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SUMMARY OF ALLOWANCE FOR CREDIT LOSSES
(Dollars in Millions) 2005 2004 2003 2002 2001
Balance at beginning of year************************************ $2,269 $2,369 $2,422 $2,457 $1,787
Charge-offs
Commercial
Commercial ******************************************** 140 244 556 559 779
Lease financing***************************************** 76 110 139 189 144
Total commercial ************************************ 216 354 695 748 923
Commercial real estate
Commercial mortgages ********************************** 16 29 44 41 50
Construction and development *************************** 31313 913
Total commercial real estate*************************** 19 42 57 50 63
Residential mortgages ************************************** 39 33 30 23 16
Retail
Credit card********************************************* 313 282 282 305 294
Retail leasing ******************************************* 38 49 57 45 34
Home equity and second mortgages ********************** 83 89 105 108 113
Other retail********************************************* 241 225 268 312 329
Total retail ****************************************** 675 645 712 770 770
Total charge-offs ********************************* 949 1,074 1,494 1,591 1,772
Recoveries
Commercial
Commercial ******************************************** 95 144 70 67 61
Lease financing***************************************** 34 41 55 40 30
Total commercial ************************************ 129 185 125 107 91
Commercial real estate
Commercial mortgages ********************************** 10 11 16 9 9
Construction and development *************************** 64221
Total commercial real estate*************************** 16 15 18 11 10
Residential mortgages ************************************** 34343
Retail
Credit card********************************************* 35 30 27 25 23
Retail leasing ******************************************* 12 10 7 6 5
Home equity and second mortgages ********************** 15 13 12 11 13
Other retail********************************************* 54 50 50 54 80
Total retail ****************************************** 116 103 96 96 121
Total recoveries ********************************** 264 307 242 218 225
Net Charge-offs
Commercial
Commercial ******************************************** 45 100 486 492 718
Lease financing***************************************** 42 69 84 149 114
Total commercial ************************************ 87 169 570 641 832
Commercial real estate
Commercial mortgages ********************************** 618283241
Construction and development *************************** (3) 9 11 7 12
Total commercial real estate*************************** 327393953
Residential mortgages ************************************** 36 29 27 19 13
Retail
Credit card********************************************* 278 252 255 280 271
Retail leasing ******************************************* 26 39 50 39 29
Home equity and second mortgages ********************** 68 76 93 97 100
Other retail********************************************* 187 175 218 258 249
Total retail ****************************************** 559 542 616 674 649
Total net charge-offs ****************************** 685 767 1,252 1,373 1,547
Provision for credit losses ************************************** 666 669 1,254 1,349 2,529
Losses from loan sales/transfers (a)****************************** ————(329)
Acquisitions and other changes ********************************* 1 (2) (55) (11) 17
Balance at end of year***************************************** $2,251 $2,269 $2,369 $2,422 $2,457
Components
Allowance for loan losses *********************************** $2,041 $2,080 $2,184
Liability for unfunded credit commitments ********************* 210 189 185
Total allowance for credit losses *********************** $2,251 $2,269 $2,369
Allowance for credit losses as a percentage of
Period-end loans******************************************* 1.63% 1.80% 2.00% 2.08% 2.15%
Nonperforming loans *************************************** 414 355 232 196 245
Nonperforming assets ************************************** 350 303 206 176 219
Net charge-offs (a) ***************************************** 329 296 189 176 159
(a) In accordance with guidance provided in the Interagency Guidance on Certain Loans Held for Sale, loans held with the intent to sell are transferred to the Loans Held for Sale category
based on the lower of cost or fair value. At the time of the transfer, the portion of the mark-to-market losses representing probable credit losses determined in accordance with policies
and methods utilized to determine the allowance for credit losses is included in net charge-offs. The remaining portion of the losses was reported separately as a reduction of the
allowance for credit losses under ‘‘Losses from loan sales/transfers.’’ Had the entire amount of the loss been reported as charge-offs, total net charge-offs would have been $1,876 million
for the year ended 2001. Additionally, the allowance as a percent of net charge-offs would have been 131 percent for the year ended December 31, 2001.
40 U.S. BANCORP
Table 16