Fifth Third Bank 2008 Annual Report Download - page 39

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Fifth Third Bancorp 37
BALANCE SHEET ANALYSIS
Loans and Leases
Total loans and leases increased $1.0 billion, or one percent, over
2007. The growth in total loans and leases was due to acquisitions
since 2007, the use of contingent liquidity facilities related to
certain off-balance sheet programs and increased loan production
across the Bancorp's footprint, partially offset by loan
securitizations.
Total commercial loans and leases increased $3.6 billion, or
eight percent, compared to December 31, 2007. The increase was
primarily driven by growth in commercial loans of $3.1 billion, or
12%, compared to 2007 resulting from $1.8 billion from
acquisitions since 2007 and $849 million from the use of
contingent liquidity facilities related to certain off-balance sheet
programs that were drawn upon in 2008. Included within the
contingent liquidity facilities were approximately $187 million of
loans outstanding at December 31, 2008 that were repurchased
from a QSPE under the Bancorp’s liquidity asset purchase
agreement. Also included in commercial loans at December 31,
2008 were $173 million in draws on outstanding letters of credit
that were supporting certain securities issued as VRDNs. For
further information on these arrangements, see the Off-Balance
Sheet Arrangements section and Note 10 of the Notes to
Consolidated Financial Statements.
Commercial mortgage loans increased eight percent
compared to 2007, which primarily included the impact of
acquisitions since 2007 of $971 million. The Bancorp’s largest
gains in outstanding loans among industries included the financial
services and insurance, manufacturing, healthcare and business
services. Reductions among originations to the real estate and
construction industries were offset by the second quarter 2008
acquisition of First Charter. In aggregate, commercial loans in the
states of Michigan and Florida as a percentage of total commercial
loans was 26% as of December 31, 2008 compared to 31% as of
December 31, 2007.
Total consumer loans and leases decreased $2.6 billion, or
seven percent, compared to 2007, as a result of the decreases in
automobile loans and residential mortgage loans partially offset by
credit card and home equity loan growth. Automobile loans
decreased by approximately $2.6 billion, or 23%, due largely to
automobile loan securitizations of $2.7 billion during the first
quarter of 2008. Despite growth of $535 million of loans from
acquisitions since 2007, residential mortgage loans were $10.3
billion at December 31, 2008, down 10% from 2007, due to the
sale of $1.7 billion of portfolio loans in 2008 compared to $572
million in 2007. Credit card loans increased to $1.8 billion, an
increase of 14% over 2007, due to continued success in cross-
selling credit cards to its existing retail customer base. Home
equity loans increased $878 million, primarily due to acquisitions
since 2007.
Average total commercial loans and leases increased $8.0
billion, or 19%, compared to 2007. The increase in average total
commercial loans and leases was primarily driven by growth in
commercial loans and commercial mortgage loans, which
increased 27% and 15%, respectively, over 2007. The increase in
average commercial loans was driven by the use of contingent
liquidity facilities related to certain off-balance sheet programs.
The growth in commercial mortgage loans included the impact of
acquisitions since 2007 of $693 million.
Average total consumer loans and leases decreased $468
million, or one percent, compared to 2007 as a result of a decrease
in automobile loans of 17% largely due to the aforementioned
automobile securitizations that occurred in the first quarter of
2008. The decline was partially offset by growth in credit card
balances of $432 million, or 34%, and home equity loans of $504
million, or five percent. Acquisitions since 2007 impacted the
change in residential mortgage loans and home equity loans by
$1.5 billion and $409 million, respectively.
TABLE 20: COMPONENTS OF AVERAGE TOTAL LOANS AND LEASES (INCLUDES HELD FOR SALE)
A
s of December 31 ($ in millions) 2008 2007 2006 2005 2004
Commercial:
Commercial loans $28,426 22,351 20,504 18,310 14,955
Commercial mortgage 12,776 11,078 9,797 8,923 7,391
Commercial construction 5,846 5,661 6,015 5,525 3,807
Commercial leases 3,680 3,683 3,730 3,495 3,296
Subtotal - commercial 50,728 42,773 40,046 36,253 29,449
Consumer:
Residential mortgage loans 10,993 10,489 9,574 8,982 6,801
Home equity 12,269 11,887 12,070 11,228 9,584
Automobile loans 8,925 10,704 9,570 8,649 8,128
Credit card 1,708 1,276 838 728 740
Other consumer loans and leases 1,212 1,219 1,395 1,897 2,340
Subtotal - consumer 35,107 35,575 33,447 31,484 27,593
Total average loans and leases $85,835 78,348 73,493 67,737 57,042
Total average portfolio loans and leases (excludes held for sale) $83,895 76,033 72,447 66,685 55,951
TABLE 19: COMPONENTS OF TOTAL LOANS AND LEASES (INCLUDES HELD FOR SALE)
A
s of December 31 ($ in millions) 2008 2007 2006 2005 2004
Commercial:
Commercial loans $29,220 26,079 20,831 19,377 16,107
Commercial mortgage 12,952 11,967 10,405 9,188 7,636
Commercial construction 5,114 5,561 6,168 6,342 4,348
Commercial leases 3,666 3,737 3,841 3,698 3,426
Subtotal - commercial 50,952 47,344 41,245 38,605 31,517
Consumer:
Residential mortgage loans 10,292 11,433 9,905 8,991 7,912
Home equity 12,752 11,874 12,154 11,805 10,318
Automobile loans 8,594 11,183 10,028 9,396 7,734
Credit card 1,811 1,591 1,004 788 794
Other consumer loans and leases 1,194 1,157 1,167 1,644 2,092
Subtotal - consumer 34,643 37,238 34,258 32,624 28,850
Total loans and leases $85,595 84,582 75,503 71,229 60,367