Fifth Third Bank 2013 Annual Report Download - page 102

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
100 Fifth Third Bancorp
January 1, 2014 and the adoption did not have a material impact on
the Bancorp’s Consolidated Financial Statements.
Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap
Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes
In July 2013, the FASB issued amended guidance which permits the
OIS to be used as a U.S. benchmark interest rate for hedge
accounting purposes, in addition to UST and LIBOR. The amended
guidance also removed a previous scope reference that required the
same benchmark interest rate be used for similar hedges and that
using different rates be rare and justified. The amended guidance
was effective prospectively for qualifying new or redesignated
hedging relationships entered into on or after July 17, 2013 (i.e., the
issuance date). The Bancorp’s adoption of the amended guidance
did not have a material impact on the Bancorp’s Consolidated
Financial Statements.
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss
Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists
In July 2013, the FASB issued amended guidance to clarify that an
unrecognized tax benefit, or a portion of an unrecognized tax
benefit, should be presented in the financial statements as a
reduction to a deferred tax asset for a net operating loss
carryforward, a similar tax loss, or a tax credit carryforward, except
as follows. To the extent a net operating loss carryforward, a similar
tax loss, or a tax credit carryforward is not available at the reporting
date under the tax law of the applicable jurisdiction to settle any
income taxes that would result from the disallowance of a tax
position or the tax law of the applicable jurisdiction does not require
the entity to use, and the entity does not intend to use, the deferred
tax asset for such purpose, the unrecognized tax benefit should be
presented in the financial statements as a liability and should not be
combined with deferred tax assets. The assessment of whether a
deferred tax asset is available is based on the unrecognized tax
benefit and deferred tax asset that exist at the reporting date and
should be made presuming disallowance of the tax position at the
reporting date. The amended guidance is effective for fiscal years,
and interim periods within those years, beginning after December
15, 2013, with early adoption permitted. The Bancorp adopted the
amended guidance on January 1, 2014 and the adoption of the
amended guidance did not have a material impact on the Bancorp’s
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 a proportional amortization method if certain conditions are
met. Under the proportional amortization method, the Bancorp
would amortize the initial cost of the investment in proportion to
the tax credits and other tax benefits received and recognize the net
investment performance in the income statement as a component of
income tax expense (benefit). The amended guidance would require
disclosure of the nature of the Bancorp’s investments in qualified
affordable housing projects, and the effect of the measurement of
the investments in qualified affordable housing projects and the
related tax credits on the Bancorp’s financial position and results of
operation. The amended guidance would be applied retrospectively
to all periods presented and is effective for fiscal years, and interim
periods within those years, beginning after December 15, 2014, with
early adoption permitted. The Bancorp is currently in the process of
evaluating the impact of adopting the amended guidance on the
Bancorp’s Consolidated Financial Statements.
Reclassification of Residential Real Estate Collateralized Consumer Mortgage
Loans upon Foreclosure
In January 2014, the FASB issued amended guidance that clarifies
when a creditor should be considered to have received physical
possession of residential real estate property collateralizing a
consumer mortgage loan such that the loan receivable should be
derecognized and the real estate property recognized. The amended
guidance clarifies that an in substance repossession or foreclosure
occurs, and a creditor is considered to have received physical
possession of residential real estate property collateralizing a
consumer mortgage loan, upon either (1) the creditor obtaining legal
title to the residential real estate property upon completion of a
foreclosure or (2) the borrower conveying all interest in the
residential real estate property to the creditor to satisfy that loan
through completion of a deed in lieu of foreclosure or through a
similar legal agreement. In addition, the amended guidance requires
interim and annual disclosures of both (1) the amount of foreclosed
residential real estate property held by the creditor and (2) the
recorded investment in consumer mortgage loans collateralized by
residential real estate property that are in the process of foreclosure
according to local requirements of the applicable jurisdiction. The
amended guidance may be applied prospectively or through a
modified retrospective approach and is effective for fiscal years, and
interim periods within those years, beginning after December 15,
2014, with early adoption permitted. The adoption of the amended
guidance is not expected to have a material impact on the Bancorp’s
Consolidated Financial Statements.