LOANS AND LEASES

9 Months Ended

Sep. 30, 2020

NOTE 3 - LOANS AND LEASES

Loans held for investment are reported at the amount of their outstanding principal, net of charge-offs, unearned income, deferred loan origination fees and costs, and unamortized premiums or discounts on purchased loans.

Loans and leases are disclosed in portfolio segments and classes. The Company’s loan and lease portfolio segments are commercial and retail. The classes of loans and leases are: commercial, commercial real estate, leases, residential mortgages, home equity, automobile, education and other retail.

The following table presents the Company’s loans and leases, excluding LHFS, disclosed in portfolio segments and classes:



(in millions)	September 30, 2020		December 31, 2019
Commercial⁽¹⁾		$45,185		$41,479
Commercial real estate	14,889		13,522
Leases	2,288		2,537
Total commercial loans and leases	62,362		57,538
Residential mortgages	19,633		19,083
Home equity	12,322		13,154
Automobile	12,035		12,120
Education	11,631		10,347
Other retail	6,088		6,846
Total retail loans	61,709		61,550
Total loans and leases		$124,071		$119,088

⁽¹⁾ Includes PPP loans fully guaranteed by the SBA of $4.7 billion as of September 30, 2020.

Accrued interest receivable on loans and leases held for investment totaled $470 million and $495 million as of September 30, 2020 and December 31, 2019, respectively, and is included in other assets in the Consolidated Balance Sheets.

The following table presents the composition of LHFS.



	September 30, 2020						December 31, 2019
(in millions)	Residential Mortgages⁽¹⁾		Commercial⁽²⁾		Total		Residential Mortgages⁽¹⁾		Commercial⁽²⁾		Total
Loans held for sale at fair value		$3,425		$162		$3,587		$1,778		$168		$1,946
Other loans held for sale	—		127		127		1,101		283		1,384

⁽¹⁾ Residential mortgage LHFS are originated for sale.

⁽²⁾Commercial LHFS at fair value consist of loans managed by the Company’s commercial secondary loan desk. Other commercial LHFS generally consist of loans associated with the Company’s syndication business.

Loans pledged as collateral for FHLB borrowed funds, primarily residential mortgages and home equity loans, totaled $25.2 billion and $25.3 billion at September 30, 2020 and December 31, 2019, respectively. Loans pledged as collateral to support the contingent ability to borrow at the FRB discount window were primarily comprised of auto, commercial, commercial real estate, and education loans, and totaled $39.2 billion and $17.4 billion at September 30, 2020 and December 31, 2019, respectively.

During the three months ended September 30, 2020, the Company purchased $801 million of education loans and $101 million of other retail loans. During the three months ended September 30, 2019, the Company purchased $164 million of education loans and $66 million of other retail loans. During the nine months ended September 30, 2020, the Company purchased $1.7 billion of education loans and $628 million of other retail loans. During the nine months ended September 30, 2019, the Company purchased $464 million of education loans and $66 million of other retail loans.

During the three months ended September 30, 2020, the Company sold $94 million of commercial loans and $879 million of education loans. For further information, see Note 2 and Note 7. During the three months ended September 30, 2019, the Company sold $109 million of commercial loans. During the nine months ended September 30, 2020, the Company sold $356 million of commercial loans, $879 million of education loans and $1.5 billion of residential mortgage loans. During the nine months ended September 30, 2019, the Company sold $291 million of commercial loans and $628 million of retail loans, including $22 million of retail TDRs.

Interest income on direct financing and sales-type leases was $17 million and $18 million for the three months ended September 30, 2020 and 2019, respectively, and was $54 million and $58 million for the nine months ended September 30, 2020 and 2019, respectively, and is reported within interest and fees on loans and leases in the Consolidated Statements of Operations.