Fifth Third Bank 2010 Annual Report Download - page 42

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
40 Fifth Third Bancorp
General Corporate and Other
General Corporate and Other includes the unallocated portion of
the investment securities portfolio, securities gains and losses,
certain non-core deposit funding, unassigned equity, provision
expense in excess of net charge-offs or income from the reduction
of ALLL, the payment of preferred stock dividends, historical
financial information for the merchant acquiring and financial
institutions processing businesses and certain support activities
and other items not attributed to the business segments.
Comparison of 2010 with 2009
The results for 2010 were impacted by $789 million in income due
to a reduction in the ALLL during 2010 compared to $967 million
of provision expense recorded in excess of net charge-offs during
2009. The decrease in provision expense was due to a decrease in
nonperforming assets and improvement in credit trends as general
economic conditions began to show signs of moderation. The
2010 results were also impacted by $152 million of noninterest
income recognized from the settlement of litigation associated
with one of the Bancorp’s BOLI policies and $25 million of
noninterest expense from related legal fees associated with the
settlement. The results for 2009 were primarily impacted by a $1.8
billion pre-tax gain ($1.1 billion after tax) resulting from the
Processing Business Sale in the second quarter of 2009. Results
for 2009 also included a $244 million gain on the sale of the
Bancorp’s Visa Inc., Class B shares and a $73 million benefit from
the reversal of the Visa litigation reserve, an $18 million benefit in
noninterest income due to mark-to-market adjustments on
warrants and put options related to the Processing Business Sale
and a $106 million tax benefit as a result of the Bancorp’s decision
to surrender one of its BOLI policies. These benefits were
partially offset by a $54 million BOLI charge reflecting reserves
recorded in the connection with the intent to surrender the policy.
Additionally, the Bancorp recorded dividends on preferred stock
of $226 million during 2009 compared to $250 million during
2010.
Comparison of 2009 with 2008
The results for 2009 were primarily impacted by the previously
mentioned Processing Business Sale, gain on the sale of the
Bancorp’s Visa Inc., Class B shares and benefit from the reversal
of the Visa litigation reserve, mark-to-market adjustments on
warrants and put options related to the Processing Business Sale,
and the tax benefit as a result of the Bancorp’s decision to
surrender one of its BOLI policies, partially offset by charges
reflecting reserves recorded in the connection with the intent to
surrender the policy. The results for 2008 were impacted by $273
million in income related to the redemption of a portion of Fifth
Third’s ownership interest in Visa, $99 million in net reductions to
noninterest expense to reflect the reversal of a portion of the
litigation reserve related to the Bancorp’s indemnification of Visa,
$229 million after-tax impact of charges relating to certain
leveraged leases, and $215 million in charges related to reduction
in the cash surrender value of one of the Bancorp’s BOLI policies.
Provision expense in excess of net charge-offs decreased from
$1.9 billion in 2008 to $967 million in 2009. Dividends on
preferred stock increased from $67 million in 2008 to $226 million
in 2009.