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LOANS AND LEASES | 12 Months Ended
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Dec. 31, 2021
Receivables [Abstract] |
LOANS AND LEASES | NOTE 5 - 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. Deferred loan origination fees and costs and purchase premiums and discounts are amortized as an adjustment of yield over the life of the loan, using the effective interest method. Unamortized amounts remaining upon prepayment or sale are recorded as interest income or gain (loss) on sale, respectively. Credit card receivables include billed and uncollected interest and fees. Interest income on loans is determined using the effective interest method. This method calculates periodic interest income at a constant effective yield on the net investment in the loan, to provide a constant rate of return over the term. Loans accounted for using the fair value option are measured at fair value with corresponding changes recognized in noninterest income. Loan commitment fees for loans that are likely to be drawn down, and other credit related fees, are deferred (together with any incremental costs) and recognized as an adjustment to the effective interest rate over the loan term. When it is unlikely that a loan will be drawn down, the loan commitment fees are recognized over the commitment period on a straight-line basis and are reported within letter of credit and loan fees in the Consolidated Statements of Operations. 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 and industrial, commercial real estate, leases, residential mortgages, home equity, automobile, education and other retail. The following table presents loans and leases, excluding LHFS:
| December 31,
(in millions) | 2021 |  | 2020
Commercial and industrial(1) | $44,500 |  |  | $44,173 |
Commercial real estate | 14,264 |  |  | 14,652 |
Leases | 1,586 |  |  | 1,968 |
Total commercial | 60,350 |  |  | 60,793 |
Residential mortgages | 22,822 |  |  | 19,539 |
Home equity | 12,015 |  |  | 12,149 |
Automobile | 14,549 |  |  | 12,153 |
Education | 12,997 |  |  | 12,308 |
Other retail | 5,430 |  |  | 6,148 |
Total retail | 67,813 |  |  | 62,297 |
Total loans and leases | $128,163 |  |  | $123,090 |
(1) Includes $787 million and $4.2 billion of PPP loans fully guaranteed by the SBA as of December 31, 2021 and 2020, respectively. Accrued interest receivable on loans and leases held for investment totaled $450 million and $449 million as of December 31, 2021 and 2020, respectively, and is included in other assets in the Consolidated Balance Sheets. Loans pledged as collateral for FHLB borrowed funds, primarily residential mortgages and home equity products, totaled $26.1 billion and $25.5 billion at December 31, 2021 and 2020, respectively. Loans pledged as collateral to support the contingent ability to borrow at the FRB discount window, if necessary, were primarily comprised of education, automobile, commercial and industrial, and commercial real estate loans, and totaled $35.8 billion and $40.0 billion at December 31, 2021 and 2020, respectively. The following table presents the composition of LHFS:
| December 31, 2021 |  | December 31, 2020
(in millions) | Residential Mortgages(1) | Commercial(2) | Total |  | Residential Mortgages(1) | Commercial(2) | Total
Loans held for sale at fair value | $2,657 |  | $76 |  | $2,733 |  |  | $3,416 |  | $148 |  | $3,564 |
Other loans held for sale | — |  | 735 |  | 735 |  |  | — |  | 439 |  | 439 |
(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. Citizens is engaged in the leasing of equipment for commercial use, primarily focused on middle market and mid-corporate clients for large capital equipment acquisitions including railcars, trucks and trailers, and other equipment. The Company determines if an arrangement is a lease and the related lease classification at inception. Lease terms predominantly range from three years to ten years and may include options to purchase the leased property prior to the end of the lease term. The Company does not have lease agreements which contain both lease and non-lease components. A lessee is evaluated from a credit perspective using the same underwriting standards and procedures as for a loan borrower. A lessee is expected to make rental payments based on its cash flows and the viability of its operations. Leases are usually not evaluated as collateral-based transactions, and therefore the lessee’s overall financial strength is the most important credit evaluation factor. The components of the net investment in direct financing and sales-type leases, before ALLL, are presented below:
(in millions) | December 31, 2021 |  | December 31, 2020
Total future minimum lease rentals | $1,195 |  |  | $1,381 |
Estimated residual value of leased equipment (non-guaranteed) | 521 |  |  | 746 |
Initial direct costs | 6 |  |  | 7 |
Unearned income | (136) |  |  | (166) |
Total leases | $1,586 |  |  | $1,968 |
Interest income on direct financing and sales-type leases for the years ended December 31, 2021, 2020 and 2019 was $49 million, $64 million and $77 million, respectively, and is reported within interest and fees on loans and leases in the Consolidated Statements of Operations. A maturity analysis of direct financing and sales-type lease receivables at December 31, 2021 is presented below:
(in millions) |
2022 | $315 |
2023 | 267 |
2024 | 203 |
2025 | 151 |
2026 | 105 |
Thereafter | 154 |
Total undiscounted future minimum lease rentals | $1,195 |

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- Definition The entire disclosure for claims held for amounts due a company, excluding disclosure for allowance for credit losses. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Also excludes disclosure for financing receivables. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 + Details
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