NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. LOANS WITH DETERIORATED CREDIT QUALITY ACQUIRED IN A TRANSFER  Interest income recognized on a cash basis for loans on nonaccrual status during 2010, 2009, and 2008, was $25 million, $20 million, and $10  million, respectively. The following table summarizes the Bancorp’s nonperforming loans and leases, by class, as of December 31, 2010: The Bancorp has acquired certain loans for which there was  evidence of deterioration of credit quality since origination and for  which it was probable, at acquisition, that all contractually  required payments would not be collected. These loans were  evaluated either individually or segregated into pools based on  common risk characteristics and accounted for under U.S. GAAP  guidance for loans acquired with deteriorated credit quality. U.S.  GAAP requires acquired loans to be recorded at their initial fair  value and prohibits carrying over valuation allowances when  applying purchase accounting. Loans carried at fair value,  mortgage loans held for sale and loans under revolving credit  agreements are excluded from the scope of this guidance on loans  acquired with deteriorated credit quality. During the years ended  December 31, 2010, 2009 and 2008, the Bancorp recorded  provision expense for loans acquired with deteriorated credit  quality of $6 million, $21 million and $35 million, respectively, in  the Consolidated Statements of Income. In addition, as of  December 31, 2010 and 2009, the Bancorp maintained an  allowance for loan and lease losses of $3 million and $21 million,  respectively, on these loans.  The following table reflects the outstanding balance of all  contractually required payments and carrying amounts of loans  acquired with deteriorated credit quality at December 31:  At the acquisition date, the Bancorp determines the excess of the  loan’s contractually required payments over all cash flows  expected to be collected as an amount that should not be accreted  into interest income (nonaccretable difference). The remaining  amount representing the difference in the expected cash flows of  acquired loans and the initial investment in the acquired loans is  accreted into interest income over the remaining life of the loan or  pool of loans (accretable yield). A summary of activity is provided.  The following table reflects loans that were acquired with  deteriorated credit quality during the years ended December 31:  Fifth Third Bancorp  85 ($ in millions)  2010 2009 Commercial $15 158 Consumer 58 58 Outstanding balance  $73 216 Carrying amount  $24 71 ($ in millions)  2010 2009 2008 Contractually required payments receivable  at acquisition: Commercial $ -  - 182 Consumer 23 - 34 Total  $23  - 216 Cash flows expected to be collected at  acquisition $8 - 90 Fair value of acquired loans at  acquisition  8 - 66 ($ in millions)  Accretable  Yield  Balance as of December 31, 2007 $6 Additions 24 Accretion (15) Disposals - Reclassifications from (to) nonaccretable difference,  net 13 Balance as of December 31, 2008 $28 Additions - Accretion (6) Disposals - Reclassifications from (to) nonaccretable difference,  net (13) Balance as of December 31, 2009  $9 Additions  - Accretion  (2) Disposals  (2) Reclassifications from (to) nonaccretable difference,  net (3) Balance as of December 31, 2010  $2 ($in millions) Nonperforming  Loans & Leases  (a) Commercial:  Commercial and industrial loans $568 Commercial mortgage loans owner-occupied  168 Commercial mortgage loans nonowner-occupied  267 Commercial construction  192 Commercial leasing  19 Total Commercial  $1,214 Residential mortgage loans  $268 Consumer:  Home equity 56 Automobile loans  3 Credit card 55 Other consumer loans and leases 84 Total Consumer  $198 Total nonperforming loans and leases  $1,680 (a) Excludes  $294  and $224 of nonaccrual loans held for sale at  December 31, 2010  and 2009, respectively. 