Fifth Third Bank 2012 Annual Report Download - page 39

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
37 Fifth Third Bancorp
TABLE 5: CHANGES IN NET INTEREST INCOME ATRRIBUTABLE TO VOLUME AND YIELD/RATE
(a)
For the years ended December 31 2012 Compared to 2011 2011 Compared to 2010
($ in millions) Volume Yield/Rate Total Volume Yield/Rate Total
A
ssets
Interest-earning assets:
Loans and leases:
Commercial and industrial loans $ 180 (71) 109 $ 100 (98) 2
Commercial mortgage (30) (18) (48) (45) (14) (59)
Commercial construction (27) (1) (28) (42) 2 (40)
Commercial leases 7 (13) (6) - (14) (14)
Subtotal – commercial 130 (103) 27 13 (124) (111)
Residential mortgage loans 87 (47) 40 67 (42) 25
Home equity (27) (13) (40) (34) (12) (46)
A
utomobile loans 23 (114) (91) 51 (129) (78)
Credit card 9 (1) 8 (1) (16) (17)
Other consumer loans/leases (59) 78 19 (41) 61 20
Subtotal – consumer 33 (97) (64) 42 (138) (96)
Total loans and leases 163 (200) (37) 55 (262) (207)
Securities:
Taxable (2) (67) (69) (29) (25) (54)
Exempt from income taxes (2) (2) (4) (10) 3 (7)
Other short-term investments (1) - (1) (3) - (3)
Total interest-earning assets 158 (269) (111) 13 (284) (271)
Total change in interest income $ 158 (269) (111) $ 13 (284) (271)
Liabilities and Equity
Interest-bearing liabilities:
Interest checking $ 9 (9) - $ 2 (5) (3)
Savings - (30) (30) 11 (51) (40)
Money market (1) (2) (3) 1 (6) (5)
Foreign office deposits (6) - (6) - (2) (2)
Other time deposits (38) (34) (72) (99) (37) (136)
Certificates - $100,000 and over (10) (16) (26) (48) (5) (53)
Federal funds purchased 1 - 1 (1) - (1)
Other short-term borrowings 3 2 5 2 (2) -
Long-term debt (34) 16 (18) (21) 37 16
Total interest-bearing liabilities (76) (73) (149) (153) (71) (224)
Total change in interest expense (76) (73) (149) (153) (71) (224)
Total change in net interest income $ 234 (196) 38 $ 166 (213) (47)
(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 $303
million in 2012 compared to $423 million in 2011. The decrease in
provision expense for 2012 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 $401
million from $2.3 billion at December 31, 2011 to $1.9 billion at
December 31, 2012. As of December 31, 2012, the ALLL as a
percent of portfolio loans and leases decreased to 2.16%, compared
to 2.78% at December 31, 2011.
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.