NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  9. BANK PREMISES AND EQUIPMENT  10. GOODWILL  86 Fifth Third Bancorp In Step 1 of the goodwill impairment test, the Bancorp  compared the fair value of each segment to its carrying amount,  including goodwill. To determine the fair value of a segment, the  Bancorp employed an income-based approach utilizing the  segment’s forecasted cash flows (including a terminal value  approach to estimate cash flows beyond the final year of the  forecast) and the segment’s estimated cost of equity as the  discount rate. The Bancorp believes that this DCF method, using  management projections for the respective segments and an  appropriate risk adjusted discount rate, is most reflective of a  market participant’s view of fair values given current market  The Bancorp conducts its evaluation of goodwill impairment as of  September 30th each year, and more frequently if events or  circumstances indicate that there may be impairment. The  Bancorp completed its annual goodwill impairment test as of  September 30, 2010 and determined that no impairment existed.  The Bancorp evaluates goodwill for impairment at the segment  level. conditions. Under the DCF method, the forecasted cash flows  were developed for each segment by considering several key  business drivers such as new business initiatives, client retention  standards, market share changes, anticipated loan and deposit  growth, forward interest rates, historical performance, recent and  anticipated regulatory changes, and industry and economic trends,  among other considerations. The long-term growth rate used in determining the terminal  value of each segment was estimated at three percent based on the  Bancorp’s assessment of the long-term expected growth rate of  each segment, as well as broader economic considerations such as  long-term expectations for gross domestic product and inflation.  The cash flow growth rate required to avoid failing Step 1 was  determined to be negative 0.5%.  Changes in the net carrying amount of goodwill by reporting segment for the years ended December 31, 2010 and 2009 were as follows:  carrying amounts exceeded their associated implied fair values by  $750 million and $215 million, respectively. The resulting $965  million goodwill impairment charge was recorded in the fourth  quarter of 2008 and represents the total amount of accumulated  impairment losses as of December 31, 2010.  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. During  the fourth quarter of 2008, the Bancorp determined that the  Commercial Banking and Consumer Lending segments’ goodwill  The Bancorp’s subsidiaries have entered into a number of  noncancelable and capital lease agreements with respect to bank  premises and equipment. The following table provides the annual  future minimum payments under capital leases and noncancelable  operating leases at December 31, 2010:  Depreciation and amortization expense related to bank premises  and equipment was $225 million in 2010, $227 million in 2009 and  $218 million in 2008. Gross occupancy expense for cancelable and noncancelable  leases was $98 million in 2010, $102 million in 2009 and $98  million in 2008, which is reduced by rental income from leased  premises of $19 million in 2010, $16 million in 2009 and $13  million in 2008.  The following is a summary of bank premises and equipment at December 31:  Commercial Branch Consumer Investment Processing ($ in millions)  Banking  Banking  Lending  Advisors  Solutions  (a) Total Balance as of December 31, 2008  $614  1,657  -  148  205  2,624  Acquisition activity (1) (1) - - 7 5 Sale of Processing Business  -  -  -  -  (212)  (212)  Balance as of December 31, 2009  613  1,656  -  148  -  2,417  Acquisition activity - - - - - Balance as of December 31, 2010  $613 1,656 - 148 2,417 (a) As a result of the Processing Business Sale on June 30, 2009, Processing Solutions is no longer a segment of the Bancorp.  ($ in millions)  Operating Leases  Capital Leases  Year ended December 31, 2011  $91 12 2012  87 13 2013  83 3 2014  79 - 2015  75 Thereafter  454 1 Total minimum lease payments  $869 29 Amounts representing interest  - 3 Present value of net minimum lease payments  32 ($ in millions)  Estimated Useful Life  2010 2009 Land and improvements  $797 748 Buildings  5 to 50 yrs.  1,593 1,539 Equipment  3 to 20 yrs.  1,296 1,354 Leasehold improvements  to 40 yrs.  393 401 Construction in progress  92 105 Accumulated depreciation and amortization  (1,782) (1,747) Total  $2,389 2,400