Fifth Third Bank 2013 Annual Report Download - page 42

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
40 Fifth Third Bancorp
offerings partially offset by 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 decreased $13 million in 2013 compared
to 2012. The decrease from the prior year was primarily the result of
a decrease in lease remarketing fees partially offset by an increase in
syndication fees. The decline in lease remarketing fees was driven by
a $9 million write-down of equipment value on an operating lease
during the fourth quarter of 2013.
Investment advisory revenue
Investment advisory revenue increased $19 million in 2013
compared to 2012. The increase was primarily due to an increase of
$17 million in securities and brokerage fees due to strong
production and an increase in equity and bond market values
coupled with an increase of $15 million 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
approximately $302 billion and $308 billion in total assets under care
as of December 31, 2013 and December 31, 2012, respectively, and
managed $27 billion in assets for individuals, corporations and not-
for-profit organizations as of December 31, 2013 and 2012.
Card and processing revenue
Card and processing revenue increased $19 million in 2013
compared to 2012. The increase was primarily the result of higher
transaction volumes. Debit card interchange revenue, included in
card and processing revenue, was $122 million and $119 million for
the years ended December 31, 2013 and 2012, respectively.
Other noninterest income
The major components of other noninterest income are as follows:
TABLE 9: COMPONENTS OF OTHER NONINTEREST INCOME
For the years ended December 31 ($ in millions) 2013 2012 2011
Gain on sale of Vantiv, Inc. shares and Vantiv, Inc. IPO $336 272 -
Valuation adjustments on the warrant and put options associated with Vantiv Holding, LLC 206 67 39
Equity method income from interest in Vantiv Holding, LLC 77 61 57
Operating lease income 75 60 58
BOLI income 52 35 41
Cardholder fees 47 46 41
Banking center income 34 32 27
Consumer loan and lease fees 27 27 31
Insurance income 25 28 28
Gain on loan sales 3 20 37
TSA revenue 1 1 21
Loss on OREO (26) (57) (71)
Loss on swap associated with the sale of Visa, Inc. class B shares (31) (45) (83)
Other, net 53 27 24
Total other noninterest income $879 574 250
Other noninterest income increased $305 million in 2013 compared
to 2012. The positive valuation adjustments on the stock warrant
associated with Vantiv Holding, LLC increased $139 million in 2013
compared to 2012. In addition, gains of $242 million and $85
million on the sale of Vantiv, Inc. shares were recorded in the
second and third quarters of 2013, respectively, compared to gains
of $115 million related to the Vantiv, Inc. IPO recorded in the first
quarter of 2012 and a $157 million gain from the sale of Vantiv, Inc.
shares during the fourth quarter of 2012. The Bancorp recognized a
gain of $9 million associated with a tax receivable agreement with
Vantiv, Inc. in the fourth quarter of 2013. The equity method
earnings from the Bancorp’s interest in Vantiv Holding, LLC
increased $16 million from 2012.
BOLI income increased $17 million in 2013 compared to 2012
primarily due to a $10 million settlement in the second quarter of
2013 related to a previously surrendered BOLI policy. The loss on
OREO decreased $31 million from 2012 due to a decrease in
OREO balances year over year and a decrease in losses on
commercial real estate in 2013 relating to fair value adjustments on
OREO. Additionally, the Bancorp recognized $31 million and $45
million in negative valuation adjustments related to the Visa total
return swap for the years ended December 31, 2013 and 2012,
respectively. For additional information on the valuation of the
swap associated with the sale of Visa, Inc. Class B shares and the
valuation of the warrant and put options associated with the sale of
Vantiv Holding, LLC, see Note 27 of the Notes to Consolidated
Financial Statements.
The “other” caption increased $26 million for the year ended
2013 compared to 2012. The increase was primarily due to a
decrease in lower of cost or market adjustments associated with the
bank premises as the Bancorp recorded $6 million in lower of cost
or market adjustments in 2013 compared to $21 million in 2012.
Additionally, in response to the issuance of the Volcker Rule, the
Bancorp recognized $4 million of OTTI on certain investments in
private equity funds in 2013.