Fifth Third Bank 2008 Annual Report Download - page 76

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
74 Fifth Third Bancorp
to sales of available-for-sale securities purchased to economically
hedge the MSR portfolio and a net gain of $89 million, classified
as mortgage banking net revenue in noninterest income, related to
changes in fair value and settlement of free-standing derivatives
purchased to economically hedge the MSR portfolio. During
2007, the Bancorp recognized a net gain of $6 million, classified as
securities gains in noninterest income, related to sales of available-
for-sale securities purchased to economically hedge the MSR
portfolio and a net gain of $23 million, classified as mortgage
banking net revenue in noninterest income, related to changes in
fair value and settlement of free-standing derivatives purchased to
economically hedge the MSR portfolio. As of December 31, 2008
and 2007, other assets included free-standing derivative
instruments related to the MSR portfolio with a fair value of $218
million and $70 million, respectively, and other liabilities included
free-standing derivative instruments with a fair value of $77
million and $16 million, respectively. The outstanding notional
amounts on the free-standing derivative instruments related to the
MSR portfolio totaled $8.5 billion and $4.3 billion as of December
31, 2008 and 2007, respectively. As of December 31, 2008 and
2007, the available-for-sale securities portfolio included $1.1
billion and $205 million, respectively, of securities related to the
non-qualifying hedging strategy.
The fair value of the servicing asset is based on the present
value of expected future cash flows. The following table displays
the beginning and ending fair value for the years ended December
31, 2008 and 2007:
($ in millions) 2008 2007
Fixed rate residential mortgage loans:
Fair value at beginning of period
$565 483
Fair value at end of period
458 565
Adjustable rate residential mortgage loans:
Fair value at beginning of period
50 45
Fair value at end of period
38 50
The following table provides a summary of the total loans and leases managed by the Bancorp, including loans securitized and loans in the
unconsolidated QSPE for the years ended December 31:
Balance
Balance of Loans 90 Days or
More Past Due
Net Credit
Losses
($ in millions) 2008 2007 2008 2007 2008 2007
Commercial loans $31,163 29,052 76 43 649 109
Commercial mortgage 12,952 11,967 136 73 613 44
Commercial construction loans 5,477 5,561 74 67 749 29
Commercial leases 3,666 3,737 45 (1) -
Residential mortgage loans 9,946 11,454 198 187 242 43
Home equity loans 13,025 12,162 98 74 207 99
Automobile loans 9,183 11,183 22 13 141 86
Other consumer loans and leases 3,006 2,749 57 32 118 54
Total loans and leases managed and securitized (a) $88,418 87,865 665 494 2,718 464
Less:
Automobile loans securitized $589 -
Home equity loans securitized 273 289
Residential mortgage loans securitized 18 21
Commercial loans sold to unconsolidated QSPE 1,943 2,973
Loans held for sale 1,452 4,329
Total portfolio loans and leases $84,143 80,253
(a) Excluding securitized assets that the Bancorp contin
u
es to service, but with which it has no other continuing involvement.