Loans and Leases

12 Months Ended

Dec. 31, 2014

Loans and Leases Receivable

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, refer to Note6.

The following table provides a summary of the total loans and leases classified by primary purpose as of December 31:
($ in millions)			2014	2013
Loans and leases held for sale:
	Commercial and industrial loans	$	36	31
	Commercial mortgage loans		11	3
	Commercial construction loans		2	2
	Commercial leases		1	1
	Residential mortgage loans		1,193	890
	Other consumer loans and leases		18	17
Total loans and leases held for sale		$	1,261	944
Portfolio loans and leases:
	Commercial and industrial loans	$	40,765	39,316
	Commercial mortgage loans		7,399	8,066
	Commercial construction loans		2,069	1,039
	Commercial leases		3,720	3,625
Total commercial loans and leases			53,953	52,046
	Residential mortgage loans		12,389	12,680
	Home equity		8,886	9,246
	Automobile loans		12,037	11,984
	Credit card		2,401	2,294
	Other consumer loans and leases		418	364
Total consumer loans and leases			36,131	36,568
Total portfolio loans and leases		$	90,084	88,614

Total portfolio loans and leases are recorded net of unearned income, which totaled $665 million as of December 31, 2014and $700million as of December 31, 2013. 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 $169million and$111 million as of December 31, 2014 and 2013, respectively.

The Bancorp's FHLB and FRB advances are generally secured by loans. The Bancorp had loans of $11.1 billion and $10.9 billion at December 31, 2014 and 2013, respectively, pledged at the FHLB, and loans of $33.9 billion and $33.5 billion at December 31, 2014 and 2013, 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)		2014	2013		2014	2013		2014	2013
Commercial and industrial loans	$	40,801	39,347	$	-	-	$	222	168
Commercial mortgage loans		7,410	8,069		-	-		26	47
Commercial construction loans		2,071	1,041		-	-		12	4
Commercial leases		3,721	3,626		-	-		1	1
Residential mortgage loans		13,582	13,570		56	66		126	60
Home equity		8,886	9,246		-	-		59	97
Automobile loans		12,037	11,984		8	8		27	22
Credit card		2,401	2,294		23	29		82	78
Other consumer loans and leases		436	381		-	-		20	24
Total loans and leases	$	91,345	89,558	$	87	103	$	575	501
Less: Loans held for sale	$	1,261	944
Total portfolio loans and leases	$	90,084	88,614

The Bancorp engages in commercial lease products primarily related to the financing of commercial equipment. The Bancorp had $2.8 billion and$2.7billion ofdirect financing leases, net of unearned income, at December 31, 2014 and 2013, respectively, and $874 million and $881millionofleveraged leases, net of unearned income,atDecember 31, 2014and 2013, respectively.

Pre-tax income from leveraged leases was $25million during both the years ended December 31, 2014 and 2013 andthe tax effect of this income was an expense of $9million during both the years ended December 31,2014 and 2013.

The following table provides the components of the investment in portfolio commercial lease financing at December 31:
($ in millions)		2014	2013
Rentals receivable, net of principal and interest on nonrecourse debt	$	3,589	3,556
Estimated residual value of leased assets		779	754
Initial direct cost, net of amortization		17	15
Gross investment in lease financing		4,385	4,325
Unearned income		(665)	(700)
Net investment in lease financing(a)	$	3,720	3,625

• The accumulated allowance for uncollectible minimum lease payments was $45million and $53million at December 31, 2014and 2013, 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 millionand $13 millionof residual value write-downs related to commercial leases for the years ended December 31, 2014 and 2013, 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, 2014, the minimum future lease payments receivable for each of the years 2015 through 2019 was $681 million, $625 million, $501 million, $405 million and $329 million, respectively.