Loans and Leases

12 Months Ended

Dec. 31, 2011

Loans and Leases

5. Loans and leases

The Bancorp diversifies its loan and lease portfolio by offering a variety of loan and lease products with various payment terms and rate structures. Lending activities are concentrated within those states in which the Bancorp has banking centers and are primarily located in the Midwestern and Southeastern regions of the United States. The Bancorp's commercial loan portfolio consists of lending to various industry types. Management periodically reviews the performance of its loan and lease products to evaluate whether they are performing within acceptable interest rate and credit risk levels and changes are made to underwriting policies and procedures as needed. The Bancorp maintains an allowance to absorb loan and lease losses inherent in the portfolio. For further information on credit quality and the ALLL, see Note 6

The following table provides a summary of the total loans and leases classified by primary purpose as of December 31:

($ in millions)			2011	2010
Loans and leases held for sale:
	Commercial and industrial loans	$	45	83
	Commercial mortgage loans		76	147
	Commercial construction loans		17	63
	Residential mortgage loans		2,802	1,901
	Other consumer loans and leases		14	22
Total loans and leases held for sale		$	2,954	2,216
Portfolio loans and leases:
	Commercial and industrial loans	$	30,783	27,191
	Commercial mortgage loans		10,138	10,845
	Commercial construction loans		1,020	2,048
	Commercial leases		3,531	3,378
Total commercial loans and leases			45,472	43,462
	Residential mortgage loans		10,672	8,956
	Home equity		10,719	11,513
	Automobile loans		11,827	10,983
	Credit card		1,978	1,896
	Other consumer loans and leases		350	681
Total consumer loans and leases			35,546	34,029
Total portfolio loans and leases		$	81,018	77,491

Total portfolio loans and leases are recorded net of unearned income, which totaled $942 million as of December 31, 2011 and $1.0 billion as of December 31, 2010. Additionally, portfolio loans and leases are recorded net of unamortized premiums and discounts, deferred loan fees and costs, and fair value adjustments (associated with acquired loans or loans designated as fair value upon origination) which totaled a net premium of $45million as of December 31, 2011 and a net discount of $19 millionas of December 31, 2010.

The following table presents a summary of the total loans and leases owned by the Bancorp as of and for the years ended December 31:

					Balance of Loans 90			Net
		Balance			Days or More Past Due			Charge-Offs
($ in millions)		2011	2010		2011	2010		2011	2010
Commercial and industrial loans	$	30,828	27,275	$	4	16	$	276	586
Commercial mortgage loans		10,214	10,992		3	11		195	524
Commercial construction loans		1,037	2,111		1	3		85	252
Commercial leases		3,531	3,378		0	-		(2)	2
Residential mortgage loans		13,474	10,857		79	100		173	439
Home equity loans		10,719	11,513		74	89		220	264
Automobile loans		11,827	10,983		9	13		53	88
Credit Card		1,978	1,896		30	42		98	155
Other consumer loans and leases		364	702		0	0		74	18
Total loans and leases	$	83,972	79,707	$	200	274	$	1,172	2,328
Less: Loans held for sale	$	2,954	2,216
Total portfolio loans and leases	$	81,018	77,491

The Bancorp engages in commercial and consumer lease products primarily related to the financing of commercial equipment and automobiles. The Bancorp had $2.9billion of direct financing leases and $1.7billion of leveraged leases at December 31, 2011 compared to $3.0 billion and $1.7 billion, respectively, at December 31, 2010.

Pre-tax income from leveraged leases for 2011 was $33million compared to pre-tax income in 2010 of $49million. The tax effect of this income was an expense of $10million in 2011 and 2010.

The components of the investment in lease financing at December 31:

($ in millions)		2011	2010
Rentals receivable, net of principal and interest on nonrecourse debt	$	3,757	3,775
Estimated residual value of leased assets		772	900
Initial direct cost, net of amortization		16	16
Gross investment in lease financing		4,545	4,691
Unearned income		(942)	(1,040)
Net investment in lease financing(a)	$	3,603	3,651

(a) The accumulated allowance for uncollectible minimum lease payments was $79 million and $112million at December 31, 2011 and 2010, 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 of residual value write-downs related to commercial leases for the year ended December 31, 2011 and an immaterial amount of residual value write-downs related to commercial leases was recognized for the year ending December 31, 2010. The Bancorp recognized no residual value write-downs relating to consumer automobile leases in 2011 and 2010. At December 31, 2011, the minimum future lease payments receivable for each of the years 2012 through 2016 was $662 million, $561 million, $553 million, $360 million and $76 million, respectively.