Fifth Third Bank 2009 Annual Report Download - page 98

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
96 Fifth Third Bancorp
21. RETIREMENT AND BENEFIT PLANS
The Bancorp recognizes the overfunded and underfunded status
of its pension plans as an asset and liability, respectively. The
underfunded amounts recognized in other liabilities in the
Consolidated Balance Sheets as of December 31, 2009 and 2008
were as follows:
($ in millions) 2009 2008
Prepaid benefit cost $ - -
Accrued benefit liability (35) (84)
Net underfunded status ($35) (84)
There were no Bancorp pension plans that had an overfunded
status at December 31, 2009 and 2008. The following table
summarizes the defined benefit retirement plans as of and for the
years ended December 31:
Plans with an Underfunded Status
The estimated net actuarial loss and prior service cost for the
defined benefit pension plans that will be amortized from
accumulated other comprehensive income into net periodic
benefit cost during 2010 are $12 million and $1 million,
respectively.
The following table summarizes net periodic benefit cost and
other changes in plan assets and benefit obligations recognized in
other comprehensive income for the years ended December 31:
($ in millions) 2009 2008 2007
Components of net periodic benefit cost:
Service cost $ - --
Interest cost 12 13 14
Expected return on assets (12) (18) (19)
Amortization of net actuarial loss 15 77
Amortization of net prior service cost 1 11
Settlement 13 10 7
Net periodic benefit cost $29 13 10
Other changes in plan assets and benefit
obligations recognized in other
comprehensive income:
Net actuarial (loss) gain ($10) 93 10
Net prior service cost - --
Amortization of net actuarial loss (15) (7) (7)
Amortization of prior service cost (1) (1) (1)
Settlement (13) (10) (7)
Total recognized in other comprehensive
income (39) 75
(5)
Total recognized in net periodic benefit
cost and other comprehensive income ($10) 88
5
Fair Value Measurements of Plan Assets
The following table summarizes Plan assets measured at fair value
on a recurring basis as of December 31, 2009:
Fair Value Measurements Using (a)
($ in million) Level 1 Level 2 Level 3
Total
Fair
Value
Equity securities:
Growth equity securities $52 - - $52
Value equity securities 49 - - 49
Total equity securities (b) 101 - - 101
Mutual & exchange traded funds:
Money market funds 6 - - 6
International funds 28 - - 28
Commodity funds 9 - - 9
Total mutual & exchange
traded funds 43 - - 43
Debt securities:
U.S Treasury obligations 6 - - 6
U.S. Govt. agencies (c) - 3 - 3
Agency mortgage backed - 27 - 27
Corporate bonds (d) - 2 - 2
Total debt securities 6 32 - 38
Total plan assets $150 32 - $182
(a) For further information on fair value hierarchy levels, see Note 27.
(b) Includes holdings in Bancorp common stock
(c) Includes debt securities issued by U.S. Government sponsored agencies
(d) Includes private label asset backed securities
The following is a description of the valuation methodologies
used for instruments measured at fair value, as well as the general
classification of such instruments pursuant to the valuation
hierarchy.
Equity securities
The Plan measures common stock using quoted prices which are
available in an active market and classifies these investments
within Level 1 of the valuation hierarchy.
Mutual and exchange traded funds
All of the Plan’s mutual and exchange traded funds are publicly
traded. The Plan measures the value of these investments using
the fund’s quoted prices that are available in an active market and
classifies these investments within Level 1 of the valuation
hierarchy.
Debt securities
For certain U.S. Treasury and federal agency obligations, the Plan
measures the fair value based on quoted prices, which are
available in an active market and classifies these investments
within Level 1 of the valuation hierarchy. Where quoted prices are
not available, the Plan measures the fair value of these
investments based on matrix pricing models that include the bid
price, which factors in the yield curve and other characteristics of
the security including the interest rate, prepayment speeds and
length of maturity. Therefore, these investments are classified
within Level 2 of the valuation hierarchy.
($ in millions) 2009 2008
Fair value of plan assets at January 1 $144 237
Actual return on assets 29 (70)
Contributions 39 4
Settlement (19) (17)
Benefits paid (11) (10)
Fair value of plan assets at December 31 182 144
Projected benefit obligation at January 1 $228 $236
Service cost --
Interest cost 12 13
Settlement (19) (17)
Actuarial loss 76
Benefits paid (11) (10)
Projected benefit obligation at December 31 $217 $228
Unfunded pro
j
ected benefit obligation recognized in
the Consolidated Balance Sheets as a liability ($35) ($84)