PNC Bank 2008 Annual Report Download - page 163

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S
UMMARY
O
F
L
OAN
L
OSS
E
XPERIENCE
Year ended December 31 - dollars in millions 2008 2007 2006 2005 2004
Allowance for loan and lease losses – January 1 $ 830 $ 560 $ 596 $ 607 $ 632
Charge-offs
Commercial (301) (156) (108) (52) (113)
Commercial real estate (165) (16) (3) (1) (2)
Equipment lease financing (3) (14) (29) (2)
Consumer (143) (73) (52) (45) (46)
Residential real estate (6) (3) (2) (3)
Total charge-offs (618) (245) (180) (129) (166)
Recoveries
Commercial (a) 53 30 19 82 31
Commercial real estate 10 11 11
Equipment lease financing 1515
Consumer 15 14 15 15 13
Residential real estate 1
Total recoveries 79 45 40 99 51
Net charge-offs (a) (539) (200) (140) (30) (115)
Provision for credit losses (b) 1,517 315 124 21 52
Acquired allowance – National City 2,224
Acquired allowance – other 20 152 23 22
Net change in allowance for unfunded loan commitments and letters of credit (135) 3 (20) (25) 16
Allowance for loan and lease losses – December 31 $3,917 $ 830 $ 560 $ 596 $ 607
Allowance as a percent of December 31:
Loans 2.23% 1.21% 1.12% 1.21% 1.40%
Nonperforming loans 236 183 350 299 405
As a percent of average loans
Net charge-offs (a) .74 .32 .28 .06 .28
Provision for credit losses 2.09 .50 .25 .04 .13
Allowance for loan and lease losses 5.38 1.33 1.13 1.26 1.48
Allowance as a multiple of net charge-offs (a) 7.27x 4.15x 4.00x 19.87x 5.28x
(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.
(b) Amount for 2008 included a $504 million conforming provision for credit losses related to National City.
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, 2008, the
portion of the reserves for these factors was $69 million.
A
LLOCATION
O
F
A
LLOWANCE
F
OR
L
OAN AND
L
EASE
L
OSSES
2008 2007 2006 2005 2004
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 $1,621 38.3% $560 41.8% $443 40.9% $489 39.2% $503 40.1%
Commercial real estate 833 14.7 153 13.0 30 7.0 32 6.4 26 4.5
Consumer 929 29.9 68 26.9 28 33.1 24 33.1 35 36.3
Residential real estate 308 12.3 9 14.0 7 12.7 7 14.9 6 11.0
Equipment lease financing 179 3.7 36 3.7 48 5.6 41 5.7 33 6.9
Other 47 1.1 4 .6 4 .7 3 .7 4 1.2
Total $3,917 100.0% $830 100.0% $560 100.0% $596 100.0% $607 100.0%
159