Loans and Leases

9 Months Ended

Sep. 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)	September 30, 2024		December 31, 2023
Loans and leases held for sale:
Commercial and industrial loans	$	14	41
Commercial mortgage loans	34		—
Commercial construction loans	50		—
Commercial leases	2		3
Residential mortgage loans	512		334
Total loans and leases held for sale	$	612	378
Portfolio loans and leases:
Commercial and industrial loans	$	50,916	53,270
Commercial mortgage loans	11,394		11,276
Commercial construction loans	5,947		5,621
Commercial leases	2,873		2,579
Total commercial loans and leases	$	71,130	72,746
Residential mortgage loans	$	17,166	17,026
Home equity	4,074		3,916
Indirect secured consumer loans	15,942		14,965
Credit card	1,703		1,865
Solar energy installation loans	4,078		3,728
Other consumer loans	2,575		2,988
Total consumer loans	$	45,538	44,488
Total portfolio loans and leases	$	116,668	117,234

Portfolio loans and leases are recorded net of unearned income, which totaled $312 million and $272 million as of September 30, 2024 and December 31, 2023, respectively. The amortized cost basis of loans and leases excludes accrued interest receivable of $593 million at both September 30, 2024 and December 31, 2023, 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 $316 million as of September 30, 2024 and $395 million as of December 31, 2023, of which $894 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 $14.9 billion and $14.5 billion as of September 30, 2024 and December 31, 2023, respectively, pledged to the FHLB, and loans of $53.1 billion and $49.3 billion at September 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)	September 30, 2024		December 31, 2023	September 30, 2024	December 31, 2023
Commercial and industrial loans	$	50,930	53,311	10	8
Commercial mortgage loans	11,428		11,276	3	—
Commercial construction loans	5,997		5,621	—	—
Commercial leases	2,875		2,582	1	—
Residential mortgage loans	17,678		17,360	8	7
Home equity	4,074		3,916	—	—
Indirect secured consumer loans	15,942		14,965	—	—
Credit card	1,703		1,865	18	21
Solar energy installation loans	4,078		3,728	—	—
Other consumer loans	2,575		2,988	—	—
Total loans and leases	$	117,280	117,612	40	36
Less: Loans and leases held for sale	612		378
Total portfolio loans and leases	$	116,668	117,234

(a)Excludes government guaranteed residential mortgage loans.

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


	For the three months ended September 30,			For the nine months ended September 30,
($ in millions)	2024		2023	2024	2023
Commercial and industrial loans	$	72	65	187	127

Commercial construction loans	—		—	—	1
Commercial leases	—		(1)	—	(1)
Residential mortgage loans	(1)		—	(1)	—
Home equity	—		—	—	1
Indirect secured consumer loans	22		19	63	48
Credit card	16		15	52	46
Solar energy installation loans	14		8	39	16
Other consumer loans	19		18	56	54
Total net charge-offs	$	142	124	396	292

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


($ in millions)(a)	September 30, 2024		December 31, 2023
Net investment in direct financing leases:
Lease payment receivable (present value)	$	593	556
Unguaranteed residual assets (present value)	119		105

Net investment in sales-type leases:
Lease payment receivable (present value)	1,829		1,585
Unguaranteed residual assets (present value)	85		84

(a)Excludes $247 and $249 of leveraged leases at September 30, 2024 and December 31, 2023, respectively.

Interest income recognized in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2024 was $10 million and $29 million, respectively, for direct financing leases and $21 million and $58 million, respectively, for sales-type leases. For the three and nine months ended September 30, 2023, interest income recognized was $7 million and $20 million, respectively, for direct financing leases and $16 million and $47 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 September 30, 2024 ($ in millions)	Direct Financing Leases		Sales-Type Leases
Remainder of 2024	$	45	134
2025	184		595
2026	151		429
2027	117		359
2028	66		237
2029	40		101
Thereafter	53		127
Total undiscounted cash flows	$	656	1,982
Less: Difference between undiscounted cash flows and discounted cash flows	63		153
Present value of lease payments (recognized as lease receivables)	$	593	1,829

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 September 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.