Fifth Third Bank 2009 Annual Report Download - page 78

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
76 Fifth Third Bancorp
The following table provides the fair value and gross unrealized losses on available-for-sale securities in an unrealized loss position, aggregated
by investment category and length of time the individual securities have been in a continuous unrealized loss position, as of December 31,
2009 and 2008:
Less than 12 months 12 months or more Total
($ in millions) Fair Value
Unrealized
Losses Fair Value
Unrealized
Losses Fair Value
Unrealized
Losses
2009
U.S. Treasury and Government agencies $288 (8) 1 - 289 (8)
U.S. Government sponsored agencies 1,024 (15) 347 (18) 1,371 (33)
Obligations of states and political subdivisions 4-3- 7-
Agency mortgage-backed securities 1,583 (7) - - 1,583 (7)
Other bonds, notes and debentures 782 (15) 108 (14) 890 (29)
Other securities 2--- 2-
Total $3,683 (45) 459 (32) 4,142 (77)
2008
U.S. Treasury and Government agencies $1 - 1 - 2 -
U.S. Government sponsored agencies 367 (4) - - 367 (4)
Obligations of states and political subdivisions 5 (1) 3 - 8 (1)
Agency mortgage-backed securities 480 (2) 876 (3) 1,356 (5)
Other bonds, notes and debentures 184 (23) 81 (20) 265 (43)
Other securities 37 (17) 2 - 39 (17)
Total $1,074 (47) 963 (23) 2,037 (70)
The Bancorp’s management has evaluated the securities in an
unrealized loss position in the available-for-sale and held-to-
maturity portfolios on the basis of both the duration of the decline
in value of the security and the severity of that decline, and
maintains the intent and ability to hold these securities to the
earlier of the recovery of the loss or maturity. At December 31,
2009 and 2008, two percent and 26%, respectively, of unrealized
losses in the available-for-sale securities portfolio were represented
by non-rated securities.
Trading securities were $355 million as of December 31, 2009
compared to $1.2 billion at December 31, 2008. Gross realized
gains and losses on trading securities were approximately $1 million
and $2 million, respectively, for the year ended December 31, 2009.
Gross unrealized losses on trading securities were $8 million and
gross unrealized gains were immaterial to the Bancorp for the year
ended December 31, 2009. Gross realized gains on trading
securities for the year ended December 31, 2008 were $3 million,
while gross realized losses as well as gross unrealized gains and
losses were immaterial to the Bancorp. Gross realized and
unrealized gains and losses on trading securities were immaterial to
the Bancorp for the year ended December 31, 2007.
Other-Than-Temporary Impairments (OTTI)
If the fair value of an available-for-sale or held-to-maturity security
is less than its amortized cost basis, the Bancorp must determine
whether an OTTI has occurred. Under U.S. GAAP, the
recognition and measurement requirements related to OTTI differ
for debt and equity securities. See Note 1 of the Notes to
Consolidated Financial Statements for further information on the
Bancorp’s accounting for OTTI.
During 2008, the Bancorp recognized a pre-tax OTTI charge
of $67 million on FHLMC and FNMA preferred stock included in
other securities as well as a pre-tax OTTI charge of $37 million on
certain bank trust preferred securities classified as available-for-sale.
Upon a change in U.S. GAAP in 2009, the Bancorp concluded that
the OTTI charges on the trust preferred securities were due to
non-credit related factors. Therefore, the Bancorp recognized an
increase of $37 million to the investment balance and related
unrealized losses. During the year ended December 31, 2009,
OTTI recognized on available-for-sale or held-to-maturity
securities was immaterial to the Bancorp’s consolidated financial
statements.