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ALLOWANCE FOR CREDIT LOSSES, NONACCRUAL LOANS AND LEASES, AND CONCENTRATIONS OF CREDIT RISK | 9 Months Ended
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Sep. 30, 2021
Receivables [Abstract] |
ALLOWANCE FOR CREDIT LOSSES, NONACCRUAL LOANS AND LEASES, AND CONCENTRATIONS OF CREDIT RISK | NOTE 4 - ALLOWANCE FOR CREDIT LOSSES, NONACCRUAL LOANS AND LEASES, AND CONCENTRATIONS OF CREDIT RISK Allowance for Credit Losses Recorded in the ACL is management’s estimate of expected credit losses in the Company’s loan and lease portfolios. See Note 5 in the Company’s 2020 Form 10-K for a detailed discussion of the ACL reserve methodology and estimation techniques as of December 31, 2020. There were no significant changes to the ACL reserve methodology in the nine months ended September 30, 2021. The following table presents a summary of changes in the ALLL and the allowance for unfunded lending commitments for the three months ended and nine months ended September 30, 2021:
| Three Months Ended September 30, 2021 |  | Nine Months Ended September 30, 2021
(in millions) | Commercial | Retail | Total |  | Commercial | Retail | Total
Allowance for loan and lease losses, beginning of period | $953 |  | $994 |  | $1,947 |  |  | $1,233 |  | $1,210 |  | $2,443 |
Charge-offs | (17) |  | (70) |  | (87) |  |  | (196) |  | (243) |  | (439) |
Recoveries | 3 |  | 40 |  | 43 |  |  | 37 |  | 122 |  | 159 |
Net charge-offs | (14) |  | (30) |  | (44) |  |  | (159) |  | (121) |  | (280) |
Provision charged to income | (72) |  | 24 |  | (48) |  |  | (207) |  | (101) |  | (308) |
Allowance for loan and lease losses, end of period | $867 |  | $988 |  | $1,855 |  |  | $867 |  | $988 |  | $1,855 |
Allowance for unfunded lending commitments, beginning of period | $121 |  | $13 |  | $134 |  |  | $186 |  | $41 |  | $227 |
Provision for unfunded lending commitments | 9 |  | 6 |  | 15 |  |  | (56) |  | (22) |  | (78) |
Allowance for unfunded lending commitments, end of period | $130 |  | $19 |  | $149 |  |  | $130 |  | $19 |  | $149 |
Overall, an ending ACL balance of $2.0 billion at September 30, 2021 compared to $2.7 billion at December 31, 2020. The difference in ACL as of September 30, 2021 as compared to December 31, 2020 was due to net charge-offs of $280 million, as detailed below, coupled with a credit provision benefit of $386 million. This reflected strong credit performance across the retail and commercial loan portfolios, and improvement in the macroeconomic outlook. The decrease in commercial net charge-offs of $126 million for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 reflects the economic recovery following the COVID-19 pandemic and associated lockdowns. Retail net charge-offs were down $97 million in the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 as a result of government stimulus and forbearance programs as well as strong collateral values in residential real estate and automobile. To determine the ACL as of September 30, 2021, Citizens utilized an economic forecast that generally reflects real GDP growth of approximately 5.8% over 2021. The forecast also projects the unemployment rate to be in the range of 5.3% to 6.3% throughout 2021. This forecast reflects an overall improved macroeconomic outlook as compared to December 31, 2020. We continue to utilize our qualitative allowance framework to reassess and adjust ACL reserve levels. Macroeconomic forecast risk, driven by uncertainty and volatility of key macroeconomic variables, is one of the primary factors influencing our qualitative reserve. As the economic recovery following the COVID-19 pandemic has continued, we have assessed risks to the recovery, including potential for continuing impacts from COVID-19 variants, challenges in the global supply chain, and recent inflationary trends, as well as potential impacts from ending monetary and fiscal stimulus programs. In addition to judgment applied to the commercial portfolio as a whole, Citizens continued to apply management judgment to adjust the modeled reserves in the commercial industry sectors most impacted by the COVID-19 pandemic and associated lockdowns, including CRE retail, CRE office and hospitality and casual dining. The following table presents a summary of changes in the ALLL and the allowance for unfunded lending commitments for the three months and nine months ended September 30, 2020:
| Three Months Ended September 30, 2020 |  | Nine Months Ended September 30, 2020
(in millions) | Commercial | Retail | Total |  | Commercial | Retail | Total
Allowance for loan and lease losses, beginning of period | $1,235 |  | $1,213 |  | $2,448 |  |  | $674 |  | $578 |  | $1,252 |
Cumulative effect of change in accounting principle | — |  | — |  | — |  |  | (176) |  | 629 |  | 453 |
Allowance for loan and lease losses, beginning of period, adjusted | 1,235 |  | 1,213 |  | 2,448 |  |  | 498 |  | 1,207 |  | 1,705 |
Charge-offs | (171) |  | (86) |  | (257) |  |  | (292) |  | (319) |  | (611) |
Recoveries | 1 |  | 37 |  | 38 |  |  | 7 |  | 101 |  | 108 |
Net charge-offs | (170) |  | (49) |  | (219) |  |  | (285) |  | (218) |  | (503) |
Provision charged to income | 224 |  | 89 |  | 313 |  |  | 1,076 |  | 264 |  | 1,340 |
Allowance for loan and lease losses, end of period | $1,289 |  | $1,253 |  | $2,542 |  |  | $1,289 |  | $1,253 |  | $2,542 |
Allowance for unfunded lending commitments, beginning of period | $69 |  | $10 |  | $79 |  |  | $44 |  | $— |  | $44 |
Cumulative effect of change in accounting principle | — |  | — |  | — |  |  | (3) |  | 1 |  | (2) |
Allowance for unfunded lending commitments, beginning of period, adjusted | 69 |  | 10 |  | 79 |  |  | 41 |  | 1 |  | 42 |
Provision for unfunded lending commitments | 83 |  | 32 |  | 115 |  |  | 111 |  | 41 |  | 152 |
Allowance for unfunded lending commitments, end of period | $152 |  | $42 |  | $194 |  |  | $152 |  | $42 |  | $194 |
Credit Quality Indicators The Company presents loan and lease portfolio segments and classes by credit quality indicator and vintage year. Citizens defines the vintage date for the purpose of this disclosure as the date of the most recent credit decision. In general, renewals are categorized as new credit decisions and reflect the renewal date as the vintage date. Loans modified in a TDR are considered a continuation of the original loan and vintage date corresponds with the most recent credit decision. For commercial loans and leases, Citizens utilizes regulatory classification ratings to monitor credit quality. The assignment of regulatory classification ratings occurs at loan origination and are periodically re-evaluated by Citizens utilizing a risk-based approach, including any time management becomes aware of information affecting the borrowers' ability to fulfill their obligations. The review process considers both quantitative and qualitative factors. Loans with a “pass” rating are those that the Company believes will fully repay in accordance with the contractual loan terms. Commercial loans and leases identified as “criticized” have some weakness or potential weakness that indicate an increased probability of future loss. Citizens groups “criticized” loans into three categories, “special mention,” “substandard,” and “doubtful.” Special mention loans have potential weaknesses that, if left uncorrected, may result in deterioration of the Company’s credit position at some future date. Substandard loans are inadequately protected loans; these loans have well-defined weaknesses that could hinder normal repayment or collection of the debt. Doubtful loans have the same weaknesses as substandard, with the added characteristic that the possibility of loss is high and collection of the full amount of the loan is improbable. The following table presents the amortized cost basis of commercial loans and leases, by vintage date and regulatory classification rating, as of September 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) | $6,411 |  |  | $4,086 |  |  | $4,723 |  |  | $3,079 |  |  | $1,723 |  |  | $2,480 |  |  | $16,578 |  | $138 |  |  | $39,218 |
Special Mention | 4 |  |  | 47 |  |  | 226 |  |  | 148 |  |  | 55 |  |  | 182 |  |  | 451 |  | 2 |  |  | 1,115 |
Substandard | 40 |  |  | 110 |  |  | 229 |  |  | 121 |  |  | 91 |  |  | 227 |  |  | 550 |  | 18 |  |  | 1,386 |
Doubtful | 26 |  |  | 8 |  |  | 12 |  |  | 21 |  |  | 11 |  |  | 17 |  |  | 37 |  | 3 |  |  | 135 |
Total commercial and industrial | 6,481 |  |  | 4,251 |  |  | 5,190 |  |  | 3,369 |  |  | 1,880 |  |  | 2,906 |  |  | 17,616 |  | 161 |  |  | 41,854 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 1,073 |  |  | 2,586 |  |  | 3,835 |  |  | 2,484 |  |  | 863 |  |  | 1,343 |  |  | 962 |  | — |  |  | 13,146 |
Special Mention | 46 |  |  | 3 |  |  | 148 |  |  | 99 |  |  | 169 |  |  | 151 |  |  | — |  | — |  |  | 616 |
Substandard | 28 |  |  | 97 |  |  | 91 |  |  | 279 |  |  | 150 |  |  | 81 |  |  | 9 |  | — |  |  | 735 |
Doubtful | — |  |  | 9 |  |  | — |  |  | — |  |  | — |  |  | 2 |  |  | — |  | — |  |  | 11 |
Total commercial real estate | 1,147 |  |  | 2,695 |  |  | 4,074 |  |  | 2,862 |  |  | 1,182 |  |  | 1,577 |  |  | 971 |  | — |  |  | 14,508 |
Leases |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 284 |  |  | 281 |  |  | 191 |  |  | 180 |  |  | 79 |  |  | 504 |  |  | — |  | — |  |  | 1,519 |
Special Mention | 2 |  |  | 16 |  |  | 2 |  |  | 8 |  |  | 5 |  |  | 16 |  |  | — |  | — |  |  | 49 |
Substandard | 1 |  |  | 16 |  |  | 6 |  |  | — |  |  | — |  |  | 1 |  |  | — |  | — |  |  | 24 |
Doubtful | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  | — |  |  | 1 |
Total leases | 287 |  |  | 313 |  |  | 199 |  |  | 188 |  |  | 84 |  |  | 522 |  |  | — |  | — |  |  | 1,593 |
Total commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass(1) | 7,768 |  |  | 6,953 |  |  | 8,749 |  |  | 5,743 |  |  | 2,665 |  |  | 4,327 |  |  | 17,540 |  | 138 |  |  | 53,883 |
Special Mention | 52 |  |  | 66 |  |  | 376 |  |  | 255 |  |  | 229 |  |  | 349 |  |  | 451 |  | 2 |  |  | 1,780 |
Substandard | 69 |  |  | 223 |  |  | 326 |  |  | 400 |  |  | 241 |  |  | 309 |  |  | 559 |  | 18 |  |  | 2,145 |
Doubtful | 26 |  |  | 17 |  |  | 12 |  |  | 21 |  |  | 11 |  |  | 20 |  |  | 37 |  | 3 |  |  | 147 |
Total commercial | $7,915 |  |  | $7,259 |  |  | $9,463 |  |  | $6,419 |  |  | $3,146 |  |  | $5,005 |  |  | $18,587 |  | $161 |  |  | $57,955 |
(1) Includes $1.9 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 of 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 September 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+ | $1,585 |  |  | $3,179 |  |  | $1,403 |  |  | $395 |  |  | $784 |  |  | $2,389 |  |  | $— |  | $— |  |  | $9,735 |
740-799 | 2,607 |  |  | 2,087 |  |  | 853 |  |  | 265 |  |  | 384 |  |  | 1,253 |  |  | — |  | — |  |  | 7,449 |
680-739 | 639 |  |  | 613 |  |  | 356 |  |  | 173 |  |  | 185 |  |  | 611 |  |  | — |  | — |  |  | 2,577 |
620-679 | 84 |  |  | 117 |  |  | 169 |  |  | 103 |  |  | 112 |  |  | 306 |  |  | — |  | — |  |  | 891 |
<620 | 8 |  |  | 56 |  |  | 166 |  |  | 167 |  |  | 165 |  |  | 281 |  |  | — |  | — |  |  | 843 |
No FICO available(1) | 2 |  |  | 5 |  |  | 1 |  |  | — |  |  | — |  |  | 10 |  |  | — |  | — |  |  | 18 |
Total residential mortgages | 4,925 |  |  | 6,057 |  |  | 2,948 |  |  | 1,103 |  |  | 1,630 |  |  | 4,850 |  |  | — |  | — |  |  | 21,513 |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | — |  |  | 2 |  |  | 6 |  |  | 6 |  |  | 4 |  |  | 154 |  |  | 4,333 |  | 294 |  |  | 4,799 |
740-799 | 1 |  |  | 1 |  |  | 5 |  |  | 5 |  |  | 8 |  |  | 137 |  |  | 3,405 |  | 299 |  |  | 3,861 |
680-739 | — |  |  | 1 |  |  | 8 |  |  | 13 |  |  | 17 |  |  | 151 |  |  | 1,665 |  | 250 |  |  | 2,105 |
620-679 | — |  |  | 3 |  |  | 13 |  |  | 23 |  |  | 19 |  |  | 123 |  |  | 345 |  | 176 |  |  | 702 |
<620 | — |  |  | 2 |  |  | 16 |  |  | 22 |  |  | 21 |  |  | 96 |  |  | 86 |  | 179 |  |  | 422 |
Total home equity | 1 |  |  | 9 |  |  | 48 |  |  | 69 |  |  | 69 |  |  | 661 |  |  | 9,834 |  | 1,198 |  |  | 11,889 |
Automobile |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 1,287 |  |  | 897 |  |  | 608 |  |  | 286 |  |  | 183 |  |  | 84 |  |  | — |  | — |  |  | 3,345 |
740-799 | 1,781 |  |  | 1,177 |  |  | 707 |  |  | 344 |  |  | 195 |  |  | 85 |  |  | — |  | — |  |  | 4,289 |
680-739 | 1,436 |  |  | 958 |  |  | 589 |  |  | 277 |  |  | 154 |  |  | 69 |  |  | — |  | — |  |  | 3,483 |
620-679 | 680 |  |  | 436 |  |  | 297 |  |  | 156 |  |  | 89 |  |  | 45 |  |  | — |  | — |  |  | 1,703 |
<620 | 120 |  |  | 142 |  |  | 168 |  |  | 118 |  |  | 75 |  |  | 45 |  |  | — |  | — |  |  | 668 |
No FICO available(1) | 4 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  | — |  |  | 4 |
Total automobile | 5,308 |  |  | 3,610 |  |  | 2,369 |  |  | 1,181 |  |  | 696 |  |  | 328 |  |  | — |  | — |  |  | 13,492 |
Education |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 1,080 |  |  | 1,865 |  |  | 921 |  |  | 566 |  |  | 519 |  |  | 951 |  |  | — |  | — |  |  | 5,902 |
740-799 | 1,245 |  |  | 1,743 |  |  | 730 |  |  | 402 |  |  | 297 |  |  | 550 |  |  | — |  | — |  |  | 4,967 |
680-739 | 369 |  |  | 526 |  |  | 246 |  |  | 150 |  |  | 113 |  |  | 278 |  |  | — |  | — |  |  | 1,682 |
620-679 | 29 |  |  | 60 |  |  | 41 |  |  | 34 |  |  | 28 |  |  | 105 |  |  | — |  | — |  |  | 297 |
<620 | 2 |  |  | 8 |  |  | 11 |  |  | 11 |  |  | 10 |  |  | 46 |  |  | — |  | — |  |  | 88 |
No FICO available(1) | 10 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 54 |  |  | — |  | — |  |  | 64 |
Total education | 2,735 |  |  | 4,202 |  |  | 1,949 |  |  | 1,163 |  |  | 967 |  |  | 1,984 |  |  | — |  | — |  |  | 13,000 |
Other retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 134 |  |  | 288 |  |  | 154 |  |  | 79 |  |  | 37 |  |  | 35 |  |  | 366 |  | — |  |  | 1,093 |
740-799 | 211 |  |  | 395 |  |  | 216 |  |  | 103 |  |  | 47 |  |  | 29 |  |  | 711 |  | 2 |  |  | 1,714 |
680-739 | 179 |  |  | 308 |  |  | 151 |  |  | 69 |  |  | 29 |  |  | 14 |  |  | 667 |  | 5 |  |  | 1,422 |
620-679 | 114 |  |  | 150 |  |  | 51 |  |  | 24 |  |  | 8 |  |  | 5 |  |  | 264 |  | 5 |  |  | 621 |
<620 | 19 |  |  | 39 |  |  | 19 |  |  | 11 |  |  | 3 |  |  | 3 |  |  | 78 |  | 6 |  |  | 178 |
No FICO available(1) | 120 |  |  | 7 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 313 |  | 1 |  |  | 441 |
Total other retail | 777 |  |  | 1,187 |  |  | 591 |  |  | 286 |  |  | 124 |  |  | 86 |  |  | 2,399 |  | 19 |  |  | 5,469 |
Total retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 4,086 |  |  | 6,231 |  |  | 3,092 |  |  | 1,332 |  |  | 1,527 |  |  | 3,613 |  |  | 4,699 |  | 294 |  |  | 24,874 |
740-799 | 5,845 |  |  | 5,403 |  |  | 2,511 |  |  | 1,119 |  |  | 931 |  |  | 2,054 |  |  | 4,116 |  | 301 |  |  | 22,280 |
680-739 | 2,623 |  |  | 2,406 |  |  | 1,350 |  |  | 682 |  |  | 498 |  |  | 1,123 |  |  | 2,332 |  | 255 |  |  | 11,269 |
620-679 | 907 |  |  | 766 |  |  | 571 |  |  | 340 |  |  | 256 |  |  | 584 |  |  | 609 |  | 181 |  |  | 4,214 |
<620 | 149 |  |  | 247 |  |  | 380 |  |  | 329 |  |  | 274 |  |  | 471 |  |  | 164 |  | 185 |  |  | 2,199 |
No FICO available(1) | 136 |  |  | 12 |  |  | 1 |  |  | — |  |  | — |  |  | 64 |  |  | 313 |  | 1 |  |  | 527 |
Total retail | $13,746 |  |  | $15,065 |  |  | $7,905 |  |  | $3,802 |  |  | $3,486 |  |  | $7,909 |  |  | $12,233 |  | $1,217 |  |  | $65,363 |
(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). Nonaccrual and Past Due Assets The following table presents nonaccrual loans and leases and loans accruing and 90 days or more past due:
| As of September 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 | $170 |  | $4 |  | $61 |  |  | $280 |  | $20 |  | $56 |
Commercial real estate | 98 |  | — |  | 1 |  |  | 176 |  | — |  | 2 |
Leases | 1 |  | — |  | — |  |  | 2 |  | 1 |  | — |
Total commercial | 269 |  | 4 |  | 62 |  |  | 458 |  | 21 |  | 58 |
Residential mortgages(1) | 164 |  | 293 |  | 142 |  |  | 167 |  | 30 |  | 96 |
Home equity | 216 |  | — |  | 188 |  |  | 276 |  | — |  | 207 |
Automobile | 55 |  | — |  | 29 |  |  | 72 |  | — |  | 17 |
Education | 23 |  | 1 |  | 2 |  |  | 18 |  | 2 |  | 2 |
Other retail | 20 |  | 14 |  | 2 |  |  | 28 |  | 9 |  | — |
Total retail | 478 |  | 308 |  | 363 |  |  | 561 |  | 41 |  | 322 |
Total loans and leases | $747 |  | $312 |  | $425 |  |  | $1,019 |  | $62 |  | $380 |
(1) 90+ days past due and accruing includes $289 million and $21 million of loans fully or partially guaranteed by the FHA, VA, and USDA for September 30, 2021 and December 31, 2020, respectively. Interest income is generally not recognized for loans and leases that are on nonaccrual status. The Company reverses accrued interest receivable with a charge to interest income upon classifying the loan or lease as nonaccrual. The following table presents an analysis of the age of both accruing and nonaccrual loan and lease past due amounts:
| September 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 | $41,783 |  | $25 |  | $3 |  | $43 |  | $41,854 |  |  | $43,817 |  | $223 |  | $16 |  | $117 |  | $44,173 |
Commercial real estate | 14,402 |  | 3 |  | 5 |  | 98 |  | 14,508 |  |  | 14,531 |  | 1 |  | 85 |  | 35 |  | 14,652 |
Leases | 1,591 |  | — |  | 1 |  | 1 |  | 1,593 |  |  | 1,956 |  | 9 |  | — |  | 3 |  | 1,968 |
Total commercial | 57,776 |  | 28 |  | 9 |  | 142 |  | 57,955 |  |  | 60,304 |  | 233 |  | 101 |  | 155 |  | 60,793 |
Residential mortgages(1) | 20,861 |  | 155 |  | 57 |  | 440 |  | 21,513 |  |  | 19,291 |  | 59 |  | 21 |  | 168 |  | 19,539 |
Home equity | 11,654 |  | 35 |  | 16 |  | 184 |  | 11,889 |  |  | 11,848 |  | 61 |  | 28 |  | 212 |  | 12,149 |
Automobile | 13,318 |  | 117 |  | 42 |  | 15 |  | 13,492 |  |  | 11,901 |  | 170 |  | 65 |  | 17 |  | 12,153 |
Education | 12,941 |  | 33 |  | 14 |  | 12 |  | 13,000 |  |  | 12,255 |  | 33 |  | 13 |  | 7 |  | 12,308 |
Other retail | 5,371 |  | 39 |  | 28 |  | 31 |  | 5,469 |  |  | 6,047 |  | 38 |  | 29 |  | 34 |  | 6,148 |
Total retail | 64,145 |  | 379 |  | 157 |  | 682 |  | 65,363 |  |  | 61,342 |  | 361 |  | 156 |  | 438 |  | 62,297 |
Total | $121,921 |  | $407 |  | $166 |  | $824 |  | $123,318 |  |  | $121,646 |  | $594 |  | $257 |  | $593 |  | $123,090 |
(1) 90+ days past due includes $289 million and $44 million of loans fully or partially guaranteed by the FHA, VA, and USDA at September 30, 2021 and December 31, 2020, respectively. At September 30, 2021 and December 31, 2020, the Company had collateral-dependent residential mortgage and home equity loans totaling $543 million and $552 million, respectively. At September 30, 2021 and December 31, 2020, the Company had collateral-dependent commercial loans totaling $42 million and $206 million, respectively. The amortized cost basis of mortgage loans collateralized by residential real estate for which formal foreclosure proceedings were in process was $150 million and $119 million as of September 30, 2021 and December 31, 2020, respectively. Troubled Debt Restructurings The following tables summarize loans modified during the three and nine months ended September 30, 2021 and 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 September 30, 2021
|  |  | Amortized Cost Basis
(dollars in millions) | Number of Contracts |  |  | Interest Rate Reduction(1) | Maturity Extension(2) |  | Other(3) | Total
Commercial and industrial | 7 |  |  |  | $— |  |  |  | $38 |  |  |  | $10 |  |  | $48 |
Total commercial | 7 |  |  |  | — |  |  |  | 38 |  |  |  | 10 |  |  | 48 |
Residential mortgages | 101 |  |  |  | 2 |  |  |  | 7 |  |  |  | 7 |  |  | 16 |
Home equity | 69 |  |  |  | — |  |  |  | 1 |  |  |  | 3 |  |  | 4 |
Automobile | 224 |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  | 1 |
Education | 226 |  |  |  | — |  |  |  | — |  |  |  | 8 |  |  | 8 |
Other retail | 549 |  |  |  | 3 |  |  |  | — |  |  |  | 1 |  |  | 4 |
Total retail | 1,169 |  |  |  | 5 |  |  |  | 8 |  |  |  | 20 |  |  | 33 |
Total | 1,176 |  |  |  | $5 |  |  |  | $46 |  |  |  | $30 |  |  | $81 |
|  |  |  | Three Months Ended September 30, 2020
|  |  |  | Amortized Cost Basis
(dollars in millions) | Number of Contracts |  |  | Interest Rate Reduction(1) |  | Maturity Extension(2) |  | Other(3) | Total
Commercial and industrial | 14 |  |  |  | $— |  |  |  | $103 |  |  |  | $1 |  |  | $104 |
Total commercial | 14 |  |  |  | — |  |  |  | 103 |  |  |  | 1 |  |  | 104 |
Residential mortgages | 107 |  |  |  | 9 |  |  |  | 6 |  |  |  | 4 |  |  | 19 |
Home equity | 179 |  |  |  | 2 |  |  |  | 4 |  |  |  | 6 |  |  | 12 |
Automobile | 1,191 |  |  |  | 1 |  |  |  | — |  |  |  | 18 |  |  | 19 |
Education | 140 |  |  |  | — |  |  |  | — |  |  |  | 3 |  |  | 3 |
Other retail | 484 |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  | 1 |
Total retail | 2,101 |  |  |  | 13 |  |  |  | 10 |  |  |  | 31 |  |  | 54 |
Total | 2,115 |  |  |  | $13 |  |  |  | $113 |  |  |  | $32 |  |  | $158 |
|  |  |  | Nine Months Ended September 30, 2021
|  |  |  | Amortized Cost Basis
(dollars in millions) | Number of Contracts |  |  | Interest Rate Reduction(1) |  | Maturity Extension(2) |  | Other(3) | Total
Commercial and industrial | 29 |  |  |  | $— |  |  |  | $44 |  |  |  | $64 |  |  | $108 |
Total commercial | 29 |  |  |  | — |  |  |  | 44 |  |  |  | 64 |  |  | 108 |
Residential mortgages | 814 |  |  |  | 14 |  |  |  | 133 |  |  |  | 54 |  |  | 201 |
Home equity | 318 |  |  |  | 3 |  |  |  | 9 |  |  |  | 10 |  |  | 22 |
Automobile | 1,272 |  |  |  | 1 |  |  |  | — |  |  |  | 14 |  |  | 15 |
Education | 638 |  |  |  | — |  |  |  | — |  |  |  | 21 |  |  | 21 |
Other retail | 1,764 |  |  |  | 7 |  |  |  | — |  |  |  | 2 |  |  | 9 |
Total retail | 4,806 |  |  |  | 25 |  |  |  | 142 |  |  |  | 101 |  |  | 268 |
Total | 4,835 |  |  |  | $25 |  |  |  | $186 |  |  |  | $165 |  |  | $376 |
|  |  |  | Nine Months Ended September 30, 2020
|  |  |  | Amortized Cost Basis
(dollars in millions) | Number of Contracts |  |  | Interest Rate Reduction(1) |  | Maturity Extension(2) |  | Other(3) | Total
Commercial and industrial | 52 |  |  |  | $— |  |  |  | $106 |  |  |  | $95 |  |  | $201 |
Total commercial | 52 |  |  |  | — |  |  |  | 106 |  |  |  | 95 |  |  | 201 |
Residential mortgages | 348 |  |  |  | 26 |  |  |  | 27 |  |  |  | 11 |  |  | 64 |
Home equity | 568 |  |  |  | 8 |  |  |  | 8 |  |  |  | 21 |  |  | 37 |
Automobile | 2,368 |  |  |  | 2 |  |  |  | — |  |  |  | 35 |  |  | 37 |
Education | 373 |  |  |  | — |  |  |  | — |  |  |  | 9 |  |  | 9 |
Other retail | 2,167 |  |  |  | 8 |  |  |  | — |  |  |  | 2 |  |  | 10 |
Total retail | 5,824 |  |  |  | 44 |  |  |  | 35 |  |  |  | 78 |  |  | 157 |
Total | 5,876 |  |  |  | $44 |  |  |  | $141 |  |  |  | $173 |  |  | $358 |
(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. Modified TDRs resulted in charge-offs of $1 million and $43 million for the three months ended September 30, 2021 and 2020, respectively. Citizens recorded $5 million and $49 million of charge-offs related to TDRs for the nine months ended September 30, 2021 and 2020, respectively. Unfunded commitments related to TDRs were $51 million and $49 million at September 30, 2021 and December 31, 2020, respectively. The following table provides a summary of TDRs that defaulted (became 90 days or more past due) within 12 months of their modification date:
| Three Months Ended September 30, |  |  |  |  |  | Nine Months Ended September 30, |  |  |  |
(dollars in millions) | 2021 |  | 2020 |  |  |  |  |  | 2021 |  | 2020 |  |  |  |
Commercial TDRs | $— |  |  | $14 |  |  |  |  |  |  | $23 |  |  | $53 |  |  |  |  |
Retail TDRs(1) | 37 |  |  | 22 |  |  |  |  |  |  | 66 |  |  | 47 |  |  |  |  |
Total | $37 |  |  | $36 |  |  |  |  |  |  | $89 |  |  | $100 |  |  |  |  |
(1) Includes $34 million and $6 million of loans fully or partially government guaranteed by the FHA, VA, and USDA for the three months ended September 30, 2021 and 2020, respectively and $37 million and $14 million of loans fully or partially government guaranteed by the FHA, VA, and USDA for the nine months ended September 30, 2021 and 2020, respectively. Concentrations of Credit Risk Most of the Company’s lending activity is with customers located in the New England, Mid-Atlantic, and Midwest regions. Generally, loans are collateralized by assets including real estate, inventory, accounts receivable, other personal property, and investment securities. As of September 30, 2021 and December 31, 2020, Citizens had a significant amount of loans collateralized by residential and commercial real estate. There were no significant concentration risks within the commercial loan or retail loan portfolios. Exposure to credit losses arising from lending transactions may fluctuate with fair values of collateral supporting loans, which may not perform according to contractual agreements. The Company’s policy is to collateralize loans to the extent necessary. However, based on the financial strength of the applicant and facts Citizens will grant unsecured loans. Certain loan products, including residential mortgages, home equity loans and lines of credit, and credit cards, have contractual features that may increase credit exposure to the Company in the event of an increase in interest rates or a decline in housing values. These products include loans that exceed 90% of the value of the underlying collateral (high LTV loans), interest-only residential mortgages, and loans with low introductory rates. The following tables present balances of loans with these characteristics:
| September 30, 2021
(in millions) | Residential Mortgages |  |  | Home Equity | Other Retail | Education | Total
High loan-to-value | $179 |  |  |  | $18 |  | $— |  | $— |  | $197 |
Interest-only | 3,317 |  |  |  | — |  | — |  | 1 |  | 3,318 |
Low introductory rate | — |  |  |  | — |  | 156 |  | — |  | 156 |
Multiple characteristics and other | 2 |  |  |  | — |  | — |  | — |  | 2 |
Total | $3,498 |  |  |  | $18 |  | $156 |  | $1 |  | $3,673 |
| December 31, 2020
(in millions) | Residential Mortgages |  |  | Home Equity | Other Retail |  | Total
High loan-to-value | $289 |  |  |  | $64 |  | $— |  |  | $353 |
Interest-only | 2,801 |  |  |  | — |  | — |  |  | 2,801 |
Low introductory rate | — |  |  |  | — |  | 170 |  |  | 170 |
Total | $3,090 |  |  |  | $64 |  | $170 |  |  | $3,324 |

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