Fifth Third Bancorp (FITB) 10-Q 10 Aug 09 2009 Q2 Quarterly report Financial data

Statement Of Financial Position

Statement Of Financial Position Unclassified - Deposit Based Operations (USD $)
In Millions	Jun. 30, 2009		Dec. 31, 2008		Jun. 30, 2008
Assets
Cash and due from banks	$2,899		$2,739		$2,853
Available-for-sale and other securities	16,061	[2]	12,728	[2]	12,718	[2]
Held-to-maturity securities	357	[7]	360	[7]	361	[7]
Trading securities	1,354		1,191		241
Other short-term investments	513		3,578		286
Loans held for sale	3,341	[5]	1,452	[5]	889	[5]
Portfolio loans and leases:
Commercial loans	28,409		29,197		28,958
Commercial mortgage loans	12,407		12,502		13,394
Commercial construction loans	4,491		5,114		6,007
Commercial leases	3,532		3,666		3,647
Residential mortgage loans	8,489	[4]	9,385	[4]	9,866	[4]
Home equity	12,511		12,752		12,421
Automobile loans	8,741		8,594		8,362
Credit card	1,914		1,811		1,717
Other consumer loans and leases	935		1,122		1,152
Portfolio loans and leases	81,429		84,143		85,524
Allowance for loan and lease losses	(3,485)		(2,787)		(1,580)
Portfolio loans and leases, net	77,944		81,356		83,944
Bank premises and equipment	2,440		2,494		2,444
Operating lease equipment	474		463		364
Goodwill	2,417		2,624		3,603
Intangible assets	133		168		203
Servicing rights	595		499		701
Other assets	7,456		10,112		6,368
Total Assets	115,984		119,764		114,975
Deposits:
Demand	17,202		15,287		16,259
Interest checking	14,630		14,222		14,002
Savings	16,819		16,063		16,602
Money market	4,193		4,689		6,806
Other time	14,540		14,350		9,839
Certificates - $100,000 and over	10,688		11,851		10,870
Foreign office and other	2,748		2,151		3,038
Total deposits	80,820		78,613		77,416
Federal funds purchased	435		287		2,447
Other short-term borrowings	6,802		9,959		5,628
Accrued taxes, interest and expenses	959		2,029		1,864
Other liabilities	3,166		3,214		1,820
Long-term debt	10,102		13,585		15,046
Total Liabilities	102,284		107,687		104,221
Shareholders' Equity
Common stock	1,779	[3]	1,295	[3]	1,295	[3]
Preferred stock	3,588	[1]	4,241	[1]	1,082	[1]
Capital surplus	1,722	[6]	848	[6]	583	[6]
Retained earnings	6,663		5,824		8,178
Accumulated other comprehensive income	152		98		(152)
Treasury stock	(204)		(229)		(232)
Total Shareholders' Equity	13,700		12,077		10,754
Total Liabilities and Shareholders' Equity	$115,984		$119,764		$114,975
[1]317,680 shares of undesignated no par value preferred stock are authorized of which none had been issued; 5.0% cumulative Series F perpetual preferred stock with a $25,000 liquidation preference: 136,320 issued and outstanding at June 30, 2009; 8.5% non-cumulative Series G convertible (into 2,159.8272 common shares) perpetual preferred stock with a $25,000 liquidation preference: 46,000 authorized, 16,451 issued and outstanding at June 30, 2009; 7,250 shares of 8.0% cumulative Series D convertible (at $23.5399 per share) perpetual preferred stock with a stated value of $1,000 per share, which were issued and outstanding at June 30, 2008 and repurchased for $22 million and retired on November 26, 2008; 2,000 shares of 8.0% cumulative Series E perpetual preferred stock with a stated value of $1,000 per share, which were issued and outstanding at June 30, 2008 and repurcha for $6 million and retired on November 26, 2008.
[2]Amortized cost: June 30, 2009 - $15,820, December 31, 2008 - $12,550 and June 30, 2008 - $12,935.
[3]Common shares: Stated value $2.22 per share; authorized 2,000,000,000; outstanding at June 30, 2009 - 795,313,448 (excludes 6,190,740 treasury shares), December 31, 2008 - 577,386,612 (excludes 6,040,492 treasury shares) and June 30, 2008 - 577,529,636 (excludes 5,897,468 treasury shares).
[4]Includes $14, $7 and $0 of residential mortgage loans measured at fair value at June 30, 2009, December 31, 2008 and June 30, 2008, respectively.
[5]Includes $2,638, $881 and $761 of residential mortgage loans held for sale measured at fair value at June 30, 2009, December 31, 2008 and June 30,2008, respectively.
[6]Includes ten-year warrants initially valued at $239 to purchase up to 43,617,747 shares of common stock, no par value, related to Series F preferred stock, at an initial exercise price of $11.72 per share.
[7]Market values: June 30, 2009 - $357, December 31, 2008 - $360 and June30, 2008 - $361.

Statement Of Income Interest Ba

Statement Of Income Interest Based Revenue (USD $)
In Millions, except Per Share data	3 Months Ended Jun. 30, 2009		3 Months Ended Jun. 30, 2008		6 Months Ended Jun. 30, 2009		6 Months Ended Jun. 30, 2008
Interest Income
Interest and fees on loans and leases	$995		$1,050		$1,992		$2,340
Interest on securities	184		155		364		307
Interest on other short-term investments	0		2		1		7
Total interest income	1,179		1,207		2,357		2,654
Interest Expense
Interest on deposits	258		278		532		677
Interest on short-term borrowings	12		49		37		129
Interest on long-term debt	78		142		181		289
Total interest expense	348		469		750		1,095
Net Interest Income	831		738		1,607		1,559
Provision for loan and lease losses	1,041		719		1,814		1,263
Net Interest Income (Loss) After Provision for Loan and Lease Losses	(210)		19		(207)		296
Noninterest Income
Electronic payment processing revenue	243		235		466		447
Service charges on deposits	162		159		308		307
Mortgage banking net revenue	147		86		281		182
Corporate banking revenue	99		111		215		218
Investment advisory revenue	73		92		149		185
Gain on sale of processing business	1,764		0		1,764		0
Other noninterest income	49		49		60		228
Securities gains (losses), net	5		(10)		(20)		17
Securities gains, net - non-qualifying hedges on mortgage servicing rights	41		0		57		3
Total noninterest income	2,583		722		3,280		1,587
Noninterest Expense
Salaries, wages and incentives	346		331		673		679
Employee benefits	75		60		158		145
Net occupancy expense	79		73		158		145
Payment processing expense	75		67		141		133
Technology and communications	45		49		90		96
Equipment expense	31		31		62		61
Other noninterest expense	370		247		702		317
Total noninterest expense	1,021		858		1,984		1,576
Income (Loss) Before Income Taxes	1,352		(117)		1,089		307
Applicable income tax expense	470		85		157		223
Net Income (Loss)	882		(202)		932		84
Dividends on preferred stock	26	[1]	0	[1]	103	[1]	0	[1]
Net Income (Loss) Available to Common Shareholders	$856		($202)		$829		$84
Earnings Per Share	1.35		-0.37		1.37		0.16
Earnings Per Diluted Share	1.15		-0.37		1.18		0.16
[1]Dividends on preferred stock were $.185 million and $.370 million for the three and six months ended June 30, 2008, respectively.

Statement Of Shareholders Equit

Statement Of Shareholders Equity And Other Comprehensive Income (USD $)
In Millions	6 Months Ended Jun. 30, 2009		6 Months Ended Jun. 30, 2008
Total Shareholders' Equity, beginning	$12,077		$9,161
Net income	932		84
Change in unrealized gains and (losses):
Available-for-sale securities	42	[1]	(38)	[1]
Qualifying cash flow hedges	7		9
Change in accumulated other comprehensive income related to employee benefit plans	5		3
Comprehensive income	986		58
Cash dividends declared:
Common stock (2009 - $.02 per share and 2008 - $.59 per share)	(13)		(321)
Preferred stock	(117)		0
Issuance of common stock	986		0
Issuance of preferred stock, Series G	0		1,072
Exchange of preferred stock, Series G	(234)		0
Stock-based awards exercised, including treasury shares issued	1		0
Stock-based compensation expense	23		28
Loans repaid related to the exercise of stock-based awards, net	0		2
Change in corporate tax benefit related to stock-based compensation	(30)		(15)
Shares issued in an acquisition	0		770
Reversal of OTTI	24	[1]	0	[1]
Other	(3)		(1)
Total Shareholders' Equity, ending	$13,700		$10,754
[1]Includes the after tax impact of the reversal of other than temporary impairment (OTTI), totaling $24 million in the second quarter of 2009; as discussed in Note 2.

1_Statement Of Shareholders Equ

Statement Of Shareholders Equity And Other Comprehensive Income (Parenthetical) (USD $)
	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Common stock, per share	0.02	0.59

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect Deposit Based Operations (USD $)
In Millions	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Operating Activities
Net income	$932	$84
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan and lease losses	1,814	1,263
Depreciation, amortization and accretion	182	172
Stock-based compensation expense	23	28
Provision for deferred income taxes	263	167
Realized securities gains	(11)	(32)
Realized securities gains - non-qualifying hedges on mortgage servicing rights	(63)	(3)
Realized securities losses	31	15
Realized securities losses - non-qualifying hedges on mortgage servicing rights	7	0
Provision (recovery) for mortgage servicing rights	19	(24)
Net losses (gains) on sales of loans	23	(57)
Capitalized mortgage servicing rights	(207)	(123)
Loss on recalculation of the timing of tax benefits on leveraged leases	0	130
Loans originated for sale, net of repayments	(12,699)	(7,651)
Proceeds from sales of loans held for sale	10,690	7,813
Decrease in trading securities	5	741
Gain on sale of processing business, net of tax	(1,056)	0
Decrease in other assets	1,098	1,329
Decrease in accrued taxes, interest and expenses	(1,074)	(486)
Increase (decrease) in other liabilities	650	(4)
Net Cash Provided by Operating Activities	627	3,362
Investing Activities
Proceeds from sales of available-for-sale securities	2,606	2,678
Proceeds from calls, paydowns and maturities of available-for-sale securities	67,652	32,850
Purchases of available-for-sale securities	(73,507)	(37,137)
Proceeds from calls, paydowns and maturities of held-to-maturity securities	2	2
Purchases of held-to-maturity securities	0	(10)
Decrease in other short-term investments	3,066	336
Decrease (increase) in loans and leases	2,499	(3,822)
Proceeds from sale of loans	295	3,511
Increase in operating lease equipment	(30)	(25)
Purchases of bank premises and equipment	(95)	(241)
Proceeds from disposal of bank premises and equipment	9	28
Proceeds from sale of processing business	562	0
Net cash paid in acquisitions	(16)	(154)
Net Cash Provided by (Used In) Investing Activities	3,043	(1,984)
Financing Activities
Increase (decrease) in core deposits	2,583	(3,327)
(Decrease) increase in certificates - $100,000 and over, including other foreign office	(671)	1,456
Increase (decrease) in federal funds purchased	148	(2,192)
(Decrease) increase in other short-term borrowings	(3,157)	148
Proceeds from issuance of long-term debt	1	2,651
Repayment of long-term debt	(3,036)	(530)
Payment of cash dividends	(128)	(466)
Exercise of stock-based awards, net	0	2
Issuance of common stock	986	0
Issuance of preferred stock	0	1,072
Exchange of preferred stock	(234)	0
Other	(2)	1
Net Cash Used In Financing Activities	(3,510)	(1,185)
Increase in Cash and Due from Banks	160	193
Cash and Due from Banks at Beginning of Period	2,739	2,660
Cash and Due from Banks at End of Period	2,899	2,853
Cash Payments
Interest	786	1,099
Income taxes	10	298
Noncash Items
Transfers of portfolio loans to held-for-sale loans	0	59
Transfers of held-for-sale loans to portfolio loans	13	1,618
Transfers of held-for-sale loans to trading securities	136	266
Transfers of portfolio loans to other real estate owned	166	131
Acquisitions
Fair value of tangible assets acquired (noncash)	7	4,318
Goodwill and identifiable intangible assets acquired	13	1,215
Liabilities assumed	(4)	(4,609)
Common stock issued	$0	($770)

Notes to Financial Statements

Notes to Financial Statements
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
1.Basis of Presentation	1. Basis of Presentation The Condensed Consolidated Financial Statements include the accounts of the Bancorp and its majority-owned subsidiaries and variable interest entities (VIEs) in which the Bancorp has been determined to be the primary beneficiary. Other entities, including certain joint ventures, in which the Bancorp has the ability to exercise significant influence over operating and financial policies of the investee, but upon which the Bancorp does not possess control, are accounted for by the equity method and not consolidated. Those entities in which the Bancorp does not have the ability to exercise significant influence are generally carried at the lower of cost or fair value. Intercompany transactions and balances have been eliminated. The Bancorp has evaluated subsequent events through August10, 2009, the date of issuance, to determine if either recognition or disclosure of significant events or transactions is required. In the opinion of management, the unaudited Condensed Consolidated Financial Statements include all adjustments, which consist of normal recurring accruals, necessary to present fairly the financial position as of June30, 2009 and 2008, the results of operations for the three and six months ended June30, 2009 and 2008, the cash flows for the six months ended June30, 2009 and 2008 and the changes in shareholders equity for the six months ended June30, 2009 and 2008. In accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information, these statements do not include certain information and footnote disclosures required for complete annual financial statements and it is suggested that these condensed financial statements be read in conjunction with the latest annual financial statements. The results of operations for the three and six months ended June30, 2009 and 2008 and the cash flows and changes in shareholders equity for the six months ended June30, 2009 and 2008 are not necessarily indicative of the results to be expected for the full year. Financial information as of December31, 2008 has been derived from the annual audited Consolidated Financial Statements of the Bancorp. The preparation of financial statements in conformity with USGAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain reclassifications have been made to prior periods Condensed Consolidated Financial Statements and related notes to conform to the current period presentation.
2.New Accounting Pronouncements	2. New Accounting Pronouncements In April 2009, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. This Staff Position reiterates that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. This Staff Position provides additional guidance and utilizes a two-step process to determine whether there has been a significant decrease in the volume and level of activity for an asset or liability when compared with normal market activity for the asset or liability, and whether a transaction is not orderly. If it is determined that there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability, transactions or quoted prices may not be determinative of fair value. Accordingly, further analysis of the transactions or quoted prices is needed, and a significant adjustment to the transactions or quoted prices may be necessary to estimate fair value in accordance with SFAS No.157, Fair Value Measurements. FSP FAS 157-4 is effective for interim and annual periods ending after June15, 2009. The Bancorps adoption of this Staff Position in the second quarter of 2009 did not have a material impact on the Bancorps Condensed Consolidated Financial Statements. In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, which amends the recognition and measurement guidance related to OTTI for debt securities. This Staff Position requires that an OTTI shall be recognized in earnings if the Bancorp intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If the Bancorp does not intend to sell the security, and it is not likely that the Bancorp will be required to sell the security before recovery of its cost basis, the OTTI related to credit losses shall be recognized in earnings, and the OTTI related to all other factors shall be recorded in other comprehensive income, net of applicable taxes. An entity shall recognize the cumulative effect of initially applying this FSP as an adjustment to the opening balance of retained earnings, net of applicable taxes, with a corresponding adjustment to accumulated other comprehensive income. FSP FAS 115-2 and FAS 124-2 is effective for interim and annual reporting periods ending after June15, 2009 and should be applied to existing and new investments held by an entity as of the beginning of the interim period in which it is adopted. During 2008, the Bancorp recognized a pre-tax OTTI charge of $37 million ($24 million after tax) on certain bank trust preferred debt securities classified as available-for-sale. In connection with its adoption of this FSP, the Bancorp c
3.Restriction on Cash and Dividends	3. Restriction on Cash and Dividends The Federal Reserve Bank requires banks to maintain minimum average reserve balances. The amount of the reserve requirement was approximately $418 million, $406 million and $416 million at June30, 2009,December31, 2008 and June30, 2008, respectively. Dividends paid by the Bancorp are subject to various federal and state regulatory limitations. The dividends paid by the Bancorps state chartered subsidiary banks are subject to regulations and limitations prescribed by the appropriate state authority. Dividends that may be paid by the Bancorps national charter subsidiary bank are limited to that banks retained net profits for the preceding two calendar years plus retained net profits up to the date of any dividend declaration in the current calendar year. Under these provisions, the dividend limitation of the Bancorps state chartered and national banks was $1.5 billion, $492 million and $2.3 billion at June 30, 2009, December 31, 2008, and June 30, 2008, respectively. The Bancorps nonbank subsidiaries are also limited by certain federal and state statutory provisions and regulations covering the amount of dividends that may be paid in any given year. Based on retained earnings at June 30, 2009, December 31, 2008 and June 30, 2008, the dividend limitation of the Bancorps nonbank subsidiaries under these provisions was $58 million, $50 million and $133 million, respectively. On December31, 2008, the Bancorp sold approximately $3.4 billion in senior preferred stock and related warrants to the U.S. Treasury under the terms of the CPP. The terms include restrictions on common stock dividends, which require the U.S. Treasurys consent to increase common stock dividends for a period of three years from the date of investment unless the preferred shares are redeemed in whole or the U.S. Treasury has transferred all of the preferred shares to a third party. For the Bancorp, approval from the U.S. Treasury will be required for common stock dividends in excess of $0.15 per share of common stock. In addition, no dividends can be declared or paid on the Bancorps common stock unless all accrued and unpaid dividends have been paid on the preferred shares.
4.Securities	4. Securities Trading securities were $1.4 billion as of June30, 2009 compared to $1.2 billion at December31, 2008 and $241 million at June30, 2008. The increase in trading securities since June30, 2008 was due to the Bancorp purchasing VRDNs from the market during the second half of 2008. VRDNs classified as trading securities totaled $970 million, $1.1 billion and zero at June30, 2009,December31, 2008 and June30, 2008, respectively. See Note 10 for further information on VRDNs. Unrealized losses on trading securities were $18 million as of June30, 2009. Unrealized gains on trading securities held at June30, 2009 and unrealized gains and losses on trading securities held at both December31, 2008 and June30, 2008 were immaterial to the Condensed Consolidated Financial Statements. For the three and six months ended June30, 2009, gross realized gains on the sale of available-for-sale securities were $54 million and $74 million, respectively, while gross realized losses on the sale of available-for sale-securities were $3 million and $31 million, respectively. For the three and six months ended June30, 2008, gross realized gains on the sale of available-for-sale securities were $5 million and $35 million, respectively, while gross realized losses on the sale of available-for-sale securities were $15 million for both periods. At June30, 2009,December31, 2008, and June30, 2008, securities with a fair value of $12.5 billion, $9.2 billion, and $8.8 billion, respectively, were pledged to secure borrowings, public deposits, trust funds and for other purposes as required or permitted by law. The following tables provide a breakdown of the available-for-sale and held-to-maturity securities portfolio: As of June30, 2009 ($ in millions) Amortized Cost Unrealized Gains Unrealized Losses FairValue Available-for-sale and other: U.S. Treasury and Government agencies $ 357 3 (3 ) $ 357 U.S. Government sponsored agencies 1,748 32 (36 ) 1,744 Obligations of states and political subdivisions 301 2 (1 ) 302 Agency mortgage-backed securities 9,085 262 (1 ) 9,346 Other bonds, notes and debentures 3,057 43 (60 ) 3,040 Other securities (a) 1,272 1,272 Total $ 15,820 342 (101 ) $ 16,061 Held-to-maturity: Obligations of states and political subdivisions $ 352 $ 352 Other debt securities 5 5 Total $ 357 $ 357 As of December31, 2008 ($ in millions) Amortized Cost Unrealized Gains Unrealized Losses FairValue Available-for-sale and other: U.S. Treasury and Government agencies $ 186 4 $ 190 U.S. Government sponsored agencies 1,651 83 (4 ) 1,730 Obligations of states and political subdivisions 323 4 (1 ) 326 Agency mortgage-backed securities 8,529 157 (5 ) 8,681 Other bonds, notes and debentures
5.Goodwill	5. Goodwill Business combinations entered into by the Bancorp typically include the acquisition of goodwill. Acquisition activity includes acquisitions in the respective period, in addition to purchase accounting adjustments related to previous acquisitions. Changes in the net carrying amount of goodwill by reporting segment for the six months ended June30, 2009 and 2008 were as follows: ($ in millions) Commercial Banking Branch Banking Consumer Lending Processing Solutions Investment Advisors Total Balance as of December 31, 2008: Goodwill $ 1,364 1,657 215 205 148 $ 3,589 Accumulated impairment losses (750 ) (215 ) (965 ) 614 1,657 205 148 2,624 Acquisition activity (1 ) (1 ) 7 5 Sale of Processing Solutions business (212 ) (212 ) Balance as of June 30, 2009: Goodwill 1,363 1,656 215 148 3,382 Accumulated impairment losses (750 ) (215 ) (965 ) Carrying value as of June 30, 2009 613 1,656 148 2,417 Balance as of December 31, 2007: Goodwill 995 950 182 205 138 2,470 Accumulated impairment losses 995 950 182 205 138 2,470 Acquisition activity 386 704 33 10 1,133 Balance as of June 30, 2008: Goodwill 1,381 1,654 215 205 148 3,603 Accumulated impairment losses Carrying value as of June 30, 2008 $ 1,381 1,654 215 205 148 $ 3,603 On June30, 2009, the Bancorp sold an approximate 51% interest in its Processing Solutions business. As a result of this sale, the Bancorp no longer consolidates the assets and liabilities of the Processing Solutions business, resulting in a $212 million reduction of goodwill for the Bancorp. See Note 19 for further discussion of this transaction. At September30, 2008, the Bancorp completed its annual goodwill impairment test and determined that no impairment existed. As prescribed in SFAS No.142, goodwill should be tested for impairment between annual tests if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. During the second quarter, the Bancorp continued to see volatile market conditions and determined that an interim goodwill impairment test should be performed as of June30, 2009. In Step 1 of the goodwill impairment test, the Bancorp compared the fair value of each reporting unit to
6.Intangible Assets	6. Intangible Assets Intangible assets consist of servicing rights, core deposit intangibles, customer lists, non-compete agreements and cardholder relationships. Intangible assets, excluding servicing rights, are amortized on either a straight-line or an accelerated basis over their estimated useful lives and have an estimated weighted-average life at June30, 2009, December 31, 2008 and June 30, 2008 of 3.1 years, 2.8 years and 3.4 years, respectively. The Bancorp reviews intangible assets for possible impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. The details of the Bancorps intangible assets are shown in the following table. For more information on servicing rights, see Note 7. ($ in millions) GrossCarrying Amount Accumulated Amortization Valuation Allowance NetCarrying Amount As of June30, 2009: Mortgage servicing rights $ 1,821 (952 ) (275 ) 594 Other consumer and commercial servicing rights 12 (11 ) 1 Core deposit intangibles 487 (373 ) 114 Other 53 (34 ) 19 Total intangible assets $ 2,373 (1,370 ) (275 ) 728 As of December31, 2008: Mortgage servicing rights $ 1,614 (862 ) (256 ) 496 Other consumer and commercial servicing rights 13 (10 ) 3 Core deposit intangibles 487 (346 ) 141 Other 61 (34 ) 27 Total intangible assets $ 2,175 (1,252 ) (256 ) 667 As of June30, 2008: Mortgage servicing rights $ 1,542 (820 ) (25 ) 697 Other consumer and commercial servicing rights 14 (10 ) 4 Core deposit intangibles 486 (320 ) 166 Other 66 (29 ) 37 Total intangible assets $ 2,108 (1,179 ) (25 ) 904 As of June30, 2009, all of the Bancorps intangible assets were being amortized. Amortization expense recognized on intangible assets, including servicing rights, for the three months ended June30, 2009 and 2008 was $63 million and $44 million, respectively. For the six months ended June30, 2009 and 2008, amortization expense was $122 million and $88 million, respectively. The Bancorp estimates amortization expense, including servicing rights, to be approximately $97 million for the remaining six months of 2009, $193 million in 2010, $136 million in 2011, $102 million in 2012 and $82 million in 2013.
7.Sales of Receivables and Servicing Rights	7. Sales of Receivables and Servicing Rights Residential Mortgage Loan Sales The Bancorp sold fixed and adjustable rate residential mortgage loans during the first and second quarters of 2009 and 2008. In those sales, the Bancorp obtained servicing responsibilities and the investors have no recourse to the Bancorps other assets for failure of debtors to pay when due. The Bancorp receives annual servicing fees based on a percentage of the outstanding balance. The Bancorp identifies classes of servicing assets based on financial asset type and interest rates. Initial carrying values of servicing rights recognized during the six months ended June30, 2009 and 2008 were $207 million and $124 million, respectively. For the three months ended June30, 2009 and 2008, the Bancorp recognized gains of $161 million and $79 million, respectively, on residential mortgage loan sales of $6.1 billion and $3.6 billion, respectively. Additionally, the Bancorp recognized $49 million and $42 million in servicing fees on residential mortgages for the three months ended June30, 2009 and 2008, respectively. For the six months ended June30, 2009 and 2008, the Bancorp recognized gains of $291 million and $172 million, respectively, on residential mortgage loan sales of $10.4 billion and $7.6 billion, respectively. Additionally, the Bancorp recognized $94 million and $83 million in servicing fees on residential mortgages for the six months ended June30, 2009 and 2008, respectively. The gains on sales of residential mortgages and servicing fees related to residential mortgages are included in mortgage banking net revenue in the Condensed Consolidated Statements of Income. The Bancorp previously sold certain residential mortgage loans in the secondary market with credit recourse. In the event of any customer default, pursuant to the credit recourse provided, the Bancorp is required to reimburse the third party. The maximum amount of credit risk in the event of nonperformance by the underlying borrowers is equivalent to the total outstanding balance. In the event of nonperformance, the Bancorp has rights to the underlying collateral value securing the loan. At June30, 2009 and 2008, the outstanding balances on these loans sold with credit recourse were approximately $1.2 billion and $1.4 billion, respectively, and the delinquency rates were approximately 7.49% and 3.86%, respectively. At June30, 2009 and 2008, the Bancorp maintained an estimated credit loss reserve on these loans sold with credit recourse of approximately $20 million and $14 million, respectively, recorded in other liabilities in the Condensed Consolidated Balance Sheets. To determine the credit loss reserve, the Bancorp used an approach that is consistent with its overall approach in estimating credit losses for various categories of residential mortgage loans held in its loan portfolio. In addition, conforming residential mortgage loans sold to unrelated third parties are generally sold with representation and warranty recourse provisions. Under these provisions, the Bancorp is required to repurchase any previously sold loan for which the representation or warranty of the Bancorp proves t
8.Other Assets	8. Other Assets The following table provides the components of other assets included in the Condensed Consolidated Balance Sheets: ($ in millions) June30, 2009 December31, 2008 June30, 2008 Derivative instruments $ 2,076 3,225 $ 990 Bank owned life insurance 1,747 1,777 1,811 Partnership investments 1,092 1,121 1,070 Accounts receivable and drafts-in-process 1,030 1,188 1,115 Investment in FTPS Holdings, LLC 524 Accrued interest receivable 429 478 484 Other real estate owned 249 231 208 Prepaid pension and other expenses 53 84 124 Deposit with IRS 1,007 407 Income tax receivables 488 Deferred tax asset 301 Other 256 212 159 Total $ 7,456 10,112 $ 6,368 The Bancorp incorporates the utilization of 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. For further information on derivative instruments, see Note 9. The Bancorp purchases life insurance policies on the lives of certain directors, officers and employees and is the owner and beneficiary of the policies. The Bancorp invests in these policies, known as BOLI, to provide an efficient form of funding for long-term retirement and other employee benefits costs. Therefore, the Bancorps BOLI policies are intended to be long-term investments to provide funding for future payment of long-term liabilities. The Bancorp records these BOLI policies within other assets in the Condensed Consolidated Balance Sheets at each policys respective cash surrender value, with changes recognized in other noninterest income in the Condensed Consolidated Statements of Income. Certain BOLI policies have a stable value agreement through either a large, well-rated bank or multi-national insurance carrier that provides limited cash surrender value protection from declines in the value of each policys underlying investments. During 2008 and the first half of 2009, the value of the investments underlying one of the Bancorps BOLI policies continued to decline due to disruptions in the credit markets, widening of credit spreads between U.S. treasuries/swaps versus municipal bonds and bank trust preferred securities, and illiquidity in the asset-backed securities market. These factors caused the cash surrender value to decline further beyond the protection provided by the stable value agreement. As a result of exceeding the cash surrender value protection, the Bancorp recorded a recovery of $2 million and charges totaling $9 million during the three and six months ended June30, 2009, respectively, and charges totalling $2 million and $154 million during the three and six months ended June30, 2008, respectively, to reflect declines in the policys cash surrender value. The cash surrender value of this BOLI policy was $238 million at June30, 2009, $291 million a
9.Derivative Financial Instruments	9. Derivative Financial Instruments The Bancorp maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce certain risks related to interest rate, prepayment and foreign currency volatility. Additionally, the Bancorp holds derivative instruments for the benefit of its commercial customers. The Bancorp does not enter into derivative instruments for speculative purposes. The Bancorps interest rate risk management strategy involves modifying the repricing characteristics of certain financial instruments so that changes in interest rates do not adversely affect the Bancorps net interest margin and cash flows. Derivative instruments that the Bancorp may use as part of its interest rate risk management strategy include interest rate swaps, interest rate floors, interest rate caps, forward contracts, options and swaptions. Interest rate swap contracts are exchanges of interest payments, such as fixed-rate payments for floating-rate payments, based on a common notional amount and maturity date. Interest rate floors protect against declining rates, while interest rate caps protect against rising interest rates. Forward contracts are contracts in which the buyer agrees to purchase, and the seller agrees to make delivery of, a specific financial instrument at a predetermined price or yield. Options provide the purchaser with the right, but not the obligation, to purchase or sell a contracted item during a specified period at an agreed upon price. Swaptions are financial instruments granting the owner the right, but not the obligation, to enter into or cancel a swap. Prepayment volatility arises mostly from changes in fair value of the largely fixed-rate MSR portfolio, mortgage loans and mortgage-backed securities. The Bancorp may enter into various free-standing derivatives (principal-only swaps, swaptions, floors, options and interest rate swaps) to economically hedge prepayment volatility. Principal-only swaps are total return swaps based on changes in the value of the underlying mortgage principal-only trust. Foreign currency volatility occurs as the Bancorp enters into certain loans denominated in foreign currencies. Derivative instruments that the Bancorp may use to economically hedge these foreign denominated loans include foreign exchange swaps and forward contracts. The Bancorp also enters into derivative contracts (including foreign exchange contracts, commodity contracts and interest rate swaps, floors and caps) for the benefit of commercial customers. The Bancorp may economically hedge significant exposures related to these free-standing derivatives by entering into offsetting third-party contracts with approved, reputable counterparties with substantially matching terms and currencies. Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. The Bancorps exposure is limited to the replacement value of the contracts rather than the notional, principal or contract amounts. The Bancorp minimizes the credit risk through credit approvals, limits, counterparty collateral and monitoring procedures. For the three and six months ended June3
10.Commitments, Contingent Liabilities and Guarantees	10. Commitments, Contingent Liabilities and Guarantees The Bancorp, in the normal course of business, enters into financial instruments and various agreements to meet the financing needs of its customers. The Bancorp also enters into certain transactions and agreements to manage its interest rate and prepayment risks, provide funding, equipment and locations for its operations and invest in its communities. These instruments and agreements involve, to varying degrees, elements of credit risk, counterparty risk and market risk in excess of the amounts recognized in the Bancorps Condensed Consolidated Balance Sheets. Creditworthiness for all instruments and agreements is evaluated on a case-by-case basis in accordance with the Bancorps credit policies. The Bancorps significant commitments, contingent liabilities and guarantees in excess of the amounts recognized in the Condensed Consolidated Balance Sheets are summarized as follows: Commitments The Bancorp has certain commitments to make future payments under contracts. A summary of significant commitments at June30 follows: ($ in millions) 2009 2008 Commitments to extend credit $ 44,993 51,396 Forward contracts to sell mortgage loans 8,527 973 Letters of credit (including standby letters of credit) 7,933 9,042 Noncancelable lease obligations 914 845 Purchase obligations 68 91 Capital expenditures 42 85 Commitments to extend credit are agreements to lend, typically having fixed expiration dates or other termination clauses that may require payment of a fee. Since many of the commitments to extend credit may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash flow requirements. The Bancorp is exposed to credit risk in the event of nonperformance for the amount of the contract. Fixed-rate commitments are also subject to market risk resulting from fluctuations in interest rates and the Bancorps exposure is limited to the replacement value of those commitments. As of June30, 2009 and 2008, the Bancorp had a reserve for unfunded commitments totaling $239 million and $115 million, respectively, included in other liabilities in the Condensed Consolidated Balance Sheets. The Bancorp enters into forward contracts to economically hedge the change in fair value of certain residential mortgage loans held for sale due to changes in interest rates. The outstanding notional amounts of these forward contracts were $8.5 billion and $1.0 billion as of June30, 2009 and 2008, respectively. Standby and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. At June30, 2009, approximately $2.7 billion of letters of credit expire within one year (including $44 million issued on behalf of commercial customers to facilitate trade payments in dollars and foreign currencies), $5.0 billion expire between one and five years and $0.2 billion expire thereafter. Standby letters of credit are considered guarantees in accordance with FASB Interpretation No.45, Guarantors Accounting and Disclosure
11.Legal and Regulatory Proceedings	11. Legal and Regulatory Proceedings During April 2006, the Bancorp was added as a defendant in a consolidated antitrust class action lawsuit originally filed against Visa, MasterCard and several other major financial institutions in the United States District Court for the Eastern District of New York. The plaintiffs, merchants operating commercial businesses throughout the U.S. and trade associations, claim that the interchange fees charged by card-issuing banks are unreasonable and seek injunctive relief and unspecified damages. In addition to being a named defendant, the Bancorp is also subject to a possible indemnification obligation of Visa as discussed in Note 10. Accordingly, in the third and fourth quarters of 2007, the Bancorp recorded a contingent liability included in the $172 million litigation reserve. During 2008, the Bancorp recorded additional reserves of $71 million for probable future litigation settlements. In connection with Visas IPO, Visa retained a portion of the proceeds to fund an escrow account in order to resolve existing litigation settlements as well as fund potential future litigation settlements. As of June 30, 2009, the Bancorp has recorded its proportional share of $169 million of the Visa escrow accounts net against the current Visa litigation reserve of $243 million to account for its potential exposure in this and related litigation. Refer to Note 20 for further information regarding the Bancorps net litigation reserve and ownership interest in Visa. This antitrust litigation is still in the pre-trial phase. Several putative class action complaints have been filed against the Bancorp in various federal and state courts. The federal cases were consolidated by the Judicial Panel on Multidistrict Litigation and are now known as In Re TJX Security Breach Litigation. The state court actions have been removed to federal court and have been consolidated into that same case. The complaints relate to the alleged intrusion of The TJX Companies, Inc.s (TJX) computer system and the potential theft of their customers non-public information and alleged violations of the Gramm-Leach-Bliley Act. Some of the complaints were filed by consumers and seek unquantified damages on behalf of putative classes of persons who transacted business at any one of TJXs stores during the period of the alleged intrusion. Another was filed by financial institutions and seeks unquantified damages on behalf of other similarly situated entities that suffered losses in relation to the alleged intrusion. All claims against the Bancorp in this matter have now been dismissed. In June 2007, Ronald A. Katz Technology Licensing, L.P. (Katz) filed a suit in the United States District Court for the Southern District of Ohio against the Bancorp and its Ohio banking subsidiary. In the suit, Katz alleges that the Bancorp and its Ohio bank are infringing on Katzs patents for interactive call processing technology by offering certain automated telephone banking and other services. This lawsuit is one of many related patent infringement suits brought by Katz in various courts against numerous other defendants. Katz is seeking unspecified monet
12.Income Taxes	12. Income Taxes At June30, 2009, December31, 2008 and June30, 2008, the Bancorp had unrecognized tax benefits of $82 million, $959 million, and $961 million, respectively. Those balances included $80 million, $83 million and $83 million of tax positions at June30, 2009,December31, 2008 and June30, 2008, respectively, that, if recognized, would impact the effective tax rate and $1 million at December31, 2008 and June30, 2008 that would impact goodwill. The remaining $2 million, $875 million and $877 million is related to tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of the deductions. Substantially all of the reduction of uncertain tax positions as of June 30, 2009, related to the settlement of certain leasing items with the IRS. It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Bancorps uncertain tax positions could significantly increase or decrease during the next 12 months. An estimate of the range of the reasonably possible changes to the unrecognized tax benefits cannot be made at this time. Any interest and penalties incurred in connection with income taxes are accrued as a component of tax expense. At June30, 2009, the Bancorp had an accrued interest liability of $11 million, net of the related tax benefits. At December31, 2008 and June30, 2008, the Bancorp had an accrued interest liability of $210 million, net of the related tax benefits. No material liabilities were recorded for penalties. Substantially all of the reduction of accrued interest related to the settlement of certain leasing items with the IRS. The Bancorp had filed suit in the United States District Court for the Southern District of Ohio in a dispute with the IRS concerning the timing of deductions associated with certain leveraged lease transactions in its 1997 tax return. The IRS had also proposed adjustments for subsequent tax years. The proposed adjustments related to the Bancorps portfolio of leveraged leases, with both domestic and foreign municipalities. During the first quarter of 2009, the Bancorp settled this dispute by entering into a closing agreement with the IRS to settle all of its leveraged leases for all open years. This settlement favorably impacted tax expense for the six months ended June30, 2009 by $55 million. As of December31, 2008, a deposit of approximately $1.0 billion was held with the IRS for taxes associated with the leveraged lease portfolio. In connection with the settlement, the Bancorp requested that approximately $750 million be applied against outstanding tax and interest with the remaining $250 million to be returned to the Bancorp. This $250 million was received in April of 2009. Additionally, during the first quarter of 2009, the Bancorp decided to surrender one of its BOLI policies. As a result of this decision, the Bancorp was required to establish a deferred tax asset relating to this investment. This decision favorably impacted tax expense for the six months ended June30, 2009 by $106 million. Deferred income taxes are included as a component of other assets and accrued taxes, in
13. Retirement and Benefit Plans	13. Retirement and Benefit Plans Net periodic pension cost is recorded as a component of employee benefits expense in the Condensed Consolidated Statements of Income. The plan assumptions are evaluated annually and are updated as necessary. The discount rate assumption reflects the yield on a portfolio of high quality fixed-income instruments that have a similar duration to the plans liabilities. The expected long-term rate of return assumption reflects the average return expected on the assets invested to provide for the plans liabilities. In determining the expected long-term rate of return, the Bancorp evaluated actuarial and economic inputs, including long-term inflation rate assumptions and broad equity and bond indices long-term return projections, as well as actual long-term historical plan performance. The following table summarizes the components of net periodic pension cost: Forthethreemonthsended June30, Forthesixmonthsended June30, ($ in millions) 2009 2008 2009 2008 Service cost $ $ Interest cost 3 3 7 7 Expected return on assets (3 ) (5 ) (6 ) (10 ) Amortization of actuarial loss 4 2 8 4 Amortization of net prior service cost Settlement Net periodic pension cost $ 4 $ 9 1
14.Accumulated Other Comprehensive Income	14. Accumulated Other Comprehensive Income The reclassification adjustments, related tax effects allocated to other comprehensive income and accumulated other comprehensive income for the six months ended June30, 2009 and 2008 were as follows: Total Other Comprehensive Income Total Accumulated Other Comprehensive Income ($ in millions) Pre-Tax Activity Tax Effect Net Activity Beginning Balance Net Activity Ending Balance 2009 Unrealized holding gains on available-for-sale securities arising during period $ 144 (50 ) 94 Reclassification adjustment for net gains included in net income (43 ) 15 (28 ) Reclassification adjustment related to prior OTTI charges (a) (37 ) 13 (24 ) Net unrealized gains on available-for-sale securities 64 (22 ) 42 $ 115 42 157 Unrealized holding gains on cash flow hedge derivatives 33 (12 ) 21 Reclassification adjustment for net gains on cash flow hedge derivatives included in net income (22 ) 8 (14 ) Net unrealized gains on cash flow hedge derivatives 11 (4 ) 7 88 7 95 Defined benefit plans: Net prior service cost Net actuarial gain 8 (3 ) 5 Defined benefit plans, net 8 (3 ) 5 (105 ) 5 (100 ) Total $ 83 (29 ) 54 $ 98 54 152 2008 Unrealized holding losses on available-for-sale securities arising during period $ (42 ) 10 (32 ) Reclassification adjustment for net gains included in net income (17 ) 11 (6 ) Net unrealized losses on available-for-sale securities (59 ) 21 (38 ) $ (94 ) (38 ) (132 ) Unrealized holding gains on cash flow hedge derivatives 8 (3 ) 5 Reclassification adjustment for net losses on cash flow hedge derivatives included in net income 6 (2 ) 4 Net unrealized gains on cash flow hedge derivatives 14 (5 ) 9 25 9 34 Defined benefit plans: Net prior service cost Net actuarial gain 4 (1 ) 3 Defined benefit plans, net 4 (1 ) 3 (57 ) 3 (54 ) Total ($ 41 ) 15 (26 ) ($ 126 ) (26 ) (152 ) (a) See Note 2 for a description of the Bancorps reclassification adjustment for OTTI charges.
15. Common and Preferred Stock	15. Common and Preferred Stock The following is a summary of the share activity within common and preferred stock for the six months ended June30, 2009 and 2008: Common Stock Preferred Stock ($ and shares in millions) Value Shares Value Shares(a) Shares at December31, 2008 $ 1,295 583 4,241 Issuance of common stock 351 158 Accretion from dividends on preferred shares, Series F 21 Exchange of preferred shares, Series G 133 60 (674 ) Shares at June30, 2009 $ 1,779 801 $ 3,588 Shares at December31, 2007 $ 1,295 583 $ 9 Issuance of preferred shares, Series G 1,073 Shares at June30, 2008 $ 1,295 583 $ 1,082 (a) At June30, 2009, there were 16,451 shares of Series G preferred stock and 136,320 shares of Series F preferred stock. There were 7,250 shares of Series D preferred stock, 2,000 shares of Series E preferred stock and 44,300 shares of Series G preferred stock at June30, 2008. In the second quarter of 2008, the Bancorp issued its 8.5% non-cumulative Series G convertible preferred stock. The depository shares represented 46,000 shares of the convertible preferred stock and had a liquidation preference of $25,000 per share. The Series G preferred stock is convertible at any time, at the option of the shareholder, into 2,159.8272 shares of common stock, representing a conversion price of approximately $11.575 per share of common stock. On June17, 2009, the Bancorp completed its offer to exchange 2,158.8272 shares of its common stock, no par value, and $8,250 in cash, for each set of 250 validly tendered and accepted depositary shares. The Bancorp issued approximately 60million shares of common stock and paid $230 million in cash in exchange for 7million depositary shares. Overall, $696 million in liquidation amount of the Bancorps depositary shares were validly tendered, not withdrawn and exchanged, which represented 63% of the aggregate liquidation amount of its depositary shares. An aggregate of 7million depositary shares representing 27,849 shares of Series G preferred stock were retired upon receipt. At the time of exchange, the Bancorp recognized an increase to retained earnings and net income available to common shareholders of $35 million, calculated as the difference between the carrying amount of the Series G preferred stock exchanged and the sum of the fair value of the common stock plus cash delivered. After settlement of the exchange offer and as of June30, 2009, 4,112,750 depositary shares representing 16,451 shares of Series G preferred stock remained outstanding. As a result of this exchange, the Bancorp increased its common equity by $441 million. On June4, 2009, the Bancorp announced the successful completion of a $1 billion at-the-market offering of its common shares. Through this offering, the Bancorp issued approximately 158million shares at an average price of $6.33.
16.Earnings Per Share	16. Earnings Per Share The calculation of earnings per share and the reconciliation of earnings per share and earnings per diluted share were as follows: 2009 2008 For the three months ended June30: (in millions, except per share data) Income Average Shares PerShare Amount Loss Average Shares PerShare Amount Earnings per share: Net income (loss) $ 882 ($ 202 ) Dividends on preferred stock (a) 26 Net income (loss) available to common shareholders $ 856 630 $ 1.35 ($ 202 ) 540 ($ 0.37 ) Earnings per diluted share: Net income (loss) available to common shareholders $ 856 630 $ 1.35 ($ 202 ) 540 ($ 0.37 ) Effect of dilutive securities: Stock based awards 1 Convertible preferred stock (b)(c) (27 ) 87 (0.20 ) Net income (loss) available to common shareholders plus assumed conversions $ 829 718 $ 1.15 ($ 202 ) 540 ($ 0.37 ) (a) Dividends on preferred stock were $.185 million for the three months ended June30, 2008. (b) The additive effect to income from dividends on convertible preferred stock for the three months ended June30, 2009 included preferred dividends of $9 million for Series G preferred shares, offset by a $35 million reduction to preferred dividends due to the conversion of a portion of Series G preferred shares during the second quarter of 2009. (c) The additive effect to income from dividends on convertible preferred stock was $.145 million for the three months ended June30, 2008. The average share dilutive effect from convertible preferred stock was .308million shares for the three months ended June30, 2008. 2009 2008 For the six months ended June30: (in millions, except per share data) Income Average Shares PerShare Amount Income Average Shares PerShare Amount Earnings per share: Net income $ 932 84 Dividends on preferred stock (a) 103 Net income available to common shareholders $ 829 601 $ 1.37 $ 84 534 $ 0.16 Earnings per diluted share: Net income available to common shareholders $ 829 601 $ 1.37 $ 84 534 $ 0.16 Effect of dilutive securities: Stock based awards 1 2 Convertible preferred stock (b)(c) (3 ) 92 (0.19 ) 7 Net income available to common shareholders plus assumed conversions $ 826 694 $ 1.18 $ 84 543 $ 0.16 (
17.Fair Value Measurements	17. Fair Value Measurements Effective January1, 2008, the Bancorp adopted SFAS No.157, which provides a framework for measuring fair value under accounting principles generally accepted in the United States of America. SFAS No.157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS No.157 also establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the instruments fair value measurement. The three levels within the fair value hierarchy are described as follows: Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Bancorp has the ability to access at the measurement date. Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 - Unobservable inputs for the asset or liability for which there is little, if any, market activity at the measurement date. Unobservable inputs reflect the Bancorps own assumptions about what market participants would use to price the asset or liability. The inputs are developed based on the best information available in the circumstances, which might include the Bancorps own financial data such as internally developed pricing models, discounted cash flow methodologies, as well as instruments for which the fair value determination requires significant management judgment. Effective January1, 2008, the Bancorp adopted SFAS No.159, which allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on an instrument-by-instrument basis. Upon election of the fair value option in accordance with SFAS No.159, subsequent changes in fair value are recorded as an adjustment to earnings. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables summarize assets and liabilities measured at fair value on a recurring basis, including financial instruments in which the Bancorp has elected the fair value option in accordance with SFAS No.159. Fair Value Measurements Using As of June30, 2009 ($ in millions) Level1 Level2 Level3 TotalFairValue Assets: Available-for-sale securities: (
18.Business Segments	18. Business Segments The Bancorp reports on five business segments: Commercial Banking, Branch Banking, Consumer Lending, Processing Solutions and Investment Advisors. Fifth Third Processing Solutions provides electronic funds transfer, debit, credit and merchant transaction processing, operates the Jeanie ATM network and provides other data processing services to affiliated and unaffiliated customers. On June30, 2009, the Bancorp completed the Processing Business Sale, which represents the sale of a majority interest in the Bancorps merchant acquiring and financial institutions processing businesses, which make up a significant portion of the Processing Solutions segment. As a result of this transaction, on June30, 2009, the Bancorp deconsolidated its remaining interest in the merchant acquiring and financial institution processing business. The income statement below reflects the results of operations for this business for the three and six months ended June30, 2009 and 2008. The Bancorp has retained its retail credit card and commercial multi-card service business, which in future reporting periods will be included in Consumer Lending and Commercial Banking business segments, respectively. Results of the Bancorps business segments are presented based on its management structure and management accounting practices. The structure and accounting practices are specific to the Bancorp; therefore, the financial results of the Bancorps business segments are not necessarily comparable with similar information for other financial institutions. The Bancorp refines its methodologies from time to time as management accounting practices are improved and businesses change. The Bancorp manages interest rate risk centrally at the corporate level by employing an FTP methodology. This methodology insulates the business segments from interest rate volatility, enabling them to focus on serving customers through loan originations and deposit taking. The FTP system assigns charge rates and credit rates to classes of assets and liabilities, respectively, based on expected duration and the LIBOR swap curve. Matching duration allocates interest income and interest expense to each segment so its resulting net interest income is insulated from interest rate risk. In a rising rate environment, the Bancorp benefits from the widening spread between deposit costs and wholesale funding costs. However, the Bancorps FTP system credits this benefit to deposit-providing businesses, such as Branch Banking and Investment Advisors, on a duration-adjusted basis. The net impact of the FTP methodology is captured in General Corporate and Other. Management made changes to the FTP methodology in the first quarter of 2009 to update the calculation of FTP charges and credits to each of the Bancorps business segments. Changes to the FTP methodology were applied retroactively and included updating rates to reflect significant increases in the Bancorps liquidity premiums. The increased spreads reflect the Bancorps liability structure and are more weighted towards retail product pricing spreads. Management will review FTP spreads periodically based on the extent of cha
19.Processing Business Sale	19. Processing Business Sale On June30, 2009, the Bancorp completed the sale of a majority interest in its merchant acquiring and financial institutions processing businesses (the Business). Under the terms of the sale, Advent International (Advent) acquired an approximate 51% interest in the Business for cash. The Bancorp has retained the remaining approximate 49% interest in the Business, and has received a $1.25 billion note and warrants that allow the Bancorp to purchase an incremental 10% nonvoting interest in the Business. As a result of the sale, and in accordance with SFAS No.160, Noncontrolling Interests in Consolidated Financial Statements, the Bancorp recognized a pre-tax gain of approximately $1.8 billion ($1.1 billion after-tax), which is recorded in other noninterest income. Of the $1.8 billion gain, approximately $848 million was the result of marking the Bancorps retained interest to fair value. In connection with the sale, the Bancorp provided Advent with certain put rights that are exercisable in the event of three unlikely circumstances. The Bancorp valued the put rights at approximately $14 million. The fair value of the put rights was calculated using a Black-Sholes option valuation model using probability weighted scenarios, assuming expected terms of 1 to 4.5 years, expected volatilities of 39.6% to 56.9%, risk free rates of 0.48% to 2.34%, and expected dividend rates of 0%. The expected volatilities were based on historical and implied volatilities of comparable companies assuming similar expected terms. The fair value of the warrants was estimated to be $62 million. The fair value of the warrants was calculated using a Black-Scholes option valuation model using probability weighted scenarios, assuming expected terms of 10 to 20 years, expected volatilities of 37.5% to 44.4%, risk free rates of 4.03% to 4.33%, and expected dividend rates of 0%. The expected volatilities were based on historical and implied volatilities of comparable companies assuming similar expected terms. The fair value of the Bancorps retained noncontrolling interest, exclusive of the warrants, in the Business at June30, 2009 is $524 million, which is based on the price Advent paid for its ownership interest in the Business. The Bancorp will account for its retained noncontrolling interest in the Business under the equity method prospectively.
20.Subsequent Event	20. Subsequent Event On July16, 2009, Visa Inc. announced it had deposited $700 million into the litigation escrow account. As a result of this funding, the Bancorp recorded its proportional share of $29 million of these additional funds as a reduction to noninterest expense which will be recognized by the Bancorp in the third quarter of 2009. On July17, 2009 the Bancorp completed the sale of its Visa Inc. Class B shares for $300 million. As part of this transaction the Bancorp entered into a total return swap in which the Bancorp will make or receive payments based on subsequent changes in the conversion rate of the Class B shares into ClassA shares. The swap terminates on the later of the third anniversary of Visas IPO or the date on which the Covered Litigation is finally settled. As a result of the sale of Class B shares and entering into the swap contract, the Bancorp reversed its net Visa litigation reserve liability and recognized a free-standing derivative liability of $55 million. The sale of the Class B shares, recognition of the derivative liability and reversal of the net litigation reserve liability resulted in a pre-tax benefit of $288 million ($187 million after-tax), which will be recognized by the Bancorp in the third quarter of 2009.

Document Information

Document Information
	6 Months Ended Jun. 30, 2009 USD / shares
Document Information [Text Block]
Document Type	10-Q
Amendment Flag	false
Amendment Description	N.A.
Document Period End Date	2009-06-30

Entity Information

Entity Information (USD $)
	6 Months Ended Jun. 30, 2009	Jun. 30, 2008
Entity [Text Block]
Trading Symbol	FITB
Entity Registrant Name	FIFTH THIRD BANCORP
Entity Central Index Key	0000035527
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	795,313,448
Entity Public Float		$5,093,484,456