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CREDIT QUALITY AND THE ALLOWANCE FOR CREDIT LOSSES | 12 Months Ended
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Dec. 31, 2023
Receivables [Abstract] |
CREDIT QUALITY AND THE ALLOWANCE FOR CREDIT LOSSES | NOTE 6 - CREDIT QUALITY AND THE ALLOWANCE FOR CREDIT LOSSES Allowance for Credit Losses The Company’s estimate of expected credit losses in its loan and lease portfolios is recorded in the ACL and considers extensive historical loss experience, including the impact of loss mitigation and restructuring programs that the Company offers to borrowers experiencing financial difficulty, as well as projected loss severity as a result of loan default. The ACL is maintained at a level the Company believes to be appropriate to absorb expected lifetime credit losses over the contractual life of a loan or lease and on unfunded lending commitments. The determination of the ACL is based on periodic evaluation of loan and lease portfolios and unfunded lending commitments that are not unconditionally cancellable. A number of relevant underlying factors, including key assumptions and the evaluation of quantitative and qualitative information, are considered. Key assumptions used in the ACL measurement process include the use of a two-year reasonable and supportable economic forecast period followed by a one-year reversion period to historical credit loss information. The evaluation of quantitative and qualitative information is performed by assessing groups of assets that share similar risk characteristics and certain individual loans and leases that do not share similar risk characteristics with the collective group. Loans are generally grouped by product type (e.g., commercial and industrial, commercial real estate, residential mortgage), and significant loan portfolios are assessed for credit losses using econometric models. The quantitative evaluation of the adequacy of the ACL utilizes a single economic forecast as its foundation and is primarily based on econometric models that use known or estimated data as of the balance sheet date and forecasted data over the reasonable and supportable period. Known and estimated data include current PD, LGD and EAD for commercial loans, timing and amount of expected draws for unfunded lending commitments, FICO, LTV, and term for retail loans. The mix and level of loan balances, delinquency levels, assigned risk ratings, previous loss experience, current business conditions, amount and timing of expected future cash flows, and factors specific to commercial credits such as competition, business and management performance are also considered. Forward-looking economic assumptions include real GDP, unemployment rate, interest rate curve, and changes in collateral values. This data is accumulated to estimate expected credit losses over the contractual life of the loans and leases, adjusted for expected prepayments. Historical information, such as financial statements for commercial customers or consumer credit ratings, may not be as important to estimating future expected losses as forecasted inputs to the models during volatile economic time periods. The ACL may also be affected by a variety of qualitative factors that the Company considers that are not measured in the statistical procedures including uncertainty related to economic forecasts, loan growth, backtesting results, credit underwriting policy exceptions, regulatory and audit findings, and peer comparisons. The qualitative allowance is further affected by sensitivity analysis for certain industry sectors or loan classes, including CRE office. The measurement process results in specific or pooled allowances for loans, leases and unfunded lending commitments, and qualitative allowances that are determined and applied across the portfolio. Certain loan portfolios don’t require an econometric model to calculate expected credit losses. For these portfolios, approaches that are less data intensive and non-modeled are utilized to estimate credit losses as they are considered more efficient and practical for portfolios that have outstanding balances that are not material (e.g., runoff or closed portfolios, new products or products that are not significant to the Company’s overall credit risk exposure). Loans and leases that do not share similar risk characteristics are individually assessed for expected credit losses. Nonaccrual commercial and industrial, and commercial real estate loans with an outstanding balance of $5 million or greater are assessed on an individual loan level basis. Generally, measurement of the ACL on an individual loan or lease is the present value of its future cash flows or the fair value of its underlying collateral, if the loan or lease is collateral dependent. A loan is considered to be collateral dependent when repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral, rather than by cash flows from the borrower’s operations, income or other resources. Generally, this occurs when cash flows to repay the loan from all other available sources, including guarantors, are expected to be no more than nominal. Loans that are deemed to be collateral dependent are written down to the fair value, less costs to sell, as of the evaluation date and are reassessed each subsequent period, which may result in an increase or decrease to the ACL based on a corresponding change in the fair value of the collateral during the period. Any decrease to the ACL would be limited to the total amount previously written off for a given loan or lease. Collateral values for residential mortgage and home equity loans are based on appraisals, which are updated every 90 days at a minimum, less estimated costs to sell. At December 31, 2023 and 2022, the Company had collateral-dependent residential mortgage and home equity loans totaling $556 million and $561 million, respectively. Commercial loans are secured by various types of collateral, including real estate, inventory, equipment, accounts receivable, securities and cash, among others. Collateral values are generally based on appraisals for commercial real estate loans, which are updated based on management judgment on a case-by-case basis. At December 31, 2023 and 2022, the Company had collateral-dependent commercial loans totaling $233 million and $21 million, respectively. The amortized cost basis of mortgage loans collateralized by residential real estate for which formal foreclosure proceedings were in-process was $336 million and $250 million as of December 31, 2023 and 2022, respectively. Expected recoveries are considered in management’s estimate of the ACL and may result in a reduction to the ACL balance. A negative ACL for a collateral dependent loan exists if the fair value of the collateral increases in a subsequent reporting period and cannot exceed the total amount previously charged off. Accrued interest receivable on loans and leases is excluded from asset balances used to calculate the ACL. The Company estimates expected credit losses associated with off-balance sheet financial instruments such as standby letters of credit, financial guarantees and unfunded loan commitments that are not unconditionally cancellable. Off-balance sheet financial instruments are subject to individual reviews and are analyzed and segregated by risk according to the Company’s internal risk rating scale. These risk classifications, in conjunction with historical loss experience, current and future economic conditions, timing and amount of expected draws, and performance trends within specific portfolio segments, are considered to estimate the allowance for unfunded lending commitments. The Company does not recognize a reserve for future draws from credit lines that are unconditionally cancellable (e.g., credit cards). The ALLL and the allowance for unfunded lending commitments are reported in the allowance for loan and lease losses and other liabilities, respectively, in the Consolidated Balance Sheets . The provision for credit losses related to loan and lease portfolios and unfunded lending commitments is reported in provision (benefit) for credit losses in the Consolidated Statements of Operations. Loan Charge-Offs Commercial loans are charged-off when available information indicates that a loan, or portion thereof, is determined to be uncollectible. The determination of whether to recognize a charge-off involves many factors, including the prioritization of the Company’s claim in bankruptcy, workout/restructuring expectations of the loan and valuation of the borrower’s equity or loan collateral. Retail loans are generally fully charged-off or written down to the net realizable value of the underlying collateral, with an offset to the ALLL, upon reaching specified stages of delinquency in accordance with standards established by the FFIEC. Residential real estate, credit card and unsecured open-end loans are generally charged-off in the month when the account becomes 180 days past due. Auto, education and unsecured closed-end loans are generally charged off in the month when the account becomes 120 days past due. Certain retail loans will be charged-off or written down to their net realizable value earlier in the following circumstances: •FDMs that are determined to be collateral dependent. •Loans to borrowers who have experienced an event (e.g., bankruptcy) that suggests a loss is either known or highly certain. ◦Residential real estate and auto loans are written down to fair value less costs to sell within 60 days of receiving notification of the bankruptcy filing, unless repayment is likely to occur, or when the loan subsequently becomes 60 days past due. ◦Credit card loans are fully charged-off within 60 days of receiving notification of the bankruptcy filing or other event. ◦Education loans are generally charged-off when the loan becomes 60 days past due after receiving notification of a bankruptcy. •Auto loans are written down to fair value less costs to sell upon repossession of the collateral. The following table presents a summary of changes in the ACL for the year ended December 31, 2023:
| Year Ended December 31, 2023
(dollars in millions) | Commercial | Retail | Total
Allowance for loan and lease losses, beginning of period | $1,060 |  | $923 |  | $1,983 |
Charge-offs | (285) |  | (472) |  | (757) |
Recoveries | 18 |  | 130 |  | 148 |
Net charge-offs | (267) |  | (342) |  | (609) |
Provision expense (benefit) for loans and leases | 457 |  | 267 |  | 724 |
Allowance for loan and lease losses, end of period | 1,250 |  | 848 |  | 2,098 |
Allowance for unfunded lending commitments, beginning of period | 207 |  | 50 |  | 257 |
Provision expense (benefit) for unfunded lending commitments | (32) |  | (5) |  | (37) |
Allowance for unfunded lending commitments, end of period | 175 |  | 45 |  | 220 |
Total allowance for credit losses, end of period | $1,425 |  | $893 |  | $2,318 |
During the year ended December 31, 2023, net charge-offs of $609 million and a provision for expected credit losses of $687 million resulted in an increase of $78 million to the ACL. Our ACL as of December 31, 2023 accounts for an economic forecast over our two-year reasonable and supportable period with peak unemployment of approximately 5% and peak-to-trough GDP decline of approximately 0.4%. This forecast reflects a mild recession over the two-year reasonable and supportable period. The following tables present a summary of changes in the ACL for the years ended December 31, 2022 and 2021:
| Year Ended December 31, 2022
(dollars in millions) | Commercial | Retail | Total
Allowance for loan and lease losses, beginning of period | $821 |  | $937 |  | $1,758 |
Allowance on PCD loans and leases at acquisition | 99 |  | 2 |  | 101 |
Charge-offs(1) | (70) |  | (364) |  | (434) |
Recoveries | 18 |  | 146 |  | 164 |
Net charge-offs | (52) |  | (218) |  | (270) |
Provision expense (benefit) for loans and leases(2) | 192 |  | 202 |  | 394 |
Allowance for loan and lease losses, end of period | 1,060 |  | 923 |  | 1,983 |
Allowance for unfunded lending commitments, beginning of period | 153 |  | 23 |  | 176 |
Provision expense (benefit) for unfunded lending commitments | 53 |  | 27 |  | 80 |
Allowance on PCD unfunded lending commitments at acquisition | 1 |  | — |  | 1 |
Allowance for unfunded lending commitments, end of period | 207 |  | 50 |  | 257 |
Total allowance for credit losses, end of period | $1,267 |  | $973 |  | $2,240 |
(1) Excludes $34 million of charge-offs previously taken by Investors or recognized upon completion of the Investors acquisition under purchase accounting for the year ended December 31, 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 year ended December 31, 2022.
| Year Ended December 31, 2021
(dollars in millions) | Commercial | Retail | Total
Allowance for loan and lease losses, beginning of period | $1,233 |  | $1,210 |  | $2,443 |
Charge-offs | (218) |  | (321) |  | (539) |
Recoveries | 54 |  | 160 |  | 214 |
Net charge-offs | (164) |  | (161) |  | (325) |
Provision expense (benefit) for loans and leases | (248) |  | (112) |  | (360) |
Allowance for loan and lease losses, end of period | 821 |  | 937 |  | 1,758 |
Allowance for unfunded lending commitments, beginning of period | 186 |  | 41 |  | 227 |
Provision expense (benefit) for unfunded lending commitments | (33) |  | (18) |  | (51) |
Allowance for unfunded lending commitments, end of period | 153 |  | 23 |  | 176 |
Total allowance for credit losses, end of period | $974 |  | $960 |  | $1,934 |
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. Renewals are categorized as new credit decisions and reflect the renewal date as the vintage date, except for renewals of loans modified for borrowers experiencing financial difficulty, or FDMs, which are presented in the original vintage. Citizens utilizes internal risk ratings to monitor credit quality for commercial loans and leases. These ratings are assigned at loan origination and are periodically reevaluated utilizing a risk-based approach, annually at a minimum, or any time management becomes aware of information affecting a borrower’s ability to fulfill their obligations. The reevaluation process considers both quantitative and qualitative factors. The following categories are utilized to develop the ACL: •Pass - includes obligations where the probability of default is considered low and repayment in full is expected in accordance with the contractual loan terms; •Special Mention - includes obligations that have potential weakness that, if left uncorrected, may result in deterioration of the Company’s credit position at some future date; •Substandard Accrual - includes obligations that have well-defined weaknesses that could hinder normal repayment or collection of the debt, but are currently performing; •Nonaccrual - includes obligations where management has determined that full payment of principal and interest is in doubt. For more information on nonaccrual loans and leases see “Nonaccrual and Past Due Assets” below. For commercial and industrial loans, the performance of the borrower is monitored in a disciplined and regular manner based upon the level of credit risk inherent in the loan. To evaluate the level of credit risk, an internal risk rating is assigned reflecting the borrower’s PD and LGD. This two-dimensional credit risk rating methodology provides granularity in the risk monitoring process. These ratings are generally reviewed annually at a minimum. The combination of the PD and LGD assigned ratings, which reflect credit quality characteristics as of the reporting date and are used as inputs into the loss forecasting process, capture both the expectation of default and loss severity in the event of default. Each loan is periodically reviewed by management based on the amount of the lending arrangement and risk rating assessment, with priority given to those loans which are perceived to be of higher risk, or loans for which credit quality is weakening (e.g., payment delinquency). Loans are proactively managed by utilizing various procedures that are customized to the risk of a given loan, including ongoing outreach to the borrower, assessment of the borrower’s financial condition and appraisal of the collateral. Credit risk associated with commercial real estate loans is managed similar to commercial and industrial loans by evaluating PD and LGD. Risks associated with commercial real estate activities are typically correlated to the loan structure, collateral location, project progress and business environment. As a result, these attributes are monitored and utilized in assessing credit risk. Periodic reviews are also performed to assess market/geographic risk and business unit/industry risk, which may result in increased scrutiny on loans that are perceived to be of higher risk, had adverse changes in risk ratings and/or areas that concern management. These reviews are designed to assess risk and facilitate actions to mitigate such risks. Credit risk associated with leases is managed similar to commercial and industrial loans by evaluating PD and LGD. Reviews are generally performed annually based upon the dollar amount of the lease and the level of credit risk, and may be more frequent if circumstances warrant. The review process includes analysis of the following factors: equipment value/residual value, exposure levels, jurisdiction risk, industry risk, guarantor requirements, and regulatory compliance as applicable. Commercial loans with renewal terms in the original contract are recognized as current year originations upon renewal unless the loan automatically renewed without a new credit decision. Citizens generally reserves the right to not renew the loan or lease until current underwriting is completed and approved. The following table presents the amortized cost basis of commercial loans and leases by vintage date and internal risk rating as of December 31, 2023, and gross charge-offs by vintage date for the year ended December 31, 2023:
| Term Loans by Origination Year |  | Revolving Loans |  |
(dollars in millions) | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior to 2019 |  | Within the Revolving Period | Converted to Term |  | Total
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $3,599 |  |  | $6,338 |  |  | $5,049 |  |  | $1,254 |  |  | $1,085 |  |  | $2,031 |  |  | $21,033 |  | $53 |  |  | $40,442 |
Special Mention | 59 |  |  | 194 |  |  | 354 |  |  | 29 |  |  | 48 |  |  | 113 |  |  | 368 |  | — |  |  | 1,165 |
Substandard Accrual | 5 |  |  | 175 |  |  | 325 |  |  | 212 |  |  | 121 |  |  | 284 |  |  | 792 |  | 11 |  |  | 1,925 |
Nonaccrual | 1 |  |  | 72 |  |  | 51 |  |  | 4 |  |  | 5 |  |  | 102 |  |  | 53 |  | 6 |  |  | 294 |
Total commercial and industrial | 3,664 |  |  | 6,779 |  |  | 5,779 |  |  | 1,499 |  |  | 1,259 |  |  | 2,530 |  |  | 22,246 |  | 70 |  |  | 43,826 |
Gross charge-offs | 1 |  |  | 3 |  |  | 34 |  |  | 4 |  |  | 1 |  |  | 34 |  |  | 44 |  | — |  |  | 121 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 1,906 |  |  | 5,791 |  |  | 6,062 |  |  | 2,555 |  |  | 2,294 |  |  | 3,895 |  |  | 1,975 |  | 8 |  |  | 24,486 |
Special Mention | — |  |  | 713 |  |  | 539 |  |  | 222 |  |  | 183 |  |  | 260 |  |  | 75 |  | — |  |  | 1,992 |
Substandard Accrual | — |  |  | 277 |  |  | 203 |  |  | 469 |  |  | 528 |  |  | 939 |  |  | 100 |  | — |  |  | 2,516 |
Nonaccrual | 1 |  |  | 66 |  |  | 2 |  |  | 23 |  |  | 144 |  |  | 238 |  |  | 3 |  | — |  |  | 477 |
Total commercial real estate | 1,907 |  |  | 6,847 |  |  | 6,806 |  |  | 3,269 |  |  | 3,149 |  |  | 5,332 |  |  | 2,153 |  | 8 |  |  | 29,471 |
Gross charge-offs | — |  |  | — |  |  | — |  |  | 56 |  |  | 13 |  |  | 95 |  |  | — |  | — |  |  | 164 |
Leases |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 95 |  |  | 174 |  |  | 282 |  |  | 191 |  |  | 62 |  |  | 268 |  |  | — |  | — |  |  | 1,072 |
Special Mention | — |  |  | 27 |  |  | 1 |  |  | 1 |  |  | 2 |  |  | — |  |  | — |  | — |  |  | 31 |
Substandard Accrual | 3 |  |  | 14 |  |  | 12 |  |  | 6 |  |  | 4 |  |  | 3 |  |  | — |  | — |  |  | 42 |
Nonaccrual | — |  |  | — |  |  | 3 |  |  | — |  |  | — |  |  | — |  |  | — |  | — |  |  | 3 |
Total leases | 98 |  |  | 215 |  |  | 298 |  |  | 198 |  |  | 68 |  |  | 271 |  |  | — |  | — |  |  | 1,148 |
Gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  | — |  |  | — |
Total commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 5,600 |  |  | 12,303 |  |  | 11,393 |  |  | 4,000 |  |  | 3,441 |  |  | 6,194 |  |  | 23,008 |  | 61 |  |  | 66,000 |
Special Mention | 59 |  |  | 934 |  |  | 894 |  |  | 252 |  |  | 233 |  |  | 373 |  |  | 443 |  | — |  |  | 3,188 |
Substandard Accrual | 8 |  |  | 466 |  |  | 540 |  |  | 687 |  |  | 653 |  |  | 1,226 |  |  | 892 |  | 11 |  |  | 4,483 |
Nonaccrual | 2 |  |  | 138 |  |  | 56 |  |  | 27 |  |  | 149 |  |  | 340 |  |  | 56 |  | 6 |  |  | 774 |
Total commercial(1) | $5,669 |  |  | $13,841 |  |  | $12,883 |  |  | $4,966 |  |  | $4,476 |  |  | $8,133 |  |  | $24,399 |  | $78 |  |  | $74,445 |
Gross charge-offs | $1 |  |  | $3 |  |  | $34 |  |  | $60 |  |  | $14 |  |  | $129 |  |  | $44 |  | $— |  |  | $285 |
(1) In the fourth quarter of 2023, the Company revised its presentation of commercial loans and leases by vintage date and internal risk rating to reflect how the Company currently manages the commercial credit portfolio. The Company now reports Substandard Accrual and Nonaccrual ratings, replacing previously reported ratings of Substandard and Doubtful, respectively. The prior period presentation was revised to conform to the new presentation. For more information regarding the Company’s internal risk ratings, see “Credit Quality Indicators” above. The following table presents the amortized cost basis of commercial loans and leases by vintage date and internal risk rating as of December 31, 2022:
| Term Loans by Origination Year |  | Revolving Loans |  |
(dollars in millions) | 2022 |  | 2021 |  | 2020 |  | 2019 |  | 2018 |  | Prior to 2018 |  | Within the Revolving Period | Converted to Term |  | Total
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $8,304 |  |  | $8,469 |  |  | $2,224 |  |  | $2,074 |  |  | $1,334 |  |  | $1,952 |  |  | $24,211 |  | $148 |  |  | $48,716 |
Special Mention | 124 |  |  | 189 |  |  | 120 |  |  | 74 |  |  | 48 |  |  | 153 |  |  | 364 |  | — |  |  | 1,072 |
Substandard Accrual | 148 |  |  | 210 |  |  | 194 |  |  | 254 |  |  | 97 |  |  | 330 |  |  | 554 |  | 12 |  |  | 1,799 |
Nonaccrual | 12 |  |  | 22 |  |  | 10 |  |  | 6 |  |  | 43 |  |  | 33 |  |  | 119 |  | 4 |  |  | 249 |
Total commercial and industrial | 8,588 |  |  | 8,890 |  |  | 2,548 |  |  | 2,408 |  |  | 1,522 |  |  | 2,468 |  |  | 25,248 |  | 164 |  |  | 51,836 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 5,767 |  |  | 6,442 |  |  | 3,639 |  |  | 3,066 |  |  | 2,145 |  |  | 3,536 |  |  | 1,888 |  | 3 |  |  | 26,486 |
Special Mention | 1 |  |  | 119 |  |  | 103 |  |  | 390 |  |  | 99 |  |  | 113 |  |  | 62 |  | — |  |  | 887 |
Substandard Accrual | 91 |  |  | 15 |  |  | 75 |  |  | 248 |  |  | 346 |  |  | 591 |  |  | 23 |  | — |  |  | 1,389 |
Nonaccrual | 1 |  |  | 5 |  |  | 13 |  |  | 60 |  |  | 4 |  |  | 20 |  |  | — |  | — |  |  | 103 |
Total commercial real estate | 5,860 |  |  | 6,581 |  |  | 3,830 |  |  | 3,764 |  |  | 2,594 |  |  | 4,260 |  |  | 1,973 |  | 3 |  |  | 28,865 |
Leases |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 263 |  |  | 363 |  |  | 250 |  |  | 99 |  |  | 128 |  |  | 345 |  |  | — |  | — |  |  | 1,448 |
Special Mention | 4 |  |  | 5 |  |  | 2 |  |  | 6 |  |  | 1 |  |  | 3 |  |  | — |  | — |  |  | 21 |
Substandard Accrual | — |  |  | 4 |  |  | 3 |  |  | 3 |  |  | — |  |  | — |  |  | — |  | — |  |  | 10 |
Nonaccrual | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  | — |  |  | — |
Total leases | 267 |  |  | 372 |  |  | 255 |  |  | 108 |  |  | 129 |  |  | 348 |  |  | — |  | — |  |  | 1,479 |
Total commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 14,334 |  |  | 15,274 |  |  | 6,113 |  |  | 5,239 |  |  | 3,607 |  |  | 5,833 |  |  | 26,099 |  | 151 |  |  | 76,650 |
Special Mention | 129 |  |  | 313 |  |  | 225 |  |  | 470 |  |  | 148 |  |  | 269 |  |  | 426 |  | — |  |  | 1,980 |
Substandard Accrual | 239 |  |  | 229 |  |  | 272 |  |  | 505 |  |  | 443 |  |  | 921 |  |  | 577 |  | 12 |  |  | 3,198 |
Nonaccrual | 13 |  |  | 27 |  |  | 23 |  |  | 66 |  |  | 47 |  |  | 53 |  |  | 119 |  | 4 |  |  | 352 |
Total commercial(1) | $14,715 |  |  | $15,843 |  |  | $6,633 |  |  | $6,280 |  |  | $4,245 |  |  | $7,076 |  |  | $27,221 |  | $167 |  |  | $82,180 |
(1) In the fourth quarter of 2023, the Company revised its presentation of commercial loans and leases by vintage date and internal risk rating to reflect how the Company currently manages the commercial credit portfolio. The Company now reports Substandard Accrual and Nonaccrual ratings, replacing previously reported ratings of Substandard and Doubtful, respectively. The prior period presentation was revised to conform to the new presentation. For more information regarding the Company’s internal risk ratings, see “Credit Quality Indicators” above. 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 current FICO score as of December 31, 2023, and gross charge-offs by vintage date for the year ended December 31, 2023:
| Term Loans by Origination Year |  | Revolving Loans |  |
(dollars in millions) | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior to 2019 |  | Within the Revolving Period | Converted to Term |  | Total
Residential mortgages |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | $889 |  |  | $3,067 |  |  | $5,172 |  |  | $3,117 |  |  | $1,131 |  |  | $3,125 |  |  | $— |  | $— |  |  | $16,501 |
740-799 | 1,333 |  |  | 1,940 |  |  | 2,560 |  |  | 1,411 |  |  | 592 |  |  | 1,625 |  |  | — |  | — |  |  | 9,461 |
680-739 | 367 |  |  | 631 |  |  | 758 |  |  | 466 |  |  | 266 |  |  | 873 |  |  | — |  | — |  |  | 3,361 |
620-679 | 54 |  |  | 135 |  |  | 165 |  |  | 90 |  |  | 121 |  |  | 445 |  |  | — |  | — |  |  | 1,010 |
<620 | 9 |  |  | 48 |  |  | 104 |  |  | 95 |  |  | 161 |  |  | 561 |  |  | — |  | — |  |  | 978 |
No FICO available(1) | 1 |  |  | — |  |  | 2 |  |  | 1 |  |  | 3 |  |  | 14 |  |  | — |  | — |  |  | 21 |
Total residential mortgages | 2,653 |  |  | 5,821 |  |  | 8,761 |  |  | 5,180 |  |  | 2,274 |  |  | 6,643 |  |  | — |  | — |  |  | 31,332 |
Gross charge-offs | — |  |  | — |  |  | — |  |  | 1 |  |  | 1 |  |  | 4 |  |  | — |  | — |  |  | 6 |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | — |  |  | 4 |  |  | 4 |  |  | 1 |  |  | 4 |  |  | 91 |  |  | 5,078 |  | 222 |  |  | 5,404 |
740-799 | — |  |  | 1 |  |  | 2 |  |  | 1 |  |  | 3 |  |  | 82 |  |  | 4,708 |  | 241 |  |  | 5,038 |
680-739 | 1 |  |  | 1 |  |  | 1 |  |  | 2 |  |  | 5 |  |  | 93 |  |  | 2,693 |  | 202 |  |  | 2,998 |
620-679 | — |  |  | 1 |  |  | 1 |  |  | 2 |  |  | 8 |  |  | 77 |  |  | 718 |  | 137 |  |  | 944 |
<620 | — |  |  | 2 |  |  | 1 |  |  | 1 |  |  | 10 |  |  | 80 |  |  | 332 |  | 230 |  |  | 656 |
Total home equity | 1 |  |  | 9 |  |  | 9 |  |  | 7 |  |  | 30 |  |  | 423 |  |  | 13,529 |  | 1,032 |  |  | 15,040 |
Gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3 |  |  | 8 |  | 1 |  |  | 12 |
Automobile |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 81 |  |  | 539 |  |  | 1,062 |  |  | 368 |  |  | 162 |  |  | 47 |  |  | — |  | — |  |  | 2,259 |
740-799 | 134 |  |  | 671 |  |  | 1,038 |  |  | 375 |  |  | 165 |  |  | 52 |  |  | — |  | — |  |  | 2,435 |
680-739 | 147 |  |  | 577 |  |  | 708 |  |  | 252 |  |  | 118 |  |  | 39 |  |  | — |  | — |  |  | 1,841 |
620-679 | 94 |  |  | 316 |  |  | 345 |  |  | 112 |  |  | 65 |  |  | 26 |  |  | — |  | — |  |  | 958 |
<620 | 44 |  |  | 232 |  |  | 291 |  |  | 100 |  |  | 66 |  |  | 32 |  |  | — |  | — |  |  | 765 |
No FICO available(1) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  | — |  |  | — |
Total automobile | 500 |  |  | 2,335 |  |  | 3,444 |  |  | 1,207 |  |  | 576 |  |  | 196 |  |  | — |  | — |  |  | 8,258 |
Gross charge-offs | 3 |  |  | 34 |  |  | 41 |  |  | 14 |  |  | 12 |  |  | 9 |  |  | — |  | — |  |  | 113 |
Education |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 296 |  |  | 671 |  |  | 1,637 |  |  | 1,418 |  |  | 600 |  |  | 1,185 |  |  | — |  | — |  |  | 5,807 |
740-799 | 368 |  |  | 694 |  |  | 1,050 |  |  | 850 |  |  | 369 |  |  | 678 |  |  | — |  | — |  |  | 4,009 |
680-739 | 143 |  |  | 289 |  |  | 333 |  |  | 273 |  |  | 134 |  |  | 298 |  |  | — |  | — |  |  | 1,470 |
620-679 | 30 |  |  | 65 |  |  | 68 |  |  | 58 |  |  | 32 |  |  | 107 |  |  | — |  | — |  |  | 360 |
<620 | 5 |  |  | 18 |  |  | 25 |  |  | 23 |  |  | 15 |  |  | 55 |  |  | — |  | — |  |  | 141 |
No FICO available(1) | 10 |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | 36 |  |  | — |  | — |  |  | 47 |
Total education | 852 |  |  | 1,737 |  |  | 3,114 |  |  | 2,622 |  |  | 1,150 |  |  | 2,359 |  |  | — |  | — |  |  | 11,834 |
Gross charge-offs | — |  |  | 5 |  |  | 19 |  |  | 25 |  |  | 17 |  |  | 45 |  |  | — |  | — |  |  | 111 |
Other retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 183 |  |  | 70 |  |  | 38 |  |  | 35 |  |  | 16 |  |  | 18 |  |  | 500 |  | — |  |  | 860 |
740-799 | 258 |  |  | 87 |  |  | 46 |  |  | 45 |  |  | 21 |  |  | 19 |  |  | 963 |  | 1 |  |  | 1,440 |
680-739 | 214 |  |  | 76 |  |  | 39 |  |  | 39 |  |  | 18 |  |  | 11 |  |  | 973 |  | 2 |  |  | 1,372 |
620-679 | 118 |  |  | 48 |  |  | 23 |  |  | 19 |  |  | 6 |  |  | 4 |  |  | 419 |  | 2 |  |  | 639 |
<620 | 31 |  |  | 35 |  |  | 18 |  |  | 14 |  |  | 4 |  |  | 2 |  |  | 251 |  | 2 |  |  | 357 |
No FICO available(1) | 7 |  |  | 1 |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | 373 |  | — |  |  | 382 |
Total other retail | 811 |  |  | 317 |  |  | 164 |  |  | 153 |  |  | 65 |  |  | 54 |  |  | 3,479 |  | 7 |  |  | 5,050 |
Gross charge-offs | 49 |  |  | 24 |  |  | 8 |  |  | 8 |  |  | 11 |  |  | 9 |  |  | 121 |  | — |  |  | 230 |
Total retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 1,449 |  |  | 4,351 |  |  | 7,913 |  |  | 4,939 |  |  | 1,913 |  |  | 4,466 |  |  | 5,578 |  | 222 |  |  | 30,831 |
740-799 | 2,093 |  |  | 3,393 |  |  | 4,696 |  |  | 2,682 |  |  | 1,150 |  |  | 2,456 |  |  | 5,671 |  | 242 |  |  | 22,383 |
680-739 | 872 |  |  | 1,574 |  |  | 1,839 |  |  | 1,032 |  |  | 541 |  |  | 1,314 |  |  | 3,666 |  | 204 |  |  | 11,042 |
620-679 | 296 |  |  | 565 |  |  | 602 |  |  | 281 |  |  | 232 |  |  | 659 |  |  | 1,137 |  | 139 |  |  | 3,911 |
<620 | 89 |  |  | 335 |  |  | 439 |  |  | 233 |  |  | 256 |  |  | 730 |  |  | 583 |  | 232 |  |  | 2,897 |
No FICO available(1) | 18 |  |  | 1 |  |  | 3 |  |  | 2 |  |  | 3 |  |  | 50 |  |  | 373 |  | — |  |  | 450 |
Total retail | $4,817 |  |  | $10,219 |  |  | $15,492 |  |  | $9,169 |  |  | $4,095 |  |  | $9,675 |  |  | $17,008 |  | $1,039 |  |  | $71,514 |
Gross charge-offs | $52 |  |  | $63 |  |  | $68 |  |  | $48 |  |  | $41 |  |  | $70 |  |  | $129 |  | $1 |  |  | $472 |
(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 current FICO score as of December 31, 2022:
| Term Loans by Origination Year |  | Revolving Loans |  |
(dollars in millions) | 2022 |  | 2021 |  | 2020 |  | 2019 |  | 2018 |  | Prior to 2018 |  | Within the Revolving Period | Converted to Term |  | Total
Residential mortgages |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | $2,132 |  |  | $4,943 |  |  | $3,143 |  |  | $1,180 |  |  | $363 |  |  | $3,081 |  |  | $— |  | $— |  |  | $14,842 |
740-799 | 2,376 |  |  | 2,991 |  |  | 1,660 |  |  | 638 |  |  | 257 |  |  | 1,635 |  |  | — |  | — |  |  | 9,557 |
680-739 | 769 |  |  | 899 |  |  | 502 |  |  | 308 |  |  | 149 |  |  | 851 |  |  | — |  | — |  |  | 3,478 |
620-679 | 125 |  |  | 168 |  |  | 135 |  |  | 138 |  |  | 99 |  |  | 422 |  |  | — |  | — |  |  | 1,087 |
<620 | 17 |  |  | 68 |  |  | 77 |  |  | 165 |  |  | 147 |  |  | 455 |  |  | — |  | — |  |  | 929 |
No FICO available(1) | 2 |  |  | 2 |  |  | 2 |  |  | 3 |  |  | 2 |  |  | 17 |  |  | — |  | — |  |  | 28 |
Total residential mortgages | 5,421 |  |  | 9,071 |  |  | 5,519 |  |  | 2,432 |  |  | 1,017 |  |  | 6,461 |  |  | — |  | — |  |  | 29,921 |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 4 |  |  | 5 |  |  | 2 |  |  | 5 |  |  | 6 |  |  | 110 |  |  | 4,958 |  | 267 |  |  | 5,357 |
740-799 | 2 |  |  | 2 |  |  | 1 |  |  | 4 |  |  | 6 |  |  | 97 |  |  | 4,350 |  | 274 |  |  | 4,736 |
680-739 | 1 |  |  | 1 |  |  | 1 |  |  | 6 |  |  | 11 |  |  | 114 |  |  | 2,296 |  | 234 |  |  | 2,664 |
620-679 | — |  |  | 1 |  |  | 2 |  |  | 9 |  |  | 16 |  |  | 93 |  |  | 558 |  | 143 |  |  | 822 |
<620 | — |  |  | — |  |  | 2 |  |  | 12 |  |  | 18 |  |  | 82 |  |  | 178 |  | 172 |  |  | 464 |
Total home equity | 7 |  |  | 9 |  |  | 8 |  |  | 36 |  |  | 57 |  |  | 496 |  |  | 12,340 |  | 1,090 |  |  | 14,043 |
Automobile |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 650 |  |  | 1,453 |  |  | 584 |  |  | 324 |  |  | 120 |  |  | 54 |  |  | — |  | — |  |  | 3,185 |
740-799 | 962 |  |  | 1,606 |  |  | 649 |  |  | 343 |  |  | 134 |  |  | 56 |  |  | — |  | — |  |  | 3,750 |
680-739 | 920 |  |  | 1,187 |  |  | 460 |  |  | 254 |  |  | 102 |  |  | 44 |  |  | — |  | — |  |  | 2,967 |
620-679 | 554 |  |  | 586 |  |  | 205 |  |  | 133 |  |  | 62 |  |  | 28 |  |  | — |  | — |  |  | 1,568 |
<620 | 188 |  |  | 309 |  |  | 130 |  |  | 106 |  |  | 56 |  |  | 31 |  |  | — |  | — |  |  | 820 |
No FICO available(1) | 2 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  | — |  |  | 2 |
Total automobile | 3,276 |  |  | 5,141 |  |  | 2,028 |  |  | 1,160 |  |  | 474 |  |  | 213 |  |  | — |  | — |  |  | 12,292 |
Education |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 548 |  |  | 1,720 |  |  | 1,567 |  |  | 694 |  |  | 410 |  |  | 1,068 |  |  | — |  | — |  |  | 6,007 |
740-799 | 735 |  |  | 1,351 |  |  | 1,126 |  |  | 486 |  |  | 267 |  |  | 609 |  |  | — |  | — |  |  | 4,574 |
680-739 | 363 |  |  | 423 |  |  | 356 |  |  | 170 |  |  | 103 |  |  | 288 |  |  | — |  | — |  |  | 1,703 |
620-679 | 54 |  |  | 76 |  |  | 62 |  |  | 38 |  |  | 29 |  |  | 102 |  |  | — |  | — |  |  | 361 |
<620 | 6 |  |  | 16 |  |  | 20 |  |  | 12 |  |  | 11 |  |  | 50 |  |  | — |  | — |  |  | 115 |
No FICO available(1) | 6 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 42 |  |  | — |  | — |  |  | 48 |
Total education | 1,712 |  |  | 3,586 |  |  | 3,131 |  |  | 1,400 |  |  | 820 |  |  | 2,159 |  |  | — |  | — |  |  | 12,808 |
Other retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 182 |  |  | 105 |  |  | 93 |  |  | 48 |  |  | 25 |  |  | 27 |  |  | 491 |  | — |  |  | 971 |
740-799 | 230 |  |  | 134 |  |  | 121 |  |  | 68 |  |  | 31 |  |  | 25 |  |  | 974 |  | 1 |  |  | 1,584 |
680-739 | 175 |  |  | 109 |  |  | 103 |  |  | 52 |  |  | 21 |  |  | 14 |  |  | 993 |  | 4 |  |  | 1,471 |
620-679 | 108 |  |  | 65 |  |  | 52 |  |  | 18 |  |  | 8 |  |  | 4 |  |  | 435 |  | 4 |  |  | 694 |
<620 | 35 |  |  | 30 |  |  | 25 |  |  | 9 |  |  | 4 |  |  | 2 |  |  | 190 |  | 6 |  |  | 301 |
No FICO available(1) | 12 |  |  | 1 |  |  | 3 |  |  | — |  |  | — |  |  | — |  |  | 380 |  | 1 |  |  | 397 |
Total other retail | 742 |  |  | 444 |  |  | 397 |  |  | 195 |  |  | 89 |  |  | 72 |  |  | 3,463 |  | 16 |  |  | 5,418 |
Total retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
800+ | 3,516 |  |  | 8,226 |  |  | 5,389 |  |  | 2,251 |  |  | 924 |  |  | 4,340 |  |  | 5,449 |  | 267 |  |  | 30,362 |
740-799 | 4,305 |  |  | 6,084 |  |  | 3,557 |  |  | 1,539 |  |  | 695 |  |  | 2,422 |  |  | 5,324 |  | 275 |  |  | 24,201 |
680-739 | 2,228 |  |  | 2,619 |  |  | 1,422 |  |  | 790 |  |  | 386 |  |  | 1,311 |  |  | 3,289 |  | 238 |  |  | 12,283 |
620-679 | 841 |  |  | 896 |  |  | 456 |  |  | 336 |  |  | 214 |  |  | 649 |  |  | 993 |  | 147 |  |  | 4,532 |
<620 | 246 |  |  | 423 |  |  | 254 |  |  | 304 |  |  | 236 |  |  | 620 |  |  | 368 |  | 178 |  |  | 2,629 |
No FICO available(1) | 22 |  |  | 3 |  |  | 5 |  |  | 3 |  |  | 2 |  |  | 59 |  |  | 380 |  | 1 |  |  | 475 |
Total retail | $11,158 |  |  | $18,251 |  |  | $11,083 |  |  | $5,223 |  |  | $2,457 |  |  | $9,401 |  |  | $15,803 |  | $1,106 |  |  | $74,482 |
(1) Represents loans for which an updated FICO score was unavailable (e.g., due to recent profile changes). Nonaccrual and Past Due Assets Nonaccrual loans and leases are those on which accrual of interest is suspended. Loans, other than certain retail loans insured by U.S. government agencies, are placed on nonaccrual status when full payment of principal and interest is in doubt, unless the loan is both well-secured and in the process of collection. When a loan is placed on nonaccrual status the accrued interest receivable is reversed against interest income and the amortization of any net deferred fees is suspended. Interest collected on nonaccrual loans and leases for which the ultimate collectability of principal is uncertain are generally applied to reduce the carrying value of the asset first. Otherwise, interest income may be recognized to the extent of the cash received if the loan is deemed fully collectible. A loan or lease may be returned to accrual status if: •no principal and interest payments are due and unpaid, and repayment of the remaining contractual principal and interest is expected; •the loan or lease has otherwise become well-secured and in the process of collection; or •the borrower has made regularly scheduled payments in full for the prior six months and it is reasonably assured that the loan or lease will be brought current within a reasonable period. Commercial and industrial loans, commercial real estate loans, and leases are generally placed on nonaccrual status when contractually past due 90 days or more, or earlier if management believes that the probability of collection is insufficient to warrant further accrual. Some of these loans and leases may remain on accrual status when contractually past due 90 days or more if management considers the loan collectible. Residential mortgages are generally placed on nonaccrual status when past due 120 days, or sooner if determined to be collateral dependent, unless repayment of the loan is fully or partially guaranteed by the FHA, VA or USDA. Credit card balances are placed on nonaccrual status when past due 90 days or more and are restored to accrual status if they subsequently become less than 90 days past due. All other retail loans are generally placed on nonaccrual status when past due 90 days or more, or earlier if management believes that the probability of collection is insufficient to warrant further accrual. Loans less than 90 days past due may be placed on nonaccrual status due to the death of the borrower, fraud or bankruptcy. The following tables present an aging analysis of accruing loans and leases, and nonaccrual loans and leases as of December 31, 2023 and 2022:
| December 31, 2023
|  | Days Past Due and Accruing |  |  |
(dollars in millions) | Current | 30-59 | 60-89 | 90+ | Nonaccrual | Total | Nonaccrual with no related ACL
Commercial and industrial | $43,447 |  | $61 |  | $18 |  | $6 |  | $294 |  | $43,826 |  | $30 |
Commercial real estate | 28,745 |  | 150 |  | 59 |  | 40 |  | 477 |  | 29,471 |  | 71 |
Leases | 1,144 |  | 1 |  | — |  | — |  | 3 |  | 1,148 |  | — |
Total commercial | 73,336 |  | 212 |  | 77 |  | 46 |  | 774 |  | 74,445 |  | 101 |
Residential mortgages(1) | 30,499 |  | 282 |  | 118 |  | 256 |  | 177 |  | 31,332 |  | 144 |
Home equity | 14,640 |  | 82 |  | 33 |  | — |  | 285 |  | 15,040 |  | 198 |
Automobile | 8,005 |  | 144 |  | 48 |  | — |  | 61 |  | 8,258 |  | 7 |
Education | 11,732 |  | 49 |  | 23 |  | 2 |  | 28 |  | 11,834 |  | 3 |
Other retail | 4,899 |  | 49 |  | 34 |  | 29 |  | 39 |  | 5,050 |  | — |
Total retail | 69,775 |  | 606 |  | 256 |  | 287 |  | 590 |  | 71,514 |  | 352 |
Total | $143,111 |  | $818 |  | $333 |  | $333 |  | $1,364 |  | $145,959 |  | $453 |
Guaranteed residential mortgages(1) | $675 |  | $128 |  | $76 |  | $243 |  | $— |  | $1,122 |  | $— |
(1) Guaranteed residential mortgages represent loans fully or partially guaranteed by the FHA, VA and USDA, and are included in the amounts presented for Residential mortgages.
| December 31, 2022
|  | Days Past Due and Accruing |  |  |
(dollars in millions) | Current | 30-59 | 60-89 | 90+ | Nonaccrual | Total | Nonaccrual with no related ACL
Commercial and industrial | $51,389 |  | $152 |  | $25 |  | $21 |  | $249 |  | $51,836 |  | $64 |
Commercial real estate | 28,665 |  | 51 |  | 45 |  | 1 |  | 103 |  | 28,865 |  | 7 |
Leases | 1,475 |  | 4 |  | — |  | — |  | — |  | 1,479 |  | — |
Total commercial | 81,529 |  | 207 |  | 70 |  | 22 |  | 352 |  | 82,180 |  | 71 |
Residential mortgages(1) | 29,228 |  | 95 |  | 45 |  | 319 |  | 234 |  | 29,921 |  | 187 |
Home equity | 13,719 |  | 64 |  | 19 |  | — |  | 241 |  | 14,043 |  | 185 |
Automobile | 12,039 |  | 152 |  | 45 |  | — |  | 56 |  | 12,292 |  | 9 |
Education | 12,718 |  | 36 |  | 17 |  | 4 |  | 33 |  | 12,808 |  | 3 |
Other retail | 5,294 |  | 44 |  | 30 |  | 22 |  | 28 |  | 5,418 |  | 1 |
Total retail | 72,998 |  | 391 |  | 156 |  | 345 |  | 592 |  | 74,482 |  | 385 |
Total | $154,527 |  | $598 |  | $226 |  | $367 |  | $944 |  | $156,662 |  | $456 |
Guaranteed residential mortgages(1) | $789 |  | $57 |  | $34 |  | $316 |  | $— |  | $1,196 |  | $— |
(1) Guaranteed residential mortgages represent loans fully or partially guaranteed by the FHA, VA and USDA, and are included in the amounts presented for Residential mortgages. Loan Modifications to Borrowers Experiencing Financial Difficulty Effective January 1, 2023, the Company adopted accounting guidance that eliminates the separate recognition and measurement of TDRs. Upon adoption of this guidance, all loan modifications to borrowers experiencing financial difficulty, or FDMs, are evaluated to determine whether the modification should be accounted for as a new loan or a continuation of the existing loan. The existing loan is derecognized and the restructured loan is accounted for as a new loan if the effective yield on the restructured loan is at least equal to the effective yield for comparable loans with similar collection risk and the modification to the original loan is more than minor. Any unamortized fees and costs from the original loan are recognized in interest income when the new loan is granted. If a loan restructuring does not meet these conditions, the existing loan’s amortized cost basis is carried forward and the modified loan is accounted for as a continuation of the existing loan. FDMs are generally accounted for as a continuation of the existing loan given the terms are typically not at market rates. The Company offers loan modifications to retail and commercial borrowers as a result of its loss mitigation activities that may result in a payment delay, interest rate reduction, term extension, principal forgiveness, or combination thereof. Payment delays consist of modifications that result in a delay of contractual amounts due greater than three months over a rolling 12-month period. Commercial loan modifications are offered on a case-by-case basis and generally include a payment delay, term extension and/or interest rate reduction. The Company does not typically offer principal forgiveness for commercial loans. Retail loan modifications are offered through structured loan modification programs, which are summarized below. •Forbearance programs provide borrowers experiencing some form of hardship a period of time during which their contractual payment obligations are suspended, resulting in a payment delay and/or term extension. •Other repayment plans are offered due to hardship and include an interest rate reduction and/or term extension designed to enable the borrower to return the loan to current status in an expeditious manner. •Settlement agreements may be executed with borrowers experiencing a long-term hardship or who are delinquent, resulting in principal forgiveness. Upon fulfillment of the terms of the settlement agreement, the unpaid principal amount is forgiven resulting in a charge-off of the outstanding principal balance. •Certain reorganization bankruptcy judgments may result in any one of the four modification types or some combination thereof. Retail and commercial loans whose contractual terms have been modified in a FDM and are current at the time of the modification may remain on accrual status if there is demonstrated performance prior to the modification and payment in full under the modified terms is expected. Cash receipts on nonaccrual impaired loans, including nonaccrual loans involved in FDMs, are generally applied to reduce the unpaid principal balance. Certain FDMs that are current in payment status are classified as nonaccrual in accordance with regulatory guidance. Nonaccrual FDMs that meet the guidelines above for accrual status can be returned to accruing if supported by a well-documented evaluation of the borrowers’ financial condition, and if they have been current for at least six months. The following table presents the period-end amortized cost of loans to borrowers experiencing financial difficulty that were modified during the year ended December 31, 2023, disaggregated by class of financing receivable and modification type. The modification type reflects the cumulative effect of all FDMs received during the indicated period.
| Year Ended December 31, 2023
(dollars in millions) | Interest Rate Reduction | Term Extension | Payment Delay | Principal Forgiveness | Interest Rate Reduction and Term Extension |  |  | Term Extension and Payment Delay |  |  |  | Total | Total as a % of Loan Class(1)
Commercial and industrial | $1 |  | $252 |  | $69 |  | $— |  | $1 |  |  |  | $2 |  |  |  |  | $325 |  | 0.74 | %
Commercial real estate | — |  | 522 |  | — |  | — |  | 70 |  |  |  | 1 |  |  |  |  | 593 |  | 2.01 |
Total commercial | 1 |  | 774 |  | 69 |  | — |  | 71 |  |  |  | 3 |  |  |  |  | 918 |  | 1.23 |
Residential mortgages | 8 |  | 77 |  | 3 |  | — |  | 20 |  |  |  | 1 |  |  |  |  | 109 |  | 0.35 |
Home equity | 2 |  | 5 |  | — |  | — |  | 8 |  |  |  | — |  |  |  |  | 15 |  | 0.10 |
Automobile | — |  | — |  | — |  | — |  | — |  |  |  | — |  |  |  |  | — |  | — |
Education | 9 |  | — |  | 31 |  | — |  | — |  |  |  | — |  |  |  |  | 40 |  | 0.34 |
Other retail | 11 |  | — |  | — |  | — |  | — |  |  |  | — |  |  |  |  | 11 |  | 0.22 |
Total retail | 30 |  | 82 |  | 34 |  | — |  | 28 |  |  |  | 1 |  |  |  |  | 175 |  | 0.24 |
Total(2) | $31 |  | $856 |  | $103 |  | $— |  | $99 |  |  |  | $4 |  |  |  |  | $1,093 |  | 0.75 | %
(1) Represents the total amortized cost as of period-end divided by the period-end amortized cost of the corresponding loan class. Accrued interest receivable is excluded from amortized cost and is immaterial. (2) Excludes borrowers that had their debt discharged by means of a Chapter 7 bankruptcy filing. The following table presents the financial effect of loans to borrowers experiencing financial difficulty that were modified during the year ended December 31, 2023, disaggregated by class of financing receivable.
| Year Ended December 31, 2023
| Weighted-Average Interest Rate Reduction(1)(5) | Weighted-Average Term Extension (in Months)(2)(5) | Weighted-Average Payment Deferral(3)(5) | Amount of Principal Forgiven(4)
Commercial and industrial | 2.02 | % | 15 | $562,777 |  | $— |
Commercial real estate | 0.59 |  | 11 | 30,821 |  | — |
Residential mortgages | 1.58 |  | 50 | — |  | — |
Home equity | 2.64 |  | 120 | 1,366 |  | — |
Automobile | 3.60 |  | 18 | 1,245 |  | — |
Education | 4.76 |  | — |  | 6,134 |  | — |
Other retail | 18.68 |  | — |  | — |  | 5 |
(1) Represents the weighted-average reduction of the loan’s interest rate. (2) Represents the weighted-average extension of a loan’s maturity date. (3) Represents the weighted-average amount of payments delayed as a result of the loan modification. Amounts are reported in whole dollars. (4) Amounts are recorded as charge-offs and are reported in millions. (5) Weighted based on period-end amortized cost. The following table presents an aging analysis of the period-end amortized cost of loans to borrowers experiencing financial difficulty that were modified during the year ended December 31, 2023, disaggregated by class of financing receivable. A loan in a forbearance or repayment plan is reported as past due according to its contractual terms until contractually modified. Subsequent to modification, it is reported as past due based on its restructured terms.
| December 31, 2023
|  | Days Past Due and Accruing |  |
(dollars in millions) | Current | 30-59 | 60-89 | 90+ | Nonaccrual | Total
Commercial and industrial | $211 |  | $— |  | $— |  | $— |  | $114 |  | $325 |
Commercial real estate | 402 |  | 7 |  | — |  | 26 |  | 158 |  | 593 |
Total commercial | 613 |  | 7 |  | — |  | 26 |  | 272 |  | 918 |
Residential mortgages | 61 |  | 11 |  | 7 |  | 17 |  | 13 |  | 109 |
Home equity | 5 |  | — |  | — |  | — |  | 10 |  | 15 |
Automobile | — |  | — |  | — |  | — |  | — |  | — |
Education | 37 |  | 1 |  | — |  | — |  | 2 |  | 40 |
Other retail | 8 |  | 1 |  | 1 |  | — |  | 1 |  | 11 |
Total retail | 111 |  | 13 |  | 8 |  | 17 |  | 26 |  | 175 |
Total | $724 |  | $20 |  | $8 |  | $43 |  | $298 |  | $1,093 |
The following table presents the period-end amortized cost of loans to borrowers experiencing financial difficulty that were modified on or after January 1, 2023 that subsequently defaulted during the year ended December 31, 2023, disaggregated by class of financing receivable and modification type. The modification type reflects the cumulative effect of all FDMs at the time of default. A loan is considered to be in default if, subsequent to modification, it becomes 90 or more days past due or is placed on nonaccrual status.
| Year Ended December 31, 2023
(dollars in millions) | Interest Rate Reduction | Term Extension | Payment Delay |  | Interest Rate Reduction and Term Extension |  |  |  |  |  |  | Total
Commercial and industrial | $— |  | $— |  | $43 |  |  | $— |  |  |  |  |  |  |  | $43 |
Commercial real estate | — |  | 102 |  | — |  |  | — |  |  |  |  |  |  |  | 102 |
Total commercial | — |  | 102 |  | 43 |  |  | — |  |  |  |  |  |  |  | 145 |
Residential mortgages | 1 |  | 9 |  | — |  |  | 5 |  |  |  |  |  |  |  | 15 |
Home equity | — |  | 1 |  | — |  |  | 2 |  |  |  |  |  |  |  | 3 |
Automobile | — |  | — |  | — |  |  | — |  |  |  |  |  |  |  | — |
Education | — |  | — |  | 1 |  |  | — |  |  |  |  |  |  |  | 1 |
Other retail | — |  | — |  | — |  |  | — |  |  |  |  |  |  |  | — |
Total retail | 1 |  | 10 |  | 1 |  |  | 7 |  |  |  |  |  |  |  | 19 |
Total | $1 |  | $112 |  | $44 |  |  | $7 |  |  |  |  |  |  |  | $164 |
Unfunded commitments related to loans modified during the year ended December 31, 2023 were $221 million at December 31, 2023. Troubled Debt Restructuring - Prior to the Adoption of ASU 2022-02 In situations where, for economic or legal reasons related to the borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider, the related loan is classified as a TDR. Concessions granted in TDRs for all classes of loans may include lowering the interest rate, forgiving a portion of principal, extending the loan term, lowering scheduled payments for a specified period of time, waiving or delaying a scheduled payment of principal or interest for other than an insignificant time period, or capitalizing past due amounts. A rate increase can be a concession if the increased rate is lower than a market rate for debt with risk similar to that of the restructured loan. TDRs for commercial loans may also involve creating a multiple note structure, accepting non-cash assets, accepting an equity interest, or receiving a performance-based fee. In some cases, a TDR may involve multiple concessions. Cash receipts on nonaccrual impaired loans, including nonaccrual loans involved in TDRs, are generally applied to reduce the unpaid principal balance. Certain TDRs that are current in payment status are classified as nonaccrual in accordance with regulatory guidance. Nonaccrual TDRs may be returned to accruing if supported by a well-documented evaluation of the borrowers’ financial condition, and if they have been current for at least six months. The ACL for loans previously identified as TDRs is measured at the product level based on post-modification credit attributes and use of an econometric model or at the fair value of collateral less costs to sell, if less than the loan’s amortized cost basis. Any portion of the loan’s amortized cost basis the Company does not expect to collect as a result of the modification is charged off at the time of modification. For retail TDR accounts assessed based on the fair value of collateral, any portion of the loan’s recorded investment in excess of the collateral value less costs to sell is charged off at the time of modification or at the time of subsequent and regularly recurring valuations. The following tables summarize loans modified during the year ended December 31, 2022. 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.
|  |  |  | December 31, 2022
|  |  |  | Amortized Cost Basis
(dollars in millions) | Number of Contracts |  |  | Interest Rate Reduction(1) |  | Maturity Extension(2) |  | Other(3) | Total
Commercial and industrial | 29 |  |  |  | $— |  |  |  | $26 |  |  |  | $— |  |  | $26 |
Total commercial | 29 |  |  |  | — |  |  |  | 26 |  |  |  | — |  |  | 26 |
Residential mortgages | 1,884 |  |  |  | 52 |  |  |  | 96 |  |  |  | 260 |  |  | 408 |
Home equity | 381 |  |  |  | 4 |  |  |  | 2 |  |  |  | 19 |  |  | 25 |
Automobile | 601 |  |  |  | 2 |  |  |  | — |  |  |  | 4 |  |  | 6 |
Education | 631 |  |  |  | — |  |  |  | — |  |  |  | 25 |  |  | 25 |
Other retail | 2,320 |  |  |  | 10 |  |  |  | — |  |  |  | 1 |  |  | 11 |
Total retail | 5,817 |  |  |  | 68 |  |  |  | 98 |  |  |  | 309 |  |  | 475 |
Total | 5,846 |  |  |  | $68 |  |  |  | $124 |  |  |  | $309 |  |  | $501 |
(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. The following are also included: 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 $3 million for the year ended December 31, 2022. Unfunded commitments related to TDRs were $81 million at December 31, 2022. The following table provides a summary of TDRs that defaulted (became 90 days or more past due) within 12 months of their modification date:
(dollars in millions) | Year Ended December 31, 2022
Commercial | $— |
Retail(1) | 242 |
Total | $242 |
(1) Includes $187 million of loans fully or partially government guaranteed by the FHA, VA, and USDA. Concentrations of Credit Risk The Company’s lending activity is geographically well diversified with an emphasis in our core markets 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 December 31, 2023 and 2022, there were no material 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 the facts surrounding the transaction.

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