MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS year ended December 31, 2010 was .19%, or five percent of the  total ALLL, compared to .25%, or five percent of the total ALLL,  as of December 31, 2009. The unallocated allowance was held  consistent to the total ALLL due to many of the impacts of recent  economic events being more fully incorporated into the historical  loss rates within the portfolio specific models and stabilization in  general economic factors including real estate values in certain of  the Bancorp’s lending markets. The ALLL as a percent of the total loan and lease portfolio  decreased to 3.88% at December 31, 2010, compared to 4.88% at  December 31, 2009. Total ALLL was $3.0 billion and $3.7 billion  as of December 31, 2010 and 2009, respectively. This decrease is  reflective of a number of factors including decreases in net charge- offs and delinquencies and signs of moderation in general  economic conditions during 2010. would increase approximately $31 million and $56 million,  respectively at December 31, 2010. As several qualitative and  quantitative factors are considered in determining the ALLL, these  sensitivity analyses do not necessarily reflect the nature and extent  of future changes in the ALLL. They are intended to provide  insights into the impact of adverse changes to risk grades and  estimated loss rates and do not imply any expectation of future  deterioration in the risk ratings or loss rates. Given current  processes employed by the Bancorp, management believes the risk  grades and estimated loss rates currently assigned are appropriate.  Total impaired loans consist of loans and leases that are  restructured in a troubled debt restructuring and larger commercial  loans included with aggregate borrower relationship balances  exceeding $1 million that exhibit probable or observed credit  weaknesses. Impaired loans are subject to individual review and  decreased from $3.3 billion as of December 31, 2009 to $2.9  billion as of December 31, 2010.  The Bancorp’s determination of the allowance for commercial loans is sensitive to the risk grades it assigns to these  loans. In the event that 10% of commercial loans in each risk  category would experience a downgrade of one risk category, the  allowance for commercial loans would increase by approximately  $156 million at December 31, 2010. In addition, the Bancorp’s  determination of the allowance for residential mortgage loans and  consumer loans is sensitive to changes in estimated loss rates. In  the event that estimated loss rates would increase 10%, the  allowance for residential mortgage loans and consumer loans  The Bancorp continually reviews its credit administration and  loan and lease portfolio and makes changes based on the  performance of its products. Management discontinued the  origination of brokered home equity products at the end of 2007,  suspended homebuilder lending in the fourth quarter of 2007 and  new commercial non-owner occupied real estate lending in 2008,  and raised underwriting standards across both the commercial and  consumer loan product offerings.  Fifth Third Bancorp 57  As of December 31 ($ in millions)  2010 2009 2008 2007 2006 Allowance attributed to:  Commercial and industrial loans  $1,123 1,282 824 271 252 Commercial mortgage loans  597 734 363 135 95 Commercial construction loans  158 380 252 98 49 Commercial leases  111 121 61 27 24 Residential mortgage loans  310 375 388 67 51 Consumer loans 554 660 611 287 247 Consumer leases  1 4 9 5 5 Unallocated  150 193 279 47 48 Total ALLL  $3,004 3,749 2,787 937 771 Portfolio loans and leases:  Commercial and industrial loans  $27,191 25,683 29,197 24,813 20,831 Commercial mortgage loans  10,845 11,803 12,502 11,862 10,405 Commercial construction loans  2,048 3,784 5,114 5,561 6,168 Commercial leases  3,378 3,535 3,666 3,737 3,842 Residential mortgage loans  8,956 8,035 9,385 10,540 8,830 Consumer loans 24,801 23,439 23,509 22,943 23,204 Consumer leases  272 500 770 797 1,073 Total portfolio loans and leases  $77,491 76,779 84,143 80,253 74,353 Attributed allowance as a percent of respective portfolio loans:  Commercial and industrial loans  4.13 %  4.99 2.82 1.09 1.21 Commercial mortgage loans  5.50 6.22 2.90 1.14 .91 Commercial construction loans  7.71 10.04 4.93 1.77 .80 Commercial leases  3.29 3.42 1.66 .72 .62 Residential mortgage loans  3.35 4.67 4.13 .63 .58 Consumer loans 2.23 2.81 2.60 1.25 1.06 Consumer leases  .37 .80 1.17 .63 .47 Unallocated (as a percent of total portfolio loans and leases)  .19 .25 .33 .06 .06 Total portfolio loans and leases  3.88 %  4.88 3.31 1.17 1.04 For the years ended December 31 ($ in millions)  2010 2009 2008 2007 2006 Balance beginning of period  $3,749 2,787 937 771 744 Impact of change in accounting principle  45 - - - - Net losses charged off  (2,328) (2,581) (2,710) (462) (316) Provision for loan and lease losses  1,538 3,543 4,560 628 343 Balance, end of year  $3,004 3,749 2,787 937 771 Reserve for unfunded commitments:  Balance beginning of period  294 195 95 76 70 Impact of change in accounting principle  (43) - - - - Provision for unfunded commitments  (24) 99 100 19 6 Balance, end of year  $227 294 195 95 76 TABLE 40: CHANGES IN ALLOWANCE FOR CREDIT LOSSES TABLE 41: ATTRIBUTION OF ALLOWANCE FOR LOAN AND LEASE LOSSES TO PORTFOLIO LOANS AND LEASES 