Fifth Third Bank 2014 Annual Report Download - page 128

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
126 Fifth Third Bancorp
13. OFFSETTING DERIVATIVE FINANCIAL INSTRUMENTS
The Bancorp’s derivative transactions are generally governed by
ISDA Master Agreements and similar arrangements, which include
provisions governing the setoff of assets and liabilities between the
parties. When the Bancorp has more than one outstanding
derivative transaction with a single counterparty, the setoff
provisions contained within these agreements generally allow the
non-defaulting party the right to reduce its liability to the defaulting
party by amounts eligible for setoff, including the collateral received
as well as eligible offsetting transactions with that counterparty,
irrespective of the currency, place of payment, or booking office.
The Bancorp’s policy is to present its derivative assets and derivative
liabilities on the Consolidated Balance Sheets on a gross basis, even
when provisions allowing for setoff are in place.
Collateral amounts included in the tables below consist
primarily of cash and highly-rated government-backed securities.
Gross Amount Gross Amounts Not Offset in the
Recognized in the Consolidated Balance Sheets
A
s of December 31, 2014 ($ in millions) Consolidated Balance Sheets(a) Derivatives Collateral(b) Net Amount
A
ssets
Derivatives $ 1,653 (440) (684) $ 529
Total assets 1,653 (440) (684) 529
Liabilities
Derivatives 1,043 (440) (293) 310
Total liabilities $ 1,043 (440) (293) $ 310
Gross Amount Gross Amounts Not Offset in the
Recognized in the Consolidated Balance Sheets
A
s of December 31, 2013 ($ in millions) Consolidated Balance Sheets(a) Derivatives Collateral(b) Net Amount
A
ssets
Derivatives $ 1,157 (321) (390) $ 446
Total assets 1,157 (321) (390) 446
Liabilities
Derivatives 753 (321) (302) 130
Total liabilities $ 753 (321) (302) $ 130
(a) Amount does not include the stock warrant associated with Vantiv Holding, LLC and IRLCs because these instruments are not subject to master netting or similar arrangements.
(b) Amount of collateral received as an offset to asset positions or pledged as an offset to liability positions. Collateral values in excess of related derivative amounts recognized in the Consolidated Balance
Sheets were excluded from this table.
14. OTHER ASSETS
The following table provides the components of other assets included in the Consolidated Balance Sheets as of December 31:
($ in millions) 2014 2013
Derivative instruments $2,080 1,553
Partnership investments 1,685 1,687
Bank owned life insurance 1,623 1,587
A
ccounts receivable and drafts-in-process 1,452 1,433
Investment in Vantiv Holding, LLC 394 423
A
ccrued interest receivable 312 361
OREO and other repossessed personal property 236 306
Income tax receivable 107 12
Prepaid expenses 97 94
Other 255 902
Total $ 8,241 8,358
The Bancorp utilizes derivative instruments as part of its overall risk
management strategy to reduce certain risks related to interest rate,
prepayment and foreign currency volatility. The Bancorp also holds
derivatives instruments for the benefit of its commercial customers
and for other business purposes. For further information on
derivative instruments, refer to Note 12.
CDC, a wholly owned subsidiary of the Bancorp, was created to
invest in projects to create affordable housing, revitalize business
and residential areas, and preserve historic landmarks, which are
included above in partnership investments. In addition, Fifth Third
Capital Holdings, a wholly owned subsidiary of the Bancorp, invests
as a direct private equity investor and as a limited partner in private
equity funds, which are included above as partnership investments.
The Bancorp has determined that these partnership investments are
VIEs and the Bancorp’s investments represent variable interests.
Refer to Note 10 for further information. Additionally, in response
to the issuance of the Volcker Rule, the Bancorp recognized $4
million of OTTI on its investments in private equity funds during