Fifth Third Bank 2014 Annual Report Download - page 106

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
104 Fifth Third Bancorp
The Bancorp engages in commercial lease products primarily related
to the financing of commercial equipment. The Bancorp had $2.8
billion and $2.7 billion of direct financing leases, net of unearned
income, at December 31, 2014 and 2013, respectively, and $874
million and $881 million of leveraged leases, net of unearned
income, at December 31, 2014 and 2013, respectively.
Pre-tax income from leveraged leases was $25 million during
both the years ended December 31, 2014 and 2013 and the tax
effect of this income was an expense of $9 million during both the
years ended December 31, 2014 and 2013.
The following table provides the components of the investment in portfolio commercial lease financing at December 31:
($ in millions) 2014 2013
Rentals receivable, net of principal and interest on nonrecourse debt $ 3,589 3,556
Estimated residual value of leased assets 779 754
Initial direct cost, net of amortization 17 15
Gross investment in lease financing 4,385 4,325
Unearned income (665) (700)
Net investment in lease financing(a) $ 3,720 3,625
(a) The accumulated allowance for uncollectible minimum lease payments was
$45 million
and $53 million at
December 31, 2014
and 2013, respectively.
The Bancorp periodically reviews residual values associated with its
leasing portfolio. Declines in residual values that are deemed to be
other-than-temporary are recognized as a loss. The Bancorp
recognized $4 million and $13 million of residual value write-downs
related to commercial leases for the years ended December 31, 2014
and 2013, respectively. The residual value write-downs related to
commercial leases are recorded in corporate banking revenue in the
Consolidated Statements of Income. At December 31, 2014, the
minimum future lease payments receivable for each of the years
2015 through 2019 was $681 million, $625 million, $501 million,
$405 million and $329 million, respectively.
6. CREDIT QUALITY AND THE ALLOWANCE FOR LOAN AND LEASE LOSSES
The Bancorp disaggregates ALLL balances and transactions in the ALLL by portfolio segment. Credit quality related disclosures for loans and
leases are further disaggregated by class.
Allowance for Loan and Lease Losses
The following tables summarize transactions in the ALLL by portfolio segment:
For the year ended December 31, 2014 Residential
($ in millions) Commercial Mortgage Consumer Unallocated Total
Transactions in the ALLL:
Balance at January 1 $ 1,058 189 225 110 1,582
Losses charged-off (299) (139) (241) - (679)
Recoveries of losses previously charged-off 38 13 53 - 104
Provision for loan and lease losses 78 41 200 (4) 315
Balance at December 31 $ 875 104 237 106 1,322
For the year ended December 31, 2013 Residential
($ in millions) Commercial Mortgage Consumer Unallocated Total
Transactions in the ALLL:
Balance at January 1 $ 1,236 229 278 111 1,854
Losses charged-off (284) (70) (283) - (637)
Recoveries of losses previously charged-off 64 10 62 - 136
Provision for loan and lease losses 42 20 168 (1) 229
Balance at December 31 $ 1,058 189 225 110 1,582
For the year ended December 31, 2012 Residential
($ in millions) Commercial Mortgage Consumer Unallocated Total
Transactions in the ALLL:
Balance at January 1 $ 1,527 227 365 136 2,255
Losses charged-off (358) (129) (350) - (837)
Recoveries of losses previously charged-off 61 7 65 - 133
Provision for loan and lease losses 6 124 198 (25) 303
Balance at December 31 $ 1,236 229 278 111 1,854