Fifth Third Bank 2011 Annual Report Download - page 36

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
34 Fifth Third Bancorp
TABLE 6: CHANGES IN NET INTEREST INCOME ATTRIBUTABLE TO VOLUME AND YIELD/RATE ( a )
For the years ended December 31 2011 Compared to 2010 2010 Compared to 2009
($ in millions) Volume Yield/Rate Total Volume Yield/Rate Total
A
ssets
Interest-earning assets:
Loans and leases:
Commercial and industrial loans $ 100 (98) 2 $ (53) 129 76
Commercial mortgage (45) (14) (59) (39) (30) (69)
Commercial construction (42) 2 (40) (46) 5 (41)
Commercial leases - (14) (14) (8) 5 (3)
Subtotal – commercial 13 (124) (111) (146) 109 (37)
Residential mortgage loans 67 (42) 25 (53) (71) (124)
Home equity (34) (12) (46) (22) (19) (41)
A
utomobile loans 51 (129) (78) 97 (45) 52
Credit card (1) (16) (17) (4) 12 8
Other consumer loans/leases (41) 61 20 (27) 57 30
Subtotal – consumer 42 (138) (96) (9) (66) (75)
Total loans and leases 55 (262) (207) (155) 43 (112)
Securities:
Taxable (29) (25) (54) (34) (37) (71)
Exempt from income taxes (10) 3 (7) 6 (10) (4)
Other short-term investments (3) - (3) 5 2 7
Total interest-earning assets 13 (284) (271) (178) (2) (180)
Total change in interest income $ 13 (284) (271) $ (178) (2) (180)
Liabilities and Equity
Interest-bearing liabilities:
Interest checking $ 2 (5) (3) $ 8 4 12
Savings 11 (51) (40) 18 (38) (20)
Money market 1 (6) (5) 2 (9) (7)
Foreign office deposits - (2) (2) 4 (2) 2
Other time deposits (99) (37) (136) (105) (89) (194)
Certificates - $100,000 and over (48) (5) (53) (98) (57) (155)
Federal funds purchased (1) - (1) - - -
Other short-term borrowings 2 (2) - (21) (18) (39)
Long-term debt (21) 37 16 (3) (25) (28)
Total interest-bearing liabilities (153) (71) (224) (195) (234) (429)
Total change in interest expense (153) (71) (224) (195) (234) (429)
Total change in net interest income $ 166 (213) (47) $ 17 232 249
(a) Changes in interest not solely due to volume or yield/rate are allocated in proportion to the absolute dollar amount of change in volume and yield/rate.
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 $423
million in 2011 compared to $1.5 billion in 2010. The decrease in
provision expense for 2011 compared to the prior year was due to
decreases in nonperforming loans and leases, improved delinquency
metrics in commercial and consumer loans and leases, and
improvement in underlying loss trends. The ALLL declined $749
million from $3.0 billion at December 31, 2010 to $2.3 billion at
December 31, 2011. As of December 31, 2011, the ALLL as a
percent of loans and leases decreased to 2.78%, compared to 3.88%
at December 31, 2010.
Refer to the Credit Risk Management section of the MD&A as
well as Note 6 of the Notes to Consolidated Financial Statements
for more detailed information on the provision for loan and lease
losses, including an analysis of loan portfolio composition,
nonperforming assets, net charge-offs, and other factors considered
by the Bancorp in assessing the credit quality of the loan and lease
portfolio and the ALLL.