Fifth Third Bank 2014 Annual Report Download - page 131

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
129 Fifth Third Bancorp
March 15, 2022. The notes are not subject to redemption at the
Bancorp’s option at any time until 30 days prior to maturity.
On February 28, 2014, the Bancorp issued and sold $500
million of senior notes to third party investors. The senior notes
bear a fixed-rate of interest of 2.30% per annum. The notes are
unsecured, senior obligations of the Bancorp. Payment of the full
principal amounts of the notes is due upon maturity on March 1,
2019. The notes are not subject to redemption at the Bancorp’s
option at any time until 30 days prior to maturity.
Subordinated Debt
The subordinated floating-rate notes due in 2016 pay interest at
three-month LIBOR plus 42 bps. The Bancorp has entered into
interest rate swaps to convert its subordinated fixed-rate notes due
in 2017 and 2018 to floating-rate, which pay interest at three-month
LIBOR plus 42 bps and 25 bps, respectively, at December 31, 2014.
The rates paid on the swaps hedging the subordinated floating-rate
notes due in 2017 and 2018 were 0.69% and 0.48%, respectively, at
December 31, 2014. Of the $1.0 billion in 8.25% subordinated
fixed-rate notes due in 2038, $705 million were subsequently hedged
to floating and paid a rate of 3.28% at December 31, 2014.
On November 20, 2013, the Bancorp issued and sold $750
million of 4.30% unsecured subordinated fixed-rate notes with a
maturity date of January 16, 2024. These fixed-rate notes will be
redeemable by the Bancorp, in whole or in part, on or after the date
that is 30 days prior to the maturity date at a redemption price equal
to 100% of the principal amount plus accrued and unpaid interest
up to, but excluding, the redemption date.
SUBSIDIARY LONG-TERM BORROWINGS
Senior and Subordinated Debt
Medium-term senior notes and subordinated bank notes with
maturities ranging from one year to 30 years can be issued by the
Bancorp’s banking subsidiary. On February 25, 2013, the Bancorp’s
banking subsidiary updated and amended its existing global bank
note program. The amended global bank note program increased
the Bank’s capacity to issue its senior and subordinated unsecured
bank notes from $20 billion to $25 billion. As of December 31,
2014, $19.1 billion was available for future issuance under the global
bank note program. For the subordinated fixed-rate bank notes due
in 2015, the Bancorp entered into interest rate swaps to convert the
fixed-rate debt into floating-rate. At December 31, 2014, the
weighted-average rate paid on the swaps was 0.33%.
On February 28, 2013, the Bank issued and sold, under its
amended bank notes program, $1.3 billion in aggregate principal
amount of unsecured senior bank notes. The bank notes consisted
of: $600 million of 1.45% senior fixed-rate notes due on
February 28, 2018; $400 million of 0.90% senior fixed-rate notes
due on February 26, 2016; and $300 million of senior floating-rate
notes due on February 26, 2016. Interest on the floating-rate notes
is 3-month LIBOR plus 41 bps. These bank notes will be
redeemable by the Bank, in whole or in part, on or after the date
that is 30 days prior to the maturity date at a redemption price equal
to 100% of the principal amount plus accrued and unpaid interest
through the redemption date.
On November 20, 2013, the Bank issued and sold, under its
amended bank notes program, $1.8 billion in aggregate principal
amount of unsecured senior bank notes. The bank notes consisted
of $1.0 billion of 1.15% senior fixed-rate notes due on
November 18, 2016 and $750 million of senior floating-rate notes
due on November 18, 2016. Interest on the floating-rate notes is 3-
month LIBOR plus 51 bps. These bank notes will be redeemable by
the Bank, in whole or in part, on or after the date that is 30 days
prior to the maturity date at a redemption price equal to 100% of
the principal amount plus accrued and unpaid interest up to, but
excluding, the redemption date.
On April 25, 2014, the Bank issued and sold, under its
amended bank notes program, $1.5 billion in aggregate principal
amount of unsecured senior bank notes. The bank notes consisted
of $850 million of 2.375% senior fixed-rate notes due on April 25,
2019 and $650 million of 1.35% senior fixed-rate notes due on June
1, 2017. These bank notes will be redeemable by the Bank, in whole
or in part, on or after the date that is 30 days prior to the maturity
date at a redemption price equal to 100% of the principal amount
plus accrued and unpaid interest up to, but excluding, the
redemption date.
On September 5, 2014, the Bank issued and sold, under its
amended bank notes program, $850 million of 2.875% unsecured
senior fixed-rate bank notes with a maturity date of October 1,
2021. These bank notes will be redeemable by the Bank, in whole or
in part, on or after the date that is 30 days prior to the maturity date
at a redemption price equal to 100% of the principal amount plus
accrued and unpaid interest up to, but excluding, the redemption
date.
Junior Subordinated Debt
The junior subordinated floating-rate bank notes due in 2035 were
assumed by the Bancorp’s banking subsidiary as part of the
acquisition of First Charter in May 2008. The obligation was issued
to First Charter Capital Trust I and II, respectively. The notes of
First Charter Capital Trust I and II pay a floating-rate at three-
month LIBOR plus 169 bps and 142 bps, respectively. The Bank
has fully and unconditionally guaranteed all obligations under the
acquired TruPS issued by First Charter Capital Trust I and II.
FHLB Advances
At December 31, 2014, FHLB advances have rates ranging from
0.05% to 6.87%, with interest payable monthly. The advances are
secured by certain residential mortgage loans and securities totaling
$20.5 billion. The $41 million in remaining advances mature as
follows: $2 million in 2015, $3 million in 2016, $1 million in 2017,
$4 million in 2018, $9 million in 2019 and $22 million thereafter.
Notes Associated with Consolidated VIE
As previously discussed in Note 10, the Bancorp was determined to
be the primary beneficiary of various VIEs associated with
automobile loan securitizations completed during the years ended
December 31, 2014 and 2013. As such, $3.4 billion of long-term
debt related to these VIEs was consolidated in the Bancorp’s
Consolidated Financial Statements as of December 31, 2014. Third-
party holders of this debt do not have recourse to the general assets
of the Bancorp.