Fifth Third Bank 2008 Annual Report Download - page 71

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fifth Third Bancorp 69
Transactions in the allowance for loan and lease losses for the years ended December 31:
($
in millions
)
2008 2007 2006
Balance at
J
anuar
y
1
$
937 771 744
Losses char
g
ed of
f
(2,791)
(
544
)
(
408
)
Recoveries of losses
p
reviousl
y
char
g
ed of
f
81 82 92
Provision for loan and lease losses 4,560 628 343
Balance at December 31 $2,787 937 771
As stated in Note 1, larger commercial loans that exhibit probable or observed credit weaknesses are subject to individual review. The balance
of these impaired loans and related valuation allowance were as follows:
2008 2007 2006
($ in millions)
Loan
Balance
Allowance Loan
Balance
Allowance Loan
Balance
Allowance
Impaired loans with allowance $1,222 $534 306 118 193 59
Impaired loans without allowance 270 - 188 - 100 -
Total impaired loans $1,492 $534 494 118 293 59
Average impaired loans $822 280 209
Cash basis interest income recognized on impaired loans during each of the years presented was immaterial to the Consolidated Financial
Statements.
The following table presents the Bancorp’s nonperforming and delinquent loans included in the Bancorp’s portfolio of loans and leases as of
December 31:
($ in millions) 2008 2007
Nonaccrual loans and leases $1,696 813
Restructured loans and leases (a) 574 80
Total nonperforming loans and leases 2,270 893
Repossessed personal property and other real estate owned 230 171
Total nonperforming assets (b) $2,500 1,064
Total 90 days past due loans and leases $662 491
(a) Represents loans modified as part of a troubled debt restructuring.
(b) Does not include $473 million of nonaccrual loans held for sale at December 31, 2008, which are held at market value and not included in the allowance for loan and lease losses.
At December 31, 2008 and 2007, total nonperforming assets were
$3.0 billion and $1.1 billion, respectively, and total loans and leases
90 days past due were $662 million and $491 million, respectively.
As of December 31, 2008 the Bancorp had less than $1 million in
funding commitments to commercial borrowers whose loans were
classified as nonperforming.
As shown previously, the Bancorp engages in commercial
and consumer lease products primarily related to the financing of
commercial equipment and automobiles. The following is a
summary of the gross investment in lease financing at December
31:
($ in millions) 2008 2007
Direct financing leases $3,445 3,407
Leveraged leases 2,375 2,452
Total $5,820 5,859
The components of the investment in lease financing at December 31:
($ in millions) 2008 2007
Rentals receivable, net of principal and interest on nonrecourse debt $4,415 4,438
Estimated residual value of leased assets 1,381 1,397
Initial direct cost, net of amortization 24 24
Gross investment in lease financing 5,820 5,859
Unearned income (1,384) (1,325)
Net investment in lease financing $4,436 4,534
The Bancorp periodically reviews residual values associated with
its leasing portfolio. Declines in residual values that are deemed
to be other-than-temporary are recognized as a loss. The Bancorp
recognized $3 million in residual value write-downs related to
consumer automobile leases for the year ended December 31,
2008 while residual write downs were immaterial for the year
ended December 31, 2007. At December 31, 2008, the minimum
future lease payments receivable for each of the years 2009
through 2013 was $1.1 billion, $1.1 billion, $.9 billion, $.7 billion
and $.4 billion, respectively.