Fifth Third Bank 2013 Annual Report Download - page 40

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
38 Fifth Third Bancorp
TABLE 6: CHANGES IN NET INTEREST INCOME ATTRIBUTABLE TO VOLUME AND YIELD/RATE
(a)
For the years ended December 31 2013 Compared to 2012 2012 Compared to 2011
($ in millions) Volume Yield/Rate Total Volume Yield/Rate Total
A
ssets
Interest-earning assets:
Loans and leases:
Commercial and industrial loans $ 187 (175) 12 $ 180 (71) 109
Commercial mortgage (44) (19) (63) (30) (18) (48)
Commercial construction (2) 4 2 (27) (1) (28)
Commercial leases 2 (13) (11) 7 (13) (6)
Subtotal – commercial loans and leases 143 (203) (60) 130 (103) 27
Residential mortgage loans 42 (21) 21 87 (47) 40
Home equity (31) (7) (38) (27) (13) (40)
A
utomobile loans 6 (72) (66) 23 (114) (91)
Credit card 15 2 17 9 (1) 8
Other consumer loans/leases 8 (8) - (59) 78 19
Subtotal – consumer loans and leases 40 (106) (66) 33 (97) (64)
Total loans and leases 183 (309) (126) 163 (200) (37)
Securities:
Taxable 38 (47) (9) (2) (67) (69)
Exempt from income taxes 1 - 1 (2) (2) (4)
Other short-term investments 2 - 2 (1) - (1)
Subtotal – securities and other short-term investments 41 (47) (6) (5) (69) (74)
Total change in interest income $ 224 (356) (132) $ 158 (269) (111)
Liabilities
Interest-bearing liabilities:
Interest checking $ - 4 4 $ 9 (9) -
Savings (4) (11) (15) - (30) (30)
Money market 11 1 12 (1) (2) (3)
Foreign office deposits - - - (6) - (6)
Other time deposits (8) (10) (18) (38) (34) (72)
Certificates - $100,000 and over 33 (29) 4 (10) (16) (26)
Federal funds purchased - - - 1 - 1
Other short-term borrowings (3) - (3) 3 2 5
Long-term debt (34) (50) (84) (34) 16 (18)
Total change in interest expense (5) (95) (100) (76) (73) (149)
Total change in net interest income $ 229 (261) (32) $ 234 (196) 38
(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 $229
million in 2013 compared to $303 million in 2012. The decrease in
provision expense for 2013 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 $272
million from $1.9 billion at December 31, 2012 to $1.6 billion at
December 31, 2013. As of December 31, 2013, the ALLL as a
percent of portfolio loans and leases decreased to 1.79%, compared
to 2.16% at December 31, 2012.
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.