Fifth Third Bank 2011 Annual Report Download - page 67

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Fifth Third Bancorp 65
TABLE 48: SUMMARY OF CREDIT LOSS EXPERIENCE
For the years ended December 31 ($ in millions) 2011 2010 2009 2008 2007
Losses charged off:
Commercial and industrial loans $(314) (631) (768) (667) (121)
Commercial mortgage loans (211) (541) (436) (618) (46)
Commercial construction loans (89) (265) (420) (750) (29)
Commercial leases (1) (7) (11) - (1)
Residential mortgage loans (180) (441) (359) (243) (43)
Home equity (234) (276) (330) (212) (106)
A
utomobile loans (85) (132) (189) (168) (117)
Credit card (114) (164) (178) (101) (54)
Other consumer loans and leases (86) (28) (28) (32) (27)
Total losses (1,314) (2,485) (2,719) (2,791) (544)
Recoveries of losses previously charged off:
Commercial and industrial loans 38 45 50 18 12
Commercial mortgage loans 16 17 14 5 2
Commercial construction loans 4 13 4 2 -
Commercial leases 3 5 4 1 1
Residential mortgage loans 7 2 2 - -
Home equity 14 12 8 7 9
A
utomobile loans 32 44 41 34 32
Credit card 16 9 8 7 8
Other consumer loans and leases 12 10 7 7 18
Total recoveries 142 157 138 81 82
Net losses charged off:
Commercial and industrial loans (276) (586) (718) (649) (109)
Commercial mortgage loans (195) (524) (422) (613) (44)
Commercial construction loans (85) (252) (416) (748) (29)
Commercial leases 2 (2) (7) 1 -
Residential mortgage loans (173) (439) (357) (243) (43)
Home equity (220) (264) (322) (205) (97)
A
utomobile loans (53) (88) (148) (134) (85)
Credit card (98) (155) (170) (94) (46)
Other consumer loans and leases (74) (18) (21) (25) (9)
Total net losses charged off $(1,172) (2,328) (2,581) (2,710) (462)
Net charge-offs as a percent of average loans and leases (excluding held for sale):
Commercial and industrial loans 0.97 %2.23 2.61 2.31 0.49
Commercial mortgage loans 1.89 4.58 3.43 4.80 0.40
Commercial construction loans 4.96 8.48 9.24 12.80 0.51
Commercial leases (0.08) 0.05 0.22 (0.02) 0.01
Total commercial loans 1.26 3.10 3.27 3.99 0.43
Residential mortgage loans 1.75 5.49 4.15 2.47 0.48
Home equity 1.97 2.20 2.57 1.67 0.82
A
utomobile loans 0.47 0.85 1.68 1.56 0.83
Credit card 5.19 8.28 8.87 5.51 3.55
Other consumer loans and leases 15.29 2.58 2.14 2.10 0.83
Total consumer loans and leases 1.79 2.92 3.10 2.08 0.84
Total net losses charged off 1.49 % 3.02 3.20 3.23 0.61
Allowance for Credit Losses
The allowance for credit losses is comprised of the ALLL and the
reserve for unfunded commitments. The ALLL provides coverage
for probable and estimable losses in the loan and lease portfolio.
The Bancorp evaluates the ALLL each quarter to determine its
adequacy to cover inherent losses. Several factors are taken into
consideration in the determination of the overall ALLL, including
an unallocated component. These factors include, but are not
limited to, the overall risk profile of the loan and lease portfolios,
net charge-off experience, the extent of impaired loans and leases,
the level of nonaccrual loans and leases, the level of 90 days past
due loans and leases and the overall percentage level of the ALLL.
The Bancorp also considers overall asset quality trends, credit
administration and portfolio management practices, risk
identification practices, credit policy and underwriting practices,
overall portfolio growth, portfolio concentrations and current
national and local economic conditions that might impact the
portfolio. See the Critical Accounting Policies section for more
information.
The ALLL attributable to the portion of the residential and
consumer loan and lease portfolio that has not been restructured is
determined on a pooled basis with the segmentation being based on
the similarity of credit risk characteristics. Loss factors for real estate
backed consumer loans are developed for each pool based on the
trailing twelve month historical loss rate, as adjusted for certain
prescriptive loss rate factors and certain qualitative adjustment
factors. The prescriptive loss rate factors and qualitative adjustments
are designed to reflect risks associated with current conditions and
trends which are not believed to be fully reflected in the trailing
twelve month historical loss rate. For real estate backed consumer
loans, the prescriptive loss rate factors include adjustments for
delinquency trends, LTV trends, refreshed FICO score trends and
product mix, and the qualitative factors include adjustments for
credit administration and portfolio management practices, credit
policy and underwriting practices and the national and local