Fifth Third Bank 2010 Annual Report Download - page 94

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
92 Fifth Third Bancorp
credit subordination and payment priority. The investors in these
securities have no credit recourse to the Bancorp’s other assets for
failure of debtors to pay when due. During 2008 and 2009,
required repurchases of previously transferred automobile loans
from the QSPE were immaterial to the Bancorp’s Consolidated
Financial Statements.
In each of these sales, the Bancorp obtained servicing
responsibilities, but no servicing asset or liability was recorded as
the market based servicing fee was considered adequate
compensation. For the years ended December 31, 2009 and 2008,
the Bancorp recognized $8 million and $9 million, respectively, of
servicing fees on these automobile loans. The servicing fees are
included in other noninterest income in the Consolidated
Statements of Income.
As of December 31, 2009, the Bancorp held retained interests
in the QSPEs in the form of asset-backed securities totaling $63
million and residual interests totaling $98 million. These retained
interests were included in available-for-sale securities in the
Consolidated Balance Sheets. During the years ended December
31, 2009 and 2008, the Bancorp received cash flows of $4 million
and $3 million, respectively, from the asset-backed securities and
$34 million and $37 million, respectively, from the residual
interests. The asset-backed securities were measured at fair value
using quoted market prices for similar assets. The residual interests
were measured at fair value based on the present value of future
expected cash flows using management’s best estimates for the key
assumptions.
Upon adoption on January 1, 2010 of the FASB guidance on
the accounting for QSPEs and VIEs, the Bancorp determined that
it is the primary beneficiary (and therefore consolidator) of these
QSPEs. Refer to Note 1 for further details.
Commercial Loan Sales to a QSPE
Through 2008, the Bancorp transferred, subject to credit recourse,
certain primarily floating-rate, short-term, investment grade
commercial loans to an unconsolidated QSPE that is wholly owned
by an independent third-party. The transfers of loans to the QSPE
were accounted for as sales. The QSPE issued commercial paper
and used the proceeds to fund the acquisition of commercial loans
transferred to it by the Bancorp. The Bancorp did not transfer any
new loans to the QSPE during 2009.
For the years ended December 31, 2009 and 2008, the
Bancorp collected $6 million and $13 million, respectively, in
servicing fees from the QSPE. For the year ended December 31,
2009, the Bancorp collected $334 million in net cash proceeds
from loan transfers to the QSPE.
Upon adoption on January 1, 2010 of the FASB guidance on
the accounting for QSPEs and VIEs, the Bancorp determined that
it is the primary beneficiary (and therefore consolidator) of this
QSPE. Refer to Note 1 for further details.
The following table provides a summary of the total loans and leases managed by the Bancorp, including loans securitized and loans in VIEs
that were not consolidated prior to January 1, 2010, as of and for the years ended December 31:
Balance
Balance of Loans 90
Days or More Past Due
Net Credit
Losses
($ in millions) 2010 2009 2010 2009 2010 2009
Commercial and industrial loans $27,275 26,458 $16 118 $586 718
Commercial mortgage 10,992 11,936 11 59 524 422
Commercial construction loans 2,111 3,921 3 16 252 417
Commercial leases 3,378 3,535 - 4 28
Residential mortgage loans 10,857 9,795 100 189 439 355
Home equity loans 11,513 12,437 89 100 264 325
Automobile loans 10,983 10,226 13 18 88 156
Other consumer loans and leases 2,598 2,802 42 65 173 190
Total loans and leases managed and securitized (a) $79,707 81,110 $274 569 $2,328 2,591
Less:
Automobile loans securitized $ - 1,230
Home equity loans securitized -263
Commercial loans sold to unconsolidated QSPE -771
Loans held for sale 2,216 2,067
Total portfolio loans and leases $77,491 76,779
(a) Excluding securitized assets that the Bancorp continues to service, but has no other continuing involvement.