Fifth Third Bank 2013 Annual Report Download

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FIFTH THIRD BANCORP
2013 ANNUAL REPORT
WHERE VALUE
MEETS TRUST

Table of contents

  • Page 1
    WHERE VALUE MEETS TRUST FIFTH THIRD BANCORP 2013 ANNUAL REPORT

  • Page 2
    ..., Indiana, Michigan, Illinsis, Flsrida, Tennessee, West Virginia, Pennsylvania, Misssuri, Gesrgia and Nsrth Carslina. Fifth Third sperates fsur main businesses: Csmmercial Banking, Branch Banking, Csnsumer Lending, and Investment Advissrs. Fifth Third alss has a 25% interest in Vantiv Hslding, LLC...

  • Page 3
    ... management is central to our culture, and in 2013 we took important steps to strengthen the infrastructure of our Company. We have never stopped investing in our revenue-generating capabilities and $1,000 $500 $0 2010 2011 2012 2013 AFTER TAX VANTIV GAINS NET INCOME EX-VANTIV 2013 ANNUAL REPORT...

  • Page 4
    ... results of those investments - increasing our national mortgage origination market share from 16th in 2009 to 13th in 2013 while developing a flexible business model that could be adjusted quickly in response to a change in the environment. We know mortgage is a cyclical business and we've managed...

  • Page 5
    ... loans. Noninterest income increased 8% from 2012, despite a significant decline in mortgage revenue, and benefited from our investment in Vantiv as well as strong card and processing revenue, service charges on deposits, and investment advisory revenue. Total noninterest expense declined...

  • Page 6
    ...as to establish new primary bank relationships and inspired product innovations, such as our Currency Processing Solutions, that simplify cash handling for our clients. This has resulted in overall Commercial Banking segment net revenue of $2.3 billion, and an increase in treasury management fees of...

  • Page 7
    ...Fifth Third and we've recognized about $2.9 billion in total pre-tax gains from the sale of the processing business in 2009 to today, including gains in 2013 of $327 million on the sale of a portion of our Class A shares of Vantiv common stock and $206 million on the valuation of the warrant we hold...

  • Page 8
    ...the Annual Report on Form 10-K for Fifth Third Bancorp's 5-year and 10-year total return analysis on page 182. of our capital as efficient as possible. We converted $398 million of 8.50% Series G Preferred Stock into shares of our common stock and issued $1.05 billion of new preferred stock, Series...

  • Page 9
    ... merits public trust and confidence. Fifth Third Bancorp's Corporate Governance Guidelines, along with Fifth Third's Articles of Incorporation, Code of Regulations, Code of Business Conduct and Ethics, charters of the various committees of the Board, and our other governance policies and procedures...

  • Page 10
    ... MORE THAN 700 THOUSAND MOBILE BANKING CUSTOMERS STRATEGY Over the past several years we've executed a multi-step effort to standardize and improve our sales process, focus on key customer segments, invest in a new deposit product set, and optimize our service capabilities. Work in many of these...

  • Page 11
    ...the bottom line. We are also focused on executing a consistent sales process and making the full scope of Fifth Third products and services available to our customers in order to acquire and deepen primary banking relationships. In 2013, we maintained our mortgage origination market share within the...

  • Page 12
    ... in our customers' financial success. We offer traditional lending and depository products as well as global cash management, foreign exchange and international trade finance, derivatives and capital markets services, asset-based lending, real estate finance, public finance, commercial leasing, and...

  • Page 13
    ...offering retirement, investment and education planning, managed money, annuities, and transactional brokerage services. • Fifth Third Insurance helps clients minimize risk and protect wealth through insurance products and services such as life insurance, long-term care insurance, disability income...

  • Page 14
    ...-out of the online component, the Job Seeker's Toolkit, to all Fifth Third online customers. It also prompted another major financial institution to adopt the program, helping to make a real difference in people's lives throughout the country. Improving lives through financial empowerment is a key...

  • Page 15
    ...Plans Accumulated Other Comprehensive Income Common, Preferred and Treasury Stock Stock-Based Compensation Other Noninterest Income and Other Noninterest Expense Earnings Per Share Fair Value Measurements Certain Regulatory Requirements and Capital Ratios Parent Company Financial Statements Business...

  • Page 16
    ...: Employee Retirement Income Security Act ERM: Enterprise Risk Management ERMC: Enterprise Risk Management Committee EVE: Economic Value of Equity FASB: Financial Accounting Standards Board FDIC: Federal Deposit Insurance Corporation FHLB: Federal Home Loan Bank FHLMC: Federal Home Loan Mortgage...

  • Page 17
    .... Includes demand, interest checking, savings, money market and foreign office deposits. Includes transaction deposits plus other time deposits. Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt. 15 Fifth Third Bancorp

  • Page 18
    ...U.S. The Bancorp reports on four business segments: Commercial Banking, Branch Banking, Consumer Lending and Investment Advisors. The Bancorp also has a 25% interest in Vantiv Holding, LLC. The carrying value of the Bancorp's investment in Vantiv Holding, LLC was $423 million as of December 31, 2013...

  • Page 19
    ...-Frank Act was signed into federal law. This act implements changes to the financial services industry and affects the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies. The legislation establishes a CFPB responsible for implementing...

  • Page 20
    ... Bancorp to the FRB on January 6, 2014. For further discussion on the 2013 and 2014 Stress Tests and CCAR, see the Capital Management section in MD&A. Fifth Third offers qualified deposit customers a deposit advance product if they choose to avail themselves of this service to meet short term, small...

  • Page 21
    ... or more in on-balance sheet foreign exposure, and a Modified LCR for BHCs with at least $50 billion in total consolidated assets that are not internationally active, like Fifth Third. The NPR was open for public comment until January 31, 2014. Refer to the Liquidity Risk Management section in MD...

  • Page 22
    ...not hold asset-backed securities backed by subprime mortgage loans in its securities portfolio. However, the Bancorp has exposure to disruptions in the capital markets and weakened economic conditions. During 2013, credit trends have improved, and as a result, the provision for loan and lease losses...

  • Page 23
    ..., and the usefulness of these measures to investors may be limited. As a result, the Bancorp encourages readers to consider its Consolidated Financial Statements in their entirety and not to rely on any single financial measure. U.S. banking regulators approved final capital rules (Basel III...

  • Page 24
    ...off-balance sheet exposures are assigned to broad risk categories. The aggregate dollar amount in each risk category is multiplied by the associated risk weight of the category. The resulting weighted values are added together, along with the measure for market risk, resulting in the Bancorp's total...

  • Page 25
    ... commercial construction, and commercial leasing. The residential mortgage portfolio segment is also considered a class. Classes within the consumer portfolio segment include home equity, automobile, credit card, and other consumer loans and leases. For an analysis of the Bancorp's ALLL by portfolio...

  • Page 26
    ... Bancorp monitors risk and adjusts its valuation allowance as necessary to adequately reserve for impairment in the servicing portfolio. For purposes of measuring impairment, the mortgage servicing rights are stratified into classes based on the financial asset type (fixed rate vs. 24 Fifth Third...

  • Page 27
    ...sale to held for investment, the fair value estimation is based on mortgage-backed securities prices, interest rate risk and an internally developed credit component. Therefore, these loans are classified within Level 3 of the valuation hierarchy. Derivatives Exchange-traded derivatives valued using...

  • Page 28
    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS market-based fair value measurement to the aggregate fair value of the Bancorp's reporting units in order to corroborate the results of the income approach. When required to perform Step 2, the Bancorp compares ...

  • Page 29
    ... properties. A portion of Fifth Third's residential mortgage and commercial real estate loan portfolios are comprised of borrowers in Florida, whose markets have been particularly adversely affected by job losses, declines in real estate value, declines in home sale volumes, and declines in new home...

  • Page 30
    ... market prices. RISKS RELATING TO FIFTH THIRD'S GENERAL BUSINESS Deteriorating credit quality, particularly in real estate loans, has adversely impacted Fifth Third and may continue to adversely impact Fifth Third. When Fifth Third lends money or commits to lend money the Bancorp incurs credit risk...

  • Page 31
    ... take their money out of the bank and put it in alternative investments, causing Fifth Third to lose a lower cost source of funding. Checking and savings account balances and other forms of customer deposits may decrease when customers perceive alternative investments, such as the stock market, as...

  • Page 32
    ... significant losses from its hedging activities. There may be periods where Fifth Third elects not to use derivatives and other instruments to hedge mortgage banking interest rate risk. The preparation of Fifth Third's financial statements requires the use of estimates that may vary from actual...

  • Page 33
    ... business, Vantiv Holding, LLC (formerly Fifth Third Processing Solutions). As a result of additional share sales completed by Fifth Third in 2012 and 2013, the Bancorp's current ownership share in Vantiv Holding, LLC is approximately 25%. Vantiv Holding, LLC is accounted for under the equity...

  • Page 34
    ... well-capitalized, well-managed and maintain at least a "Satisfactory" CRA rating for the Bancorp to retain its status as a financial holding company. Failure to meet these requirements could result in the FRB placing limitations or conditions on the Bancorp's activities (and the commencement of new...

  • Page 35
    ... its operations and limit the businesses in which Fifth Third may engage. These laws and regulations may change from time to time and are primarily intended for the protection of consumers, depositors and the deposit insurance funds. The impact of any changes to laws and regulations or other actions...

  • Page 36
    ...of action). Depending on the final rules that relate to Fifth Third's swaps businesses, the nature and extent of those businesses may change. ï,· Financial institutions may be required, regardless of risk, to pay taxes or other fees to the U.S. Treasury. Such taxes or other fees could be designed to...

  • Page 37
    ...regulatory action against Fifth Third could materially adversely affect its business, financial condition or results of operations and/or cause significant reputational harm to its business. Fifth Third's ability to pay or increase dividends on its common stock or to repurchase its capital stock is...

  • Page 38
    ... deposits, primarily as a result of acquisitions in previous years, which increased net interest income by $17 million during 2013 and $31 million during 2012. The original purchase accounting discounts reflected the high discount rates in the market at the time of the acquisitions; the total loan...

  • Page 39
    ...NET INTEREST INCOME For the years ended December 31 2013 2012 2011 Average Average Average Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/ ($ in millions) Balance Cost Rate Balance Cost Rate Balance Cost Rate Assets Interest-earning assets: Loans and leases:(a) Commercial and...

  • Page 40
    ...) Money market 11 1 12 (1) (2) (3) Foreign office deposits (6) (6) Other time deposits (8) (10) (18) (38) (34) (72) Certificates - $100,000 and over 33 (29) 4 (10) (16) (26) Federal funds purchased 1 1 Other short-term borrowings (3) (3) 3 2 5 Long-term debt (34) (50) (84) (34) 16 (18) Total change...

  • Page 41
    ... management fees as a result of pricing changes implemented in the third quarter of 2012 and the third quarter of 2013 and the acquisition of new customers. Consumer deposit revenue increased $10 million due to an increase in consumer checking fees due to new deposit product 39 Fifth Third Bancorp

  • Page 42
    ... in private client service fees, partially offset by a decrease in mutual fund fees. Due to the sale of certain funds by ClearArc Capital, Inc., formerly Fifth Third Asset Management, during the third quarter of 2012, mutual fund fees decreased $13 million in 2013 compared to 2012. The Bancorp had...

  • Page 43
    ... in loan closing fees due to a decline in mortgage originations. The benefit from the reserve for unfunded commitments and letters of credit was $17 million and $2 million in 2013 and 2012, respectively. The increase in the benefit recognized reflects a decrease in estimated loss rates related...

  • Page 44
    ... on taxexempt investments, income on life insurance policies held by the Bancorp, and certain gains on the sale of leases that are exempt from federal taxation. As required under U.S. GAAP, the Bancorp established a deferred tax asset for stock-based awards granted to its employees. When the actual...

  • Page 45
    ... BUSINESS SEGMENT REVIEW The Bancorp reports on four business segments: Commercial Banking, Branch Banking, Consumer Lending and Investment Advisors. Additional detailed financial information on each business segment is included in Note 30 of the Notes to Consolidated Financial Statements. Results...

  • Page 46
    ... products and services include global cash management, foreign exchange and international trade finance, derivatives and capital markets services, asset-based lending, real estate finance, public finance, commercial leasing and syndicated finance. The following table contains selected financial...

  • Page 47
    ... charges on deposits and other noninterest income. The increase in corporate banking revenue was primarily driven by increases in syndication fees, business lending fees, lease remarketing fees and institutional sales. Service charges on deposits increased from 2011 primarily due to new customer...

  • Page 48
    ...increased securities and brokerage fees due to an increase in equity and bond market values. Card and processing revenue increased $12 million compared to the prior year due to higher transaction volumes, higher levels of consumer spending and the benefit of new products. Service charges on deposits...

  • Page 49
    ...and underlying loss trends improved across all consumer loan types. Net charge-offs as a percent of average loans and leases decreased to 88 bps for 2012 compared to 134 bps for 2011. Noninterest income increased $246 million primarily due to increases in mortgage banking net revenue of $245 million...

  • Page 50
    ... Capital, Inc. provides asset management services and previously advised the Bancorp's proprietary family of mutual funds. Fifth Third Private Bank offers holistic strategies to affluent clients in wealth planning, investing, insurance and wealth protection. Fifth Third Institutional Services...

  • Page 51
    ... equity loans of $55 million, commercial mortgage loans of $45 million and commercial and industrial loans of $30 million. Average core deposits increased $911 million compared to 2011 due to growth in interest checking as customers have opted to maintain excess funds in liquid transaction accounts...

  • Page 52
    ... transition to the Bancorp's new and simplified deposit product offerings. Commercial service charges increased two percent from the previous quarter and six percent from a year ago primarily as a result of new customer accounts and higher treasury management fees. Corporate banking revenue of $94...

  • Page 53
    ... FDIC insurance and other taxes. Net charge-offs as a percent of average portfolio loans and leases decreased to 0.85% during 2012 compared to 1.49% during 2011 largely due to improved credit trends across all commercial and consumer loan types, excluding commercial leases. The Bancorp took a number...

  • Page 54
    ...the Bancorp from the sale of Vantiv, Inc. common shares by either the Bancorp or Vantiv, Inc. As a result, the Board of Directors authorized the Bancorp to repurchase up to 100 million common shares in the open market or in privately negotiated transactions. In addition, in the third quarter of 2012...

  • Page 55
    ...increase in average balances per account and the volume of new customer accounts. TABLE 20: COMPONENTS OF AVERAGE TOTAL LOANS AND LEASES (INCLUDES HELD FOR SALE) For the years ended December 31 ($ in millions) 2013 2012 Commercial: Commercial and industrial loans $ 37,770 32,911 Commercial mortgage...

  • Page 56
    ..., 2012 due to an increase in average balances per account and the volume of new customer accounts. Average home equity loans decreased $815 million, or eight percent, from December 31, 2012 as payoffs exceeded new loan production. mortgage loans in its investment portfolio. Additionally, securities...

  • Page 57
    ... Savings Money market Foreign office Transaction deposits Other time Core deposits Certificates - $100,000 and over Other Total deposits by improving customer satisfaction, building full relationships and offering competitive rates. Core deposits represented 71% of the Bancorp's asset funding...

  • Page 58
    ... December 31, 2012 due to new customer accounts. The foreign office deposits are primarily Eurodollar sweep accounts from the Bancorp's commercial customers. These accounts bear interest rates at slightly higher than money market accounts and unlike repurchase agreements the Bancorp does not have...

  • Page 59
    ...11,411 2009 182 1,415 10,507 12,104 Federal funds purchased decreased by $617 million, or 68%, from December 31, 2012 driven by a decrease in excess balances in reserve accounts held at Federal Reserve Banks that the Bancorp purchased from other member banks on an overnight basis. Other short-term...

  • Page 60
    ... recovery services for the Bancorp; Capital Markets Risk Management is responsible for instituting, monitoring, and reporting appropriate trading limits, monitoring liquidity, interest rate risk and risk tolerances within Treasury, Mortgage, and Capital Markets groups and utilizing a value at risk...

  • Page 61
    ...- Financial Instruments-Credit Losses (Subtopic 825-15) issued on December 20, 2012. Scoring systems, various analytical tools and portfolio performance monitoring are used to assess the credit risk in the Bancorp's homogenous consumer and small business loan portfolios. 59 Fifth Third Bancorp

  • Page 62
    ... limits based on industry, lines of business within the commercial segment, geography and credit product type. The risk within the commercial loan and lease portfolio is managed and monitored through an underwriting process utilizing detailed origination policies, continuous loan level reviews...

  • Page 63
    ...OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS such as local market conditions or location may also be considered as necessary. The Bancorp assesses all real estate and non-real estate collateral securing a loan and considers all cross collateralized loans in the calculation of the LTV ratio. The...

  • Page 64
    ... loans and leases: TABLE 33: COMMERCIAL LOAN AND LEASE PORTFOLIO (EXCLUDING LOANS HELD FOR SALE) 2013 As of December 31 ($ in millions) Outstanding Exposure Nonaccrual Outstanding By industry: Manufacturing $ 10,299 19,955 55 $ 9,982 Financial services and insurance 5,998 14,010 25 4,886 Real estate...

  • Page 65
    ... Charge-offs 12 5 3 4 1 1 1 27 $ $ Included in commercial mortgage and commercial construction loans on the Consolidated Balance Sheets. TABLE 35: NON-OWNER OCCUPIED COMMERCIAL REAL ESTATE(a) ($ in millions) By State: Ohio Michigan Florida Illinois North Carolina Indiana All other states Total...

  • Page 66
    ... consumer loan portfolio due to high loan amount to collateral value. The Bancorp does not update LTV ratios for the consumer portfolio subsequent to origination except as part of the charge-off process for real estate secured loans. Residential Mortgage Portfolio The Bancorp manages credit risk in...

  • Page 67
    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS TABLE 40: RESIDENTIAL MORTGAGE PORTFOLIO LOANS, LTV GREATER THAN 80%, NO MORTGAGE INSURANCE As of December 31, 2012 ($ in millions) By State: Ohio Michigan Florida Illinois Indiana North Carolina Kentucky All ...

  • Page 68
    ..., refer to the Analysis of Nonperforming Assets section of MD&A. During the fourth quarter of 2013, the Bancorp modified its charge-off policy for home equity loans and lines of credit. For further information, refer to the Analysis of Net Loan Charge-offs section of MD&A. 66 Fifth Third Bancorp

  • Page 69
    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS TABLE 44: HOME EQUITY LOANS OUTSTANDING WITH LTV GREATER THAN 80% As of December 31, 2012 ($ in millions) By State: Ohio Michigan Illinois Indiana Kentucky Florida All other states Total Outstanding 1,254 795 428 ...

  • Page 70
    ... December 31, 2012. The decrease is primarily due to a decline in new nonaccrual levels due to modest improvement in general economic conditions in 2013. Home equity nonaccrual levels increased $39 million from the prior year due to the aforementioned nonaccrual policy change 68 Fifth Third Bancorp

  • Page 71
    ... sale or write-down of OREO properties in 2013 and 2012, respectively. These losses are primarily reflective of the continued stress in the Michigan and Florida markets for commercial real estate and residential mortgage loans as Michigan and Florida represented 15% and 15%, respectively, of total...

  • Page 72
    ... servicing agreements to GNMA mortgage loan pools whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. As of December 31, 2013, 2012, 2011, 2010, and 2009 these advances were $378, $414, $309, $279 and $130, respectively. The Bancorp...

  • Page 73
    ... to performing (restructured) Transfers to held for sale Loans sold from portfolio Loan paydowns/payoffs Transfers to other real estate owned Charge-offs Draws/other extensions of credit Ending Balance Commercial 697 409 (9) (15) (3) (38) (295) (81) (221) 14 458 Residential Mortgage 237 204 (52...

  • Page 74
    ... standards across all commercial loan product offerings. The Bancorp resumed homebuilder and developer lending and non-owner occupied commercial real estate lending in the third quarter of 2011. Net charge-offs for 2013 related to non-owner occupied commercial real estate were $27 million...

  • Page 75
    ... OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS TABLE 52: SUMMARY OF CREDIT LOSS EXPERIENCE For the years ended December 31 ($ in millions) Losses charged off: Commercial and industrial loans Commercial mortgage loans Commercial construction loans Commercial leases Residential mortgage loans Home...

  • Page 76
    ... rates. Given current processes employed by the Bancorp, management believes the risk grades and estimated loss rates currently assigned are appropriate. 2013 $ 1,854 (637) 136 229 1,582 2012 2,255 (837) 133 303 1,854 2011 3,004 (1,314) 142 423 2,255 2010 3,749 45 (2,485) 157 1,538 3,004 2009...

  • Page 77
    ... on loan demand, credit losses, mortgage originations, the value of servicing rights and other sources of the Bancorp's earnings. Stability of the Bancorp's net income is largely dependent upon the effective management of interest rate risk. Management continually reviews the Bancorp's balance sheet...

  • Page 78
    ... Policy Limit 2.16 % (12.00) 1.50 0.43 (0.52) At December 31, 2013, the EVE sensitivity was modestly negative, compared to a small benefit at December 31, 2012. The primary factors contributing to the change are an increase in the average life of mortgage loan and securities positions as a result...

  • Page 79
    ... of refinancing, the total value of existing servicing rights declines because no further servicing fees are collected on repaid loans. The Bancorp maintains a non-qualifying hedging strategy relative to its mortgage banking activity in order to manage a portion of the risk 77 Fifth Third Bancorp

  • Page 80
    ... Consolidated Statements of Income. The balance of the Bancorp's foreign denominated loans at December 31, 2013 and 2012 was $581 million and $549 million, respectively. The Bancorp also enters into foreign exchange contracts for the benefit of commercial customers involved in international trade to...

  • Page 81
    .... The Bancorp does not hold any of the notes or equity certificates issued by the trust, and the investors in these securities have no credit recourse to the Bancorp's assets for failure of debtors to pay when due. In August of 2013, the Bancorp transferred approximately $1.3 billion in fixed-rate...

  • Page 82
    ...trading activities to adjust their capital requirements to better account for the market risks of those activities. The rule introduces new measures of market risk, establishes a charge related to stressed VaR for covered trading positions and replaces references to credit ratings in the market risk...

  • Page 83
    ... from the NASDAQ Global Select Market and withdrawn from the Exchange. On December 9, 2013, the Bancorp issued, in a registered public offering, 18,000,000 depositary shares, representing 18,000 shares of 6.625% fixed-to-floating rate non-cumulative Series I perpetual preferred stock, for net...

  • Page 84
    ... 2012 19,201,518 86,269,178 (42,424,014) 63,046,682 $ 14.82 2011 19,201,518 19,201,518 N/A In March 2013, the Bancorp announced that its Board of Directors had authorized management to purchase 100 million shares of the Bancorp's common stock through the open market or in any private transaction...

  • Page 85
    ... sale of Vantiv, Inc stock; and Issuance of an additional $500 million in preferred stock. The capital plan also included the assumption that the Bancorp would issue approximately 3.5 million shares in restricted stock under employee compensation plans in 2013. The above potential capital actions...

  • Page 86
    ... the fourth quarter of 2013, the Bancorp settled certain repurchase claims related to mortgage loans originated and sold to FHLMC prior to January 1, 2009 for $25 million after paid claim credits and other adjustments. The settlement removes the Bancorp's responsibility to repurchase or indemnify...

  • Page 87
    ...-income housing, historic tax investments and market tax credits. For additional information, see Note 10 of the Notes to Consolidated Financial Statements. Represents agreements to purchase goods or services and includes commitments to various general contractors for work related to banking center...

  • Page 88
    ... of the Bancorp's management, including the Bancorp's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Bancorp's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act). Based...

  • Page 89
    ... those consolidated financial statements. Cincinnati, Ohio February 24, 2014 To the Shareholders and Board of Directors of Fifth Third Bancorp: We have audited the accompanying consolidated balance sheets of Fifth Third Bancorp and subsidiaries (the "Bancorp") as of December 31, 2013 and 2012, and...

  • Page 90
    ...except share data) 2013 2012 Assets Cash and due from banks(a) $ 3,178 2,441 Available-for-sale and other securities(b) 18,597 15,207 Held-to-maturity securities(c) 208 284 Trading securities 343 207 Other short-term investments 5,116 2,421 Loans held for sale(d) 944 2,939 Portfolio loans and leases...

  • Page 91
    ... Corporate banking revenue Investment advisory revenue Card and processing revenue Other noninterest income Securities gains, net Securities gains, net - non-qualifying hedges on mortgage servicing rights Total noninterest income Noninterest Expense Salaries, wages and incentives Employee benefits...

  • Page 92
    ... amounts to net periodic benefit costs Other comprehensive (loss) income Comprehensive income Less: Comprehensive income attributable to noncontrolling interests Comprehensive income attributable to Bancorp See Notes to Consolidated Financial Statements. $ 2013 1,826 2012 1,574 2011 1,298 (295...

  • Page 93
    ... plans, net Other Balance at December 31, 2013 See Notes to Consolidated Financial Statements. Bancorp Shareholders' Equity Accumulated Total Other Bancorp NonCommon Preferred Capital Retained Comprehensive Treasury Shareholders' Controlling Stock Stock Surplus Earnings Income Stock Equity...

  • Page 94
    ... method investments Net change in: Other short-term investments Loans and leases Operating lease equipment Net Cash Used in Investing Activities Financing Activities Net change in: Core deposits Certificates - $100,000 and over, including foreign office and other Federal funds purchased Other short...

  • Page 95
    ... ACCOUNTING AND REPORTING POLICIES Nature of Operations Fifth Third Bancorp, an Ohio corporation, conducts its principal lending, deposit gathering, transaction processing and service advisory activities through its banking and non-banking subsidiaries from banking centers located throughout...

  • Page 96
    ...to the ALLL, unless such loans are both well-secured and in the process of collection. The Bancorp modified its charge-off policy for home equity loans and lines of credit in the fourth quarter of 2013 to assess for a charge-off to the ALLL when such loans or lines of credit have become past due 120...

  • Page 97
    ... need for a loss accrual. mortgage-backed securities prices, interest rate risk and an internally developed credit component. Loans held for sale are placed on nonaccrual status consistent with the Bancorp's nonaccrual policy for portfolio loans and leases. Other Real Estate Owned OREO, which is...

  • Page 98
    ...resulting from residential mortgage loan sales are initially recorded at fair value and subsequently amortized in proportion to and over the period of estimated net servicing revenues and are reported as a component of mortgage banking net revenue, in the Consolidated Statements of Income. Servicing...

  • Page 99
    ... amount of the long-lived asset or asset group exceeds its fair value. Maintenance, repairs and minor improvements are charged to noninterest expense in the Consolidated Statements of Income as incurred. Derivative Financial Instruments The Bancorp accounts for its derivatives as either assets or...

  • Page 100
    ... a terminal value approach to estimate cash flows beyond the final year of the forecast) and the reporting unit's estimated cost of equity as the discount rate. Additionally, the Bancorp determines its market capitalization based on the average of the closing price of the Bancorp's stock during the...

  • Page 101
    ... by credit card associations) not controlled by the Bancorp. The Bancorp purchases life insurance policies on the lives of certain directors, officers and employees and is the owner and beneficiary of the policies. The Bancorp invests in these policies, known as BOLI, to provide an efficient form of...

  • Page 102
    ... Consolidated Financial Statements. Accounting for Investments in Qualified Affordable Housing Projects In January 2014, the FASB issued amended guidance which would permit the Bancorp to make an accounting policy election to account for its investments in qualified affordable housing projects using...

  • Page 103
    ... of the Bancorp's total deposit at the FRB. The Bancorp's total deposit at the FRB is held in other short-term investments in the Consolidated Balance Sheets. The dividends paid by the Bancorp's banking subsidiary are subject to regulations and limitations prescribed by state and federal supervisory...

  • Page 104
    ... and 2012, respectively, recorded at fair value with fair value changes recorded in securities gains, net (b) and securities gains, net - non-qualifying hedges on mortgage servicing rights in the Consolidated Statements of Income. Other securities consist of FHLB and FRB restricted stock holdings of...

  • Page 105
    ... losses in the available-for-sale securities portfolio were represented by non-rated securities at December 31, 2013 and 2012. During the years ended December 31, 2013, 2012 and 2011, the Bancorp did not recognize OTTI on any of its available-for-sale equity securities. 103 Fifth Third Bancorp

  • Page 106
    ... United States. The Bancorp's commercial loan portfolio consists of lending to various industry types. Management periodically reviews the performance of its loan and lease products to evaluate whether they are performing within acceptable interest rate and credit risk levels and changes are made to...

  • Page 107
    ... of residual value write-downs related to commercial leases for the years ended December 31, 2013 and 2012, respectively. The residual value write-downs related to commercial leases are recorded in corporate banking revenue in the Consolidated Statements of Income. At December 31, 2013, the minimum...

  • Page 108
    ... of leveraged leases, net of unearned income. (c) Includes five restructured nonaccrual loans at December 31, 2013 associated with a consolidated variable interest entity, in which the Bancorp has no continuing credit risk due to the risk being assumed by a third party, with a recorded investment of...

  • Page 109
    ... unless such loans are both well secured and in the process of collection. During the fourth quarter of 2013, the Bancorp modified its nonaccrual policy for home equity loans and lines of credit. Home equity loans and lines of credit are reported as nonperforming if principal or interest...

  • Page 110
    ... in real and/or personal property for which the Bancorp estimates proceeds from sale would be sufficient to recover the outstanding principal and accrued interest balance of the loan and pay all costs to sell the collateral. The Bancorp considers a loan in the process of collection if collection...

  • Page 111
    ... at fair value. Information for current residential mortgage loans includes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. As of December 31, 2012, $80 of...

  • Page 112
    ... loans at December 31, 2013 associated with a consolidated variable interest entity, in which the Bancorp has no continuing credit risk due to the risk being assumed by a third party, with an unpaid principal balance of $28, a recorded investment of $28, and an allowance of $11. 110 Fifth Third...

  • Page 113
    ... loans at December 31, 2013 associated with a consolidated variable interest entity, in which the Bancorp has no continuing credit risk due to the risk being assumed by a third party, with an unpaid principal balance of $28, an average recorded investment of $29, and an allowance of $11. 111 Fifth...

  • Page 114
    ... of collection; and certain other assets, including OREO and other repossessed property. The following table summarizes the Bancorp's nonperforming loans and leases, by class, as of December 31: ($ in millions) 2013 2012 Commercial: Commercial and industrial loans $ 281 330 Commercial mortgage owner...

  • Page 115
    ... mortgage loans 1,758 340 35 Consumer: Home equity 1,343 82 1 Automobile loans 1,289 23 2 Credit card 11,407 75 11 Total portfolio loans and leases 16,064 $ 793 24 11 (a) Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality. (b) Represents number of loans...

  • Page 116
    ...owner occupied loans Commercial construction loans Residential mortgage loans Consumer: Home equity Automobile loans Credit card (revised) Total portfolio loans and leases (a) Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality. $ 114 Fifth Third Bancorp

  • Page 117
    ..., 2011 Acquisition activity Net carrying value as of December 31, 2012 Acquisition activity Net carrying value as of December 31, 2013 Commercial Banking 613 613 613 Branch Banking 1,656 (1) 1,655 1,655 Consumer Lending Investment Advisors 148 148 148 Total 2,417 (1) 2,416 2,416 $ $ $ The Bancorp...

  • Page 118
    ... on existing asset balances as of December 31, 2013. Future amortization expense may vary from these projections. Estimated amortization expense for the years ending December 31, 2014 through 2018 is as follows: ($ in millions) 2014 2015 2016 2017 2018 Total 5 2 2 2 2 $ 116 Fifth Third Bancorp

  • Page 119
    ... 31, 2012 ($ in millions) Assets: Commercial mortgage loans ALLL Other assets Total assets Noncontrolling interests CDC Investments $ 50 (5) 3 48 48 Total 50 (5) 3 48 48 $ Automobile Loan Securitization In August of 2013, the Bancorp transferred approximately $1.3 billion in fixed-rate consumer...

  • Page 120
    ...to private equity funds during 2013 and 2012, respectively. Additionally, in response to the issuance of the Volcker Rule in the fourth quarter of 2013, the Bancorp recognized $4 million of OTTI on its investments in private equity funds. See Note 27 for further information. 118 Fifth Third Bancorp

  • Page 121
    ... of December 31, 2013 and 2012, the Bancorp's carrying value of these equity investments was immaterial to the Bancorp's Consolidated Balance Sheets. Additionally, the Bancorp had outstanding loans to these VIEs, included in commercial loans in the Consolidated Balance Sheets, which are included in...

  • Page 122
    ... sold fixed and adjustable rate residential mortgage loans during 2013, 2012, and 2011. In those sales, the Bancorp obtained servicing responsibilities and the investors have no recourse to the Bancorp's other assets for failure of debtors to pay when due. The Bancorp receives annual servicing fees...

  • Page 123
    ...) Securities gains, net - non-qualifying hedges on MSRs Changes in fair value and settlement of free-standing derivatives purchased to economically hedge the MSR portfolio (Mortgage banking net revenue) Recovery of (provision for) MSR impairment (Mortgage banking net revenue) 2013 13 (30) 192 2012...

  • Page 124
    ... swaps are total return swaps based on changes in the value of the underlying mortgage principal-only trust. TBAs are a forward purchase agreement for a mortgage-backed securities trade whereby the terms of the security are undefined at the time the trade is made. Foreign currency volatility occurs...

  • Page 125
    ... to held for sale mortgage loans Stock warrant associated with Vantiv Holding, LLC Swap associated with the sale of Visa, Inc. Class B shares Total free-standing derivatives - risk management and other business purposes Free-standing derivatives - customer accommodation: Interest rate contracts for...

  • Page 126
    ... recognized in other noninterest income 2013 (13) 44 2012 37 83 2011 89 69 1 $ Free-Standing Derivative Instruments - Risk Management and Other Business Purposes As part of its overall risk management strategy relative to its mortgage banking activity, the Bancorp may enter into various...

  • Page 127
    ...exchange contracts: Foreign exchange contracts for risk management purposes Equity contracts: Stock warrant associated with Vantiv Holding, LLC Put option associated with Vantiv Holding, LLC Swap associated with sale of Visa, Inc. Class B shares 2013 24 (30) 5 206 (31) 2012 28 63 2 66 1 (45) 2011...

  • Page 128
    ...revenue) Foreign exchange contracts - customers (credit portion of fair value adjustment) Consolidated Statements of Income Caption Corporate banking revenue Other noninterest expense Other noninterest expense Mortgage banking net revenue Corporate banking revenue Other noninterest expense Corporate...

  • Page 129
    ...Partnership investments Bank owned life insurance Derivative instruments Accounts receivable and drafts-in-process Bankers' acceptances Investment in Vantiv Holding, LLC Accrued interest receivable OREO and other repossessed personal property Prepaid expenses Income tax receivable Other Total $ 2013...

  • Page 130
    ...in the Consolidated Balance Sheets. In 2009, the Bancorp sold an approximate 51% interest in its processing business, Vantiv Holding, LLC. As a result of additional share sales completed by the Bancorp in 2012 and 2013, the Bancorp's current ownership share in Vantiv Holding, LLC is approximately 25...

  • Page 131
    .... At December 31, 2012, the Bancorp had outstanding principal balances of $6.5 billion, net discounts of $20 million and additions for mark-to-market adjustments on its hedged debt of $555 million. The Bancorp was in compliance with all debt covenants at December 31, 2013. PARENT COMPANY LONG-TERM...

  • Page 132
    ... under the acquired trust preferred securities issued by First Charter Capital Trust I and II. Junior Subordinated Debt The Bancorp redeemed all $750 million of the outstanding TruPS issued by Fifth Third Capital Trust IV on December 30, 2013. These securities had a distribution rate of 6.50% and...

  • Page 133
    ... business, enters into financial instruments and various agreements to meet the financing needs of its customers. The Bancorp also enters into certain transactions and agreements to manage its interest rate and prepayment risks, provide funding, equipment and locations for its operations and invest...

  • Page 134
    ... into a limited number of agreements for work related to banking center construction and to purchase goods or services. Bancorp suspended the practice of providing reinsurance of private mortgage insurance for newly originated mortgage loans. In the second quarter of 2011, the Bancorp allowed one...

  • Page 135
    ... FINANCIAL STATEMENTS During the fourth quarter of 2013, the Bancorp settled certain repurchase claims related to mortgage loans originated and sold to FHLMC prior to January 1, 2009 for $25 million, after paid claim credits and other adjustments. The settlement removes the Bancorp's responsibility...

  • Page 136
    ...in 2009, the Bancorp completed the sale of Visa, Inc. Class B shares for proceeds of $300 million. As part of this transaction the Bancorp entered into a total return swap in which the Bancorp will make or receive payments based on subsequent changes in the conversion rate of the Class B shares into...

  • Page 137
    ... five putative securities class action complaints were filed against the Bancorp and its Chief Executive Officer, among other parties. The five cases have been consolidated under the caption Local 295/Local 851 IBT Employer Group Pension Trust and Welfare Fund v. Fifth Third Bancorp. et al., Case No...

  • Page 138
    ... TO CONSOLIDATED FINANCIAL STATEMENTS denying any factual allegations, consented to the SEC's issuance of an administrative order containing findings that the Bancorp did not properly account for a portion of its commercial real estate loan portfolio in its Form 10-Q for the third quarter of 2008...

  • Page 139
    ... 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...

  • Page 140
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2013 and 2012. Vantiv Holding, LLC did not draw upon its lines of credit during the years ended December 31, 2013 or 2012. 20. INCOME TAXES The Bancorp and its subsidiaries file a consolidated federal income tax return. The following is a ...

  • Page 141
    ... the first quarter of 2012. As a result, all issues have been resolved with the IRS through 2009. The IRS is currently examining the Bancorp's 2010 and 2011 federal income tax returns. The statute of limitations for the Bancorp's federal income tax returns remains open for tax years 2010-2013. On...

  • Page 142
    ... cost during 2014 is $7 million. The estimated net prior service cost for the defined benefit pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost during 2014 is immaterial to the Consolidated Financial Statements. 140 Fifth Third Bancorp

  • Page 143
    ... Settlement Total recognized in other comprehensive income Total recognized in net periodic benefit cost and other comprehensive income 2013 $ 10 (13) 11 5 13 (38) (11) (5) (54) (41) 2012 10 (13) 14 6 17 7 (14) (6) (13) 4 2011 11 (15) 11 1 6 14 50 (11) (1) (6) 32 46 $ $ $ 141 Fifth Third Bancorp

  • Page 144
    ... Equity securities The plan measures common stock using quoted prices which are available in an active market and classifies these investments within Level 1 of the valuation hierarchy. Mutual and exchange traded funds All of the plan's mutual and exchange traded funds are publicly traded. The plan...

  • Page 145
    ... Bancorp common stock Total equity securities(a) Total fixed income securities Alternative strategies Cash(b) Total (a) (b) Includes mutual and exchange traded funds Cash was held in a Federated Prime Cash Obligation Fund in 2013 and in a Fifth Third Money Market Fund in 2012. Targeted...

  • Page 146
    ...2013 and 2012, $200 million and $123 million, respectively, of plan assets were managed by Fifth Third Bank, a subsidiary of the Bancorp. Plan assets included $4 million and $3 million of Bancorp common stock as of December 31, 2013 and 2012, respectively. Plan assets are not expected to be returned...

  • Page 147
    ... Other Comprehensive Income Pretax Tax Net Activity Effect Activity Total Accumulated Other Comprehensive Income Beginning Net Ending Balance Activity Balance ($ in millions) 2013 Unrealized holding losses on available-for-sale securities arising during period Reclassification adjustment for net...

  • Page 148
    ...and fees on loans and leases Interest on long-term debt Income before income taxes Applicable income tax expense Net income Net periodic benefit costs Amortization of net actuarial loss Settlements (11) (5) (16) 6 (10) $ 15 Employee benefits expense (a) Employee benefits expense (a) Income before...

  • Page 149
    ...NASDAQ Global Select Market and withdrawn from the Exchange. Preferred Stock-Series I On December 9, 2013, the Bancorp issued, in a registered public offering, 18,000,000 depositary shares, representing 18,000 shares of 6.625% fixed-to-floating rate non-cumulative Series I perpetual preferred stock...

  • Page 150
    ...the sale of Vantiv, Inc. common shares by either the Bancorp or Vantiv, Inc. As a result, on August 21, 2012, Fifth Third's Board of Directors authorized the Bancorp to repurchase up to 100 million shares of its outstanding common stock in the open market or in privately negotiated transactions, and...

  • Page 151
    ... the treasury shares purchased on the acquisition date. On November 13, 2013, the Bancorp entered into an accelerated share repurchase transaction with a counterparty pursuant to which the Bancorp purchased 8,538,423 shares, or approximately $200 million, of its outstanding common stock on November...

  • Page 152
    ... by the Bancorp's stock price. Annual dividends are based on projected dividends, estimated using a historical long-term dividend payout ratio, over the estimated life of the awards. The risk-free interest rate for periods within the contractual life of the SARs is based on the U.S. Treasury yield...

  • Page 153
    ...The Bancorp's Board of Directors previously approved the use of phantom stock units as part of its compensation for executives in connection with changes made in reaction to the TARP compensation rules. On February 22, 2011, the Bancorp redeemed its Series F preferred stock held by the U.S. Treasury...

  • Page 154
    ... 15, 2011 or the executive's death. Units issued thereafter were settled in cash with 50% settled on June 15, 2012 and 50% settled on June 15, 2013. The amount paid on settlement of the phantom stock units was equal to the total amount of phantom stock units settled at the reported closing price of...

  • Page 155
    ... processing business Equity method income from interest in Vantiv Holding, LLC Operating lease income BOLI income Cardholder fees Banking center income Consumer loan and lease fees Insurance income Gain on loan sales TSA revenue Loss on OREO Loss on swap associated with the sale of Visa, Inc. class...

  • Page 156
    ... Amount 2012 Average Per Share Shares Amount 2011 Average Per Share Shares Amount (in millions, except per share data) Earnings per share: Net income attributable to Bancorp Dividends on preferred stock Net income available to common shareholders Less: Income allocated to participating securities...

  • Page 157
    ... mortgage-backed securities Other bonds, notes and debentures Other securities Trading securities Residential mortgage loans held for sale Residential mortgage loans(b) Derivative assets: Interest rate contracts Foreign exchange contracts Equity contracts Commodity contracts Derivative assets Total...

  • Page 158
    ... loans held for sale, fair value is estimated based upon mortgage-backed securities prices and spreads to those prices or, for certain ARM loans, DCF models that may incorporate the anticipated portfolio composition, credit spreads of asset-backed securities with similar collateral and market...

  • Page 159
    ... Risk Department, which reports to the Bancorp's Chief Risk and Credit Officer, are responsible for determining the valuation methodology for residential mortgage loans held for investment. The Secondary Marketing Department reviews loss severity assumptions quarterly to determine if adjustments...

  • Page 160
    ..., as of December 31, 2013, $177 and $33, respectively, as of December 31, 2012, and $113 and $81, respectively, as of December 31, 2011. Includes residential mortgage loans held for sale that were transferred to held for investment. Includes interest income and expense. 158 Fifth Third Bancorp

  • Page 161
    ... value on a recurring basis using significant unobservable inputs (Level 3) were recorded in the Consolidated Statements of Income as follows: ($ in millions) Mortgage banking net revenue Corporate banking revenue Other noninterest income Total gains $ 2013 57 1 175 233 2012 418 1 21 440 2011 210...

  • Page 162
    ... 31, 2013 ($ in millions) Commercial loans held for sale(a) Commercial and industrial loans Commercial mortgage loans Commercial construction loans MSRs OREO Private equity investment funds Total Total 3 443 61 16 967 87 181 1,758 $ $ As of December 31, 2012 ($ in millions) Commercial loans held...

  • Page 163
    ... table. Commercial Credit Risk, which reports to the Chief Risk and Credit Officer, is responsible for preparing and reviewing the fair value estimates for commercial loans held for investment. MSRs Mortgage interest rates increased during the year ended December 31, 2013 and the Bancorp recognized...

  • Page 164
    .... The Bancorp's private equity department, which reports to the Chief Operating Officer, in conjunction with Accounting, is responsible for preparing and reviewing the fair value estimates. Fair Value Option The Bancorp elected to measure certain residential mortgage loans held for sale under the...

  • Page 165
    ... financial instruments include cash and due from banks, FHLB and FRB restricted stock, other short-term investments, certain deposits (demand, interest checking, savings, money market and foreign office deposits), and federal funds purchased. Fair values for other time deposits, certificates of...

  • Page 166
    ... that provide income tax credits as the economic return on the investment. The fair value of these instruments is estimated based on current U.S. Treasury tax credit rates. Loans held for sale Fair values for commercial loans held for sale were valued based on executable bids when available, or on...

  • Page 167
    ..., regulations and requirements as mandated by the Federal Deposit Insurance Act. The Bancorp and its banking subsidiary, Fifth Third Bank, had Tier I capital, Total risk-based capital and Tier I leverage ratios above the well-capitalized levels at December 31, 2013 and 2012. As of December 31, 2013...

  • Page 168
    ... 29. PARENT COMPANY FINANCIAL STATEMENTS Condensed Statements of Income (Parent Company Only) For the years ended December 31 ($ in millions) Income Dividends from subsidiaries: Consolidated bank subsidiaries(a) Consolidated nonbank subsidiary Interest on loans to subsidiaries Total income Expenses...

  • Page 169
    ... FINANCIAL STATEMENTS Condensed Balance Sheets (Parent Company Only) As of December 31 ($ in millions) Assets Cash Short-term investments Loans to subsidiaries: Bank subsidiaries Nonbank subsidiaries Total loans to subsidiaries Investment in subsidiaries Nonbank subsidiaries Total investment...

  • Page 170
    ... CONSOLIDATED FINANCIAL STATEMENTS 30. BUSINESS SEGMENTS The Bancorp reports on four business segments: Commercial Banking, Branch Banking, Consumer Lending and Investment Advisors. Results of the Bancorp's business segments are presented based on its management structure and management accounting...

  • Page 171
    ... Corporate banking revenue Investment advisory revenue Card and processing revenue Other noninterest income Securities gains, net Securities gains, net - non-qualifying hedges on mortgage servicing rights Total noninterest income Noninterest expense: Salaries, wages and incentives Employee benefits...

  • Page 172
    ... FINANCIAL STATEMENTS 2012 ($ in millions) Net interest income Provision for loan and lease losses Net interest income after provision for loan and lease losses Noninterest income: Mortgage banking net revenue Service charges on deposits Corporate banking revenue Investment advisory revenue Card...

  • Page 173
    ... Corporate banking revenue Investment advisory revenue Card and processing revenue Other noninterest income Securities gains, net Securities gains, net - non-qualifying hedges on mortgage servicing rights Total noninterest income Noninterest expense: Salaries, wages and incentives Employee benefits...

  • Page 174
    ...Stock Market LLC 10-K Cross Reference Index PART I Item 1. Business Employees Segment Information Average Balance Sheets Analysis of Net Interest Income and Net Interest Income Changes Investment Securities Portfolio Loan and Lease Portfolio Risk Elements of Loan and Lease Portfolio Deposits Return...

  • Page 175
    ...checking, savings and money market accounts, and credit products such as credit cards, installment loans, mortgage loans and leases. Fifth Third Bank has deposit insurance provided by the Federal Deposit Insurance Corporation (the "FDIC") through the Deposit Insurance Fund. Refer to Exhibit 21 filed...

  • Page 176
    .... The federal and state laws and regulations that are applicable to banks and to some extent bank holding companies regulate, among other matters, the scope of their business, their activities, their investments, their reserves against deposits, the timing of the availability of deposited funds, the...

  • Page 177
    ... anti-money laundering, compliance, suspicious activity and currency transaction reporting and due diligence on customers. The Patriot Act and its underlying regulations also permit information sharing for counter-terrorist purposes between federal law enforcement agencies and financial institutions...

  • Page 178
    ...to named executive officers in connection with sale transactions. The SEC adopted rules finalizing these say on pay provisions in January 2011. Pursuant to the Dodd-Frank Act, in June 2012, the SEC adopted a final rule directing the stock exchanges to prohibit listing classes of equity securities if...

  • Page 179
    ... certain investments in small business investment companies. Transactions on behalf of customers and in connection with certain underwriting and market making activities, as well as risk-mitigating hedging activities and certain foreign banking activities are also permitted. The Final Rules exclude...

  • Page 180
    ... of the Bancorp' s process for assessing capital adequacy and the Bancorp' s capital policy. In December 2011, the FRB issued proposed rules to strengthen regulation and supervision of large bank holding companies and systemically important nonbank financial firms. The proposed rules would generally...

  • Page 181
    ..., common stock repurchases and discretionary cash payments to executive officers based on the amount of the shortfall. The Final Capital Rules provide for a number of deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing rights, deferred...

  • Page 182
    ...The Bancorp' s executive offices and the main office of Fifth Third Bank are located on Fountain Square Plaza in downtown Cincinnati, Ohio in a 32-story office tower, a five-story office building with an attached parking garage and a separate ten-story office building known as the Fifth Third Center...

  • Page 183
    ...PURCHASES OF EQUITY SECURITIES The Bancorp' s common stock is traded in the over-the-counter market and is listed under the symbol "FITB" on the NASDAQ® Global Select Market System. High and Low Stock Prices and Dividends Paid Per Share 2013 Fourth Quarter Third Quarter Second Quarter First Quarter...

  • Page 184
    ... therein. Total Return Analysis The graphs below summarize the cumulative return experienced by the Bancorp's shareholders over the years 2008 through 2013, and 2003 through 2013, respectively, compared to the S&P 500 Stock and the S&P Banks indices. FIFTH THIRD BANCORP VS. MARKET INDICES...

  • Page 185
    ... Annual Report on Form 10-K. 2.1 Master Investment Agreement (excluding exhibits and schedules) dated as of March 27, 2009 and amended as of June 30, 2009, among Fifth Third Bank, Fifth Third Financial Corporation, Advent-Kong Blocker Corp., FTPS Holding, LLC and Fifth Third Processing Solutions...

  • Page 186
    ...Current Report on Form 8-K/A filed with the Securities and Exchange Commission on March 7, 2012. Deposit Agreement dated May 16, 2013, between Fifth Third Bancorp, as issuer, Wilmington Trust, National Association, as depositary and calculation agent, American Stock Transfer & Trust Company, LLC, as...

  • Page 187
    ... accelerated share repurchase transaction dated December 10, 2013 between Fifth Third Bancorp and Deutsche Bank AG, London Branch** Computations of Consolidated Ratios of Earnings to Fixed Charges. Computations of Consolidated Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividend...

  • Page 188
    ... duly authorized. FIFTH THIRD BANCORP Registrant /s/ Kevin T. Kabat Kevin T. Kabat Vice Chairman and CEO Principal Executive Officer February 24, 2014 Pursuant to requirements of the Securities Exchange Act of 1934, this report has been signed on February 24, 2014 by the following persons on behalf...

  • Page 189
    ... funds sold and interest-bearing deposits in banks are combined in other short-term investments in the Consolidated Financial Statements. Adjusted for accounting guidance related to the calculation of earnings per share, which was adopted retroactively on January 1, 2009. 187 Fifth Third Bancorp

  • Page 190
    ..., CEO & Director Marathon Petroleum Corporation Jewell D. Hoover Principal & Bank Consultant Hoover and Associates, LLC Kevin T. Kabat Vice Chairman & CEO Fifth Third Bancorp Mitchel D. Livingston, Ph.D. Retired Vice President for Student Affairs & Chief Diversity Officer University of Cincinnati...

  • Page 191
    ....78 Fifth Third's common stock is traded on the NASDAQ® Global Select Market under the symbol "FITB." * Non-GAAP measure. For further information, see the Non-GAAP Financial Measures section of MD&A. CORPORATE ADDRESS Fifth Third Bancorp 38 Fountain Square Plaza Cincinnati, OH 45263 Website: www...

  • Page 192
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