Fifth Third Bank 2009 Annual Report Download - page 54

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
52 Fifth Third Bancorp
Allowance for Credit Losses
The allowance for credit losses is comprised of the allowance for
loan and lease losses and the reserve for unfunded commitments.
The allowance for loan and lease losses provides coverage for
probable and estimable losses in the loan and lease portfolio. The
Bancorp evaluates the allowance each quarter to determine its
adequacy to cover inherent losses. Several factors are taken into
consideration in the determination of the overall allowance for
loan and lease losses, including an unallocated component. These
factors include, but are not limited to, the overall risk profile of
the loan and lease portfolios, net charge-off experience, the extent
of impaired loans and leases, the level of nonaccrual loans and
leases, the level of 90 days past due loans and leases and the
overall percentage level of the allowance for loan and lease losses.
The Bancorp also considers overall asset quality trends, credit
administration and portfolio management practices, risk
identification practices, credit policy and underwriting practices,
overall portfolio growth, portfolio concentrations and current
national and local economic conditions that might impact the
portfolio. More information on the allowance for loan and lease
losses can be found in the Critical Accounting Policies section of
Management’s Discussion and Analysis.
TABLE 42: SUMMARY OF CREDIT LOSS EXPERIENCE
For the years ended December 31 ($ in millions) 2009 2008 2007 2006 2005
Losses charged off:
Commercial loans ($768) (667) (121) (131) (99)
Commercial mortgage loans (436) (618) (46) (27) (13)
Commercial construction loans (420) (750) (29) (7) (5)
Commercial leases (11) - (1) (4) (38)
Residential mortgage loans (359) (243) (43) (23) (19)
Home equity (330) (212) (106) (65) (60)
Automobile loans (189) (168) (117) (87) (63)
Credit card (178) (101) (54) (36) (46)
Other consumer loans and leases (28) (32) (27) (28) (30)
Total losses (2,719) (2,791) (544) (408) (373)
Recoveries of losses previously charged off:
Commercial loans 50 18 12 24 24
Commercial mortgage loans 14 52 33
Commercial construction loans 42- -1
Commercial leases 411 51
Residential mortgage loans 2-- --
Home equity 879 910
Automobile loans 41 34 32 30 18
Credit card 878 55
Other consumer loans and leases 77 18 16 12
Total recoveries 138 81 82 92 74
Net losses charged off:
Commercial loans (718) (649) (109) (107) (75)
Commercial mortgage loans (422) (613) (44) (24) (10)
Commercial construction loans (416) (748) (29) (7) (4)
Commercial leases (7) 1 - 1 (37)
Residential mortgage loans (357) (243) (43) (23) (19)
Home equity (322) (205) (97) (56) (50)
Automobile loans (148) (134) (85) (57) (45)
Credit card (170) (94) (46) (31) (41)
Other consumer loans and leases (21) (25) (9) (12) (18)
Total net losses charged off ($2,581) (2,710) (462) (316) (299)
Net charge-offs as a percent of average loans and leases (excluding held for sale):
Commercial loans 2.61 % 2.31 .49 .53 .41
Commercial mortgage loans 3.43 4.80 .40 .25 .10
Commercial construction loans 9.24 12.80 .51 .11 .08
Commercial leases 0.22 (.02) .01 (.03) 1.06
Total commercial loans and leases 3.27 3.99 .43 .34 .35
Residential mortgage loans 4.15 2.47 .48 .27 .23
Home equity 2.57 1.67 .82 .46 .44
Automobile loans 1.68 1.56 .83 .60 .53
Credit card 8.87 5.51 3.55 3.65 5.65
Other consumer loans and leases 2.14 2.10 .83 .91 1.06
Total consumer loans and leases 3.10 2.08 .84 .55 .57
Total net losses charged off 3.20 % 3.23 .61 .44 .45