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Loans and Leases
 9 Months Ended
Sep. 30, 2022
Receivables [Abstract]  
Loans and Leases LOANS AND LEASES
The following tables as of September 30, 2022 include loan and lease balances acquired in the CIT Merger, which were recorded at fair value on the Merger Date. Refer to Note 2 — Business Combinations for further information. Refer to Note 1 — Accounting Policies and Basis of Presentation for updates to our accounting policies related to loans.

Unless otherwise noted, loans held for sale are not included in the following tables. Leases in the following tables include finance leases but exclude operating lease equipment.

Loans by Class
dollars in millionsSeptember 30, 2022December 31, 2021
Commercial
Commercial construction$2,752 $1,238 
Owner occupied commercial mortgage14,053 12,099 
Non-owner occupied commercial mortgage9,683 3,041 
Commercial and industrial24,288 5,937 
Leases2,184 271 
Total commercial52,960 22,586 
Consumer
Residential mortgage12,910 6,088 
Revolving mortgage1,923 1,818 
Consumer auto1,385 1,332 
Consumer other612 548 
Total consumer16,830 9,786 
Total loans and leases$69,790 $32,372 

At September 30, 2022 and December 31, 2021, accrued interest receivable on loans included in other assets was $171 million and $87 million, respectively, and was excluded from the estimate of credit losses.

The following table presents selected components of the amortized cost of loans.

Components of Amortized Cost
dollars in millionsSeptember 30, 2022December 31, 2021
Deferred fees, including unearned fees and unamortized costs on non-PCD loans$72$32
Net unamortized discount on purchased loans
Non-PCD$81$11
PCD5029 
Total net unamortized discount$131$40
The aging of the outstanding loans and leases, by class, at September 30, 2022 and December 31, 2021 is provided in the tables below. Loans and leases less than 30 days past due are considered current, as various grace periods allow borrowers to make payments within a stated period after the due date and remain in compliance with the respective agreement.

Loans and Leases - Delinquency Status
dollars in millionsSeptember 30, 2022
30-59 Days
Past Due		60-89 Days
Past Due		90 Days or
Greater		Total
Past Due		CurrentTotal
Commercial
Commercial construction$5 $— $— $5 $2,747 $2,752 
Owner occupied commercial mortgage23 3 26 52 14,001 14,053 
Non-owner occupied commercial mortgage34 — 46 80 9,603 9,683 
Commercial and industrial80 20 21 121 24,167 24,288 
Leases41 15 14 70 2,114 2,184 
Total commercial183 38 107 328 52,632 52,960 
Consumer
Residential mortgage74 16 48 138 12,772 12,910 
Revolving mortgage9 2 8 19 1,904 1,923 
Consumer auto7 1 2 10 1,375 1,385 
Consumer other4 2 4 10 602 612 
Total consumer94 21 62 177 16,653 16,830 
Total loans and leases$277 $59 $169 $505 $69,285 $69,790 
December 31, 2021
30-59 Days
Past Due		60-89 Days
Past Due		90 Days or
Greater		Total
Past Due		CurrentTotal
Commercial
Commercial construction$1 $— $2 $3 $1,235 $1,238 
Owner occupied commercial mortgage21 1 9 31 12,068 12,099 
Non-owner occupied commercial mortgage3 — 2 5 3,036 3,041 
Commercial and industrial8 3 5 16 5,921 5,937 
Leases— 1 1 2 269 271 
Total commercial33 5 19 57 22,529 22,586 
Consumer
Residential mortgage24 6 23 53 6,035 6,088 
Revolving mortgage6 2 6 14 1,804 1,818 
Consumer auto6 1 1 8 1,324 1,332 
Consumer other2 2 1 5 543 548 
Total consumer38 11 31 80 9,706 9,786 
Total loans and leases$71 $16 $50 $137 $32,235 $32,372 
The amortized cost, by class, of loans and leases on non-accrual status, and loans and leases greater than 90 days past due and still accruing at September 30, 2022 and December 31, 2021 are presented below.

Loans on Non-Accrual Status (1) (2)
dollars in millionsSeptember 30, 2022December 31, 2021
Non-Accrual LoansLoans >
90 Days and
Accruing		Non-Accrual LoansLoans >
90 Days and
Accruing
Commercial
Commercial construction$20 $— $4 $— 
Owner occupied commercial mortgage41 3 18 5 
Non-owner occupied commercial mortgage96 28 5 — 
Commercial and industrial172 3 15 1 
Leases27 5 3 — 
Total commercial356 39 45 6 
Consumer
Residential mortgage74 8 54 — 
Revolving mortgage19 — 18 — 
Consumer auto4 — 3 — 
Consumer other1 3 1 1 
Total consumer98 11 76 1 
Total loans and leases$454 $50 $121 $7 
(1) Accrued interest that was reversed when the loan went to non-accrual status was $2 million for the nine months ended September 30, 2022.
(2) Non-accrual loans for which there was no related ACL totaled $41 million at September 30, 2022 and $15 million at December 31, 2021.

Other real estate owned (“OREO”) and repossessed assets were $54 million as of September 30, 2022 and $40 million as of December 31, 2021.

Credit quality indicators
Loans and leases are monitored for credit quality on a recurring basis. Commercial loans and leases and consumer loans have different credit quality indicators as a result of the unique characteristics of the loan classes being evaluated. The credit quality indicators for Non-PCD commercial loans and leases are developed through a review of individual borrowers on an ongoing basis. Commercial loans are evaluated periodically with more frequent evaluations done on criticized loans. The indicators as of the date presented are based on the most recent assessment performed and are defined below:

Pass – A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification.

Special mention – A special mention asset has potential weaknesses which deserve management’s close attention. If left uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification.

Substandard – A substandard asset is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not corrected.

Doubtful – An asset classified as doubtful has all the weaknesses inherent in an asset classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently existing facts, conditions and values.

Loss – Assets classified as loss are considered uncollectible and of such little value it is inappropriate to be carried as an asset. This classification is not necessarily equivalent to any potential for recovery or salvage value, but rather it is not appropriate to defer a full charge-off even though partial recovery may be affected in the future.
Ungraded – Ungraded loans represent loans not included in the individual credit grading process due to their relatively small balances or borrower type. The majority of ungraded loans at September 30, 2022 and December 31, 2021, relate to business credit cards. Business credit card loans are subject to automatic charge-off when they become 120 days past due in the same manner as unsecured consumer lines of credit.

The credit quality indicator for consumer loans is based on delinquency status of the borrower as of the date presented. As the borrower becomes more delinquent, the likelihood of loss increases. An exemption is applied to government guaranteed loans as the principal repayments are insured by the Federal Housing Administration (“FHA”) and U.S. Department of Veterans Affairs and thus remain on accrual status regardless of delinquency status.

The following table summarizes the commercial loans disaggregated by year of origination and by risk rating. The consumer loan delinquency status by year of origination is also presented below. The tables reflect the amortized cost of the loans and include PCD loans.

Commercial Loans - Risk Classifications by Class
September 30, 2022
Risk Classification:Term Loans by Origination YearRevolving Converted to Term Loans
dollars in millions202220212020201920182017 & PriorRevolvingTotal
Commercial construction
Pass$782 $816 $628 $222 $27 $81 $67 $— $2,623 
Special Mention3 — 17 18 29 — — — 67 
Substandard2 — — 42 11 4 — — 59 
Doubtful— — — 3 — — — — 3 
Ungraded— — — — — — — — — 
Total commercial construction787 816 645 285 67 85 67 — 2,752 
Owner occupied commercial mortgage
Pass2,095 3,261 3,043 1,883 1,095 2,031 174 — 13,582 
Special Mention31 23 38 33 17 49 1 — 192 
Substandard7 29 40 43 40 114 5 — 278 
Doubtful— — — — — 1 — — 1 
Ungraded— — — — — — — — — 
Total owner occupied commercial mortgage2,133 3,313 3,121 1,959 1,152 2,195 180 — 14,053 
Non-owner occupied commercial mortgage
Pass1,918 1,668 1,833 1,575 774 1,147 43 — 8,958 
Special Mention— 1 32 83 3 10 1 — 130 
Substandard4 12 66 293 60 148 — — 583 
Doubtful— — — 5 — 7 — — 12 
Ungraded— — — — — — — — — 
Total non-owner occupied commercial mortgage1,922 1,681 1,931 1,956 837 1,312 44 — 9,683 
Commercial and industrial
Pass6,784 4,502 2,278 1,745 997 1,108 5,046 33 22,493 
Special Mention84 126 86 73 60 31 31 — 491 
Substandard70 109 184 150 173 192 289 1 1,168 
Doubtful— 1 1 3 13 18 5 — 41 
Ungraded— — — — — — 95 — 95 
Total commercial and industrial6,938 4,738 2,549 1,971 1,243 1,349 5,466 34 24,288 
Leases
Pass547 523 457 257 106 116 — — 2,006 
Special Mention13 18 26 10 5 2 — — 74 
Substandard21 32 19 16 8 1 — — 97 
Doubtful1 2 2 1 1 — — — 7 
Ungraded— — — — — — — — — 
Total leases582 575 504 284 120 119 — — 2,184 
Total commercial$12,362 $11,123 $8,750 $6,455 $3,419 $5,060 $5,757 $34 $52,960 
Consumer Loans - Delinquency Status by Class
September 30, 2022
Days Past Due:Term Loans by Origination YearRevolving Converted to Term Loans
dollars in millions202220212020201920182017 & PriorRevolvingTotal
Residential mortgage
Current$2,797 $3,759 $2,156 $842 $432 $2,763 $23 $— $12,772 
30-59 days6 5 3 5 5 50 — — 74 
60-89 days— 3 1 — 1 11 — — 16 
90 days or greater— 1 1 2 2 42 — — 48 
Total residential mortgage2,803 3,768 2,161 849 440 2,866 23 — 12,910 
Revolving mortgage
Current— — — — — — 1,784 120 1,904 
30-59 days— — — — — — 6 3 9 
60-89 days— — — — — — 1 1 2 
90 days or greater— — — — — — 3 5 8 
Total revolving mortgage— — — — — — 1,794 129 1,923 
Consumer auto
Current470 437 241 128 71 28 — — 1,375 
30-59 days1 2 2 1 1 — — — 7 
60-89 days— 1 — — — — — — 1 
90 days or greater— 1 — — — 1 — — 2 
Total consumer auto471 441 243 129 72 29 — — 1,385 
Consumer other
Current121 91 15 7 3 19 346 — 602 
30-59 days— — — — — 2 2 — 4 
60-89 days— — — — — 1 1 — 2 
90 days or greater— — — — — 3 1 — 4 
Total consumer other121 91 15 7 3 25 350 — 612 
Total consumer$3,395 $4,300 $2,419 $985 $515 $2,920 $2,167 $129 $16,830 
 
The following tables represent current credit quality indicators by origination year as of December 31, 2021.

Commercial Loans - Risk Classifications by Class
December 31, 2021
Risk Classification:Term Loans by Origination YearRevolving Converted to Term Loans
dollars in millions202120202019201820172016 & PriorRevolvingTotal
Commercial construction
Pass$540 $400 $189 $29 $48 $11 $10 $— $1,227 
Special Mention— — — — — 1 — — 1 
Substandard2 — 1 2 4 1 — — 10 
Doubtful— — — — — — — — — 
Ungraded— — — — — — — — — 
Total commercial construction542 400 190 31 52 13 10 — 1,238 
Owner occupied commercial mortgage
Pass3,045 3,022 1,873 1,194 963 1,572 125 — 11,794 
Special Mention3 35 37 22 13 33 5 — 148 
Substandard31 16 18 12 18 56 6 — 157 
Doubtful— — — — — — — — — 
Ungraded— — — — — — — — — 
Total owner occupied commercial mortgage3,079 3,073 1,928 1,228 994 1,661 136 — 12,099 
Non-owner occupied commercial mortgage
Pass644 737 578 263 266 412 37 — 2,937 
Special Mention1 — — 3 3 10 — — 17 
Substandard9 11 24 12 7 22 1 — 86 
Doubtful— — — — 1 — — — 1 
Ungraded— — — — — — — — — 
Total non-owner occupied commercial mortgage654 748 602 278 277 444 38 — 3,041 
Commercial and industrial
Pass2,107 1,018 599 257 149 281 1,342 5 5,758 
Special Mention9 7 20 2 4 5 5 — 52 
Substandard20 7 3 4 2 2 16 1 55 
Doubtful— — — — — — — — — 
Ungraded— — — — — — 72 — 72 
Total commercial and industrial2,136 1,032 622 263 155 288 1,435 6 5,937 
Leases
Pass93 68 38 42 17 8 — — 266 
Special Mention— 1 — — — — — — 1 
Substandard2 1 — 1 — — — — 4 
Doubtful— — — — — — — — — 
Ungraded— — — — — — — — — 
Total leases95 70 38 43 17 8 — — 271 
Total commercial$6,506 $5,323 $3,380 $1,843 $1,495 $2,414 $1,619 $6 $22,586 

 
Consumer Loans - Delinquency Status by Class
December 31, 2021
Days Past Due:Term Loans by Origination YearRevolving Converted to Term Loans
dollars in millions202120202019201820172016 & PriorRevolvingTotal
Residential mortgage
Current$2,139 $1,663 $627 $368 $349 $867 $22 $— $6,035 
30-59 days2 3 2 2 1 14 — — 24 
60-89 days— — — 1 1 4 — — 6 
90 days or greater1 1 1 2 1 17 — — 23 
Total residential mortgage2,142 1,667 630 373 352 902 22 — 6,088 
Revolving mortgage
Current— — — — — — 1,678 126 1,804 
30-59 days— — — — — — 4 2 6 
60-89 days— — — — — — — 2 2 
90 days or greater— — — — — — 2 4 6 
Total revolving mortgage— — — — — — 1,684 134 1,818 
Consumer auto
Current597 343 198 119 48 19 — — 1,324 
30-59 days1 2 1 1 — 1 — — 6 
60-89 days— — — — — 1 — — 1 
90 days or greater— — — — — 1 — — 1 
Total consumer auto598 345 199 120 48 22 — — 1,332 
Consumer other
Current131 24 11 4 2 29 342 — 543 
30-59 days— — — — — — 2 — 2 
60-89 days1 — — — — — 1 — 2 
90 days or greater— — — — — — 1 — 1 
Total consumer other132 24 11 4 2 29 346 — 548 
Total consumer$2,872 $2,036 $840 $497 $402 $953 $2,052 $134 $9,786 

Purchased loans and leases
The following table summarizes PCD loans and leases that BancShares acquired in the CIT Merger.

PCD Loans and Leases - CIT Merger
dollars in millionsTotal PCD from CIT Merger
UPB$3,550 
Initial PCD ACL(272)
Fair value discount, net of the PCD Gross-Up(45)
Purchase price$3,233 

The recorded fair values of Non-PCD loans acquired in the CIT Merger as of the acquisition date was $29.5 billion, resulting in a PAA discount of $61 million.

Troubled Debt Restructuring
As part of BancShares’ ongoing risk-management practices, BancShares attempts to work with borrowers when necessary to extend or modify loan terms to better align with their current ability to repay. Extensions and modifications are made in accordance with internal policies and guidelines to conform to regulatory guidance. BancShares accounts for certain loan modifications or restructurings as troubled debt restructurings (“TDRs”). In general, a modification or restructuring of a loan is considered a TDR if, for economic or legal reasons related to a borrower’s financial difficulties, a concession is granted to the borrower that creditors would not otherwise consider. BancShares may determine that a borrower is experiencing financial difficulty if the borrower is currently in default on any of its debt, or if is probable that a borrower may default in the foreseeable future. Many aspects of a borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty.
Concessions may relate to the contractual interest rate, maturity date, payment structure or other actions. The assessments of whether a borrower is experiencing (or is likely to experience) financial difficulty, and whether a concession has been granted, are subjective in nature and management’s judgment is required when determining whether a modification is classified as a TDR. In accordance with regulatory guidance discussed below, certain loan modifications that might ordinarily have qualified as TDRs were not accounted for as TDRs.

The Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (the “Interagency Statement”) was published by banking regulators in April 2020 to clarify expectations around loan modifications and the determination of TDRs for borrowers experiencing COVID-19-related financial difficulty. The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and Interagency Statement offer some practical expedients for evaluating whether loan modifications that occur in response to the COVID-19 pandemic are TDRs. Any loan modification that meets these practical expedients would not automatically be considered a TDR because the borrower is presumed not to be experiencing financial difficulty at the time of the loan modification. BancShares applied this regulatory guidance during its TDR identification process through January 1, 2022 for short-term loan forbearance agreements as a result of COVID-19 and in most cases did not record these as TDRs.

Modified loans that meet the definition of a TDR are subject to BancShares’ individually reviewed loans policy.

The following table presents amortized cost of TDRs.

TDRs
dollars in millionsSeptember 30, 2022
AccruingNon-AccruingTotal
Commercial
Commercial construction$2 $1 $3 
Owner occupied commercial mortgage45 10 55 
Non-owner occupied commercial mortgage28 31 59 
Commercial and industrial49 11 60 
Leases— 1 1 
Total commercial124 54 178 
Consumer
Residential mortgage32 18 50 
Revolving mortgage17 6 23 
Consumer auto2 — 2 
Consumer other— — — 
Total consumer51 24 75 
Total TDRs$175 $78 $253 

December 31, 2021
AccruingNon-AccruingTotal
Commercial
Commercial construction$2 $— $2 
Owner occupied commercial mortgage57 8 65 
Non-owner occupied commercial mortgage26 3 29 
Commercial and industrial12 9 21 
Leases— 1 1 
Total commercial97 21 118 
Consumer
Residential mortgage29 18 47 
Revolving mortgage17 7 24 
Consumer auto2 — 2 
Consumer other1 — 1 
     Total consumer49 25 74 
Total TDRs$146 $46 $192 
The following table summarizes the loan restructurings during the three and nine months ended September 30, 2022 and 2021 that were designated as TDRs. BancShares defines payment default as movement of the TDR to non-accrual status, which is generally 90 days past due, foreclosure or charge-off, whichever occurs first.

Restructurings
dollars in millions (except for number of loans)Three Months Ended September 30,
20222021
Number of LoansAmortized Cost at Period EndNumber of LoansAmortized Cost at Period End
Loans and leases
Interest only5 $31 7 $10 
Loan term extension35 30 41 6 
Below market rates17 4 47 3 
Discharge from bankruptcy36 2 21 3 
Total93 $67 116 $22 
Nine Months Ended September 30,
20222021
Number of LoansAmortized Cost at Period EndNumber of LoansAmortized Cost at Period End
Loans and leases
Interest only13 $37 17 $20 
Loan term extension110 51 112 15 
Below market rates62 8 148 21 
Discharge from bankruptcy78 4 110 12 
Total263 $100 387 $68 

There were $3 million and $0.4 million of commitments to lend additional funds to borrowers whose loan terms have been modified in TDRs as of September 30, 2022 and December 31, 2021, respectively.

After a loan is determined to be a TDR, BancShares continues to track its performance under its most recent restructured terms. TDRs that subsequently defaulted during the three and nine months ended September 30, 2022 and 2021, and were classified as TDRs during the applicable 12-month period preceding September 30, 2022 and 2021 were as follows:

TDR Defaults
dollars in millionsThree Months Ended September 30,
20222021
TDR Defaults$2 $1 
Nine Months Ended September 30,
20222021
TDR Defaults$4 $5 
Loans Pledged

The following table provides information regarding loans pledged as collateral for borrowing capacity through the FHLB of Atlanta and the Federal Reserve Bank (“FRB”) as of September 30, 2022 and December 31, 2021:

Loans Pledged
dollars in millionsSeptember 30, 2022December 31, 2021
FHLB of Atlanta
Lendable collateral value of pledged non-PCD loans$14,390 $9,564 
Less: Advances5,800 645 
Less: Letters of Credit1,450 — 
Available borrowing capacity$7,140 $8,919 
Pledged non-PCD loans (contractual balance)$21,093 $14,507 
FRB
Lendable collateral value of pledged non-PCD loans$4,464 $3,951 
Less: Advances— — 
Available borrowing capacity$4,464 $3,951 
Pledged non-PCD loans (contractual balance)$5,533 $4,806