Fifth Third Bank 2014 Annual Report Download - page 165

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
163 Fifth Third Bancorp
Held-to-maturity securities
The Bancorp’s held-to-maturity securities are primarily composed of
instruments that provide income tax credits as the economic return
on the investment. The fair value of these instruments is estimated
based on current U.S. Treasury tax credit rates.
Loans held for sale
Fair values for commercial loans held for sale were valued based on
executable bids when available, or on DCF models incorporating
appraisals of the underlying collateral, as well as assumptions about
investor return requirements and amounts and timing of expected
cash flows. Fair values for residential mortgage loans held for sale
were valued based on estimated third-party valuations utilizing
recent sales data from similar transactions. Broker opinion
statements were also obtained as additional evidence to support the
third-party valuations. Fair values for other consumer loans held for
sale were based on contractual values upon which the loans may be
sold to a third party, and approximate their carrying value.
Portfolio loans and leases, net
Fair values were estimated by discounting future cash flows using
the current market rates of loans to borrowers with similar credit
characteristics, similar remaining maturities, prepayment speeds and
loss severities.
Long-term debt
Fair value of long-term debt was based on quoted market prices,
when available, or a DCF calculation using LIBOR/swap interest
rates and, in some cases, Fifth Third credit and/or debt instrument
spreads for new issuances with similar terms.