Business Combination (Tables)

9 Months Ended

Sep. 30, 2020

Consideration Paid, Noncontrolling Interest Recognized, and Acquired Identifiable Assets and Liabilities

The following table reflects consideration paid and the noncontrolling interest recognized for MB Financial, Inc.’s net assets and the amounts of acquired identifiable assets and liabilities assumed at their fair value as of the acquisition date:


($ in millions)
Consideration paid
Cash payments	$	469
Fair value of common stock issued	3,121
Stock-based awards	38
Dividend receivable from MB Financial, Inc.	(20)
Total consideration paid	$	3,608

Fair value of noncontrolling interest in acquiree	$	197


Net Identifiable Assets Acquired, at Fair Value:
Assets
Cash and due from banks	$	1,679
Federal funds sold	35
Other short-term investments	53
Available-for-sale debt and other securities	832
Held-to-maturity securities	4
Equity securities	51
Loans and leases held for sale	12
Portfolio loans and leases	13,414		(a)
Bank premises and equipment	266		(a)
Operating lease equipment	394		(a)
Intangible assets	219		(a)
Servicing rights	263
Other assets	750		(a)
Total assets acquired	$	17,972
Liabilities
Deposits	$	14,489
Other short-term borrowings	267		(a)
Accrued taxes, interest and expenses	276		(a)
Other liabilities	194		(a)
Long-term debt	727		(a)
Total liabilities assumed	$	15,953

Net identifiable assets acquired				2,019
Goodwill				$	1,786

(a)Fair values have been updated from the preliminary estimates reported in the March 31, 2019 Form 10-Q.

Merger-related Expenses

The following table provides a summary of merger-related expenses recorded in noninterest expense:


	For the three months ended September 30,			For the nine months ended September 30,
($ in millions)	2020		2019	2020	2019
Compensation and benefits	$	—	14	4	88
Technology and communications	—		8	6	68
Net occupancy expense	—		3	4	10
Equipment expense	—		—	—	1
Card and processing expense	—		—	—	1
Marketing expense	—		—	—	7
Other noninterest expense	—		3	2	38
Total	$	—	28	16	213

Unaudited Pro Forma

The following table presents unaudited pro forma information as if the acquisition of MB Financial, Inc. had occurred on January 1, 2018. This pro forma information combines the historical condensed consolidated results of operations of Fifth Third Bancorp and MB Financial, Inc. after giving effect to certain adjustments, including purchase accounting fair value adjustments, amortization of intangibles, stock-based compensation expense and acquisition costs, as well as the related income tax effects of those adjustments. The pro forma results also reflect reclassification adjustments to noninterest income and noninterest expense to conform MB Financial, Inc.’s presentation of operating lease income and the related depreciation expense with the Bancorp’s presentation. Direct costs associated with the acquisition were included in pro forma earnings as of January 1, 2018.

The pro forma information does not necessarily reflect the results of operations that would have occurred had Fifth Third Bancorp acquired MB Financial, Inc. on January 1, 2018. Furthermore, cost savings and other business synergies related to the acquisition are not reflected in the unaudited pro forma amounts.


	Unaudited Pro Forma Information
($ in millions)	For the three months ended September 30, 2019		For the nine months ended September 30, 2019
Net interest income	$	1,223	3,696
Noninterest income	739		2,601
Net income available to common shareholders	520		1,840

Acquired Loans and Leases

The following table reflects the contractually required payments receivable, cash flows expected to be collected and estimated fair value of loans identified as PCI loans on the acquisition date of MB Financial, Inc. These fair value estimates were final as of March 31, 2020.


($ in millions)	March 22, 2019
Contractually required payments including interest	$	1,139
Less: Nonaccretable difference	81
Cash flows expected to be collected	1,058
Less: Accretable yield	202
Fair value of loans acquired	$	856

Movement in Accretable Yield

A summary of activity related to the accretable yield is as follows:


($ in millions)	Accretable Yield
Balance as of December 31, 2018	$	—
Additions	202
Accretion	(30)
Reclassifications from (to) nonaccretable difference	(2)
Balance as of September 30, 2019	$	170