Fifth Third Bank 2013 Annual Report Download - page 117

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
115 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 2013 2012
Land and improvements $838 841
Buildings 2 to 30 yrs. 1,763 1,692
Equipment 1 to 30 yrs. 1,581 1,460
Leasehold improvements 5 to 30 yrs. 397 386
Construction in progress 118 141
A
ccumulated depreciation and amortizatio
n
(2,166) (1,978)
Total $2,531 2,542
Depreciation and amortization expense related to bank premises
and equipment was $245 million in 2013, $233 million in 2012 and
$224 million in 2011.
For the years ended 2013 and 2012, the Bancorp recorded
charges of $6 million and $21 million, respectively, 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 $98 million in 2013 and $99 million in 2012 and 2011,
which was reduced by rental income from leased premises of $16
million in 2013, $17 million in 2012 and $19 million in 2011. The
Bancorp’s subsidiaries have entered into a number of noncancelable
and capital lease agreements with respect to bank premises and
equipment.
The following table provides the annual future minimum payments under capital leases and noncancelable operating leases at December 31, 2013:
($ in millions) Operating Leases Capital Leases
Y
ear ending December 31,
2014 $91 8
2015 88 7
2016 82 4
2017 75 -
2018 71 -
Thereafter 339 -
Total minimum lease payments $746 19
Less: Amounts representing interest - 1
Present value of net minimum lease payments - 18
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 $965 million
goodwill impairment charge was recorded in the fourth quarter of
2008 and represents the total amount of accumulated impairment
losses as of December 31, 2013.
Changes in the net carrying amount of goodwill, by reporting unit, for the years ended December 31, 2013 and 2012 were as follows:
Commercial Branch Consumer Investment
($ in millions) Banking Banking Lending Advisors Total
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
A
cquisition activit
y
- - - - -
Net carrying value as of December 31, 2013 $ 613 1,655 - 148 2,416
The Bancorp completed its annual goodwill impairment test as of
September 30, 2013 by performing a qualitative assessment of
goodwill at the reporting unit level to determine whether any
indicators of impairment existed. In performing this qualitative
assessment, the Bancorp evaluated events and circumstances since
the date of the last quantitative impairment test including the results
of that test, macroeconomic conditions, banking industry and
market conditions, and key financial metrics of the Bancorp as well
as segment and overall Bancorp financial performance. After
assessing the totality of the events and circumstances, the Bancorp
determined that it was not more likely than not that the fair value of
each of its reporting units was less than their carrying amounts and,
therefore, the first and second steps of the quantitative goodwill
impairment test were deemed unnecessary.