Fifth Third Bank 2012 Annual Report Download - page 41

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
39 Fifth Third Bancorp
qualifying hedges on mortgage servicing rights in the Bancorp’s
Consolidated Statements of Income.
Service charges on deposits
Service charges on deposits increased $2 million in 2012 compared
to 2011. Commercial deposit revenue increased by $20 million in
2012 compared to 2011 due to new customer relationships offset by
an $18 million decrease in consumer deposit revenue primarily due
to the elimination of daily overdraft fees on continuing consumer
overdraft positions which took effect in the second quarter of 2012.
Corporate banking revenue
Corporate banking revenue increased $63 million in 2012 compared
to 2011. The increase from the prior year was primarily the result of
increases in syndication fees, business lending fees, lease
remarketing fees and institutional sales.
Investment advisory revenue
Investment advisory revenue decreased $1 million in 2012
compared to 2011. The decrease was primarily driven by a decline in
mutual fund fees due to the sale of certain FTAM funds during the
third quarter of 2012 which was partially offset by the positive
impact of an overall increase in equity and bond market values. As
of December 31, 2012, the Bancorp had approximately $308 billion
in total assets under care and managed $27 billion in assets for
individuals, corporations and not-for-profit organizations.
Card and processing revenue
Card and processing revenue decreased $55 million in 2012
compared to 2011. The decrease was primarily the result of the
impact of the implementation of the Dodd-Frank Act’s debit card
interchange fee cap in the fourth quarter of 2011 partially offset by
increased debit and credit card transaction volumes, higher levels of
consumer spending, and new products.
Other noninterest income
The major components of other noninterest income are as follows:
TABLE 8: COMPONENTS OF OTHER NONINTEREST INCOME
For the years ended December 31 ($ in millions) 2012 2011 2010
Gain on Vantiv, Inc. IPO and sale of Vantiv, Inc. shares $272 - -
Net gain from warrant and put options associated with sale of the processing business 67 39 5
Equity method income from interest in Vantiv Holding, LLC 61 57 26
Operating lease income 60 58 62
Cardholder fees 46 41 36
BOLI income 35 41 194
Banking center income 32 27 22
Insurance income 28 28 38
Consumer loan and lease fees 27 31 32
Gain on loan sales 20 37 51
TSA revenue 1 21 49
Loss on swap associated with the sale of Visa, Inc. class B shares (45) (83) (19)
Loss on sale of OREO (57) (71) (78)
Other, net 27 24 (12)
Total other noninterest income $574 250 406
Other noninterest income increased $324 million in 2012 compared
to 2011 primarily due to an $115 million gain from the Vantiv, Inc.
IPO recognized in the first quarter of 2012 and a $157 million gain
from the sale of Vantiv, Inc. shares in the fourth quarter of 2012.
Compared to 2011, losses from fair value adjustments on
commercial loans designated as held for sale, recorded in the
“other” caption above, were reduced by $38 million. Additionally,
other noninterest income included a $38 million increase in income
related to the Visa total return swap which had a negative valuation
adjustment of $45 million in 2012 compared with a negative
valuation adjustment of $83 million in 2011. The $61 million in
equity method income from the Bancorp’s interest in Vantiv
Holding, LLC recorded in 2012 was reduced by $34 million in debt
termination charges incurred in connection with the refinancing of
Vantiv Holding, LLC debt which occurred in the first quarter of
2012. The net gain from warrant and put options associated with
the sale of the processing business increased by $28 million and the
loss on the sale of OREO decreased by $14 million in 2012
compared to 2011. These impacts were partially offset by $21
million in lower of cost or market adjustments associated with bank
premises incurred during 2012, recorded in the “other” caption,
along with a $20 million decrease in TSA revenue. As part of the
sale of the processing business, in 2009, the Bancorp entered into a
TSA with the processing business. For additional information on
the valuation of the swap associated with the sale of Visa, Inc. Class
B shares and the valuation of warrants and put options associated
with the sale of the processing business, see Note 26 of the Notes
to Consolidated Financial Statements.