Fifth Third Bank 2012 Annual Report Download - page 110

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
108 Fifth Third Bancorp
7. BANK PREMISES AND EQUIPMENT
The following is a summary of bank premises and equipment at December 31:
($ in millions) Estimated Useful Life 2012 2011
Land and improvements $841 834
Buildings 5 to 50 yrs. 1,692 1,623
Equipment 2 to 20 yrs. 1,460 1,318
Leasehold improvements 3 to 40 yrs. 386 394
Construction in progress 141 140
A
ccumulated depreciation and amortization (1,978) (1,862)
Total $ 2,542 2,447
Depreciation and amortization expense related to bank premises
and equipment was $233 million in 2012, $224 million in 2011 and
$225 million in 2010.
During 2012, the Bancorp recorded charges of $21 million of
lower of cost or market adjustments associated with bank premises.
These adjustments were generally based on appraisals of the
underlying bank premises less estimated selling costs. The
recognized impairment losses were recorded in other noninterest
income in the Consolidated Statements of Income.
Gross occupancy expense for cancelable and noncancelable
leases was $99 million in 2012 and 2011 and $98 million in 2010,
which was reduced by rental income from leased premises of $17
million in 2012 and $19 million in 2011 and 2010. The Bancorp’s
subsidiaries have entered into a number of noncancelable and
capital lease agreements with respect to bank premises and
equipment.
The following table provides the annual future minimum payments under capital leases and noncancelable operating leases at December 31, 2012:
($ in millions) Operating Leases Capital Leases
Y
ear ended December 31,
2013 $89 7
2014 85 7
2015 81 6
2016 74 3
2017 66 -
Thereafter 374 1
Total minimum lease payments $769 24
Less: Amounts representing interest - 3
Present value of net minimum lease payments - 21
8. GOODWILL
Business combinations entered into by the Bancorp typically include
the acquisition of goodwill. Acquisition activity includes acquisitions
in the respective period, in addition to purchase accounting
adjustments related to previous acquisitions. During the fourth
quarter of 2008, the Bancorp determined that the Commercial
Banking and Consumer Lending segments’ goodwill carrying
amounts exceeded their associated implied fair values by $750
million and $215 million, respectively. The resulting $965 million
goodwill impairment charge was recorded in the fourth quarter of
2008 and represents the total amount of accumulated impairment
losses as of December 31, 2012.
Changes in the net carrying amount of goodwill, by reporting unit, for the years ended December 31, 2012 and 2011 were as follows:
Commercial Branch Consumer Investment
($ in millions) Banking Banking Lending Advisors Total
Net carrying value as of December 31, 2010 $613 1,656 - 148 2,417
A
cquisition activit
y
- - - - -
Net carrying value as of December 31, 2011 $613 1,656 - 148 2,417
A
cquisition activit
y
- (1) - - (1)
Net carrying value as of December 31, 2012 $ 613 1,655 - 148 2,416
The Bancorp completed its annual goodwill impairment test as of
September 30, 2012 and the estimated fair values of the Commercial
Banking, Branch Banking and Investment Advisors segments
substantially exceeded their carrying values, including goodwill.