PNC Bank 2007 Annual Report Download - page 126

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S
UMMARY
O
F
L
OAN
L
OSS
E
XPERIENCE
Year ended December 31 - dollars in millions 2007 2006 2005 2004 2003
Allowance for loan and lease losses at beginning of year $ 560 $ 596 $ 607 $ 632 $ 673
Charge-offs
Commercial (156) (108) (52) (113) (168)
Commercial real estate (16) (3) (1) (2) (3)
Consumer (73) (52) (45) (43) (39)
Residential mortgage (3) (2) (3) (4)
Lease financing (14) (29) (5) (46)
Total charge-offs (245) (180) (129) (166) (260)
Recoveries
Commercial (a) 30 19 82 31 32
Commercial real estate 11 111
Consumer 14 15 15 12 12
Residential mortgage 11
Lease financing 5 163
Total recoveries 45 40 99 51 49
Net charge-offs (a) (200) (140) (30) (115) (211)
Provision for credit losses 315 124 21 52 177
Acquisitions 152 23 22
Net change in allowance for unfunded loan commitments and letters of credit 3(20) (25) 16 (7)
Allowance for loan and lease losses at end of year $ 830 $ 560 $ 596 $ 607 $ 632
Allowance as a percent of period-end
Loans 1.21% 1.12% 1.21% 1.40% 1.74%
Nonperforming loans 190 381 314 424 238
As a percent of average loans
Net charge-offs (a) .32 .28 .06 .28 .59
Provision for credit losses .50 .25 .04 .13 .49
Allowance for loan and lease losses 1.33 1.13 1.26 1.48 1.76
Allowance as a multiple of net charge-offs (a) 4.15x 4.00x 19.87x 5.28x 3.00x
(a) Amounts for 2005 reflect the impact of a $53 million loan recovery in that year. Excluding this recovery, net charge-offs would have been .18% of average loans and the allowance as
a multiple of net charge-offs would have been 7.18x.
The following table presents the assignment of the allowance for loan and lease losses and the categories of loans as a percentage
of total loans. Changes in the allocation over time reflect the changes in loan portfolio composition, risk profile and refinements to
reserve methodologies. For purposes of this presentation, a portion of the allowance for loan and lease losses has been assigned to
loan categories based on the relative specific and pool allocation amounts to provide coverage for probable losses not covered in
specific, pool and consumer reserve methodologies related to qualitative and measurement factors. At December 31, 2007, the
portion of the reserves for these factors was $38 million.
A
LLOCATION
O
F
A
LLOWANCE
F
OR
L
OAN AND
L
EASE
L
OSSES
2007 2006 2005 2004 2003
December 31
Dollars in millions Allowance
Loans to
Total Loans Allowance
Loans to
Total Loans Allowance
Loans to
Total Loans Allowance
Loans to
Total Loans Allowance
Loans to
Total Loans
Commercial $560 41.8% $443 40.9% $489 39.2% $503 40.1% $514 41.5%
Commercial real estate 153 13.0 30 7.0 32 6.4 26 4.5 34 5.1
Consumer 68 26.9 28 33.1 24 33.1 35 35.9 28 32.6
Residential mortgage 9 14.0 7 12.7 7 14.9 6 11.0 7 8.0
Lease financing 36 3.7 48 5.6 41 5.7 33 7.3 44 11.4
Other 4.6 4 .7 3 .7 4 1.2 5 1.4
Total $830 100.0% $560 100.0% $596 100.0% $607 100.0% $632 100.0%
121