Fifth Third Bank 2011 Annual Report Download - page 125

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fifth Third Bancorp 123
19. RELATED PARTY TRANSACTIONS
The Bancorp maintains written policies and procedures covering
related party transactions to principal shareholders, directors and
executives of the Bancorp. These procedures cover transactions
such as employee-stock purchase loans, personal lines of credit,
residential secured loans, overdrafts, letters of credit and increases in
indebtedness. Such transactions are subject to the Bancorp’s normal
underwriting and approval procedures. Prior to the closing of a loan
to a related party, Compliance Risk Management must approve and
determine whether the transaction requires approval from or a post
notification be sent to the Bancorp’s Board of Directors. At
December 31, 2011 and 2010, certain directors, executive officers,
principal holders of Bancorp common stock, associates of such
persons, and affiliated companies of such persons were indebted,
including undrawn commitments to lend, to the Bancorp’s banking
subsidiary.
The following table summarizes the Bancorp’s activities with
its principal shareholders, directors and executives at December 31:
($ in millions) 2011 2010
Commitments to lend, net of participations:
Directors and their affiliated companies $254 157
Executive officers 5 3
Total $259 160
Outstanding balance on loans, net of
participations and undrawn commitments $172 74
The commitments to lend are in the form of loans and guarantees
for various business and personal interests. This indebtedness was
incurred in the ordinary course of business on substantially the same
terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with unrelated parties. This
indebtedness does not involve more than the normal risk of
repayment or present other features unfavorable to the Bancorp.
On June 30, 2009, the Bancorp completed the sale of a
majority interest in its processing business, Vantiv Holding, LLC.
Advent International acquired an approximate 51% interest in
Vantiv Holding, LLC for cash and warrants. The Bancorp retained
the remaining approximate 49% interest in Vantiv Holding, LLC
and, as part of the sale, Vantiv Holding, LLC assumed loans totaling
$1.25 billion owed to the Bancorp. The Bancorp recognized $57
million and $26 million, respectively, in noninterest income as part
of its equity method investment in Vantiv Holding, LLC for the
years ended December 31, 2011 and 2010 and received distributions
totaling $3 million and $25 million, respectively, during 2011 and
2010.
The Bancorp and Vantiv Holding, LLC have various
agreements in place covering services relating to the operations of
Vantiv Holding, LLC. The services provided by the Bancorp to
Vantiv Holding, LLC were required to support Vantiv Holding,
LLC as a standalone entity during the deconversion period. These
services involve transition support, including product development,
risk management, legal, accounting and general business resources.
Vantiv Holding, LLC paid the Bancorp $21 million and $49 million,
respectively, for these services for the years ended December 31,
2011 and 2010. Other services provided to Vantiv Holding, LLC by
the Bancorp, which will continue beyond the deconversion period,
include treasury management, clearing, settlement, sponsorship, and
data center support. Vantiv Holding, LLC paid the Bancorp $37
million and $34 million, respectively, for these services for the years
ended December 31, 2011 and 2010. In addition to the previously
mentioned services, the Bancorp entered into an agreement under
which Vantiv Holding, LLC will provide processing services to the
Bancorp. The total amount of fees relating to the processing
services provided to the Bancorp by Vantiv Holding, LLC totaled
$74 million and $64 million, respectively, for the years ended
December 31, 2011 and 2010.
During the fourth quarter of 2010, Vantiv Holding, LLC
refinanced its debt into a larger syndicated loan structure that
included the Bancorp. The Bancorp recognized $4 million in
syndication fees in 2010 associated with the refinanced loan to
Vantiv Holding, LLC. The outstanding balance of loans to Vantiv
Holding, LLC was $377 million and $381 million at December 31,
2011 and 2010, respectively. Interest income relating to the loans
was $18 million, $102 million and $60 million, respectively, for the
years ended December 31, 2011, 2010 and 2009 and is included in
interest and fees on loans and leases in the Consolidated Statements
of Income. Vantiv Holding, LLC’s line of credit was $50 million as
of December 31, 2011 and 2010. Vantiv Holding, LLC did not draw
upon its lines of credit during the years ended December 31, 2011
or 2010.