Fifth Third Bank 2003 Annual Report Download - page 58

FIFTH THIRD BANCORP AND SUBSIDIARIES
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Management’s Discussion and Analysis of
Financial Condition and Results of Operations
multiple factors, including the existence of and potential to provide
additional products and services.
Table 10–Commercial Loan and Lease Portfolio
Exposure by Industry at December 31
2003 2002
($ in millions) Outstanding (a) Exposure (a) Outstanding (a) Exposure (a)
Manufacturing . . . . $ 3,497 $ 7,464 $ 3,090 $ 6,814
Real Estate . . . . . . . 6,303 7,289 5,230 6,084
Construction . . . . . 3,121 4,896 3,019 4,742
Retail Trade. . . . . . 2,449 4,060 2,106 3,804
Business
Services . . . . . . . 1,851 2,964 1,896 2,978
Wholesale
Trade . . . . . . . . . 1,330 2,508 1,190 2,293
Individuals. . . . . . . 1,511 1,943 645 907
Financial Services
& Insurance . . . . 602 1,938 505 1,885
Healthcare . . . . . . . 1,151 1,714 1,015 1,523
Transportation &
Warehousing . . . 1,222 1,434 1,013 1,228
Accommodation
& Food . . . . . . . 861 1,144 897 1,074
Public
Administration . . 862 965 750 845
Other Services . . . . 648 878 790 1,208
Other . . . . . . . . . . 645 857 990 990
Communication &
Information . . . . 423 768 445 620
Entertainment &
Recreation . . . . . 401 603 365 470
Agribusiness. . . . . . 456 593 424 533
Utilities . . . . . . . . . 164 531 113 418
Mining . . . . . . . . . 188 278 216 347
Total . . . . . . . . . . . $27,685 $42,827 $24,699 $38,763
(a) Outstanding reflects total commercial customer loan and lease balances,
net of unearned income, and exposure reflects total commercial customer
lending commitments.
Table 11–Commercial Loan Portfolio Exposure
by Loan Size by Obligor at December 31
2003 2002
($ in millions) Outstanding (a) Exposure (a) Outstanding (a) Exposure (a)
Less than
$5 million . . . . . 66% 55% 67% 55%
$5 million to
$15 million . . . . 24 26 24 27
$15 million to
$25 million . . . . 712 811
Greater than
$25 million . . . . 3717
Total . . . . . . . . . . . 100% 100% 100% 100%
(a) Outstanding reflects total commercial customer loan and lease balances,
net of unearned income, and exposure reflects total commercial customer
lending commitments.
To maintain balance sheet flexibility and enhance liquidity
during 2003 and 2002, the Bancorp transferred, with servicing
retained, certain primarily fixed-rate, short-term investment grade
commercial loans to an unconsolidated QSPE. The outstanding
balance of loans transferred was $1.8 billion both at December 31,
2003 and 2002.
In addition to the loan and lease portfolio, the Bancorp serviced
loans and leases for others totaling approximately $29.2 billion and
$31.7 billion at December 31, 2003 and 2002, respectively,
including $24.5 billion and $26.5 billion of residential mortgage
loans at December 31, 2003 and 2002, respectively.
Based on repayment schedules at December 31, 2003, the
remaining maturities of loans and leases held for investment follows:
Table 12–Loan and Lease Maturities
Commercial, Real Real
Financial and Estate Estate
Agricultural Construction Commercial Residential Consumer Lease
($ in millions) Loans Loans Loans Mortgage Loans Financing Total
Due in one year
or less. . . . . . $ 8,609 1,992 2,121 1,317 4,218 1,031 19,288
Due between
one and
five years . . . 4,940 1,400 4,051 1,450 9,712 3,050 24,603
Due after
five years . . . 660 244 722 1,658 3,502 1,631 8,417
Total . . . . . . . . $14,209 3,636 6,894 4,425 17,432 5,712 52,308
A summary of the remaining maturities of the loan and lease
portfolio as of December 31, 2003 based on the sensitivity of the loans
and leases to interest rate changes for loans due after one year follows:
Table 13–Loan and Lease Interest Rate Sensitivity
Commercial, Real Real
Financial and Estate Estate
Agricultural Construction Commercial Residential Consumer Lease
($ in millions) Loans Loans Loans Mortgage Loans Financing Total
Predetermined
interest rate . . $1,970 413 2,139 1,300 6,571 4,681 17,074
Floating or
adjustable
interest rate . . $3,630 1,231 2,634 1,808 6,643 — 15,946
Nonperforming and Underperforming Assets
Nonperforming assets include (1) nonaccrual loans and leases on
which the ultimate collectibility of the full amount of interest is
uncertain, (2) loans and leases which have been renegotiated to provide
for a reduction or deferral of interest or principal because of a
deterioration in the financial position of the borrower and (3) other
assets, including other real estate owned and repossessed equipment.
Underperforming assets include nonperforming assets and loans and
leases past due 90 days or more as to principal or interest. For a
detailed discussion on the Bancorp’s policy on accrual of interest on
loans see Note 1 to the Consolidated Financial Statements.
Total nonperforming assets were $319 million at December 31,
2003, or .61 percent of total loans, leases and other assets,
including other real estate owned, up $46 million (2 bps)
compared to $273 million, or .59 percent, at December 31, 2002.
Compared to 2002 there has, however, been a decrease in loans
and leases ninety days past due. The $46 million increase in total
nonperforming assets at December 31, 2003 is primarily comprised
of a net decrease of $5 million in nonaccrual loans and leases, an
$8 million increase in renegotiated loans and leases, a $28 million
increase in other real estate owned and a $15 million increase in
other nonperforming assets. Table 15 provides the breakout of
nonaccrual loans and leases by loan category. The decrease in