Fifth Third Bank 2010 Annual Report Download - page 81

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fifth Third Bancorp 79
4. RESTRICTIONS ON CASH AND DIVIDENDS
The FRB requires that banks hold cash in reserve against deposit
liabilities, known as the reserve requirement. The amount of the
reserve requirement is currently calculated based on net
transaction account deposits, and is satisfied with vault cash.
When vault cash alone is not sufficient to meet the reserve
requirement, the remaining amount must be satisfied with funds
held at the FRB. At December 31, 2010 and 2009, the Bancorp’s
reserve requirements were satisfied with vault cash. The dividends
paid by the Bancorp’s state chartered bank and nonbank
subsidiaries are subject to regulations and limitations prescribed
by the appropriate state authority. The Bancorp’s state chartered
bank paid the Bancorp $1.4 billion in dividends during the year
ended December 31, 2010 and did not pay a dividend during the
year ended December 31, 2009. Based on retained earnings at
December 31, 2010 and 2009, the dividend limitation of the
Bancorp’s nonbank subsidiaries under these provisions was $150
million and $87 million, respectively.
On December 31, 2008, the Bancorp sold $3.4 billion in
senior preferred stock and related warrants to the U.S. Treasury
under the terms of the CPP. The terms include restrictions on
common stock dividends, which require the U.S. Treasury’s
consent to increase common stock dividends for a period of three
years from the date of investment unless the preferred shares are
redeemed in whole or the U.S. Treasury has transferred all of the
preferred shares to a third party. For the Bancorp, approval from
the U.S. Treasury will be required for common stock dividends in
excess of $0.15 per share of common stock. Also, no dividends
can be declared or paid on the Bancorp’s common stock unless all
accrued and unpaid dividends have been paid on the preferred
shares and certain other outstanding securities. Additionally, the
Bancorp’s ability to pay dividends on its common stock is limited
by its need to maintain adequate capital levels, comply with safe
and sound banking practices and meet regulatory expectations.
On February 2, 2011, the Bancorp redeemed all 136,320
shares of its Series F preferred stock held by the U.S Treasury
under the CPP totaling $3.4 billion. See Note 32 for further
information on the redemption of the preferred shares.
5. SECURITIES
The following table provides the amortized cost, fair value and unrealized gains and losses for the major categories of the available-for-sale and
held-to-maturity securities portfolio as of December 31:
2010 2009
($ in millions)
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
A
vailable-for-sale and other:
U.S. Treasury and Government
agencies $225 5 - 230 464 2 (8) 458
U.S. Government sponsored
agencies 1,564 81 - 1,645 2,143 32 (33) 2,142
Obligations of states and
political subdivisions 170 2 - 172 240 3 - 243
Agency mortgage-backed
securities 10,570 435 (32) 10,973 11,074 315 (7) 11,382
Other bonds, notes and
debentures 1,338 19 (15) 1,342 2,541 57 (29) 2,569
Other securities(a) 1,052 - - 1,052 1,417 2 - 1,419
Total $14,919 542 (47) 15,414 17,879 411 (77) 18,213
Held-to-maturity:
Obligations of states and
political subdivisions $348 - - 348 350 - - 350
Other debt securities 5 - - 5 5- -5
Total $353 - - 353 355 - - 355
(a) Other securities consist of FHLB and FRB restricted stock holdings of $524 and $344 at December 31, 2010 , respectively, and $551 and $342 at December 31, 2009, respectively, that are
carried at cost, and certain mutual fund holdings and equity security holdings.
The following table presents realized gains and losses recognized in income from available-for-sale securities for the years ended December 31:
($ in millions) 2010 2009 2008
Realized gains $69 91 161
Realized losses (13) (34) (130)
Net realized gains $56 57 31
Trading securities totaled $294 million as of December 31, 2010
compared to $355 million at December 31, 2009. Gross realized
gains and gross realized losses on trading securities were $1 million
each for the year ended December 31, 2010. Gross unrealized gains
and gross unrealized losses on trading securities were $8 million
each. for the year ended December 31, 2010. Gross realized gains
and losses on trading securities were $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.
At December 31, 2010 and 2009, securities with a fair value of
$11.3 billion and $14.2 billion, respectively, were pledged to secure
borrowings, public deposits, trust funds, derivative contracts and
for other purposes as required or permitted by law.