Bank Premises and Equipment

3 Months Ended

Mar. 31, 2019

8. Bank Premises and Equipment

The following table provides a summary of bank premises and equipment as of:

($ in millions)		March 31, 2019	December 31, 2018
Land and improvements^(a)	$	660	586
Buildings^(a)		1,590	1,547
Equipment		2,053	1,987
Leasehold improvements		422	403
Construction in progress^(a)		98	81
Bank premises and equipment held for sale:
Land and improvements		47	25
Buildings		27	14
Equipment		4	3
Accumulated depreciation and amortization		(2,809)	(2,785)
Total bank premises and equipment	$	2,092	1,861

(a) At March 31, 2019 and December 31, 2018, land and improvements, buildings and construction in progress included $57 and $55, respectively, associated with parcels of undeveloped land intended for future branch expansion.

The Bancorp monitors changing customer preferences associated with the channels it uses for banking transactions to evaluate the efficiency, competitiveness and quality of the customer service experience in its consumer distribution network. As part of this ongoing assessment, the Bancorp may determine that it is no longer fully committed to maintaining full-service branches at certain of its existing banking center locations. Similarly, the Bancorp may also determine that it is no longer fully committed to building banking centers on certain parcels of land which had previously been held for future branch expansion.

During the second quarter of 2018, the Bancorp adopted a plan to close approximately 100 to 125 branches over the next three years (the “2018 Branch Optimization Plan”). As of March 31, 2019, the Bancorp has closed 31 branches under the 2018 Branch Optimization Plan. During the first quarter of 2019 the Bancorp identified an additional 21 branches that will be closed in the second half of 2019. As part of the adoption of the 2018 Branch Optimization Plan, the Bancorp has also elected to sell 21 parcels of land which had previously been held for future branch expansion.

As a result of the MB Financial, Inc. acquisition as of March 31, 2019, the Bancorp has identified 46 branches in the Chicago market that are expected to be closed in the second half of 2019. These 46 branches, which are not part of the 2018 Branch Optimization Plan, are in addition to the branch in the Chicago market that the Bancorp closed in November 2018. These 46 branches include 9 branches with a fair value, less cost to sell, of $10 million that were acquired from MB Financial, Inc. and classified as held for sale by the Bancorp at March 31, 2019. In addition to the identified branches, the Bancorp has identified 10 other non-branch locations with a fair value, less cost to sell, of $11 million that were acquired from MB Financial, Inc. and classified as held for sale by the Bancorp at March 31, 2019.

The Bancorp performs assessments of the recoverability of long-lived assets when events or changes in circumstances indicate that their carrying values may not be recoverable. Impairment losses associated with such assessments and lower of cost or market adjustments were $20 million and $8 million for the three months ended March 31, 2019 and 2018, respectively. The first quarter of 2019 impairment charge included $14 million associated with Fifth Third branches in the Chicago market that have been assessed for impairment as a result of the MB Financial, Inc. acquisition and $3 million associated with the additional 21 branches identified for closure during the first quarter of 2019 under the 2018 Branch Optimization Plan. The recognized impairment losses were recorded in other noninterest income in the Condensed Consolidated Statements of Income.