Fifth Third Bank 2010 Annual Report Download - page 101

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fifth Third Bancorp 99
17. LONG-TERM DEBT
The following table is a summary of the Bancorp’s long-term borrowings at December 31:
($ in millions) Maturity Interest Rate 2010 2009
Parent Company
Senior:
Fixed-rate notes 2013 6.25% $797 785
Subordinated: (b)
Floating-rate notes 2016 0.72% 250 250
Fixed-rate notes 2017 5.45% 613 572
Fixed-rate notes 2018 4.50% 584 533
Fixed-rate notes 2038 8.25% 1,034 1,024
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unior subordinated: (a)
Fixed-rate notes (c) 2067 6.50% 750 750
Fixed-rate notes (c) 2067 7.25% 613 606
Fixed-rate notes (c) 2067 7.25% 907 886
Fixed-rate notes (c) 2068 8.88% 400 389
Subsidiaries
Senior:
Floating-rate bank notes 2013 0.39% 499 500
Fixed-rate bank notes -804
Subordinated: (b)
Fixed-rate bank notes 2015 4.75% 561 544
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unior subordinated: (a)
Floating-rate bank notes 2032 - 2033 3.40% - 4.15% 51 52
Floating-rate debentures 2033 - 2034 3.09% - 3.20% 67 67
Floating-rate debentures 2035 1.72% - 1.99% 62 62
FHLB advances 2011 - 2040 0% - 8.34% 1,561 2,564
Notes associated with consolidated VIEs:
Automobile loan securitizations:
Fixed-rate notes 2013 4.81% 99 -
Floating-rate notes 2013 - 2015 0.76% - 2.26% 460 -
Home equity securitization:
Floating-rate notes 2023 0.51% 133 -
Other 2011 - 2039 Varies 117 119
Total $9,558 10,507
(a) Qualify as Tier I capital for regulatory capital purposes. See Note 29 for further information.
(b) Qualify as Tier II capital for regulatory capital purposes.
(c) Future periods of debt are floating.
The Bancorp pays down long-term debt in accordance with
contractual terms over maturity periods summarized in the above
table. Contractually obligated payments for long-term debt as of
December 31, 2010 are due over the following periods: $14
million in 2011; $15 million in 2012, $1.9 billion in 2013, $30
million in 2014, $1.0 billion in 2015 and $6.6 billion after 2015.
At December 31, 2010 the Bancorp had outstanding principal
balances of $9.1 billion, discounts and premiums of negative $15
million and additions for mark-to-market adjustments on its
hedged debt of $439 million. At December 31, 2009, the Bancorp
had outstanding principal balances of $10.2 billion, discounts and
premiums of negative $15 million and additions for mark-to-
market adjustments on its hedged debt of $272 million. The
Bancorp is in compliance with all debt covenants at December 31,
2010.
Under recent regulatory developments, certain of the
Bancorp’s trust preferred securities are callable at par as of certain
dates, or may become callable at par under certain circumstances.
Parent Company Long-Term Borrowings
In April 2008, the Bancorp issued $750 million of senior notes to
third party investors. The senior notes bear a fixed rate of interest
of 6.25% per annum. The Bancorp entered into interest rate
swaps to convert $675 million to floating rate and, at December
31, 2010, paid a rate of 2.70%. The notes are unsecured, senior
obligations of the Bancorp. Payment of the full principal amount
of the notes will be due upon maturity on May 1, 2013. The notes
are not subject to redemption at the Bancorp's option at any time
prior to maturity. The subordinated floating-rate notes due in
2016 pay interest at three-month LIBOR plus 42 bp. The Bancorp
has entered into interest rate swaps to convert its subordinated
fixed-rate notes due in 2017 and 2018 to floating-rate, which pay
interest at three-month LIBOR plus 42 bp and 25 bp, respectively,
at December 31, 2010. The rates paid on the swaps hedging the
subordinated floating-rate notes due in 2017 and 2018 were 0.72%
and 0.55%, respectively, at December 31, 2010. Of the $1.0 billion
in 8.25% subordinated fixed rate notes due in 2038, $705 million
were subsequently hedged to floating and paid a rate of 3.35% at
December 31, 2010.
The 6.50% junior subordinated notes due in 2067 pay a fixed
rate of 6.50% until 2017, then convert to a floating rate at three-
month LIBOR plus 137 bp until 2047. Thereafter, the notes pay a
floating rate at one-month LIBOR plus 237 bp. Junior
subordinated notes due in 2067, with a carrying amount of $613
million and an outstanding principal balance of $575 million at
December 31, 2010, pay a fixed rate of 7.25% until 2057, then
convert to a floating rate at three-month LIBOR plus 257 bp. The
Bancorp entered into interest rate swaps to convert $500 million
of the fixed-rate debt into a floating rate. At December 31, 2010,
the weighted-average rate paid on these swaps was 1.01%. Junior
subordinated notes due in 2067, with a carrying amount of $907
million and an outstanding principal balance of $863 million at
December 31, 2010, pay a fixed rate of 7.25% until 2057, then
convert to a floating rate at three-month LIBOR plus 303 bp
thereafter. The Bancorp entered into interest rate swaps to
convert $700 million of the fixed-rate debt into a floating rate. At
December 31, 2010, the weighted-average rate paid on the swaps
was 1.44%. The obligations were issued to Fifth Third Capital
Trusts IV, V and VI, respectively. The Bancorp has fully and
unconditionally guaranteed all obligations under the trust
preferred securities issued by Fifth Third Capital Trusts IV, V and
VI. In addition, the Bancorp entered into replacement capital
covenants for the benefit of holders of long-term debt senior to
the junior subordinated notes that limits, subject to certain