowance for Loan and Lease Losses

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 three months ended June 30, 2024 ($ in millions)	Commercial		Residential Mortgage	Consumer	Total
Balance, beginning of period	$	1,141	140	1,037	2,318
Losses charged off(a)	(83)		(1)	(98)	(182)
Recoveries of losses previously charged off(a)	3		1	34	38
Provision for (benefit from) loan and lease losses	52		(4)	66	114
Balance, end of period	$	1,113	136	1,039	2,288

(a)The Bancorp recorded $7 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.

For the three months ended June 30, 2023 ($ in millions)	Commercial		Residential Mortgage	Consumer	Total
Balance, beginning of period	$	1,143	185	887	2,215
Losses charged off(a)	(35)		(1)	(85)	(121)
Recoveries of losses previously charged off(a)	3		1	27	31
Provision for (benefit from) loan and lease losses	88		(12)	126	202
Balance, end of period	$	1,199	173	955	2,327

(a)The Bancorp recorded $8 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.

For the six months ended June 30, 2024 ($ in millions)	Commercial		Residential Mortgage	Consumer	Total
Balance, beginning of period	$	1,130	145	1,047	2,322
Losses charged off(a)	(123)		(1)	(204)	(328)
Recoveries of losses previously charged off(a)	8		2	64	74
Provision for (benefit from) loan and lease losses	98		(10)	132	220
Balance, end of period	$	1,113	136	1,039	2,288

(a)The Bancorp recorded $15 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.

For the six months ended June 30, 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)	(69)		(2)	(160)	(231)
Recoveries of losses previously charged off(a)	6		2	55	63
Provision for (benefit from) loan and lease losses	131		(36)	255	350
Balance, end of period	$	1,199	173	955	2,327

(a)The Bancorp recorded $17 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 June 30, 2024 ($ in millions)	Commercial		Residential Mortgage	Consumer	Total
ALLL:(a)
Individually evaluated	$	88	—	5	93
Collectively evaluated	1,025		136	1,034	2,195
Total ALLL	$	1,113	136	1,039	2,288
Portfolio loans and leases:(b)
Individually evaluated	$	215	129	72	416
Collectively evaluated	71,568		16,802	27,684	116,054
Total portfolio loans and leases	$	71,783	16,931	27,756	116,470

(a)Includes $2 related to commercial leveraged leases at June 30, 2024.

(b)Excludes $109 of residential mortgage loans measured at fair value and includes $246 of commercial leveraged leases, net of unearned income, at June 30, 2024.

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.

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 of the Notes to Consolidated Financial Statements included in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2023.

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 June 30, 2024 ($ in millions)	Term Loans and Leases by Origination Year							Revolving Loans
	2024		2023	2022	2021	2020	Prior		Total
Commercial and industrial loans:
Pass	$	1,357	1,763	2,761	1,552	532	479	39,476	47,920
Special mention	32		62	117	20	3	77	1,334	1,645
Substandard	35		65	110	80	39	99	1,827	2,255
Doubtful	—		—	—	—	—	—	20	20
Total commercial and industrial loans	$	1,424	1,890	2,988	1,652	574	655	42,657	51,840
Commercial mortgage owner-occupied loans:
Pass	$	324	873	963	659	355	390	1,461	5,025
Special mention	32		26	5	17	—	19	6	105
Substandard	48		19	27	38	8	47	99	286
Doubtful	—		—	—	—	—	—	—	—
Total commercial mortgage owner-occupied loans	$	404	918	995	714	363	456	1,566	5,416
Commercial mortgage nonowner-occupied loans:
Pass	$	300	855	743	226	308	493	2,581	5,506
Special mention	9		3	154	—	1	1	63	231
Substandard	19		53	4	—	—	2	198	276
Doubtful	—		—	—	—	—	—	—	—
Total commercial mortgage nonowner-occupied loans	$	328	911	901	226	309	496	2,842	6,013
Commercial construction loans:
Pass	$	21	134	101	38	41	32	4,678	5,045
Special mention	—		—	—	—	—	—	447	447
Substandard	5		52	—	—	—	2	255	314
Doubtful	—		—	—	—	—	—	—	—
Total commercial construction loans	$	26	186	101	38	41	34	5,380	5,806
Commercial leases:
Pass	$	731	391	340	388	165	607	—	2,622
Special mention	2		—	2	3	2	9	—	18
Substandard	—		19	13	1	4	31	—	68
Doubtful	—		—	—	—	—	—	—	—
Total commercial leases	$	733	410	355	392	171	647	—	2,708
Total commercial loans and leases:
Pass	$	2,733	4,016	4,908	2,863	1,401	2,001	48,196	66,118
Special mention	75		91	278	40	6	106	1,850	2,446
Substandard	107		208	154	119	51	181	2,379	3,199
Doubtful	—		—	—	—	—	—	20	20
Total commercial loans and leases	$	2,915	4,315	5,340	3,022	1,458	2,288	52,445	71,783

As of December 31, 2023 ($ in millions)	Term Loans and Leases by Origination Year							Revolving 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

The following tables summarize the Bancorp’s gross charge-offs within the commercial portfolio segment, by class and vintage:

For the six months ended June 30, 2024 ($ in millions)	Term Loans and Leases by Origination Year							Revolving Loans
	2024		2023	2022	2021	2020	Prior		Total
Commercial loans and leases:
Commercial and industrial loans	$	—	2	3	1	1	—	116	123
Commercial mortgage owner-occupied loans	—		—	—	—	—	—	—	—
Commercial construction loans	—		—	—	—	—	—	—	—
Total commercial loans and leases	$	—	2	3	1	1	—	116	123

For the six months ended June 30, 2023 ($ in millions)	Term Loans and Leases by Origination Year							Revolving Loans
	2023		2022	2021	2020	2019	Prior		Total
Commercial loans and leases:
Commercial and industrial loans	$	—	5	11	1	—	5	45	67
Commercial mortgage owner-occupied loans	—		—	—	—	—	—	1	1
Commercial construction loans	—		—	—	—	—	—	1	1
Total commercial loans and leases	$	—	5	11	1	—	5	47	69

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 June 30, 2024 ($ in millions)			30-89 Days(a)	90 Days or More(a)	Total Past Due
Commercial loans and leases:
Commercial and industrial loans	$	51,724	28	88	116	51,840	3
Commercial mortgage owner-occupied loans	5,411		3	2	5	5,416	1
Commercial mortgage nonowner-occupied loans	6,010		3	—	3	6,013	—
Commercial construction loans	5,781		25	—	25	5,806	—
Commercial leases	2,686		18	4	22	2,708	4
Total portfolio commercial loans and leases	$	71,612	77	94	171	71,783	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, 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.

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, solar energy installation loans 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 of the Notes to Consolidated Financial Statements included in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2023 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 June 30, 2024 ($ in millions)	Term Loans by Origination Year							Revolving Loans	Revolving Loans Converted to Term Loans
	2024		2023	2022	2021	2020	Prior			Total
Residential mortgage loans:
Performing:
Current(a)	$	788	1,025	3,048	4,775	2,585	4,550	—	—	16,771
30-89 days past due	—		1	4	5	2	13	—	—	25
90 days or more past due	—		1	1	2	—	4	—	—	8
Nonperforming	—		—	7	9	7	104	—	—	127
Total residential mortgage loans(b)	$	788	1,027	3,060	4,791	2,594	4,671	—	—	16,931
Home equity:
Performing:
Current	$	63	76	38	2	5	96	3,545	57	3,882
30-89 days past due	—		—	—	—	—	1	21	4	26
90 days or more past due	—		—	—	—	—	—	—	—	—
Nonperforming	—		—	—	—	—	7	52	2	61
Total home equity	$	63	76	38	2	5	104	3,618	63	3,969
Indirect secured consumer loans:
Performing:
Current	$	3,431	3,415	3,668	3,104	1,104	556	—	—	15,278
30-89 days past due	7		24	40	31	14	12	—	—	128
90 days or more past due	—		—	—	—	—	—	—	—	—
Nonperforming	1		5	13	8	4	5	—	—	36
Total indirect secured consumer loans	$	3,439	3,444	3,721	3,143	1,122	573	—	—	15,442
Credit card:
Performing:
Current	$	—	—	—	—	—	—	1,666	—	1,666
30-89 days past due	—		—	—	—	—	—	19	—	19
90 days or more past due	—		—	—	—	—	—	17	—	17
Nonperforming	—		—	—	—	—	—	31	—	31
Total credit card	$	—	—	—	—	—	—	1,733	—	1,733
Solar energy installation loans:
Performing:
Current	$	469	2,226	1,140	2	—	35	—	—	3,872
30-89 days past due	1		6	6	—	—	—	—	—	13
90 days or more past due	—		—	—	—	—	—	—	—	—
Nonperforming	—		35	30	—	—	1	—	—	66
Total solar energy installation loans	$	470	2,267	1,176	2	—	36	—	—	3,951
Other consumer loans:
Performing:
Current	$	115	435	604	271	206	181	772	45	2,629
30-89 days past due	—		4	9	3	2	2	2	1	23
90 days or more past due	—		—	—	—	—	—	—	—	—
Nonperforming	—		2	4	1	—	1	—	1	9
Total other consumer loans	$	115	441	617	275	208	184	774	47	2,661
Total residential mortgage and consumer loans:
Performing:
Current	$	4,866	7,177	8,498	8,154	3,900	5,418	5,983	102	44,098
30-89 days past due	8		35	59	39	18	28	42	5	234
90 days or more past due	—		1	1	2	—	4	17	—	25
Nonperforming	1		42	54	18	11	118	83	3	330
Total residential mortgage and consumer loans(b)	$	4,875	7,255	8,612	8,213	3,929	5,568	6,125	110	44,687

(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 June 30, 2024, $77 of these loans were 30-89 days past due and $126 were 90 days or more past due. The Bancorp recognized an immaterial amount and $1 of losses during the three and six months ended June 30, 2024, respectively, due to claim denials and curtailments associated with these insured or guaranteed loans.

(b)Excludes $109 of residential mortgage loans measured at fair value at June 30, 2024, including $1 of 30-89 days past due loans and $2 of nonperforming loans.

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
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	—		—	—	—	—	—	—	—	—
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	—		—	—	—	—	—	—	—	—
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
Nonperforming	—		—	—	—	—	—	34	—	34
Total credit card	$	—	—	—	—	—	—	1,865	—	1,865
Solar energy installation loans:
Performing:
Current	$	2,415	1,192	2	—	—	41	—	—	3,650
30-89 days past due	12		6	—	—	—	—	—	—	18
90 days or more past due	—		—	—	—	—	—	—	—	—
Nonperforming	29		30	—	—	—	1	—	—	60
Total solar energy installation loans	$	2,456	1,228	2	—	—	42	—	—	3,728
Other consumer loans:
Performing:
Current	$	511	703	328	246	101	154	859	41	2,943
30-89 days past due	5		15	4	2	2	2	2	1	33
90 days or more past due	—		—	—	—	—	—	—	—	—
Nonperforming	2		6	1	1	1	—	—	1	12
Total other consumer loans	$	518	724	333	249	104	156	861	43	2,988
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
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 $1 of losses during both the three and six months ended June 30, 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.

The following tables summarize the Bancorp’s gross charge-offs within the residential mortgage and consumer portfolio segments, by class and vintage:

For the six months ended June 30, 2024 ($ in millions)	Term Loans by Origination Year							Revolving Loans	Revolving Loans Converted to Term Loans
	2024		2023	2022	2021	2020	Prior			Total
Residential mortgage loans	$	—	—	—	—	—	1	—	—	1
Consumer loans:
Home equity	—		—	—	—	—	—	3	—	3
Indirect secured consumer loans	—		16	26	13	5	6	—	—	66
Credit card	—		—	—	—	—	—	46	—	46
Solar energy installation loans	—		8	6	—	5	9	—	—	28
Other consumer loans	—		5	13	6	10	9	16	2	61
Total residential mortgage and consumer loans	$	—	29	45	19	20	25	65	2	205

For the six months ended June 30, 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	$	—	—	—	—	—	2	—	—	2
Consumer loans:
Home equity	—		—	—	—	—	1	3	—	4
Indirect secured consumer loans	1		18	12	7	5	5	—	—	48
Credit card	—		—	—	—	—	—	40	—	40
Solar energy installation loans	—		7	1	—	—	1	—	—	9
Other consumer loans	—		18	9	6	4	5	16	1	59
Total residential mortgage and consumer loans	$	1	43	22	13	9	14	59	1	162

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)	June 30, 2024		December 31, 2023
Commercial loans and leases:
Commercial and industrial loans	$	187	268
Commercial mortgage owner-occupied loans	25		8
Commercial mortgage nonowner-occupied loans	2		2
Commercial construction loans	1		1
Total commercial loans and leases	$	215	279
Residential mortgage loans	129		126
Consumer loans:
Home equity	55		54
Indirect secured consumer loans	17		15
Total consumer loans	$	72	69
Total portfolio loans and leases	$	416	474

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:

	June 30, 2024				December 31, 2023
($ in millions)	With an ALLL		No Related ALLL	Total	With an ALLL	No Related ALLL	Total
Commercial loans and leases:
Commercial and industrial loans	$	198	36	234	273	31	304
Commercial mortgage owner-occupied loans	13		22	35	11	6	17
Commercial mortgage nonowner-occupied loans	1		2	3	—	3	3
Commercial construction loans	—		1	1	—	1	1
Commercial leases	1		—	1	—	1	1
Total nonaccrual portfolio commercial loans and leases	$	213	61	274	284	42	326
Residential mortgage loans	37		92	129	26	98	124
Consumer loans:
Home equity	20		41	61	21	36	57
Indirect secured consumer loans	30		6	36	32	4	36
Credit card	31		—	31	34	—	34
Solar energy installation loans	66		—	66	60	—	60
Other consumer loans	9		—	9	12	—	12
Total nonaccrual portfolio consumer loans	$	156	47	203	159	40	199
Total nonaccrual portfolio loans and leases(a)(b)	$	406	200	606	469	180	649
OREO and other repossessed property	—		37	37	—	39	39
Total nonperforming portfolio assets(a)(b)	$	406	237	643	469	219	688

(a)Excludes $4 and $1 of nonaccrual loans held for sale as of June 30, 2024 and December 31, 2023, respectively.

(b)Includes $24 and $19 of nonaccrual government-insured commercial loans whose repayments are insured by the SBA as of June 30, 2024 and December 31, 2023, respectively.

The Bancorp recognized an immaterial amount of interest income on nonaccrual loans and leases for both the three and six months ended June 30, 2024 and 2023.

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 $93 million and $107 million as of June 30, 2024 and December 31, 2023, respectively.

Modifications to Borrowers Experiencing Financial Difficulty

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.

Portfolio loans with an amortized cost basis of $183 million and $331 million as of June 30, 2024 and 2023, respectively, were modified during the three months ended June 30, 2024 and 2023, respectively, and $300 million and $444 million were modified during the six months ended June 30, 2024 and 2023, respectively, for borrowers experiencing financial difficulty, as further discussed in the following sections. These modifications for the three months ended June 30, 2024 and 2023 represented 0.16% and 0.27%, respectively, of total portfolio loans and leases as of June 30, 2024 and 2023, respectively, and 0.26% and 0.36% for the six months ended June 30, 2024 and 2023, respectively. These amounts excluded $21 million and $9 million for the three months ended June 30, 2024 and 2023, respectively, and $30 million and $20 million for the six months ended June 30, 2024 and 2023, respectively, of consumer and residential mortgage loans which have been granted a concession under provisions of the Federal Bankruptcy Act and are monitored separately from loans modified under the Bancorp’s

loan modification programs. As of June 30, 2024 and December 31, 2023, the Bancorp had commitments of $88 million and $130 million, respectively, to lend additional funds to borrowers experiencing financial difficulty whose terms have been modified during the twelve months ended June 30, 2024 and December 31, 2023, respectively.

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 three to twelve 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 tables present the amortized cost basis as of June 30, 2024 and 2023, respectively, of the Bancorp’s commercial portfolio loans that were modified for borrowers experiencing financial difficulty, by portfolio class and type of modification:

For the three months ended June 30, 2024 ($ in millions)	Term Extension		Term Extension and Payment Delay	Payment Delay	Other	Total	% of Total Class
Commercial and industrial loans	$	95	18	3	—	116	0.22	%
Commercial mortgage owner-occupied loans	23		—	1	—	24	0.44
Commercial mortgage nonowner-occupied loans	—		—	—	—	—	—
Commercial construction loans	4		—	—	—	4	0.07
Total commercial portfolio loans	$	122	18	4	—	144	0.20	%

For the three months ended June 30, 2023 ($ in millions)	Term Extension		Term Extension and Payment Delay	Payment Delay	Other	Total	% of Total Class
Commercial and industrial loans	$	163	—	7	—	170	0.30	%
Commercial mortgage owner-occupied loans	40		—	—	—	40	0.74
Commercial mortgage nonowner-occupied loans	2		—	—	—	2	0.03
Commercial construction loans	70		—	—	—	70	1.28
Total commercial portfolio loans	$	275	—	7	—	282	0.37	%

For the six months ended June 30, 2024 ($ in millions)	Term Extension		Term Extension and Payment Delay	Payment Delay	Other	Total	% of Total Class
Commercial and industrial loans	$	149	18	16	—	183	0.35	%
Commercial mortgage owner-occupied loans	33		—	1	—	34	0.63
Commercial mortgage nonowner-occupied loans	5		—	—	—	5	0.08
Commercial construction loans	4		—	—	—	4	0.07
Total commercial portfolio loans	$	191	18	17	—	226	0.31	%

For the six months ended June 30, 2023 ($ in millions)	Term Extension		Term Extension and Payment Delay	Payment Delay	Other	Total	% of Total Class
Commercial and industrial loans	$	183	—	7	1	191	0.34	%
Commercial mortgage owner-occupied loans	40		—	—	—	40	0.74
Commercial mortgage nonowner-occupied loans	24		—	—	2	26	0.44
Commercial construction loans	101		—	—	—	101	1.84
Total commercial portfolio loans	$	348	—	7	3	358	0.47	%

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 six to twelve months.

The following tables present the amortized cost basis as of June 30, 2024 and 2023, respectively, of the Bancorp’s residential mortgage portfolio loans that were modified for borrowers experiencing financial difficulty, by type of modification:

	June 30, 2024				June 30, 2023
For the three months ended ($ in millions)	Total		% of Total Class		Total		% of Total Class
Payment delay	$	3	0.02	%	$	6	0.03	%
Term extension and payment delay	24		0.14		29		0.17
Term extension, interest rate reduction and payment delay	2		0.01		1		0.01
Total residential mortgage portfolio loans	$	29	0.17	%	$	36	0.21	%

	June 30, 2024				June 30, 2023
For the six months ended ($ in millions)	Total		% of Total Class		Total		% of Total Class
Payment delay	$	5	0.03	%	$	14	0.08	%
Term extension and payment delay	45		0.26		42		0.24
Term extension, interest rate reduction and payment delay	3		0.02		3		0.02
Total residential mortgage portfolio loans	$	53	0.31	%	$	59	0.34	%

The Bancorp had $3 million and $17 million of in-process modifications to residential mortgage loans outstanding as of June 30, 2024 and 2023, respectively, 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, solar energy installation 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 tables present the amortized cost basis as of June 30, 2024 and 2023, respectively, of the Bancorp’s consumer portfolio loans that were modified for borrowers experiencing financial difficulty, by portfolio class and type of modification:

For the three months ended June 30, 2024 ($ in millions)	Interest Rate Reduction		Payment Delay	Term Extension and Payment Delay	Term Extension, Interest Rate Reduction and Payment Delay	Total	% of Total Class
Home equity	$	1	—	—	2	3	0.08	%
Credit card	6		—	—	—	6	0.35
Solar energy installation loans	—		—	—	—	—	—
Other consumer loans	—		1	—	—	1	0.04
Total consumer portfolio loans	$	7	1	—	2	10	0.04	%

For the three months ended June 30, 2023 ($ in millions)	Interest Rate Reduction		Payment Delay	Term Extension and Payment Delay	Term Extension, Interest Rate Reduction and Payment Delay	Total	% of Total Class
Home equity	$	—	—	1	2	3	0.08	%
Credit card	8		—	—	—	8	0.44
Solar energy installation loans	—		1	—	—	1	0.03
Other consumer loans	—		1	—	—	1	0.03
Total consumer portfolio loans	$	8	2	1	2	13	0.05	%

For the six months ended June 30, 2024 ($ in millions)	Interest Rate Reduction		Payment Delay	Term Extension and Payment Delay	Term Extension, Interest Rate Reduction and Payment Delay	Total	% of Total Class
Home equity	$	1	—	1	5	7	0.18	%
Credit card	12		—	—	—	12	0.69
Solar energy installation loans	—		—	—	—	—	—
Other consumer loans	—		2	—	—	2	0.08
Total consumer portfolio loans	$	13	2	1	5	21	0.08	%

For the six months ended June 30, 2023 ($ in millions)	Interest Rate Reduction		Payment Delay	Term Extension and Payment Delay	Term Extension, Interest Rate Reduction and Payment Delay	Total	% of Total Class
Home equity	$	1	—	2	4	7	0.18	%
Credit card	17		—	—	—	17	0.94
Solar energy installation loans	—		1	—	—	1	0.03
Other consumer loans	—		2	—	—	2	0.06
Total consumer portfolio loans	$	18	3	2	4	27	0.10	%

Financial effects of loan modifications

The following tables present the financial effects of the Bancorp’s significant types of portfolio loan modifications to borrowers experiencing financial difficulty, by portfolio class:

		For the three months ended June 30,
	Financial Effects	2024	2023
Commercial loans:
Commercial and industrial loans	Weighted-average length of term extensions	10 months	4 months
	Approximate amount of payment delays as a percentage of the related loan balances	10%	12%
Commercial mortgage owner- occupied loans	Weighted-average length of term extensions	12 months	10 months
Commercial construction loans	Weighted-average length of term extensions	6 months	12 months
Residential mortgage loans	Weighted-average length of term extensions	9.1 years	11.6 years
	Approximate amount of payment delays as a percentage of the related loan balances	11%	17%
Consumer loans:
Home equity	Weighted-average length of term extensions	24.0 years	25.5 years
	Weighted-average interest rate reduction	From 8.8% to 7.1%	From 8.7% to 6.6%
	Approximate amount of payment delays as a percentage of the related loan balances	5%	3%
Credit card	Weighted-average interest rate reduction	From 23.7% to 3.7%	From 23.6% to 3.6%

		For the six months ended June 30,
	Financial Effects	2024	2023
Commercial loans:
Commercial and industrial loans	Weighted-average length of term extensions	9 months	4 months
	Approximate amount of payment delays as a percentage of the related loan balances	12%	12%
Commercial mortgage owner- occupied loans	Weighted-average length of term extensions	9 months	10 months
Commercial mortgage nonowner- occupied loans	Weighted-average length of term extensions	6 months	8 months
Commercial construction loans	Weighted-average length of term extensions	6 months	12 months
Residential mortgage loans	Weighted-average length of term extensions	10.2 years	11.3 years
	Approximate amount of payment delays as a percentage of the related loan balances	12%	16%
Consumer loans:
Home equity	Weighted-average length of term extensions	24.9 years	25.1 years
	Weighted-average interest rate reduction	From 8.9% to 7.2%	From 8.3% to 6.5%
	Approximate amount of payment delays as a percentage of the related loan balances	5%	5%
Credit card	Weighted-average interest rate reduction	From 23.9% to 3.9%	From 23.4% to 3.7%

Credit quality of modified loans

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

The following table presents the amortized cost basis as of June 30, 2024 for the Bancorp’s portfolio loans that were modified during the twelve months then ended for borrowers experiencing financial difficulty, by age and portfolio class:

($ in millions)			Past Due
	Current		30-89 Days	90 Days or More	Total
Commercial loans:
Commercial and industrial loans	$	199	3	8	210
Commercial mortgage owner-occupied loans	34		—	—	34
Commercial mortgage nonowner-occupied loans	50		—	—	50
Commercial construction loans	23		—	—	23
Residential mortgage loans	74		15	11	100
Consumer loans:
Home equity	13		1	1	15
Credit card(a)	17		3	3	23
Solar energy installation loans	1		—	—	1
Other consumer loans	4		—	—	4
Total portfolio loans	$	415	22	23	460

(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 following table presents the amortized cost basis as of June 30, 2023 for the Bancorp’s portfolio loans that were modified between January 1, 2023 and June 30, 2023 to borrowers experiencing financial difficulty, by age and portfolio class:

($ in millions)			Past Due
	Current		30-89 Days	90 Days or More	Total
Commercial loans:
Commercial and industrial loans	$	190	—	1	191
Commercial mortgage owner-occupied loans	40		—	—	40
Commercial mortgage nonowner-occupied loans	26		—	—	26
Commercial construction loans	101		—	—	101
Residential mortgage loans	56		2	1	59
Consumer loans:
Home equity	7		—	—	7
Credit card(a)	12		3	2	17
Solar energy installation loans	1		—	—	1
Other consumer loans	2		—	—	2
Total portfolio loans	$	435	5	4	444

(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 for borrowers experiencing financial difficulty that subsequently defaulted during the three months ended June 30, 2024 and were within twelve months of the modification date:

($ in millions)	Term Extension		Interest Rate Reduction	Payment Delay	Term Extension and Payment Delay	Term Extension and Interest Rate Reduction	Total
Commercial loans:
Commercial and industrial loans	$	—	—	13	6	—	19
Residential mortgage loans	—		—	—	7	—	7
Consumer loans:
Home equity	—		1	—	—	—	1
Credit card	—		4	—	—	—	4
Total portfolio loans	$	—	5	13	13	—	31

The following table presents the amortized cost basis of the modifications for borrowers experiencing financial difficulty that subsequently defaulted during the six months ended June 30, 2024 and were within twelve months of the modification date:

($ in millions)	Term Extension		Interest Rate Reduction	Payment Delay	Term Extension and Payment Delay	Term Extension and Interest Rate Reduction	Total
Commercial loans:
Commercial and industrial loans	$	8	—	13	6	1	28
Residential mortgage loans	—		—	1	16	—	17
Consumer loans:
Home equity	—		1	—	—	—	1
Credit card	—		6	—	—	—	6
Total portfolio loans	$	8	7	14	22	1	52

There was an immaterial amount of modifications to borrowers experiencing financial difficulty completed between January 1, 2023 and June 30, 2023 that had become 90 days or more past due under the modified terms during the three and six months ended June 30, 2023.