Fifth Third Bank 2013 Annual Report Download - page 75

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
73 Fifth Third Bancorp
TABLE 52: SUMMARY OF CREDIT LOSS EXPERIENCE
For the years ended December 31 ($ in millions) 2013 2012 2011 2010 2009
Losses charged off:
Commercial and industrial loans $(207) (194) (314) (631) (768)
Commercial mortgage loans (66) (120) (211) (541) (436)
Commercial construction loans (9) (34) (89) (265) (420)
Commercial leases (2) (10) (1) (7) (11)
Residential mortgage loans (70) (129) (180) (441) (359)
Home equity (114) (172) (234) (276) (330)
A
utomobile loans (44) (55) (85) (132) (189)
Credit card (92) (90) (114) (164) (178)
Other consumer loans and leases (33) (33) (86) (28) (28)
Total losses (637) (837) (1,314) (2,485) (2,719)
Recoveries of losses previously charged off:
Commercial and industrial loans 39 29 38 45 50
Commercial mortgage loans 19 21 16 17 14
Commercial construction loans 5 9 4 13 4
Commercial leases 1 2 3 5 4
Residential mortgage loans 10 7 7 2 2
Home equity 17 15 14 12 8
A
utomobile loans 22 24 32 44 41
Credit card 14 16 16 9 8
Other consumer loans and leases 9 10 12 10 7
Total recoveries 136 133 142 157 138
Net losses charged off:
Commercial and industrial loans (168) (165) (276) (586) (718)
Commercial mortgage loans (47) (99) (195) (524) (422)
Commercial construction loans (4) (25) (85) (252) (416)
Commercial leases (1) (8) 2 (2) (7)
Residential mortgage loans (60) (122) (173) (439) (357)
Home equity (97) (157) (220) (264) (322)
A
utomobile loans (22) (31) (53) (88) (148)
Credit card (78) (74) (98) (155) (170)
Other consumer loans and leases (24) (23) (74) (18) (21)
Total net losses charged off $(501) (704) (1,172) (2,328) (2,581)
Net charge-offs as a percent of average loans and leases (excluding held for sale):
Commercial and industrial loans 0.44 %0.50 0.97 2.23 2.61
Commercial mortgage loans 0.56 1.02 1.89 4.58 3.43
Commercial construction loans 0.51 3.08 4.96 8.48 9.24
Commercial leases 0.04 0.22 (0.08) 0.05 0.22
Total commercial loans 0.44 0.63 1.26 3.10 3.27
Residential mortgage loans 0.48 1.07 1.75 5.49 4.15
Home equity 1.02 1.51 1.97 2.20 2.57
A
utomobile loans 0.18 0.26 0.47 0.85 1.68
Credit card 3.67 3.79 5.19 8.28 8.87
Other consumer loans and leases 6.71 7.02 15.29 2.58 2.14
Total consumer loans and leases 0.77 1.13 1.79 2.92 3.10
Total net losses charged off 0.58 %0.85 1.49 3.02 3.20
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
relative to portfolio loans and leases. 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.
In 2013, the Bancorp did not substantively change any material
aspect of its overall approach in the determination of the ALLL and
there have been no material changes in assumptions or estimation
techniques as compared to prior periods that impacted the
determination of the current period allowance. In addition to the
ALLL, the Bancorp maintains a reserve for unfunded commitments
recorded in other liabilities in the Consolidated Balance Sheets. The
methodology used to determine the adequacy of this reserve is
similar to the Bancorp’s methodology for determining the ALLL.
The provision for unfunded commitments is included in other
noninterest expense in the Consolidated Statements of Income.
The ALLL attributable to the portion of the residential
mortgage and consumer loan and lease portfolio that has not been