Fifth Third Bank 2014 Annual Report Download - page 73

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
71 Fifth Third Bancorp
TABLE 53: SUMMARY OF CREDIT LOSS EXPERIENCE
For the years ended December 31 ($ in millions) 2014 2013 2012 2011 2010
Losses charged-off:
Commercial and industrial loans $(248) (207) (194) (314) (631)
Commercial mortgage loans (37) (66) (120) (211) (541)
Commercial construction loans (13) (9) (34) (89) (265)
Commercial leases (1) (2) (10) (1) (7)
Residential mortgage loans (139) (70) (129) (180) (441)
Home equity (75) (114) (172) (234) (276)
A
utomobile loans (44) (44) (55) (85) (132)
Credit card (95) (92) (90) (114) (164)
Other consumer loans and leases (27) (33) (33) (86) (28)
Total losses (679) (637) (837) (1,314) (2,485)
Recoveries of losses previously charged-off:
Commercial and industrial loans 26 39 29 38 45
Commercial mortgage loans 11 19 21 16 17
Commercial construction loans 1 5 9 4 13
Commercial leases - 1 2 3 5
Residential mortgage loans 13 10 7 7 2
Home equity 16 17 15 14 12
A
utomobile loans 17 22 24 32 44
Credit card 13 14 16 16 9
Other consumer loans and leases 7 9 10 12 10
Total recoveries 104 136 133 142 157
Net losses charged-off:
Commercial and industrial loans (222) (168) (165) (276) (586)
Commercial mortgage loans (26) (47) (99) (195) (524)
Commercial construction loans (12) (4) (25) (85) (252)
Commercial leases (1) (1) (8) 2 (2)
Residential mortgage loans (126) (60) (122) (173) (439)
Home equity (59) (97) (157) (220) (264)
A
utomobile loans (27) (22) (31) (53) (88)
Credit card (82) (78) (74) (98) (155)
Other consumer loans and leases (20) (24) (23) (74) (18)
Total net losses charged-off $(575) (501) (704) (1,172) (2,328)
Net charge-offs as a percent of average loans and leases (excluding held for sale):
Commercial and industrial loans 0.54 %0.44 0.50 0.97 2.23
Commercial mortgage loans 0.34 0.56 1.02 1.89 4.58
Commercial construction loans 0.79 0.51 3.08 4.96 8.48
Commercial leases 0.01 0.04 0.22 (0.08) 0.05
Total commercial loans 0.48 0.44 0.63 1.26 3.10
Residential mortgage loans 0.99 0.48 1.07 1.75 5.49
Home equity 0.65 1.02 1.51 1.97 2.20
A
utomobile loans 0.22 0.18 0.26 0.47 0.85
Credit card 3.60 3.67 3.79 5.19 8.28
Other consumer loans and leases 5.80 6.71 7.02 15.29 2.58
Total consumer loans and leases 0.86 0.77 1.13 1.79 2.92
Total net losses charged-off 0.64 %0.58 0.85 1.49 3.02
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 level of the ALLL as a
percentage of loans. 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. Refer to the Critical Accounting Policies section of
MD&A for more information.
In 2014, 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.