Fifth Third Bank 2014 Annual Report Download - page 19

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
17 Fifth Third Bancorp
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TABLE 2: SUMMARY OF ACCELERATED SHARE REPURCHASE TRANSACTIONS  
    Shares Repurchased on
Repurchase Date
Shares Received from Forward
Contract Settlement
Total Shares
Repurchased Repurchase Date Amount ($ in millions) Settlement Date
November 9, 2012 $125 7,710,761 657,914 8,368,675 February 12, 2013
December 19, 2012 100 6,267,410 127,760 6,395,170 February 27, 2013
J
anuary 31, 2013 125 6,953,028 849,037 7,802,065 April 5, 2013
May 24, 2013 539 25,035,519 4,270,250 29,305,769 October 1, 2013
November 18, 2013 200 8,538,423 1,132,495 9,670,918 March 5, 2014
December 13, 2013 456 19,084,195 2,294,932 21,379,127 March 31, 2014
J
anuary 31, 2014 99 3,950,705 602,109 4,552,814 March 31, 2014
May 1, 2014 150 6,216,480 1,016,514 7,232,994 July 21, 2014
J
uly 24, 2014 225 9,352,078 1,896,685 11,248,763 October 14, 2014
October 23, 2014 180 8,337,875 794,245 9,132,120 January 8, 2015
Preferred Stock Offering
On June 5, 2014, the Bancorp issued in a registered public offering
300,000 depositary shares, representing 12,000 shares of 4.90%
fixed-to-floating rate non-cumulative Series J perpetual preferred
stock, for net proceeds of $297 million. The Series J preferred
shares are not convertible into Bancorp common shares or any
other securities. For more information, refer to Note 23 of the
Notes to Consolidated Financial Statements.
Senior Notes Offerings
On February 28, 2014, the Bancorp issued and sold $500 million of
2.30% unsecured senior fixed-rate notes, with a maturity of five
years, due on March 1, 2019. These 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.
On April 25, 2014, the Bank issued and sold $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, with a maturity of five years, due on April 25, 2019; and $650
million of 1.35% senior fixed-rate notes with a maturity of three
years, 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 $850 million
of 2.875% unsecured senior fixed-rate bank notes, with a maturity
of seven years, due on 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. For additional
information on the senior notes offerings, refer to Note 16 of the
Notes to Consolidated Financial Statements.
Automobile Loan Securitizations
In securitization transactions that occurred in 2014, the Bancorp
transferred an aggregate amount of approximately $3.8 billion in
fixed-rate consumer automobile loans to bankruptcy remote trusts
which were deemed to be VIEs. The Bancorp concluded that it is
the primary beneficiary of these VIEs and, therefore, has
consolidated these VIEs. For additional information on the
automobile loan securitizations, refer to Notes 10 and 16 of the
Notes to Consolidated Financial Statements.
Legislative Developments
On July 21, 2010, the DFA was signed into federal law. This act
implements changes to the financial services industry and affects the
lending, deposit, investment, trading and operating activities of
financial institutions and their holding companies. The legislation
established the CFPB responsible for implementing and enforcing
compliance with consumer financial laws, changes the methodology
for determining deposit insurance assessments, gives the FRB the
ability to regulate and limit interchange rates charged to merchants
for the use of debit cards, enacts new limitations on proprietary
trading, broadens the scope of derivative instruments subject to
regulation, requires on-going stress tests and the submission of
annual capital plans for certain organizations, requires changes to
rules governing regulatory capital ratios and requires enhanced
liquidity standards.
The FRB launched the 2014 capital planning and stress testing
program, CCAR, on November 1, 2013. The CCAR program
requires BHCs with $50 billion or more of total consolidated assets
to submit annual capital plans to the FRB for review and to conduct
stress tests under a number of economic scenarios. The capital plan
and stress testing results were submitted by the Bancorp to the FRB
on January 6, 2014.
In March of 2014, the FRB disclosed its estimates of
participating institutions results under the FRB supervisory stress
scenario, including capital results, which assume all banks take
certain consistently applied future capital actions. In addition, the
FRB disclosed its estimates of participating institutions results under
the FRB supervisory severe stress scenarios including capital results
based on each company’s own base scenario capital actions.
On March 26, 2014, the Bancorp announced the results of its
capital plan submitted to the FRB as part of the 2014 CCAR. The
FRB indicated to the Bancorp that it did not object to the following
capital actions for the period beginning April 1, 2014 and ending
March 31, 2015:
xThe potential increase in the quarterly common stock
dividend to $0.13 per share;
xThe potential repurchase of common shares in an
amount up to $669 million;
xThe additional ability to repurchase shares in the
amount of any after-tax gains from the sale of Vantiv,
Inc. common stock; and
xThe issuance of an additional $300 million in
preferred stock.
For more information on the 2014 CCAR results, refer to the
Capital Management section of MD&A.