US Bank 2012 Annual Report Download - page 98

million. These amounts were determined based upon the
estimated remaining life of the underlying loans, which includes
the effects of estimated prepayments. For the purchased
nonimpaired loans acquired in the BankEast transaction, the
estimate as of the acquisition date of the contractually required
payments receivable was $135 million, the contractual cash
flows not expected to be collected was $22 million, and the
estimated fair value of the loans was $96 million. The BankEast
transaction did not include a loss sharing agreement.
Changes in the accretable balance for all purchased impaired loans, including those acquired in the BankEast transaction, for the
years ended December 31, were as follows:
(Dollars in Millions) 2012 2011 2010
Balance at beginning of period ............................................................................. $2,619 $2,890 $2,845
Purchases .................................................................................................. 13 100 –
Accretion ................................................................................................... (437) (451) (421)
Disposals ................................................................................................... (208) (67) (27)
Reclassifications (to)/from nonaccretable difference (a) .................................................... 454 184 536
Other (b) .................................................................................................... (732) (37) (43)
Balance at end of period ................................................................................... $1,709 $2,619 $2,890
(a) Primarily relates to changes in expected credit performance.
(b) Primarily relates to changes in variable rates, and in 2012 to a change in the Company’s expectations regarding potential sale of modified covered loans at the end of the indemnification
agreements which results in a reduction in the expected contractual interest payments included in the accretable balance for those loans that may be sold.
Allowance for Credit Losses The allowance for credit losses
reserves for probable and estimable losses incurred in the
Company’s loan and lease portfolio and includes certain
amounts 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 by portfolio class 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
Balance at December 31, 2009 ................. $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 December 31, 2010 ................. $1,104 $1,291 $820 $1,395 $ 807 $5,417 $114 $5,531
Add
Provision for credit losses .................... 312 361 596 431 628 2,328 15 2,343
Deduct
Loans charged off ............................ 516 543 502 922 733 3,216 13 3,229
Less recoveries of loans charged off ......... (110) (45) (13) (88) (129) (385) (1) (386)
Net loans charged off ...................... 406 498 489 834 604 2,831 12 2,843
Net change for credit losses to be reimbursed
by the FDIC .................................. – – – – – – (17) (17)
Balance at December 31, 2011 ................. $1,010 $1,154 $927 $ 992 $ 831 $4,914 $100 $5,014
Add
Provision for credit losses .................... 316 (131) 446 571 558 1,760 122 1,882
Deduct
Loans charged off ............................ 378 242 461 769 666 2,516 11 2,527
Less recoveries of loans charged off ......... (103) (76) (23) (102) (125) (429) (1) (430)
Net loans charged off ...................... 275 166 438 667 541 2,087 10 2,097
Net change for credit losses to be reimbursed
by the FDIC .................................. – – – – – – (33) (33)
Other changes .................................. – – – (33) – (33) – (33)
Balance at December 31, 2012 ................ $1,051 $ 857 $935 $ 863 $ 848 $4,554 $179 $4,733
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