Fifth Third Bank 2011 Annual Report Download - page 62

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
60 Fifth Third Bancorp
TABLE 43: AUTOMOBILE LOANS OUTSTANDING WITH LTV GREATER THAN 100%
A
s of December 31, 2010 ($ in millions)
For the Year Ended
December 31, 2010
90 Days
Net Charge-offs By State: Outstanding Past Due Nonaccrual
Ohio $ 447 1 - 5
Illinois 375 1 - 5
Michigan 269 - - 4
Indiana 208 1 - 3
Florida 199 - - 5
Kentucky 181 - - 3
A
ll other states 2,451 4 2 33
Total $ 4,130 7 2 58
European Exposure
The Bancorp has no direct sovereign exposure to any European
nation as of December 31, 2011. In providing services to our
customers, the Bancorp routinely enters into financial transactions
with foreign domiciled and U.S. subsidiaries of foreign businesses as
well as foreign financial institutions. These financial transactions are
in the form of loans, loan commitments, letters of credit, derivatives
and securities. The Bancorp’s risk appetite for foreign country
exposure is managed by having established country exposure limits.
The Bancorp’s total exposure to European domiciled or owned
businesses and European financial institutions was $2.2 billion and
funded exposure was $1.4 billion as of December 31, 2011.
Additionally, the Bancorp was within its established country
exposure limits for all European countries.
Certain European countries have been experiencing increased
levels of stress throughout 2011 including Portugal, Ireland, Italy,
Greece and Spain. The Bancorp’s total exposure to businesses
domiciled or owned by companies and financial institutions in these
countries was approximately $138 million and funded exposure was
$72 million as of December 31, 2011. The following table provides
detail about the Bancorp’s exposure to all European domiciled and
owned businesses and financial institutions as of December 31,
2011:
TABLE 44: EUROPEAN EXPOSURE
Sovereigns Financial Institutions
Non-Financial
Institutions Total
Total Funded Total Funded Total Funded Total Funded
($ in millions) Exposure Exposure Exposure Exposure Exposure Exposure Exposure (a) Exposure
Peripheral Europe(b) $ - - 2 - 136 72 138 72
Other Eurozone (c) - - 111 53 1,106 751 1,217 804
Total Eurozone - - 113 53 1,242 823 1,355 876
Other Europe (d) - - 60 31 801 501 861 532
Total Europe $ - - 173 84 2,043 1,324 2,216 1,408
(a) Total exposure includes funded and unfunded commitments, net of collateral; funded exposure excludes unfunded exposure.
(b) Peripheral Europe includes Portugal, Ireland, Italy, Greece and Spain.
(c) Eurozone includes countries participating in the European common currency (Euro).
(d) Other Europe includes European countries not part of the Euro (primarily the United Kingdom and Switzerland).
Analysis of Nonperforming Assets
Nonperforming assets include nonaccrual loans and leases for
which ultimate collectability of the full amount of the principal
and/or interest is uncertain; restructured commercial and credit card
loans which have not yet met the requirements to be classified as a
performing asset; restructured consumer loans which are 90 days
past due based on the restructured terms unless the loan is both
well-secured and in the process of collection; and certain other
assets, including OREO and other repossessed property. A
summary of nonperforming assets is included in Table 45.
Residential mortgage loans are typically placed on nonaccrual status
when principal and interest payments have become past due 150
days unless such loans are both well secured and in the process of
collection. Residential mortgage loans may stay on nonperforming
status for an extended time as the foreclosure process typically lasts
longer than 180 days. Typically, home equity loans and leases are
reported on nonaccrual status if principal or interest has been in
default for 180 days or more unless the loan is both well secured
and in the process of collection. Automobile and other consumer
loans and leases that have been modified in a TDR and
subsequently become past due 90 days are placed on nonaccrual
status. Credit card loans that have been modified in a TDR are
classified as nonaccrual unless such loans have a sustained
repayment performance of six months or greater and the Bancorp is
reasonably assured of repayment in accordance with the
restructured terms. Well secured loans are collateralized by
perfected security interests in real and/or personal property for
which the Bancorp estimates proceeds from sale would be sufficient
to recover the outstanding principal and accrued interest balance of
the loan and pay all costs to sell the collateral. The Bancorp
considers a loan in the process of collection if collection efforts or
legal action is proceeding and the Bancorp expects to collect funds
sufficient to bring the loan current or recover the entire outstanding
principal and accrued interest balance. When a loan is placed on
nonaccrual status, the accrual of interest, amortization of loan
premiums, accretion of loan discounts and amortization or accretion
of deferred net loan fees or costs are discontinued and previously
accrued, but unpaid interest is reversed. Commercial loans on
nonaccrual status are reviewed for impairment at least quarterly. If
the principal or a portion of the principal is deemed a loss, the loss
amount is charged off to the ALLL.
Total nonperforming assets, including loans held for sale, were
$2.0 billion at December 31 2011 compared to $2.5 billion at
December 31, 2010. At December 31, 2011, $138 million of
nonaccrual loans, consisting primarily of real estate secured loans,
were held for sale, compared to $294 million at December 31, 2010.