Bank Premises and Equipment

9 Months Ended

Sep. 30, 2019

Bank Premises and Equipment

Bank Premises and Equipment

8. Bank Premises and Equipment

The following table provides a summary of bank premises and equipment as of:
($ in millions)		September 30, 2019	December 31, 2018
Land and improvements(a)	$	640	586
Buildings(a)		1,552	1,547
Equipment		2,095	1,987
Leasehold improvements		415	403
Construction in progress(a)		98	81
Bank premises and equipment held for sale:
Land and improvements		50	25
Buildings		32	14
Equipment		5	3
Accumulated depreciation and amortization		(2,834)	(2,785)
Total bank premises and equipment	$	2,053	1,861

(a) At September 30, 2019 and December 31, 2018, land and improvements, buildings and construction in progress included $60 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 September 30, 2019, the Bancorp expects the total number of branch closures under the 2018 Branch Optimization Plan to be approximately 125 branches of which 65 branches have already been closed and an additional 4 branches are expected to close in the fourth quarter of 2019, 30 branches have been identified for closure in 2020 and the Bancorp expects to identify the remaining branches to be closed under the 2018 Branch Optimization Plan in 2020 with expected closure dates in 2021. 

As a result of the MB Financial, Inc. acquisition, the Bancorp identified 46 branches in the Chicago market that it planned to close. Of these locations, 45 were closed in the third quarter of 2019 and the 46^th location is expected to close in the first quarter of 2020. These 46 branches are not part of the aforementioned 2018 Branch Optimization Plan and are in addition to the branch in the Chicago market that the Bancorp closed in November 2018. In addition, the Bancorp has identified 11 other non-branch locations with a fair value, less cost to sell, of $10 million that were acquired from MB Financial, Inc. and are classified as held for sale by the Bancorp.

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 $5 million and immaterial for the three months ended September 30, 2019 and 2018, respectively. Impairment losses associated with such assessments and lower of cost or market adjustments were $27 million and $41 million for the nine months ended September 30, 2019 and 2018, respectively. For the nine months ended September 30, 2019, impairment charges 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. The recognized impairment losses were recorded in other noninterest income in the Condensed Consolidated Statements of Income.