Fifth Third Bank 2010 Annual Report Download - page 33

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Fifth Third Bancorp 31
Provision for Loan and Lease Losses
The Bancorp provides as an expense an amount for probable loan
and lease losses within the loan and lease portfolio that is based
on factors previously discussed in the Critical Accounting Policies
section. The provision is recorded to bring the ALLL to a level
deemed appropriate by the Bancorp to cover losses inherent in
the portfolio. Actual credit losses on loans and leases are charged
against the ALLL. The amount of loans actually removed from
the Consolidated Balance Sheets is referred to as charge-offs. Net
charge-offs include current period charge-offs less recoveries on
previously charged-off loans and leases.
The provision for loan and lease losses decreased to $1.5
billion in 2010 compared to $3.5 billion in 2009. The decrease in
provision expense from the prior year was due to decreases in
nonperforming assets and delinquencies in commercial and
consumer loans. In addition to these trends, signs of moderation
in general economic conditions during 2010 further contributed to
a decrease in expected loss rates. As of December 31, 2010, the
ALLL as a percent of loans and leases decreased to 3.88%, from
4.88% at December 31, 2009.
Refer to the Credit Risk Management section for more
detailed information on the provision for loan and lease losses
including an analysis of the loan portfolio composition, non-
performing assets, net charge-offs, and other factors considered
by the Bancorp in assessing the credit quality of the loan portfolio
and the ALLL.
TABLE 6: CHANGES IN NET INTEREST INCOME ATTRIBUTED TO VOLUME AND YIELD/RATE (a)
For the years ended December 31 2010 Compared to 2009 2009 Compared to 2008
($ in millions) Volume Yield/Rate
T
ota
l
V
olume Yield/Rate Total
Assets
Increase (decrease) in interest income:
Loans and leases:
Commercial and industrial loans ($53) 129 76 ($45) (313) (358)
Commercial mortgage (39) (30) (69) (17) (304) (321)
Commercial construction (46) 5 (41) (60) (148) (208)
Commercial leases (8) 5 (3) (1) 133 132
Subtotal - commercial (146) 109 (37) (123) (632) (755)
Residential mortgage (53) (71) (124) (7) (96) (103)
Home equity (22) (19) (41) 15 (196) (181)
Automobile loans 97 (45) 52 (7) (3) (10)
Credit card (4) 12 8 20 6 26
Other consumer loans and leases (27) 57 30 (12) 34 22
Subtotal - consumer (9) (66) (75) 9 (255) (246)
Total loans and leases (155) 43 (112) (114) (887) (1,001)
Securities:
Taxable (34) (37) (71) 169 (91) 78
Exempt from income taxes 6(10)(4) (7) (1) (8)
Other short-term investments 527 5 (17) (12)
Total interest-earning assets (178) (2) (180) 53 (996) (943)
Cash and due from banks
Other assets
A
llowance for loan and lease losses
Total change in interest income ($178) (2) (180) $53 (996) (943)
Liabilities and Equity
Increase (decrease) in interest expense:
Interest-bearing core deposits:
Interest checking $8 4 12 $8 (96) (88)
Savings 18 (38) (20) 9 (106) (97)
Money market 2(9)(7) (28) (64) (92)
Foreign office deposits 4(2) 2 (1) (23) (24)
Other time deposits (105) (89) (194) 102 (43) 59
Total interest-bearing core deposits (73) (134) (207) 90 (332) (242)
Certificates - $100,000 and over (98) (57) (155) 27 (71) (44)
Other foreign office deposits ---(25) (25) (50)
Federal funds purchased ---(33) (36) (69)
Other short-term borrowings (21) (18) (39) (26) (110) (136)
Long-term debt (3) (25) (28) (101) (138) (239)
Total interest-bearing liabilities (195) (234) (429) (68) (712) (780)
Demand deposits
Other liabilities
Total change in interest expense (195) (234) (429) (68) (712) (780)
Equity
Total liabilities and equity
Total change in net interest income $17 232 249 $121 (284) (163)
(a) Changes in interest not solely due to volume or yield/rate are allocated in proportion to the absolute amount of change in volume or yield/rate.