ALLOWANCE FOR CREDIT LOSSES, NONACCRUING LOANS AND LEASES, AND CONCENTRATIONS OF CREDIT RISK (Tables)

6 Months Ended

Jun. 30, 2021

Schedule of changes in the allowance for credit losses

The following table presents a summary of changes in the ALLL and the allowance for unfunded lending commitments for the three months ended and six months ended June 30, 2021:


	Three Months Ended June 30, 2021			Six Months Ended June 30, 2021
(in millions)	Commercial	Retail	Total	Commercial	Retail	Total
Allowance for loan and lease losses, beginning of period	$1,146	$1,048	$2,194	$1,233	$1,210	$2,443


Charge-offs	(45)	(80)	(125)	(179)	(173)	(352)
Recoveries	4	43	47	34	82	116
Net charge-offs	(41)	(37)	(78)	(145)	(91)	(236)

Provision charged to income	(152)	(17)	(169)	(135)	(125)	(260)
Allowance for loan and lease losses, end of period	$953	$994	$1,947	$953	$994	$1,947

Allowance for unfunded lending commitments, beginning of period	$165	$13	$178	$186	$41	$227


Provision for unfunded lending commitments	(44)	—	(44)	(65)	(28)	(93)
Allowance for unfunded lending commitments, end of period	$121	$13	$134	$121	$13	$134

The following table presents a summary of changes in the ALLL and the allowance for unfunded lending commitments for the three months and six months ended June 30, 2020:


	Three Months Ended June 30, 2020			Six Months Ended June 30, 2020
(in millions)	Commercial	Retail	Total	Commercial	Retail	Total
Allowance for loan and lease losses, beginning of period	$752	$1,419	$2,171	$674	$578	$1,252
Cumulative effect of change in accounting principle	—	—	—	(176)	629	453
Allowance for loan and lease losses, beginning of period, adjusted	752	1,419	2,171	498	1,207	1,705
Charge-offs	(74)	(106)	(180)	(121)	(233)	(354)
Recoveries	3	30	33	6	64	70
Net charge-offs	(71)	(76)	(147)	(115)	(169)	(284)

Provision charged to income	554	(130)	424	852	175	1,027
Allowance for loan and lease losses, end of period	$1,235	$1,213	$2,448	$1,235	$1,213	$2,448

Allowance for unfunded lending commitments, beginning of period	$38	$1	$39	$44	$—	$44
Cumulative effect of change in accounting principle	—	—	—	(3)	1	(2)
Allowance for unfunded lending commitments, beginning of period, adjusted	38	1	39	41	1	42
Provision for unfunded lending commitments	31	9	40	28	9	37
Allowance for unfunded lending commitments, end of period	$69	$10	$79	$69	$10	$79

Schedule of classes of loans and leases, amortized cost basis by credit quality indicator

The following table presents the amortized cost basis of commercial loans and leases, by vintage date and regulatory classification rating, as of June 30, 2021:


	Term Loans by Origination Year						Revolving Loans
(in millions)	2021	2020	2019	2018	2017	Prior to 2017	Within the Revolving Period	Converted to Term	Total
Commercial and industrial
Pass(1)	$5,146	$5,140	$5,260	$3,623	$1,975	$2,797	$15,853	$151	$39,945
Special Mention	3	41	196	196	74	181	454	—	1,145
Substandard	32	125	263	267	114	226	583	21	1,631
Doubtful	27	16	16	22	12	18	7	3	121
Total commercial and industrial	5,208	5,322	5,735	4,108	2,175	3,222	16,897	175	42,842
Commercial real estate
Pass	462	2,572	3,726	3,013	1,026	1,507	809	—	13,115
Special Mention	73	7	193	102	155	122	14	—	666
Substandard	1	39	210	135	146	73	—	—	604
Doubtful	—	9	16	—	—	2	—	—	27
Total commercial real estate	536	2,627	4,145	3,250	1,327	1,704	823	—	14,412
Leases
Pass	269	368	216	203	98	622	—	—	1,776
Special Mention	1	2	1	2	5	18	—	—	29
Substandard	—	16	5	1	—	1	—	—	23
Doubtful	—	—	—	—	—	1	—	—	1
Total leases	270	386	222	206	103	642	—	—	1,829
Total commercial
Pass(1)	5,877	8,080	9,202	6,839	3,099	4,926	16,662	151	54,836
Special Mention	77	50	390	300	234	321	468	—	1,840
Substandard	33	180	478	403	260	300	583	21	2,258
Doubtful	27	25	32	22	12	21	7	3	149
Total commercial	$6,014	$8,335	$10,102	$7,564	$3,605	$5,568	$17,720	$175	$59,083

(1) Includes $3.5 billion of PPP loans designated as pass that are fully guaranteed by the SBA originating in 2021 and 2020.

The following table presents the amortized cost basis of commercial loans and leases, by vintage date and regulatory classification rating, as of December 31, 2020:


	Term Loans by Origination Year						Revolving Loans
(in millions)	2020	2019	2018	2017	2016	Prior to 2016	Within the Revolving Period	Converted to Term	Total
Commercial and industrial
Pass(1)	$8,036	$5,730	$4,180	$2,174	$1,157	$1,980	$17,281	$340	$40,878
Special Mention	34	264	163	84	60	173	771	34	1,583
Substandard	91	195	248	100	81	127	600	22	1,464
Doubtful	65	10	34	38	3	31	63	4	248
Total commercial and industrial	8,226	6,199	4,625	2,396	1,301	2,311	18,715	400	44,173
Commercial real estate
Pass	1,848	2,836	2,810	1,106	566	919	3,271	—	13,356
Special Mention	19	130	121	92	94	48	300	—	804
Substandard	116	2	65	5	53	26	149	—	416
Doubtful	16	26	8	—	—	2	24	—	76
Total commercial real estate	1,999	2,994	3,004	1,203	713	995	3,744	—	14,652
Leases
Pass	455	246	229	139	180	673	—	—	1,922
Special Mention	3	4	2	4	2	18	—	—	33
Substandard	—	2	2	4	4	—	—	—	12
Doubtful	—	—	—	—	—	1	—	—	1
Total leases	458	252	233	147	186	692	—	—	1,968
Total commercial
Pass(1)	10,339	8,812	7,219	3,419	1,903	3,572	20,552	340	56,156
Special Mention	56	398	286	180	156	239	1,071	34	2,420
Substandard	207	199	315	109	138	153	749	22	1,892
Doubtful	81	36	42	38	3	34	87	4	325
Total commercial	$10,683	$9,445	$7,862	$3,746	$2,200	$3,998	$22,459	$400	$60,793

(1) Includes $4.2 billion PPP loans designated as pass that are fully guaranteed by the SBA originating in 2020.

For retail loans, Citizens utilizes FICO credit scores and the loan’s payment and delinquency status to monitor credit quality. Management believes FICO scores are the strongest indicator of credit losses over the contractual life of the loan and assist management in predicting the borrower’s future payment performance. Scores are based on current and historical national industry-wide consumer level credit performance data.

The following table presents the amortized cost basis of retail loans, by vintage date and FICO scores, as of June 30, 2021:


	Term Loans by Origination Year						Revolving Loans
(in millions)	2021	2020	2019	2018	2017	Prior to 2017	Within the Revolving Period	Converted to Term	Total
Residential mortgages
800+	$851	$3,079	$1,574	$454	$897	$2,697	$—	$—	$9,552
740-799	1,619	2,261	890	311	448	1,335	—	—	6,864
680-739	377	653	360	178	169	660	—	—	2,397
620-679	42	112	180	103	117	328	—	—	882
<620	2	49	153	162	167	293	—	—	826
No FICO available(1)	2	3	1	—	—	11	—	—	17
Total residential mortgages	2,893	6,157	3,158	1,208	1,798	5,324	—	—	20,538
Home equity
800+	1	2	6	6	5	170	4,292	318	4,800
740-799	—	1	5	6	6	146	3,333	306	3,803
680-739	—	1	8	13	18	162	1,608	274	2,084
620-679	—	3	13	24	20	133	336	182	711
<620	—	3	20	25	23	106	79	187	443
No FICO available(1)	—	—	—	—	—	—	—	—	—
Total home equity	1	10	52	74	72	717	9,648	1,267	11,841
Automobile
800+	756	951	681	333	223	122	—	—	3,066
740-799	1,096	1,320	813	401	242	122	—	—	3,994
680-739	969	1,109	690	335	190	98	—	—	3,391
620-679	458	506	345	184	108	63	—	—	1,664
<620	59	138	180	133	90	61	—	—	661
No FICO available(1)	3	—	—	—	—	1	—	—	4
Total automobile	3,341	4,024	2,709	1,386	853	467	—	—	12,780
Education
800+	564	1,843	1,103	662	590	1,066	—	—	5,828
740-799	759	1,831	892	480	338	614	—	—	4,914
680-739	204	536	289	172	123	300	—	—	1,624
620-679	14	54	45	37	29	110	—	—	289
<620	1	6	10	12	10	49	—	—	88
No FICO available(1)	2	—	—	—	—	55	—	—	57
Total education	1,544	4,270	2,339	1,363	1,090	2,194	—	—	12,800
Other retail
800+	107	343	209	100	48	42	357	—	1,206
740-799	169	479	285	128	58	36	662	2	1,819
680-739	150	372	190	85	37	18	593	5	1,450
620-679	94	181	65	28	10	6	208	6	598
<620	11	39	23	13	4	2	66	7	165
No FICO available(1)	6	8	—	—	—	—	285	2	301
Total other retail	537	1,422	772	354	157	104	2,171	22	5,539
Total retail
800+	2,279	6,218	3,573	1,555	1,763	4,097	4,649	318	24,452
740-799	3,643	5,892	2,885	1,326	1,092	2,253	3,995	308	21,394
680-739	1,700	2,671	1,537	783	537	1,238	2,201	279	10,946
620-679	608	856	648	376	284	640	544	188	4,144
<620	73	235	386	345	294	511	145	194	2,183
No FICO available(1)	13	11	1	—	—	67	285	2	379
Total retail	$8,316	$15,883	$9,030	$4,385	$3,970	$8,806	$11,819	$1,289	$63,498

(1) Represents loans for which an updated FICO score was unavailable (e.g., due to recent profile changes).

The following table presents the amortized cost basis of retail loans, by vintage date and FICO scores, as of December 31, 2020:


	Term Loans by Origination Year						Revolving Loans
(in millions)	2020	2019	2018	2017	2016	Prior to 2016	Within the Revolving Period	Converted to Term	Total
Residential mortgages
800+	$2,687	$1,885	$638	$1,129	$1,615	$1,755	$—	$—	$9,709
740-799	2,931	1,133	398	527	743	904	—	—	6,636
680-739	784	351	162	172	295	458	—	—	2,222
620-679	97	94	44	56	66	223	—	—	580
<620	12	28	35	58	50	185	—	—	368
No FICO available(1)	1	2	1	5	1	14	—	—	24
Total residential mortgages	6,512	3,493	1,278	1,947	2,770	3,539	—	—	19,539
Home equity
800+	2	8	10	7	5	216	4,319	344	4,911
740-799	2	6	7	6	5	180	3,234	331	3,771
680-739	1	6	10	15	8	179	1,632	284	2,135
620-679	—	10	18	21	14	136	402	195	796
<620	1	17	30	29	18	122	105	214	536

Total home equity	6	47	75	78	50	833	9,692	1,368	12,149
Automobile
800+	1,056	812	424	312	169	62	—	—	2,835
740-799	1,514	1,022	531	344	172	59	—	—	3,642
680-739	1,347	889	461	282	138	47	—	—	3,164
620-679	669	484	259	157	84	32	—	—	1,685
<620	140	242	189	137	79	34	—	—	821
No FICO available(1)	2	—	—	—	—	4	—	—	6
Total automobile	4,728	3,449	1,864	1,232	642	238	—	—	12,153
Education
800+	1,817	1,363	849	781	578	777	—	—	6,165
740-799	1,797	1,009	541	387	251	423	—	—	4,408
680-739	450	294	173	127	90	221	—	—	1,355
620-679	26	35	33	28	25	95	—	—	242
<620	2	5	10	10	8	41	—	—	76
No FICO available(1)	2	—	—	—	—	60	—	—	62
Total education	4,094	2,706	1,606	1,333	952	1,617	—	—	12,308
Other retail
800+	461	380	163	77	15	44	341	—	1,481
740-799	620	460	184	81	19	31	638	2	2,035
680-739	495	302	111	48	10	13	561	5	1,545
620-679	248	104	37	14	3	5	174	7	592
<620	24	30	17	6	1	3	77	8	166
No FICO available(1)	54	1	—	—	—	—	272	2	329
Total other retail	1,902	1,277	512	226	48	96	2,063	24	6,148
Total retail
800+	6,023	4,448	2,084	2,306	2,382	2,854	4,660	344	25,101
740-799	6,864	3,630	1,661	1,345	1,190	1,597	3,872	333	20,492
680-739	3,077	1,842	917	644	541	918	2,193	289	10,421
620-679	1,040	727	391	276	192	491	576	202	3,895
<620	179	322	281	240	156	385	182	222	1,967
No FICO available(1)	59	3	1	5	1	78	272	2	421
Total retail	$17,242	$10,972	$5,335	$4,816	$4,462	$6,323	$11,755	$1,392	$62,297

(1) Represents loans for which an updated FICO score was unavailable (e.g., due to recent profile changes).

Schedule of nonaccrual loans and leases and loans accruing and 90 days or more past due

The following table presents nonaccrual loans and leases and loans accruing and 90 days or more past due:


	As of June 30, 2021			As of December 31, 2020
(in millions)	Nonaccrual loans and leases	90+ days past due and accruing	Nonaccrual with no related ACL	Nonaccrual loans and leases	90+ days past due and accruing	Nonaccrual with no related ACL
Commercial and industrial	$163	$—	$40	$280	$20	$56
Commercial real estate	102	—	37	176	—	2
Leases	1	1	—	2	1	—
Total commercial	266	1	77	458	21	58
Residential mortgages(1)	174	270	138	167	30	96
Home equity	234	—	189	276	—	207
Automobile	62	—	34	72	—	17
Education	21	2	2	18	2	2
Other retail	22	7	2	28	9	—
Total retail	513	279	365	561	41	322
Total loans and leases	$779	$280	$442	$1,019	$62	$380

(1) 90+ days past due and accruing includes $266 million and $21 million of loans fully or partially guaranteed by the FHA, VA and USDA for June 30, 2021 and December 31, 2020, respectively.

Schedule of accruing and nonaccruing past due amounts

The following table presents an analysis of the age of both accruing and nonaccruing loan and lease past due amounts:


	June 30, 2021					December 31, 2020
	Days Past Due					Days Past Due
(in millions)	Current-29	30-59	60-89	90+	Total	Current-29	30-59	60-89	90+	Total
Commercial and industrial	$42,769	$24	$7	$42	$42,842	$43,817	$223	$16	$117	$44,173
Commercial real estate	14,310	1	—	101	14,412	14,531	1	85	35	14,652
Leases	1,827	—	—	2	1,829	1,956	9	—	3	1,968
Total commercial	58,906	25	7	145	59,083	60,304	233	101	155	60,793
Residential mortgages(1)	19,885	176	61	416	20,538	19,291	59	21	168	19,539
Home equity	11,607	32	17	185	11,841	11,848	61	28	212	12,149
Automobile	12,613	114	43	10	12,780	11,901	170	65	17	12,153
Education	12,747	29	13	11	12,800	12,255	33	13	7	12,308
Other retail	5,454	37	20	28	5,539	6,047	38	29	34	6,148
Total retail	62,306	388	154	650	63,498	61,342	361	156	438	62,297
Total	$121,212	$413	$161	$795	$122,581	$121,646	$594	$257	$593	$123,090

(1) 90+ days past due includes $266 million and $44 million of loans fully or partially guaranteed by the FHA, VA, and USDA at June 30, 2021 and December 31, 2020, respectively.

Troubled debt restructurings on financing receivables

The following tables summarize loans modified during the three and six months ended June 30, 2021 and June 30, 2020. The balances represent the post-modification outstanding amortized cost basis and may include loans that became TDRs during the period and were subsequently paid off in full, charged off, or sold prior to period end. Pre-modification balances for modified loans approximate the post-modification balances shown.


		Three Months Ended June 30, 2021
		Amortized Cost Basis
(dollars in millions)	Number of Contracts		Interest Rate Reduction(1)	Maturity Extension(2)		Other(3)		Total
Commercial and industrial	15		$—		$3		$54		$57
Commercial real estate	—		—		—		—		—
Total commercial	15		—		3		54		57
Residential mortgages	671		8		120		44		172
Home equity	102		1		3		3		7
Automobile	379		1		—		5		6
Education	265		—		—		9		9
Other retail	585		1		—		—		1
Total retail	2,002		11		123		61		195
Total	2,017		$11		$126		$115		$252


		Three Months Ended June 30, 2020
		Amortized Cost Basis
(dollars in millions)	Number of Contracts	Interest Rate Reduction(1)	Maturity Extension(2)	Other(3)	Total
Commercial and industrial	19	$—	$3	$53	$56
Commercial real estate	—	—	—	—	—
Total commercial	19	—	3	53	56
Residential mortgages	145	11	14	3	28
Home equity	266	2	4	11	17
Automobile	947	—	—	15	15
Education	142	—	—	4	4
Other retail	710	3	—	1	4
Total retail	2,210	16	18	34	68
Total	2,229	$16	$21	$87	$124


		Six Months Ended June 30, 2021
		Amortized Cost Basis
(dollars in millions)	Number of Contracts	Interest Rate Reduction(1)	Maturity Extension(2)	Other(3)	Total
Commercial and industrial	22	$—	$6	$54	$60
Commercial real estate	—	—	—	—	—
Total commercial	22	—	6	54	60
Residential mortgages	713	12	126	47	185
Home equity	249	3	8	7	18
Automobile	1,048	1	—	13	14
Education	412	—	—	13	13
Other retail	1,215	4	—	1	5
Total retail	3,637	20	134	81	235
Total	3,659	$20	$140	$135	$295


		Six Months Ended June 30, 2020
		Amortized Cost Basis
(dollars in millions)	Number of Contracts	Interest Rate Reduction(1)	Maturity Extension(2)	Other(3)	Total
Commercial and industrial	38	$—	$3	$94	$97
Commercial real estate	—	—	—	—	—
Total commercial	38	—	3	94	97
Residential mortgages	241	17	21	7	45
Home equity	389	6	4	15	25
Automobile	1,177	1	—	17	18
Education	233	—	—	6	6
Other retail	1,683	7	—	2	9
Total retail	3,723	31	25	47	103
Total	3,761	$31	$28	$141	$200

(1) Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

(2) Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

(3) Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post-modification balances being higher than pre-modification.

Schedule of loans that may increase credit exposure

The following tables present balances of loans with these characteristics:


	June 30, 2021
(in millions)	Residential Mortgages	Home Equity	Other Retail	Education	Total
High loan-to-value	$235	$27	$—	$—	$262
Interest-only	3,143	—	—	1	3,144
Low introductory rate	—	—	135	—	135

Total	$3,378	$27	$135	$1	$3,541


	December 31, 2020
(in millions)	Residential Mortgages	Home Equity	Other Retail	Education	Total
High loan-to-value	$289	$64	$—	$—	$353
Interest-only	2,801	—	—	—	2,801
Low introductory rate	—	—	170	—	170

Total	$3,090	$64	$170	$1	$3,324