Fifth Third Bank 2009 Annual Report Download - page 79

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fifth Third Bancorp 77
6. LOANS AND LEASES AND ALLOWANCE FOR LOAN AND LEASE LOSSES
The following table provides a summary of the total loans and leases classified by primary purpose as of December 31:
Total portfolio loans and leases were recorded net of unearned
income, which totaled $1.2 billion and $1.4 billion as of December
31, 2009 and 2008, respectively. Additionally, unamortized
premiums and discounts, deferred loan fees and costs, and fair
value adjustments (associated with acquired loans or loans
designated as fair value upon origination) were $242 million and
$421 million as of December 31, 2009 and 2008, respectively.
The Bancorp diversifies its loan and lease portfolio by
offering a variety of loan and lease products with various payment
terms and rate structures. Lending activities are concentrated
within those states in which the Bancorp has banking centers and
are primarily located in the Midwestern and Southeastern regions
of the United States. The Bancorp’s commercial loan portfolio
consists of lending to various industry types. Management
periodically reviews the performance of its loan and lease
products to ensure they are performing within acceptable interest
rate and credit risk levels and changes are made to underwriting
policies and procedures as needed. The Bancorp maintains an
allowance to absorb loan and lease losses inherent in the portfolio.
In 2009, approximately $20 million of interest income was
recognized on a cash basis for loans on nonaccrual compared to
approximately $10 million in 2008.
Transactions in the allowance for loan and lease losses for the years ended December 31:
(
$ in millions
)
2009 2008 2007
Balance at
J
anuar
y
1 $2
,
787 937 771
Losses char
g
ed of
f
(2,719)
(
2,791
)
(
544
)
Recoveries of losses
p
reviousl
y
char
g
ed of
f
138 81 82
Provision for loan and lease losses 3,543 4,560 628
Balance at December 31 $3,749 2,787 937
Larger commercial loans that exhibit probable or observed credit weaknesses are subject to individual review. The balance of these impaired
loans and related valuation allowance were as follows:
2009 2008 2007
($ in millions)
Loan
Balance
Allowance
Loan
Balance
Allowance
Loan
Balance
Allowance
Impaired loans with allowance $1,468 $510 1,222 534 306 118
Impaired loans without allowance 214 - 270 - 188 -
Total impaired loans $1,682 $510 1,492 534 494 118
Average impaired loans $1,053 822 280
The following table summarizes the Bancorp’s nonperforming and delinquent loans included in the Bancorp’s portfolio of loans and leases as
of December 31:
($ in millions) 2009 2008
Nonaccrual loans and leases $2,642 1,696
Restructured nonaccrual loans and leases (a) 305 80
Total nonperforming loans and leases 2,947 1,776
Repossessed personal property and other real estate owned 297 230
Total nonperforming assets (b) $3,244 2,006
Total 90 days past due loans and leases $567 662
(a)Represents loans modified as part of a troubled debt restructuring. During 2009, the Bancorp modified its consumer nonaccrual policy to exclude troubled debt restructured loans that
were less than 90 days past due because they were performing in accordance with the restructured terms. For comparability purposes, December 31, 2008 was adjusted to reflect this
reclassification.
(b)Does not include $224 million and $473 million of nonaccrual loans held for sale at December 31, 2009 and 2008, respectively, which are held at the lower of cost or market value
and not included in the allowance for loan and lease losses.
($ in millions) 2009 2008
Loans and leases held for sale:
Commercial loans $4 23
Commercial mortgage loans 134 229
Commercial construction loans 87 221
Residential mortgage loans 1,811 906
Other consumer loans and leases 31 73
Total loans and leases held for sale $2,067 1,452
Portfolio loans and leases:
Commercial loans $25,683 29,197
Commercial mortgage loans 11,803 12,502
Commercial construction loans 3,784 5,114
Commercial leases 3,535 3,666
Total commercial loans and leases 44,805 50,479
Residential mortgage loans 8,035 9,385
Home equity 12,174 12,752
Automobile loans 8,995 8,594
Credit card 1,990 1,811
Other consumer loans and leases 780 1,122
Total consumer loans and leases 31,974 33,664
Total portfolio loans and leases $76,779 84,143