54 Fifth Third Bancorp MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Analysis of Net Loan Charge-offs  result of the Bancorp’s foreclosure, during the fourth quarter of  2010, on a commercial loan collateralized by individual consumer  loans with a carrying value of $78 million that were classified as  nonaccrual loans at December 31, 2010. Consumer restructured  loans on accrual status totaled $1.6 billion and $1.4 billion as of  December 31, 2010 and 2009, respectively, driven by an increased  volume of restructured loans. As of December 31, 2010, redefault  rates on restructured residential mortgage, home equity loans and  credit card loans were 27%, 18% and 20%, respectively.  Repossessed personal property and OREO increased from  $297 million at December 31, 2009 to $494 million at December  31, 2010, driven by higher levels of foreclosures on commercial  mortgage loans. At December 31, 2010 OREO totaled $467  million and included $351 million of commercial assets and $116  million of consumer assets. Properties in Michigan and Florida  accounted for 49% of foreclosed real estate at December 31,  2010. In 2010 and 2009, approximately $10 million and $20 million,  respectively, of interest income was recognized on a cash basis for  loans on nonaccrual. In 2010 and 2009, additional interest income  of approximately $206 million and $236 million, respectively,  would have been recorded if the nonaccrual and renegotiated  loans and leases on nonaccrual status had been current in  accordance with the original terms. Although this value helps  demonstrate the costs of carrying nonaccrual credits, the Bancorp  does not expect to recover the full amount of interest.  Net charge-offs were 302 bp of average loans and leases for 2010,  compared to 320 bp for 2009. Table 39 provides a summary of  credit loss experience and net charge-offs as a percentage of  average loans and leases outstanding by loan category.  The ratio of commercial loan net charge-offs to average  commercial loans outstanding decreased to 3.10% in 2010  compared to 3.27% in 2009. This improvement was primarily due  to actions taken by the Bancorp to address problem loans,  reflected by significant net charge-offs recorded in 2008 and 2009  and the impact of loss mitigation activities such as suspending  home builder and developer lending and non-owner occupied  commercial real estate lending in 2007 and 2008, respectively, and  tighter underwriting standards implemented on commercial loan  products over the past three years. Net charge-offs for 2010  included $625 million related to non-owner occupied commercial  real-estate, a decrease from $721 million in 2009. Charge-offs on  these loans represented 46% of all commercial net charge-offs in  2010 and 2009. Florida and Michigan continued to experience the  most stress, accounting for approximately 48% of the total net  charge-offs in the commercial loan product portfolio in 2010  compared to 44% in 2009.  The ratio of consumer loan net charge-offs to average  consumer loans outstanding decreased to 2.92% in 2010 compared to 3.10% in 2009. Compared to 2009, total consumer  net charge-offs decreased $54 million to $964 million in 2010.  Residential mortgage loan net charge-offs increased $82 million to  $439 million during 2010. The ratio of residential mortgage net  charge-offs to average residential mortgage loans increased from  4.15% in 2009 to 5.49% in 2010. These increases were primarily  due to $123 million in charge-offs taken on $228 million of  portfolio residential mortgage loans sold during the third quarter  of 2010. The Bancorp’s Florida and Michigan markets continue to  experience the most stress as residential mortgage loan charge-offs  in these states accounted for 72% of residential mortgage net  charge-offs during 2010. Home equity net charge-offs decreased $58 million to $264  million during 2010. The ratio of home equity net charge-offs to  average home equity loans decreased from 2.57% in 2009 to  2.20% in 2010. These decreases are primarily due to a $33 million  decrease in net charge-offs on the brokered home equity portfolio  and a $20 million decrease in net charge-offs in the Florida and  Michigan markets on home equity products originated by the  Bancorp. Management responded to the performance of the  brokered home equity portfolio by eliminating this channel of  origination at the end of 2007. In addition, management actively  manages lines of credit and makes reductions in lending limits  when it believes it is necessary based on FICO score deterioration  and property devaluation. Automobile loan net charge offs decreased $60 million to $88  million in 2010. The ratio of automobile loan net charge-offs to  average automobile loans was .85% for 2010, a decrease of 83 bp  compared to 2009. These decreases are the result of improvements in delinquencies and loss severity as well as  improvements made in underwriting over the past three years.  Credit card net charge-offs decreased $15 million to $155  million in 2010. The net charge-off ratio on credit card balances  decreased from 8.87% in 2009 to 8.28% in 2010. The decreases  from the prior year are primarily due to the Bancorp actively  managing open credit card balances and a decrease in delinquency  trends throughout 2010 as general economic conditions began to  show signs of improvement. Management expects trends in the  charge-off ratio on credit card balances to be consistent with  general economic trends, such as unemployment and personal  bankruptcy filings. The Bancorp employs a risk-adjusted pricing  methodology to help ensure adequate compensation is received  for those products that have higher credit costs. 