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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, 2022
Receivables [Abstract] |
ALLOWANCE FOR CREDIT LOSSES, NONACCRUAL LOANS AND LEASES, AND CONCENTRATIONS OF CREDIT RISK | NOTE 5 - 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 6 in the Company’s 2021 Form 10-K for a detailed discussion of the ACL reserve methodology and estimation techniques as of December 31, 2021. There were no significant changes to the ACL reserve methodology during the nine months ended September 30, 2022. The following table presents a summary of changes in the ACL for the three and nine months ended September 30, 2022:
| Three Months Ended September 30, 2022 |  | Nine Months Ended September 30, 2022
(in millions) | Commercial | Retail | Total |  | Commercial | Retail | Total
Allowance for loan and lease losses, beginning of period | $987 |  | $977 |  | $1,964 |  |  | $821 |  | $937 |  | $1,758 |
Allowance on PCD loans and leases at acquisition | — |  | — |  | — |  |  | 99 |  | 2 |  | 101 |
Charge-offs(1) | (22) |  | (94) |  | (116) |  |  | (49) |  | (259) |  | (308) |
Recoveries | 7 |  | 35 |  | 42 |  |  | 13 |  | 113 |  | 126 |
Net charge-offs | (15) |  | (59) |  | (74) |  |  | (36) |  | (146) |  | (182) |
Provision expense (benefit) for loans and leases(2) | 58 |  | 32 |  | 90 |  |  | 146 |  | 157 |  | 303 |
Allowance for loan and lease losses, end of period | 1,030 |  | 950 |  | 1,980 |  |  | 1,030 |  | 950 |  | 1,980 |
Allowance for unfunded lending commitments, beginning of period | 166 |  | 17 |  | 183 |  |  | 153 |  | 23 |  | 176 |
Provision expense (benefit) for unfunded lending commitments | 6 |  | 27 |  | 33 |  |  | 18 |  | 21 |  | 39 |
Allowance on PCD unfunded lending commitments at acquisition | — |  | — |  | — |  |  | 1 |  | — |  | 1 |
Allowance for unfunded lending commitments, end of period | 172 |  | 44 |  | 216 |  |  | 172 |  | 44 |  | 216 |
Total allowance for credit losses, end of period | $1,202 |  | $994 |  | $2,196 |  |  | $1,202 |  | $994 |  | $2,196 |
(1) Excludes $33 million of charge-offs previously taken by Investors or recognized upon completion of the Investors acquisition under purchase accounting for the nine months ended September 30, 2022. The initial allowance for loan and lease losses on PCD assets included these amounts and, after charging these amounts off upon acquisition, the net impact for PCD assets was $101 million of additional allowance for loan and lease losses. (2) Includes $169 million of initial provision expense related to non-PCD loans and leases acquired from HSBC and Investors for the nine months ended September 30, 2022. During the nine months ended September 30, 2022, net charge-offs of $182 million, the ACL on PCD loans and leases and unfunded lending commitments at acquisition of $102 million, and a credit provision of $342 million resulted in an increase of $262 million to the ACL. Retail NCO ratio increased for the three months ended September 30, 2022 compared to the same period in 2021, reflecting the normalization of the credit cycle; however, the NCO ratio remains below pre-pandemic levels. Retail NCO ratio for the nine months ended September 30, 2022 remained relatively flat compared to the same period in 2021. Commercial NCO ratio remained stable for the three months ended September 30, 2022 and decreased for the nine months ended September 30, 2022 compared to the same periods in 2021, as credit performance remained strong. Our ACL as of September 30, 2022 accounts for an economic forecast with 2022 real GDP growth of approximately 1.5% and an average unemployment rate of approximately 4%, and 2023 real GDP decline of approximately 0.5% and an average unemployment rate of approximately 6%. This forecast incorporates the increased risk of a shallow recession beginning in the fourth quarter of 2022 and persisting for three consecutive quarters. To address economic uncertainty, the Company utilizes a 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 the Company’s qualitative reserve. The Company’s September 2022 qualitative consideration for macroeconomic risk reflects the Federal Reserve’s aggressively tightening monetary policy and the contraction of fiscal policy. These conditions, weighed together with the impacts of Russia’s invasion of Ukraine on key global commodity prices, labor shortage-related wage increases and continuing supply-chain challenges contributing to surging inflation, may push the U.S. economy into a shallow recession and create volatility in key macroeconomic variables, including GDP and employment. The following table presents a summary of changes in the ACL for the three 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 expense (benefit) for loans and leases | (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 expense (benefit) for unfunded lending commitments | 9 |  | 6 |  | 15 |  |  | (56) |  | (22) |  | (78) |
Allowance for unfunded lending commitments, end of period | 130 |  | 19 |  | 149 |  |  | 130 |  | 19 |  | 149 |
Total allowance for credit losses, end of period | $997 |  | $1,007 |  | $2,004 |  |  | $997 |  | $1,007 |  | $2,004 |
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, 2022:
| Term Loans by Origination Year |  | Revolving Loans |  |
(in millions) | 2022 |  | 2021 |  | 2020 |  | 2019 |  | 2018 |  | Prior to 2018 |  | Within the Revolving Period | Converted to Term |  | Total
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $6,375 |  |  | $8,966 |  |  | $2,479 |  |  | $2,441 |  |  | $1,587 |  |  | $2,404 |  |  | $23,840 |  | $173 |  |  | $48,265 |
Special Mention | 55 |  |  | 206 |  |  | 134 |  |  | 139 |  |  | 71 |  |  | 123 |  |  | 321 |  | — |  |  | 1,049 |
Substandard | 55 |  |  | 158 |  |  | 124 |  |  | 337 |  |  | 91 |  |  | 238 |  |  | 469 |  | 15 |  |  | 1,487 |
Doubtful | 10 |  |  | 9 |  |  | 12 |  |  | 4 |  |  | 39 |  |  | 24 |  |  | 88 |  | 2 |  |  | 188 |
Total commercial and industrial | 6,495 |  |  | 9,339 |  |  | 2,749 |  |  | 2,921 |  |  | 1,788 |  |  | 2,789 |  |  | 24,718 |  | 190 |  |  | 50,989 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 4,752 |  |  | 6,514 |  |  | 3,674 |  |  | 3,431 |  |  | 2,305 |  |  | 3,962 |  |  | 2,220 |  | 3 |  |  | 26,861 |
Special Mention | 1 |  |  | 32 |  |  | 110 |  |  | 273 |  |  | 149 |  |  | 140 |  |  | 9 |  | — |  |  | 714 |
Substandard | 132 |  |  | 1 |  |  | — |  |  | 192 |  |  | 216 |  |  | 530 |  |  | 23 |  | — |  |  | 1,094 |
Doubtful | — |  |  | 1 |  |  | 9 |  |  | — |  |  | — |  |  | 2 |  |  | — |  | — |  |  | 12 |
Total commercial real estate | 4,885 |  |  | 6,548 |  |  | 3,793 |  |  | 3,896 |  |  | 2,670 |  |  | 4,634 |  |  | 2,252 |  | 3 |  |  | 28,681 |
Leases |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 173 |  |  | 377 |  |  | 257 |  |  | 108 |  |  | 133 |  |  | 368 |  |  | — |  | — |  |  | 1,416 |
Special Mention | 2 |  |  | 9 |  |  | — |  |  | 5 |  |  | 2 |  |  | 4 |  |  | — |  | — |  |  | 22 |
Substandard | — |  |  | — |  |  | 3 |  |  | 3 |  |  | — |  |  | — |  |  | — |  | — |  |  | 6 |
Doubtful | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  | — |  |  | — |
Total leases | 175 |  |  | 386 |  |  | 260 |  |  | 116 |  |  | 135 |  |  | 372 |  |  | — |  | — |  |  | 1,444 |
Total commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 11,300 |  |  | 15,857 |  |  | 6,410 |  |  | 5,980 |  |  | 4,025 |  |  | 6,734 |  |  | 26,060 |  | 176 |  |  | 76,542 |
Special Mention | 58 |  |  | 247 |  |  | 244 |  |  | 417 |  |  | 222 |  |  | 267 |  |  | 330 |  | — |  |  | 1,785 |
Substandard | 187 |  |  | 159 |  |  | 127 |  |  | 532 |  |  | 307 |  |  | 768 |  |  | 492 |  | 15 |  |  | 2,587 |
Doubtful | 10 |  |  | 10 |  |  | 21 |  |  | 4 |  |  | 39 |  |  | 26 |  |  | 88 |  | 2 |  |  | 200 |
Total commercial | $11,555 |  |  | $16,273 |  |  | $6,802 |  |  | $6,933 |  |  | $4,593 |  |  | $7,795 |  |  | $26,970 |  | $193 |  |  | $81,114 |
The following table presents the amortized cost basis of commercial loans and leases, by vintage date and regulatory classification rating, as of December 31, 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 | $10,218 |  |  | $3,336 |  |  | $3,599 |  |  | $2,284 |  |  | $1,426 |  |  | $1,863 |  |  | $19,406 |  | $122 |  |  | $42,254 |
Special Mention | 47 |  |  | 71 |  |  | 155 |  |  | 114 |  |  | 41 |  |  | 64 |  |  | 316 |  | 1 |  |  | 809 |
Substandard | 97 |  |  | 112 |  |  | 215 |  |  | 81 |  |  | 50 |  |  | 201 |  |  | 521 |  | 17 |  |  | 1,294 |
Doubtful | 1 |  |  | 9 |  |  | 9 |  |  | 22 |  |  | 10 |  |  | 16 |  |  | 74 |  | 2 |  |  | 143 |
Total commercial and industrial | 10,363 |  |  | 3,528 |  |  | 3,978 |  |  | 2,501 |  |  | 1,527 |  |  | 2,144 |  |  | 20,317 |  | 142 |  |  | 44,500 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 2,766 |  |  | 2,417 |  |  | 3,181 |  |  | 1,756 |  |  | 626 |  |  | 1,119 |  |  | 1,451 |  | 3 |  |  | 13,319 |
Special Mention | 45 |  |  | 42 |  |  | 113 |  |  | 100 |  |  | 27 |  |  | 79 |  |  | — |  | — |  |  | 406 |
Substandard | 27 |  |  | — |  |  | 88 |  |  | 267 |  |  | 78 |  |  | 59 |  |  | 9 |  | — |  |  | 528 |
Doubtful | 1 |  |  | 9 |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  | — |  |  | 11 |
Total commercial real estate | 2,839 |  |  | 2,468 |  |  | 3,382 |  |  | 2,123 |  |  | 731 |  |  | 1,258 |  |  | 1,460 |  | 3 |  |  | 14,264 |
Leases |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 447 |  |  | 262 |  |  | 134 |  |  | 144 |  |  | 66 |  |  | 459 |  |  | — |  | — |  |  | 1,512 |
Special Mention | 10 |  |  | 15 |  |  | — |  |  | 5 |  |  | 3 |  |  | 16 |  |  | — |  | — |  |  | 49 |
Substandard | 1 |  |  | 16 |  |  | 5 |  |  | 2 |  |  | — |  |  | — |  |  | — |  | — |  |  | 24 |
Doubtful | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  | — |  |  | 1 |
Total leases | 458 |  |  | 293 |  |  | 139 |  |  | 151 |  |  | 69 |  |  | 476 |  |  | — |  | — |  |  | 1,586 |
Total commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 13,431 |  |  | 6,015 |  |  | 6,914 |  |  | 4,184 |  |  | 2,118 |  |  | 3,441 |  |  | 20,857 |  | 125 |  |  | 57,085 |
Special Mention | 102 |  |  | 128 |  |  | 268 |  |  | 219 |  |  | 71 |  |  | 159 |  |  | 316 |  | 1 |  |  | 1,264 |
Substandard | 125 |  |  | 128 |  |  | 308 |  |  | 350 |  |  | 128 |  |  | 260 |  |  | 530 |  | 17 |  |  | 1,846 |
Doubtful | 2 |  |  | 18 |  |  | 9 |  |  | 22 |  |  | 10 |  |  | 18 |  |  | 74 |  | 2 |  |  | 155 |
Total commercial | $13,660 |  |  | $6,289 |  |  | $7,499 |  |  | $4,775 |  |  | $2,327 |  |  | $3,878 |  |  | $21,777 |  | $145 |  |  | $60,350 |
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, 2022:
| Term Loans by Origination Year |  | Revolving Loans |  |
(in millions) | 2022 |  | 2021 |  | 2020 |  | 2019 |  | 2018 |  | Prior to 2018 |  | Within the Revolving Period | Converted to Term |  | Total
Residential mortgages |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | $1,501 |  |  | $4,470 |  |  | $3,068 |  |  | $1,142 |  |  | $331 |  |  | $2,878 |  |  | $— |  | $— |  |  | $13,390 |
740-799 | 2,362 |  |  | 3,464 |  |  | 1,818 |  |  | 716 |  |  | 300 |  |  | 1,965 |  |  | — |  | — |  |  | 10,625 |
680-739 | 669 |  |  | 949 |  |  | 519 |  |  | 297 |  |  | 161 |  |  | 922 |  |  | — |  | — |  |  | 3,517 |
620-679 | 104 |  |  | 156 |  |  | 125 |  |  | 164 |  |  | 101 |  |  | 442 |  |  | — |  | — |  |  | 1,092 |
<620 | 8 |  |  | 62 |  |  | 77 |  |  | 166 |  |  | 145 |  |  | 438 |  |  | — |  | — |  |  | 896 |
No FICO available(1) | 2 |  |  | 2 |  |  | 2 |  |  | 3 |  |  | 3 |  |  | 16 |  |  | — |  | — |  |  | 28 |
Total residential mortgages | 4,646 |  |  | 9,103 |  |  | 5,609 |  |  | 2,488 |  |  | 1,041 |  |  | 6,661 |  |  | — |  | — |  |  | 29,548 |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 2 |  |  | 3 |  |  | 2 |  |  | 5 |  |  | 6 |  |  | 111 |  |  | 4,866 |  | 287 |  |  | 5,282 |
740-799 | 3 |  |  | 4 |  |  | 2 |  |  | 5 |  |  | 6 |  |  | 108 |  |  | 4,282 |  | 286 |  |  | 4,696 |
680-739 | 1 |  |  | 1 |  |  | 2 |  |  | 7 |  |  | 13 |  |  | 123 |  |  | 2,106 |  | 236 |  |  | 2,489 |
620-679 | — |  |  | 1 |  |  | 1 |  |  | 9 |  |  | 16 |  |  | 99 |  |  | 498 |  | 159 |  |  | 783 |
<620 | — |  |  | — |  |  | 2 |  |  | 12 |  |  | 19 |  |  | 89 |  |  | 140 |  | 172 |  |  | 434 |
Total home equity | 6 |  |  | 9 |  |  | 9 |  |  | 38 |  |  | 60 |  |  | 530 |  |  | 11,892 |  | 1,140 |  |  | 13,684 |
Automobile |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 597 |  |  | 1,516 |  |  | 643 |  |  | 369 |  |  | 147 |  |  | 78 |  |  | — |  | — |  |  | 3,350 |
740-799 | 921 |  |  | 1,783 |  |  | 727 |  |  | 397 |  |  | 164 |  |  | 81 |  |  | — |  | — |  |  | 4,073 |
680-739 | 866 |  |  | 1,342 |  |  | 527 |  |  | 300 |  |  | 127 |  |  | 63 |  |  | — |  | — |  |  | 3,225 |
620-679 | 526 |  |  | 676 |  |  | 234 |  |  | 155 |  |  | 74 |  |  | 40 |  |  | — |  | — |  |  | 1,705 |
<620 | 141 |  |  | 303 |  |  | 133 |  |  | 116 |  |  | 65 |  |  | 41 |  |  | — |  | — |  |  | 799 |
No FICO available(1) | 3 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  | — |  |  | 3 |
Total automobile | 3,054 |  |  | 5,620 |  |  | 2,264 |  |  | 1,337 |  |  | 577 |  |  | 303 |  |  | — |  | — |  |  | 13,155 |
Education |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 474 |  |  | 1,714 |  |  | 1,582 |  |  | 719 |  |  | 426 |  |  | 1,131 |  |  | — |  | — |  |  | 6,046 |
740-799 | 665 |  |  | 1,456 |  |  | 1,209 |  |  | 517 |  |  | 284 |  |  | 647 |  |  | — |  | — |  |  | 4,778 |
680-739 | 333 |  |  | 454 |  |  | 375 |  |  | 182 |  |  | 108 |  |  | 300 |  |  | — |  | — |  |  | 1,752 |
620-679 | 44 |  |  | 74 |  |  | 60 |  |  | 37 |  |  | 29 |  |  | 106 |  |  | — |  | — |  |  | 350 |
<620 | 4 |  |  | 14 |  |  | 18 |  |  | 12 |  |  | 11 |  |  | 50 |  |  | — |  | — |  |  | 109 |
No FICO available(1) | 12 |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | 46 |  |  | — |  | — |  |  | 59 |
Total education | 1,532 |  |  | 3,712 |  |  | 3,244 |  |  | 1,468 |  |  | 858 |  |  | 2,280 |  |  | — |  | — |  |  | 13,094 |
Other retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 149 |  |  | 151 |  |  | 116 |  |  | 64 |  |  | 32 |  |  | 33 |  |  | 460 |  | — |  |  | 1,005 |
740-799 | 194 |  |  | 192 |  |  | 155 |  |  | 86 |  |  | 40 |  |  | 31 |  |  | 932 |  | 1 |  |  | 1,631 |
680-739 | 155 |  |  | 148 |  |  | 129 |  |  | 65 |  |  | 27 |  |  | 18 |  |  | 948 |  | 4 |  |  | 1,494 |
620-679 | 97 |  |  | 82 |  |  | 64 |  |  | 23 |  |  | 10 |  |  | 6 |  |  | 427 |  | 4 |  |  | 713 |
<620 | 27 |  |  | 33 |  |  | 28 |  |  | 11 |  |  | 5 |  |  | 3 |  |  | 167 |  | 3 |  |  | 277 |
No FICO available(1) | 42 |  |  | 1 |  |  | 3 |  |  | — |  |  | — |  |  | — |  |  | 378 |  | 1 |  |  | 425 |
Total other retail | 664 |  |  | 607 |  |  | 495 |  |  | 249 |  |  | 114 |  |  | 91 |  |  | 3,312 |  | 13 |  |  | 5,545 |
Total retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 2,723 |  |  | 7,854 |  |  | 5,411 |  |  | 2,299 |  |  | 942 |  |  | 4,231 |  |  | 5,326 |  | 287 |  |  | 29,073 |
740-799 | 4,145 |  |  | 6,899 |  |  | 3,911 |  |  | 1,721 |  |  | 794 |  |  | 2,832 |  |  | 5,214 |  | 287 |  |  | 25,803 |
680-739 | 2,024 |  |  | 2,894 |  |  | 1,552 |  |  | 851 |  |  | 436 |  |  | 1,426 |  |  | 3,054 |  | 240 |  |  | 12,477 |
620-679 | 771 |  |  | 989 |  |  | 484 |  |  | 388 |  |  | 230 |  |  | 693 |  |  | 925 |  | 163 |  |  | 4,643 |
<620 | 180 |  |  | 412 |  |  | 258 |  |  | 317 |  |  | 245 |  |  | 621 |  |  | 307 |  | 175 |  |  | 2,515 |
No FICO available(1) | 59 |  |  | 3 |  |  | 5 |  |  | 4 |  |  | 3 |  |  | 62 |  |  | 378 |  | 1 |  |  | 515 |
Total retail | $9,902 |  |  | $19,051 |  |  | $11,621 |  |  | $5,580 |  |  | $2,650 |  |  | $9,865 |  |  | $15,204 |  | $1,153 |  |  | $75,026 |
(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, 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+ | $2,431 |  |  | $3,017 |  |  | $1,230 |  |  | $342 |  |  | $672 |  |  | $2,139 |  |  | $— |  | $— |  |  | $9,831 |
740-799 | 4,015 |  |  | 1,876 |  |  | 746 |  |  | 246 |  |  | 360 |  |  | 1,086 |  |  | — |  | — |  |  | 8,329 |
680-739 | 1,116 |  |  | 572 |  |  | 335 |  |  | 152 |  |  | 172 |  |  | 585 |  |  | — |  | — |  |  | 2,932 |
620-679 | 111 |  |  | 130 |  |  | 161 |  |  | 93 |  |  | 107 |  |  | 276 |  |  | — |  | — |  |  | 878 |
<620 | 24 |  |  | 66 |  |  | 164 |  |  | 162 |  |  | 157 |  |  | 257 |  |  | — |  | — |  |  | 830 |
No FICO available(1) | 3 |  |  | 8 |  |  | 1 |  |  | — |  |  | — |  |  | 10 |  |  | — |  | — |  |  | 22 |
Total residential mortgages | 7,700 |  |  | 5,669 |  |  | 2,637 |  |  | 995 |  |  | 1,468 |  |  | 4,353 |  |  | — |  | — |  |  | 22,822 |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | — |  |  | 2 |  |  | 5 |  |  | 5 |  |  | 3 |  |  | 134 |  |  | 4,394 |  | 281 |  |  | 4,824 |
740-799 | — |  |  | 1 |  |  | 4 |  |  | 5 |  |  | 7 |  |  | 122 |  |  | 3,514 |  | 278 |  |  | 3,931 |
680-739 | — |  |  | 1 |  |  | 7 |  |  | 14 |  |  | 16 |  |  | 134 |  |  | 1,738 |  | 243 |  |  | 2,153 |
620-679 | — |  |  | 3 |  |  | 11 |  |  | 19 |  |  | 17 |  |  | 112 |  |  | 363 |  | 167 |  |  | 692 |
<620 | — |  |  | 2 |  |  | 16 |  |  | 23 |  |  | 20 |  |  | 87 |  |  | 91 |  | 176 |  |  | 415 |
Total home equity | — |  |  | 9 |  |  | 43 |  |  | 66 |  |  | 63 |  |  | 589 |  |  | 10,100 |  | 1,145 |  |  | 12,015 |
Automobile |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 1,887 |  |  | 829 |  |  | 538 |  |  | 244 |  |  | 148 |  |  | 57 |  |  | — |  | — |  |  | 3,703 |
740-799 | 2,418 |  |  | 1,051 |  |  | 615 |  |  | 288 |  |  | 156 |  |  | 58 |  |  | — |  | — |  |  | 4,586 |
680-739 | 1,968 |  |  | 827 |  |  | 500 |  |  | 234 |  |  | 123 |  |  | 48 |  |  | — |  | — |  |  | 3,700 |
620-679 | 1,029 |  |  | 378 |  |  | 257 |  |  | 131 |  |  | 72 |  |  | 32 |  |  | — |  | — |  |  | 1,899 |
<620 | 164 |  |  | 142 |  |  | 155 |  |  | 103 |  |  | 62 |  |  | 32 |  |  | — |  | — |  |  | 658 |
No FICO available(1) | 3 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  | — |  |  | 3 |
Total automobile | 7,469 |  |  | 3,227 |  |  | 2,065 |  |  | 1,000 |  |  | 561 |  |  | 227 |  |  | — |  | — |  |  | 14,549 |
Education |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 1,361 |  |  | 1,771 |  |  | 840 |  |  | 514 |  |  | 470 |  |  | 880 |  |  | — |  | — |  |  | 5,836 |
740-799 | 1,555 |  |  | 1,577 |  |  | 672 |  |  | 371 |  |  | 275 |  |  | 514 |  |  | — |  | — |  |  | 4,964 |
680-739 | 512 |  |  | 474 |  |  | 229 |  |  | 140 |  |  | 107 |  |  | 262 |  |  | — |  | — |  |  | 1,724 |
620-679 | 50 |  |  | 66 |  |  | 45 |  |  | 34 |  |  | 28 |  |  | 99 |  |  | — |  | — |  |  | 322 |
<620 | 5 |  |  | 11 |  |  | 12 |  |  | 12 |  |  | 10 |  |  | 45 |  |  | — |  | — |  |  | 95 |
No FICO available(1) | 4 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 52 |  |  | — |  | — |  |  | 56 |
Total education | 3,487 |  |  | 3,899 |  |  | 1,798 |  |  | 1,071 |  |  | 890 |  |  | 1,852 |  |  | — |  | — |  |  | 12,997 |
Other retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 233 |  |  | 214 |  |  | 122 |  |  | 65 |  |  | 30 |  |  | 29 |  |  | 386 |  | — |  |  | 1,079 |
740-799 | 323 |  |  | 296 |  |  | 173 |  |  | 84 |  |  | 38 |  |  | 26 |  |  | 764 |  | 2 |  |  | 1,706 |
680-739 | 246 |  |  | 240 |  |  | 122 |  |  | 56 |  |  | 23 |  |  | 12 |  |  | 709 |  | 5 |  |  | 1,413 |
620-679 | 149 |  |  | 119 |  |  | 43 |  |  | 19 |  |  | 7 |  |  | 4 |  |  | 299 |  | 5 |  |  | 645 |
<620 | 32 |  |  | 37 |  |  | 17 |  |  | 10 |  |  | 3 |  |  | 2 |  |  | 100 |  | 6 |  |  | 207 |
No FICO available(1) | 44 |  |  | 5 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 330 |  | 1 |  |  | 380 |
Total other retail | 1,027 |  |  | 911 |  |  | 477 |  |  | 234 |  |  | 101 |  |  | 73 |  |  | 2,588 |  | 19 |  |  | 5,430 |
Total retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 5,912 |  |  | 5,833 |  |  | 2,735 |  |  | 1,170 |  |  | 1,323 |  |  | 3,239 |  |  | 4,780 |  | 281 |  |  | 25,273 |
740-799 | 8,311 |  |  | 4,801 |  |  | 2,210 |  |  | 994 |  |  | 836 |  |  | 1,806 |  |  | 4,278 |  | 280 |  |  | 23,516 |
680-739 | 3,842 |  |  | 2,114 |  |  | 1,193 |  |  | 596 |  |  | 441 |  |  | 1,041 |  |  | 2,447 |  | 248 |  |  | 11,922 |
620-679 | 1,339 |  |  | 696 |  |  | 517 |  |  | 296 |  |  | 231 |  |  | 523 |  |  | 662 |  | 172 |  |  | 4,436 |
<620 | 225 |  |  | 258 |  |  | 364 |  |  | 310 |  |  | 252 |  |  | 423 |  |  | 191 |  | 182 |  |  | 2,205 |
No FICO available(1) | 54 |  |  | 13 |  |  | 1 |  |  | — |  |  | — |  |  | 62 |  |  | 330 |  | 1 |  |  | 461 |
Total retail | $19,683 |  |  | $13,715 |  |  | $7,020 |  |  | $3,366 |  |  | $3,083 |  |  | $7,094 |  |  | $12,688 |  | $1,164 |  |  | $67,813 |
(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 tables present an aging analysis of accruing loans and leases, and nonaccrual loans and leases:
| September 30, 2022
|  | Days Past Due and Accruing |  |  |
(in millions) | Current | 30-59 | 60-89 | 90+ | Nonaccrual | Total | Nonaccrual with no related ACL
Commercial and industrial | $50,637 |  | $71 |  | $34 |  | $13 |  | $234 |  | $50,989 |  | $52 |
Commercial real estate | 28,483 |  | 136 |  | 23 |  | 2 |  | 37 |  | 28,681 |  | 3 |
Leases | 1,443 |  | 1 |  | — |  | — |  | — |  | 1,444 |  | — |
Total commercial | 80,563 |  | 208 |  | 57 |  | 15 |  | 271 |  | 81,114 |  | 55 |
Residential mortgages(1) | 28,779 |  | 66 |  | 42 |  | 425 |  | 236 |  | 29,548 |  | 199 |
Home equity | 13,393 |  | 41 |  | 15 |  | — |  | 235 |  | 13,684 |  | 190 |
Automobile | 12,934 |  | 131 |  | 38 |  | — |  | 52 |  | 13,155 |  | 9 |
Education | 13,006 |  | 32 |  | 19 |  | 4 |  | 33 |  | 13,094 |  | 3 |
Other retail | 5,436 |  | 39 |  | 27 |  | 18 |  | 25 |  | 5,545 |  | 1 |
Total retail | 73,548 |  | 309 |  | 141 |  | 447 |  | 581 |  | 75,026 |  | 402 |
Total | $154,111 |  | $517 |  | $198 |  | $462 |  | $852 |  | $156,140 |  | $457 |
| December 31, 2021
|  | Days Past Due and Accruing |  |  |
(in millions) | Current | 30-59 | 60-89 | 90+ | Nonaccrual | Total | Nonaccrual with no related ACL
Commercial and industrial | $44,247 |  | $47 |  | $26 |  | $9 |  | $171 |  | $44,500 |  | $36 |
Commercial real estate | 14,247 |  | 6 |  | — |  | — |  | 11 |  | 14,264 |  | 1 |
Leases | 1,570 |  | 14 |  | 1 |  | — |  | 1 |  | 1,586 |  | — |
Total commercial | 60,064 |  | 67 |  | 27 |  | 9 |  | 183 |  | 60,350 |  | 37 |
Residential mortgages(1) | 21,918 |  | 102 |  | 52 |  | 549 |  | 201 |  | 22,822 |  | 137 |
Home equity | 11,745 |  | 38 |  | 12 |  | — |  | 220 |  | 12,015 |  | 186 |
Automobile | 14,324 |  | 131 |  | 39 |  | — |  | 55 |  | 14,549 |  | 22 |
Education | 12,926 |  | 34 |  | 13 |  | 1 |  | 23 |  | 12,997 |  | 2 |
Other retail | 5,331 |  | 40 |  | 23 |  | 16 |  | 20 |  | 5,430 |  | 2 |
Total retail | 66,244 |  | 345 |  | 139 |  | 566 |  | 519 |  | 67,813 |  | 349 |
Total | $126,308 |  | $412 |  | $166 |  | $575 |  | $702 |  | $128,163 |  | $386 |
(1) 90+ days past due and accruing includes $425 million and $544 million of loans fully or partially guaranteed by the FHA, VA, and USDA at September 30, 2022 and December 31, 2021, 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 a loan or lease as nonaccrual. At September 30, 2022 and December 31, 2021, the Company had collateral-dependent residential mortgage and home equity loans totaling $537 million and $542 million, respectively. At September 30, 2022 and December 31, 2021, the Company had collateral-dependent commercial loans totaling $18 million and $103 million, respectively. The amortized cost basis of mortgage loans collateralized by residential real estate for which formal foreclosure proceedings were in process was $219 million and $142 million as of September 30, 2022 and December 31, 2021, respectively. Troubled Debt Restructurings The following tables summarize loans modified during the three and nine months ended September 30, 2022 and 2021. 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, 2022
|  |  | Amortized Cost Basis
(dollars in millions) | Number of Contracts |  |  | Interest Rate Reduction(1) | Maturity Extension(2) |  | Other(3) | Total
Commercial and industrial | 6 |  |  |  | $— |  |  |  | $2 |  |  |  | $46 |  |  | $48 |
Total commercial | 6 |  |  |  | — |  |  |  | 2 |  |  |  | 46 |  |  | 48 |
Residential mortgages | 185 |  |  |  | 6 |  |  |  | 21 |  |  |  | 13 |  |  | 40 |
Home equity | 68 |  |  |  | 2 |  |  |  | — |  |  |  | 2 |  |  | 4 |
Automobile | 135 |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  | 1 |
Education | 245 |  |  |  | — |  |  |  | — |  |  |  | 8 |  |  | 8 |
Other retail | 590 |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  | 2 |
Total retail | 1,223 |  |  |  | 10 |  |  |  | 21 |  |  |  | 24 |  |  | 55 |
Total | 1,229 |  |  |  | $10 |  |  |  | $23 |  |  |  | $70 |  |  | $103 |
|  |  |  | 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 |
|  |  |  | Nine Months Ended September 30, 2022
|  |  |  | Amortized Cost Basis
(dollars in millions) | Number of Contracts |  |  | Interest Rate Reduction(1) |  | Maturity Extension(2) |  | Other(3) | Total
Commercial and industrial | 25 |  |  |  | $— |  |  |  | $26 |  |  |  | $80 |  |  | $106 |
Total commercial | 25 |  |  |  | — |  |  |  | 26 |  |  |  | 80 |  |  | 106 |
Residential mortgages | 1,656 |  |  |  | 44 |  |  |  | 74 |  |  |  | 248 |  |  | 366 |
Home equity | 318 |  |  |  | 4 |  |  |  | 1 |  |  |  | 16 |  |  | 21 |
Automobile | 447 |  |  |  | 1 |  |  |  | — |  |  |  | 3 |  |  | 4 |
Education | 481 |  |  |  | — |  |  |  | — |  |  |  | 19 |  |  | 19 |
Other retail | 1,678 |  |  |  | 7 |  |  |  | — |  |  |  | 1 |  |  | 8 |
Total retail | 4,580 |  |  |  | 56 |  |  |  | 75 |  |  |  | 287 |  |  | 418 |
Total | 4,605 |  |  |  | $56 |  |  |  | $101 |  |  |  | $367 |  |  | $524 |
|  |  |  | 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 |
(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 for the three months ended September 30, 2021, and $2 million and $5 million for the nine months ended September 30, 2022 and 2021, respectively. Unfunded commitments related to TDRs were $117 million and $56 million at September 30, 2022 and December 31, 2021, 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,
(in millions) | 2022 |  | 2021 |  | 2022 |  | 2021
Commercial TDRs | $— |  |  | $— |  |  | $— |  |  | $23 |
Retail TDRs(1) | 28 |  |  | 37 |  |  | 224 |  |  | 66 |
Total | $28 |  |  | $37 |  |  | $224 |  |  | $89 |
(1) Includes $18 million and $34 million of loans fully or partially government guaranteed by the FHA, VA, and USDA for the three months ended September 30, 2022 and 2021, respectively, and $174 million and $37 million for the nine months ended September 30, 2022 and 2021, 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, 2022 and December 31, 2021, Citizens had a significant amount of loans collateralized by residential and commercial real estate. There were no significant concentration risks within the commercial 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, unsecured loans are also granted on the basis of the financial strength of the applicant and facts surrounding the transaction.

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