Fifth Third Bank 2011 Annual Report Download - page 49

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Fifth Third Bancorp 47
BALANCE SHEET ANALYSIS
Loans and Leases
The Bancorp classifies its loans and leases based upon the primary
purpose of the loan. Table 18 summarizes end of period loans and
leases, including loans held for sale and Table 19 summarizes
average total loans and leases, including loans held for sale.
TABLE 18: COMPONENTS OF TOTAL LOANS AND LEASES (INCLUDES HELD FOR SALE)
A
s of December 31 ($ in millions) 2011 2010 2009 2008 2007
Commercial:
Commercial and industrial loans $30,828 27,275 25,687 29,220 26,079
Commercial mortgage loans 10,214 10,992 11,936 12,731 11,967
Commercial construction loans 1,037 2,111 3,871 5,335 5,561
Commercial leases 3,531 3,378 3,535 3,666 3,737
Subtotal – commercial 45,610 43,756 45,029 50,952 47,344
Consumer:
Residential mortgage loans 13,474 10,857 9,846 10,292 11,433
Home equity 10,719 11,513 12,174 12,752 11,874
A
utomobile loans 11,827 10,983 8,995 8,594 11,183
Credit card 1,978 1,896 1,990 1,811 1,591
Other consumer loans and leases 364 702 812 1,194 1,157
Subtotal – consumer 38,362 35,951 33,817 34,643 37,238
Total loans and leases $83,972 79,707 78,846 85,595 84,582
Total portfolio loans and leases (excludes loans held for sale) $81,018 77,491 76,779 84,143 80,253
Total loans and leases, including loans held for sale, increased $4.3
billion, or five percent, from December 31, 2010. The increase in
total loans and leases from December 31, 2010 was the result of a
$1.9 billion, or four percent, increase in commercial loans and a $2.4
billion, or seven percent, increase in consumer loans.
The increase of $1.9 billion in commercial loans and leases
from 2010 was primarily due to an increase in commercial and
industrial loans partially offset by a decrease in commercial
mortgage and commercial construction loans. Commercial and
industrial loans increased $3.6 billion, or 13%, due to an increase in
new loan origination activity. Commercial mortgage loans decreased
$778 million, or seven percent, and commercial construction loans
decreased $1.1 billion, or 51%, from December 31, 2010 as the
Bancorp experienced continued run-off in these loan categories.
The run-off activity was the result of management’s decision to
suspend new homebuilder and developer lending in 2007 and non-
owner occupied real estate lending in 2008 combined with weak
customer demand for owner-occupied commercial mortgage loans
and tighter underwriting standards.
Total consumer loans and leases increased $2.4 billion from
2010 primarily due to an increase in residential mortgage loans and
automobile loans partially offset by a decrease in home equity loans
and other consumer loans and leases. The increase of $2.6 billion, or
24%, in residential mortgage loans from December 31, 2010, was
driven by a $1.7 billion increase in portfolio loans due to
management’s decision in the third quarter of 2010 and throughout
2011 to retain certain shorter term residential mortgage loans
originated through the Bancorp’s retail branches. Additionally,
residential mortgage loans held for sale increased $901 million from
December 31, 2010 due to an increase in refinancing activity in the
fourth quarter of 2011 and the timing of delivery of loans.
Automobile loans increased $844 million, or eight percent,
compared to December 31, 2010, due to strong origination volumes
through consistent and competitive pricing, enhanced customer
service with our dealership network and disciplined sales execution.
Home equity loans decreased $794 million, or seven percent, due to
tighter underwriting standards implemented in 2010 and 2011 and
decreased customer demand. Other consumer loans and leases,
primarily made up of automobile leases as well as student loans
designated as held for sale, decreased $338 million, or 48%,
compared to December 31, 2010 due to a decline in new
originations driven by tighter underwriting standards implemented
in 2010 and 2011 and runoff due to the Bancorp’s decision to
discontinue auto lease originations.
TABLE 19: COMPONENTS OF AVERAGE TOTAL LOANS AND LEASES (INCLUDES HELD FOR SALE)
A
s of December 31 ($ in millions) 2011 2010 2009 2008 2007
Commercial:
Commercial and industrial loans $28,546 26,334 27,556 28,426 22,351
Commercial mortgage loans 10,447 11,585 12,511 12,776 11,078
Commercial construction loans 1,740 3,066 4,638 5,846 5,661
Commercial leases 3,341 3,343 3,543 3,680 3,683
Subtotal – commercial 44,074 44,328 48,248 50,728 42,773
Consumer:
Residential mortgage loans 11,318 9,868 10,886 10,993 10,489
Home equity 11,077 11,996 12,534 12,269 11,887
A
utomobile loans 11,352 10,427 8,807 8,925 10,704
Credit card 1,864 1,870 1,907 1,708 1,276
Other consumer loans and leases 529 743 1,009 1,212 1,219
Subtotal – consumer 36,140 34,904 35,143 35,107 35,575
Total average loans and leases $80,214 79,232 83,391 85,835 78,348
Total portfolio loans and leases (excludes loans held for sale) $78,533 77,045 80,681 83,895 76,033