US Bank 2010 Annual Report Download - page 88

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The allowance for credit losses reserves for probable and estimatable losses incurred in the Company’s loan and lease portfolio
and includes certain amounts related to purchased loans that do not represent loss exposure to the Company, because those
losses are recoverable under loss sharing agreements with the FDIC. Activity in the allowance for credit losses was as follows:
(Dollars in Millions) 2010 2009 2008
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,264 $3,639 $2,260
Add
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,356 5,557 3,096
Deduct
Loans charged off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,496 4,111 2,009
Less recoveries of loans charged off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (315) (243) (190)
Net loans charged off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,181 3,868 1,819
Net change for credit losses to be reimbursed by the FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 – –
Acquisitions and other changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – (64) 102
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,531 $5,264 $3,639
Components
Allowance for loan losses, excluding losses to be reimbursed by the FDIC . . . . . . . . . . . . . . . . . . . . . . . $5,218 $5,079 $3,514
Allowance for credit losses to be reimbursed by the FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 – –
Liability for unfunded credit commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 185 125
Total allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,531 $5,264 $3,639
Additional detail of the allowance for credit losses and related loan balances, by portfolio type, for the year ended
December 31, 2010, was as follows:
(Dollars in Millions) Commercial
Commercial
Real
Estate
Residential
Mortgages
Credit
Card
Other
Retail
Total
Loans,
Excluding
Covered Loans
Covered
Loans
Total
Loans
Allowance for credit losses:
Balance at beginning of year . . . . . . . . . . . . . $ 1,208 $ 1,001 $ 672 $ 1,495 $ 871 $ 5,247 $ 17 $ 5,264
Add
Provision for credit losses . . . . . . . . . . . . . . 723 1,135 694 1,100 681 4,333 23 4,356
Deduct
Loans charged off . . . . . . . . . . . . . . . . . . 918 871 554 1,270 863 4,476 20 4,496
Less recoveries of loans charged off. . . . . . . (91) (26) (8) (70) (118) (313) (2) (315)
Net loans charged off . . . . . . . . . . . . . . . . 827 845 546 1,200 745 4,163 18 4,181
Net change for credit losses to be reimbursed
by the FDIC. . . . . . . . . . . . . . . . . . . . . . . – – – – – – 92 92
Balance at end of year . . . . . . . . . . . . . . . . . $ 1,104 $ 1,291 $ 820 $ 1,395 $ 807 $ 5,417 $ 114 $ 5,531
Allowance balance at end of year related to:
Loans individually evaluated for impairment (a) . . $ 38 $ 55 $ – $ – $ – $ 93 $ – $ 93
TDRs collectively evaluated for impairment . . . . – – 320 223 30 573 – 573
Other loans collectively evaluated for
impairment . . . . . . . . . . . . . . . . . . . . . . . 1,066 1,235 500 1,172 777 4,750 28 4,778
Loans acquired with deteriorated credit quality . . – 1 – – – 1 86 87
Total allowance for credit losses . . . . . . . . . $ 1,104 $ 1,291 $ 820 $ 1,395 $ 807 $ 5,417 $ 114 $ 5,531
Loan balance at end of year:
Loans individually evaluated for impairment (a) . . $ 295 $ 801 $ – $ – $ – $ 1,096 $ – $ 1,096
TDRs collectively evaluated for impairment . . . . – – 1,957 452 114 2,523 – 2,523
Other loans collectively evaluated for
impairment . . . . . . . . . . . . . . . . . . . . . . . 48,103 33,834 28,775 16,351 48,277 175,340 11,899 187,239
Loans acquired with deteriorated credit quality . . – 60 – – – 60 6,143 6,203
Total loans . . . . . . . . . . . . . . . . . . . . . . . $48,398 $34,695 $30,732 $16,803 $48,391 $179,019 $18,042 (b) $197,061
(a) Represents commercial and commercial real estate loans that are greater than $5 million and are classified as nonperforming or TDRs.
(b) Includes expected reimbursements from the FDIC under loss sharing agreements.
86 U.S. BANCORP