SunTrust 2009 Annual Report Download - page 51

Table 9 - Summary of Credit Losses Experience
Year Ended December 31
(Dollars in millions) 2009 2008 2007 2006 2005
Allowance for Credit Losses
Balance - beginning of period $2,378.5 $1,290.2 $1,047.0 $1,031.7 $1,050.0
Allowance associated with loans at fair
value 1-- (4.1) - -
Allowance from acquisitions and other
activity - net -158.7 - - -
Provision for loan losses 4,006.7 2,474.2 664.9 262.5 176.9
Provision for unfunded commitments 487.4 19.8 5.2 (1.1) 3.6
Charge-offs:
Commercial (612.8) (218.7) (133.6) (178.9) (107.3)
Real estate:
Home equity lines (714.9) (449.6) (116.2) (28.8) (24.5)
Construction (507.0) (194.5) (12.2) (2.3) (6.0)
Residential mortgages 3(1,235.7) (525.1) (113.1) (29.6) (22.8)
Commercial real estate (31.6) (24.7) (2.1) (8.1) (3.1)
Consumer loans:
Direct (56.9) (41.9) (23.4) (22.0) (37.2)
Indirect (152.4) (192.9) (106.4) (82.3) (109.6)
Credit cards (86.0) (33.1) (7.3) (4.6) (4.7)
Total charge-offs (3,397.3) (1,680.5) (514.3) (356.6) (315.2)
Recoveries:
Commercial 40.4 24.1 23.3 28.6 35.1
Real estate:
Home equity lines 30.2 16.4 7.8 6.9 6.2
Construction 7.6 2.8 1.2 2.0 0.8
Residential mortgages 17.8 7.8 5.5 7.9 8.1
Commercial real estate 3.8 1.1 1.9 6.2 2.6
Consumer loans:
Direct 8.2 8.2 9.6 12.1 13.5
Indirect 49.0 54.2 41.3 45.4 48.9
Credit cards 2.6 1.5 0.9 1.4 1.2
Total recoveries 159.6 116.1 91.5 110.5 116.4
Net charge-offs (3,237.7) (1,564.4) (422.8) (246.1) (198.8)
Balance - end of period $3,234.9 $2,378.5 $1,290.2 $1,047.0 $1,031.7
Components:
Allowance for loan and lease losses $3,120.0 $2,351.0 $1,282.5 $1,044.5 $1,028.1
Unfunded commitments reserve 114.9 27.5 7.7 2.5 3.6
Allowance for credit losses $3,234.9 $2,378.5 $1,290.2 $1,047.0 $1,031.7
Average loans $121,040.6 $125,432.7 $120,080.6 $119,645.2 $108,742.0
Year-end loans outstanding 113,674.8 126,998.4 122,319.0 121,454.3 114,554.9
Ratios:
Allowance to year-end loans52.76 % 1.86 % 1.05 % 0.86 % 0.90 %
Allowance to nonperforming loans2,5 58.9 61.7 101.9 216.9 378.0
Allowance to net charge-offs50.96 x 1.50 x 3.03 x 4.24 x 5.17 x
Net charge-offs to average loans 2.67 % 1.25 % 0.35 % 0.21 % 0.18 %
Provision for loan losses to average loans 3.31 1.97 0.55 0.22 0.16
Recoveries to total gross charge-offs 4.7 6.9 17.8 31.0 36.9
1Amount removed from the ALLL related to our election to record $4.1 billion of residential mortgages at fair value.
2During the second quarter of 2008, the Company revised its method of calculating this ratio to include, within the nonperforming loan amount, only loans measured at amortized cost.
Previously, this calculation included nonperforming loans measured at fair value or the lower of cost or market. The Company believes this is an improved method of calculation due to the
fact that the allowance for loan losses relates solely to the loans measured at amortized cost. Nonperforming loans measured at fair value or the lower of cost or market that have been
excluded from the 2007 calculation were $171.5 million, which increased the calculation approximately 12 basis points as of December 31, 2007. Amounts excluded in years prior to 2007
were immaterial and resulted in no basis point change in the respective calculation.
3Prior to 2009, borrower misrepresentation fraud and denied insurance claim losses were recorded as operating losses in the Consolidated Statements of Income/(Loss). These credit-related
operating losses totaled $160.3 million and $78.4 million during the year ended December 31, 2008 and 2007, respectively. Prior to 2007, credit-related operating losses were immaterial.
During 2009, credit-related operating losses charged-off against previously established reserves within other liabilities totaled $194.9 million.
4Beginning in the fourth quarter of 2009, SunTrust recorded the provision for unfunded commitments of $57.2 million within the provision for credit losses in the Consolidated Statements
of Income/(Loss). Including the provision for unfunded commitments for the fourth quarter of 2009, the provision for credit losses was $4.1 billion for the twelve months ended
December 31, 2009. Considering the immateriality of this provision prior to the fourth quarter of 2009, the provision for unfunded commitments remains classified within other noninterest
expense in the Consolidated Statements of Income/(Loss).
5This ratio is calculated using the allowance for loan and lease losses.
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