Fifth Third Bank 2009 Annual Report Download - page 110

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
108 Fifth Third Bancorp
2008. These gains and losses are reported as mortgage banking
net revenue in the Consolidated Statements of Income.
Losses included in earnings attributable to changes in
instrument-specific credit risk for residential mortgage loans
measured at fair value were $4 million and $1 million,
respectively, during 2009 and 2008. Interest on residential
mortgage loans measured at fair value is accrued as it is earned
using the effective interest method and is reported as interest
income in the Consolidated Statements of Income.
The following tables summarize the difference between the aggregate fair value and the aggregate unpaid principal balance for residential
mortgage loans measured at fair value.
($ in millions)
Aggregate
Fair Value
Aggregate Unpaid
Principal Balance Difference
As of December 31, 2009
Residential mortgage loans measured at fair value $1,496 1,463 $33
Past due loans of 90 days or more 3 4 (1)
Nonaccrual loans 1 1 -
As of December 31, 2008
Residential mortgage loans measured at fair value $888 848 $40
Past due loans of 90 days or more 2 3 (1)
Nonaccrual loans - - -
Fair Value of Certain Financial Instruments
The following table summarizes carrying amounts and estimated fair values for certain financial instruments, excluding financial instruments
measured at fair value on a recurring basis at December 31:
2009 2008
($ in millions)
Carrying
Amount Fair Value
Carrying
Amount Fair Value
Financial assets:
Cash and due from banks $2,318 2,318 2,739 2,739
Other securities 893 893 797 797
Held-to-maturity securities 355 355 360 360
Other short-term investments 3,369 3,369 3,578 3,578
Loans held for sale 543 543 571 571
Portfolio loans and leases, net 73,004 68,748 81,349 74,234
Financial liabilities:
Deposits 84,305 84,544 78,613 79,145
Federal funds purchased 182 182 287 287
Other short-term borrowings 1,415 1,415 9,959 9,969
Long-term debt 10,507 9,899 13,585 11,022
Cash and due from banks, other securities, other short-term investments,
deposits, federal funds purchased and other short-term borrowings
For financial instruments with a short-term or no stated maturity,
prevailing market rates and limited credit risk, carrying amounts
approximate fair value. Those financial instruments include cash
and due from banks, FHLB and FRB restricted stock, other short-
term investments, certain deposits (demand, interest checking,
savings, money market and foreign office deposits), and federal
funds purchased. Fair values for other time deposits, certificates
of deposit $100,000 and over, and other short-term borrowings
were estimated using a discounted cash flow calculation that
applied prevailing LIBOR/swap interest rates for the same
maturities.
Held-to-maturity securities
The Bancorp's held-to-maturity securities are primarily composed
of instruments that provide income tax credits as the economic
return on the investment. The fair value of these instruments is
estimated based on current U.S. Treasury tax credit rates.
Loans held for sale
Fair values for commercial loans held for sale were valued based
on executable broker quotes when available, or on the fair value
of the underlying collateral. Fair values for other consumer loans
held for sale are based on contractual values upon which the loans
may be sold to a third party, and approximate their carrying value.
Portfolio loans and leases, net
Fair values were estimated by discounting future cash flows using
the current market rates as similar loans would be made to
borrowers for the same remaining maturities.
Long-term debt
Fair value of long-term debt was based on quoted market prices,
when available, or a discounted cash flow calculation using
LIBOR/swap interest rates and, in some cases, a spread for new
issues for borrowings of similar terms.