Loans and Leases

12 Months Ended

Dec. 31, 2013

Loans And Leases

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 Note6.

The following table provides a summary of the total loans and leases classified by primary purpose as of December 31:
($ in millions)			2013	2012
Loans and leases held for sale:
	Commercial and industrial loans	$	31	39
	Commercial mortgage loans		3	13
	Commercial construction loans		2	9
	Commercial leases		1	-
	Residential mortgage loans		890	2,856
	Other consumer loans and leases		17	22
Total loans and leases held for sale		$	944	2,939
Portfolio loans and leases:
	Commercial and industrial loans	$	39,316	36,038
	Commercial mortgage loans		8,066	9,103
	Commercial construction loans		1,039	698
	Commercial leases		3,625	3,549
Total commercial loans and leases			52,046	49,388
	Residential mortgage loans		12,680	12,017
	Home equity		9,246	10,018
	Automobile loans		11,984	11,972
	Credit card		2,294	2,097
	Other consumer loans and leases		364	290
Total consumer loans and leases			36,568	36,394
Total portfolio loans and leases		$	88,614	85,782

Total portfolio loans and leases are recorded net of unearned income, which totaled $700 million as of December 31, 2013and $758million as of December 31, 2012. 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 $111million and$73 million as of December 31, 2013 and 2012, respectively.

The Bancorp's FHLB and FRB advances are generally secured by loans. The Bancorp had loans of $10.9 billion and $12.7 billion at December 31, 2013 and 2012, respectively, pledged at the FHLB, and loans of $33.5 billion and $30.9 billion at December 31, 2013 and 2012, respectively, pledged at the FRB.

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:
					90 Days Past Due			Net
		Balance			and Still Accruing			Charge-Offs
($ in millions)		2013	2012		2013	2012		2013	2012
Commercial and industrial loans	$	39,347	36,077	$	-	1	$	168	165
Commercial mortgage loans		8,069	9,116		-	22		47	99
Commercial construction loans		1,041	707		-	1		4	25
Commercial leases		3,626	3,549		-	-		1	8
Residential mortgage loans		13,570	14,873		66	75		60	122
Home equity		9,246	10,018		-	58		97	157
Automobile loans		11,984	11,972		8	8		22	31
Credit card		2,294	2,097		29	30		78	74
Other consumer loans and leases		381	312		-	-		24	23
Total loans and leases	$	89,558	88,721	$	103	195	$	501	704
Less: Loans held for sale	$	944	2,939
Total portfolio loans and leases	$	88,614	85,782

The Bancorp engages in commercial lease products primarily related to the financing of commercial equipment. The Bancorp had $3.0billion of direct financing leases and $1.3billion of leveraged leases at both of the years ended December 31, 2013and 2012.

Pre-tax income from leveraged leases for 2013was $25million compared to pre-tax income in 2012 of $37million. The tax effect of this income was an expense of $9 million in 2013 and a benefit of $6million in 2012.

The components of the investment in lease financing at December 31:
($ in millions)		2013	2012
Rentals receivable, net of principal and interest on nonrecourse debt	$	3,556	3,543
Estimated residual value of leased assets		754	760
Initial direct cost, net of amortization		15	16
Gross investment in lease financing		4,325	4,319
Unearned income		(700)	(758)
Net investment in lease financing(a)	$	3,625	3,561

• The accumulated allowance for uncollectible minimum lease payments was $53 million and $67million at December 31, 2013and 2012, 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 $13 million and $9 millionof residual value write-downs related to commercial leases for the years ended December 31, 2013 and 2012, 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, 2013, the minimum future lease payments receivable for each of the years 2014 through 2018 was $664 million, $591 million, $505 million, $389 million and $289 million, respectively.