Exhibit 99.1
News Release
| CONTACT: | | Neal E. Arnold, CFO (Analysts) | | FOR IMMEDIATE RELEASE |
| | | (513) 579-4356 | | January 15, 2004 |
| | | Bradley S. Adams, IR (Analysts) | | |
| | | (513) 534-0983 | | |
| | | Roberta R. Jennings (Media) | | |
| | | (513) 579-4153 | | |
FIFTH THIRD BANCORP REPORTS 11 PERCENT INCREASE IN FOURTH QUARTER EARNINGS
Fifth Third Bancorp’s 2003 fourth quarter earnings per diluted share were $.80, an increase of 11 percent over $.72 per diluted share for the same period in 2002. Fourth quarter net income totaled $460,499,000, a nine percent increase over fourth quarter 2002’s net income of $423,372,000. Fourth quarter return on average assets (ROA) and return on average equity (ROE) were 2.02 percent and 21.3 percent, respectively, compared to 2.11 percent and 19.8 percent in 2002’s fourth quarter. Earnings per diluted share for the full year 2003 were $3.03, an increase of 10 percent over last year’s earnings of $2.76. ROA for the full year 2003 was 2.01 percent and ROE was 20.4 percent, compared to 2.18 percent and 19.9 percent, respectively, in 2002.
“I would like to thank all of our employees for their hard work in producing another good year for our shareholders,” stated George A. Schaefer, Jr., President and CEO of Fifth Third Bancorp. “While 2003 was certainly not an easy year, I believe we have accomplished a great deal. We were faced with the lowest level of interest rates in over 40 years, earning asset yields and margins declining to levels not seen since the 1970’s and business and economic stress in some segments of the economy that resulted in credit losses well in excess of our historical averages. Despite these factors, we were able to produce double-digit earnings growth driven by a focused loan and deposit sales effort and continued growth from our service businesses. We also invested significantly in strengthening your investment in Fifth Third for the years to come by adding new banking center locations in vibrant growth markets, increasing automation of processes, building a comprehensive risk management infrastructure and welcoming numerous talented and experienced bankers to the Fifth Third team.”
“Fifth Third continues to be defined by the same core operating principles that have served us well over the years. We believe a focused and energetic sales force, conservative risk profile, diversified business mix and a unique, decentralized affiliate banking model effectively position Fifth Third to continue to deliver consistent earnings growth. With the significant investments we have made in the expansion of our sales force, new banking centers and improvements in infrastructure, we enter 2004 with optimism and look forward to meeting the opportunities and challenges that lie ahead.”
Balance Sheet Trends
Loan and lease balances exhibited extremely strong growth with period end loans and leases increasing by $6.4 billion in 2003 on a full year basis, driven primarily by very strong results in consumer lending and continued growth in commercial loans and leases. On an average basis, total loans and leases increased by 15 percent over last year. Direct installment loan originations continued recent year trends and remained strong throughout 2003, totaling $1.6 billion in the fourth quarter and $7.4 billion for the full year compared to $1.7 billion in last year’s fourth quarter and $6.7 billion for the full year 2002, driving an increase in installment loan balances of 14 percent over the same quarter last year. Consumer loans and comparisons to prior periods are impacted by the securitization and sale of $903 million in home equity lines of credit in the third quarter of 2003 and the inclusion of $750 million in automotive loans in held for sale. These actions were taken to limit balance
sheet leverage due to the exceptionally strong demand experienced in these asset classes over recent periods relative to the entire loan and lease portfolio. Period end commercial loan and lease balances increased by 12 percent over the same quarter last year and by $950 million, or 14 percent on an annualized basis, from last quarter. Improving demand and customer additions in middle-market and small business commercial loan originations during the quarter were partially mitigated by modest year-end seasonal decreases in existing commercial line of credit utilization percentages across the footprint.
Significant numbers of commercial customer additions and net new retail checking account growth have resulted in very strong deposit growth trends for Fifth Third. Average demand deposit balances increased 18 percent and average interest checking balances grew nine percent compared to last year’s fourth quarter, and 17 percent and 15 percent on the full year, respectively. Compared to the third quarter of this year, average transaction account balances increased by eight percent on an annualized basis highlighted by 22 percent annualized growth in demand deposits and 13 percent annualized growth in interest checking balances. The level of savings, money market, and time deposit balances continued to moderate in the fourth quarter given the low level of interest rates. Fifth Third’s most recent consumer checking account campaign, The Fall Classic, concluded on December 15, 2003 at 155 percent of goal with $1.3 billion in new checking account balances. Fifth Third is continuing to devote significant marketing and sales focus on checking account growth in its retail and commercial franchises.
Compared to the fourth quarter of 2002, net interest income on a fully-taxable equivalent basis increased five percent despite a 26 basis point (bp) decrease in the net interest margin due to 13 percent growth in average earning assets. On a full year basis, the eight percent increase in net interest income over 2002 was primarily driven by 18 percent growth in average earning assets mitigated by a 34 bp reduction in the net interest margin as all asset classes experienced accelerated prepayment rates in 2003 due to the low interest rate environment. Sequentially, net interest income on a fully-taxable equivalent basis increased five percent on an annualized basis due to the positive impact of the recent slowing of prepayment speeds on the net interest margin and modest growth in the level of average earning assets. Fifth Third expects that margin and net interest income trends in coming periods will be dependent upon the magnitude of deposit growth in relation to balance sheet growth and the speed of interest rate changes in an improving economy.
Fifth Third repurchased approximately 4.7 million shares of its common stock for a total of approximately $271 million in the fourth quarter of 2003 and 11.5 million shares for a total of approximately $655 million in all of 2003. With increasing capital levels and greater stability in earning asset yields anticipated in 2004, Fifth Third continues to view share repurchases as an effective means of returning excess capital to shareholders. As of December 31, 2003, the remaining authority under the plan authorized by the Board of Directors in March 2003 is approximately 14.1 million shares.
Other Operating Income
Other Operating Income increased three percent over the same quarter last year and 14 percent on a full year basis with double-digit growth in major captions partially mitigated by significant decreases in the level of gains on sales of securities and loans.
Fifth Third Processing Solutions, our Electronic Payment Processing division, delivered a nine percent increase in revenues over the fourth quarter of last year, 12 percent on full year basis and 47 percent on a seasonally strong annualized sequential basis. Comparisons to 2002 prior periods are impacted by a slowdown in transaction volume growth rates on the existing customer base reflective of current economic conditions, sluggish growth in the retail sector of the economy and an $8 million fourth quarter revenue impact ($13 million full year 2003) associated with the recent MasterCard®/Visa® settlement. Revenue from Electronic Funds Transfer (EFT) was essentially flat compared to the same quarter last year and merchant processing increased 15 percent over the same quarter last year despite growth of only approximately six percent in transaction volumes from the existing merchant customer base. Along with the introduction of Fifth Third’s POS Check Services at
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Pearle Visions locations, significant new processing customers welcomed during the fourth quarter of 2003 include Sovereign Bancorp, AFFN (Armed Forces Financial Network), Steak n’ Shake, Limited TOO Brands, and Atwood’s Distributing. Additionally, Fifth Third received several major contract extensions including Saks Incorporated, Barnes and Noble, Bealls Incorporated and Fisher’s Foods. Fifth Third Processing Solutions now handles electronic processing for over 197,000 merchant locations and 1,500 financial institutions worldwide.
Successful sales of retail and commercial deposit accounts and corporate treasury management products fueled increases in deposit service revenues of 11 percent over the same quarter last year and 13 percent for the full year. The fourth quarter increase was highlighted by a nine percent increase in retail deposit based revenues and a 13 percent increase in commercial deposit based revenues over the same quarter last year on the strength of Fifth Third’s continuing focus on cross-sell initiatives, new customer relationships and the benefit of a lower interest rate environment.
Mortgage net service revenue totaled $57.2 million in the fourth quarter and $301.7 million on a full year 2003 basis compared to $66.7 million in 2002’s fourth quarter and $187.9 million in all of 2002. Inclusive of net realized securities gains/losses resulting from sales from a portfolio established to hedge against volatility related to the value of mortgage servicing rights, mortgage net service revenue was $304.5 million on a full year basis in 2003 and $221.4 million on a full year basis in 2002. Mortgage originations totaled $1.9 billion in the fourth quarter versus $4.9 billion last quarter and $4.3 billion in the fourth quarter of last year. The $17.6 million decrease in mortgage banking revenues relative to last quarter is primarily attributable to declines in the level of refinance activity as mortgage interest rates continued to increase from record lows. Fifth Third is aggressively reducing mortgage banking volume-related processing expenses as originations have slowed in recent periods. Fourth quarter mortgage net service revenue was comprised of $80.8 million in total mortgage banking fees and loan sales, less $12.7 million of losses and mark-to-market adjustments on both settled and outstanding free-standing derivative financial instruments and less $10.9 million in net valuation adjustments and amortization on mortgage servicing rights. The mark-to-market adjustments and settlement of free-standing derivative financial instruments and corresponding valuation adjustments resulted from the movement of interest rates during the quarter and the resulting impact of changing prepayment speeds on the mortgage servicing portfolio. The mortgage servicing asset, net of the valuation reserve, is $289.0 million at December 31, 2003, compared to $274.6 million last quarter and $263.5 million a year ago.
Investment Advisory revenues increased 14 percent over the same quarter last year and two percent on a full year basis. The increase in service revenue compared to the same quarter last year resulted primarily from strengthening sales results in Retirement Plan Services and improved institutional asset management revenues from better market performance. Fifth Third continues to focus its sales efforts on integrating services across business lines and working closely with retail and commercial team members to take advantage of a diverse and expanding customer base. Fifth Third Investment Advisors, among the largest money managers in the Midwest, has $35 billion in assets under management and $194 billion in assets under care.
Other service charges and fee revenue totaled $112.5 million in the fourth quarter and $581.4 million on a full year basis, compared to $164.0 million in the same quarter last year and $579.7 million in all of 2002. The decrease in revenue relative to the fourth quarter last year is primarily attributable to the previously disclosed fourth quarter 2002 pre-tax gain of approximately $26 million realized from the sale of the property and casualty insurance agency product line operations representing approximately $26 million in revenue on a full year 2002 basis. Sequential quarter comparisons are impacted by the previously disclosed third quarter 2003 $22 million gain from the securitization and sale of $903 million of home equity lines of credit and declines in both indirect consumer and commercial loan and lease fees. On a full year comparison basis, commercial banking revenues increased 13 percent, institutional fixed income trading and sales revenues increased 47 percent and cardholder fee revenue increased 15 percent.
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Operating Expenses
Operating expenses increased 12 percent over the fourth quarter last year and 10 percent on a full year basis with direct comparisons to prior periods impacted by the following factors: (i) the early implementation of FASB Interpretation No. 46 (FIN 46) in the third quarter of 2003 resulting in the recognition of depreciation expense captured as a component of operating expenses totaling $44.0 million in the fourth quarter and $93.5 million in all of 2003 on operating lease assets; (ii) an $82 million pre-tax charge realized in the third quarter of 2002 related to treasury clearing and other related settlement accounts; (iii) a $30.8 million pre-tax recovery of the above mentioned treasury charge realized as a credit to other operating expense in the second quarter of 2003; and (iv) a charge of $20.1 million related to the early retirement of approximately $200 million of Federal Home Loan Bank advances in the second quarter of 2003. Fifth Third’s efficiency ratio stands at 47.3 percent in the fourth quarter and 45.0 percent in 2003 compared to 44.0 percent in the fourth quarter last year and 44.9 percent in 2002.
Excluding the impact of the above mentioned factors, operating expenses increased by four percent over the same quarter last year and 11 percent on a full year basis; comparisons being provided to supplement an understanding of the fundamental trends in operating expenses. The increases over last year are primarily attributable to the implications of growth in all of our markets and increases in spending related to the expansion and improvement of our sales force, third-party consulting, continuing investment in support personnel, process improvement, technology and infrastructure to support recent and future growth and increasing insurance and other employee benefit expenses. Fifth Third has also invested significantly in the growth of its retail banking platform with the opening of 58 new banking centers since December of 2002. Near-term improvement continues to be expected from certain volume related expense items and efficiency initiatives related to non-risk management expenses. As part of our core emphasis on operating leverage, these initiatives include increasing levels of automation of processes, the rationalization and reduction of non-core businesses as they relate to our retail and middle market commercial customer base, returns on invested capital and related opportunities for continued growth in 2004 and years to come.
Credit Quality
Net charge-offs as a percentage of average loans and leases were 72 bp in the fourth quarter and 63 bp in all of 2003, compared to 59 bp last quarter and 43 bp in all of 2002. Nonperforming assets (NPA’s) were 61 bp of total loans and leases and other real estate owned at December 31, 2003, improved from 62 bp posted last quarter. Overall, the level of nonperforming loans and net charge-offs remain a small percentage of the total loan and lease portfolio. Net charge-offs were $95.0 million in the fourth quarter and $312.2 million in 2003, compared to $49.5 million in the same quarter last year and $186.8 million in all of 2002. Commercial loan and lease net charge-offs totaled $54.0 million in the fourth quarter with the increase relative to prior periods primarily due to the charge-off of two airline leases totaling approximately $18 million. The provision for loan and lease losses totaled $93.7 million in the fourth quarter and $399.4 million for the full year, compared to $72.1 million in the same quarter last year and $246.6 million in the full year 2002. Fifth Third expects near-term improvement in the level of commercial loan losses and nonperforming assets as the overall economy in the Bank’s Midwestern footprint continues to build upon recent positive momentum.
Corporate Trust Sale
On December 29, 2003, Fifth Third completed the sale of its corporate trust business which resulted in a $62 million pre-tax ($40 million after-tax) gain in the fourth quarter of 2003. Corporate trust services has been a relatively small contributor to both total revenues and earnings for Fifth Third in all periods. Fifth Third remains committed to offering trust services as part of our relationship based approach to commercial banking and will continue to be a part of a complete product set for our middle market commercial clients. The sale allows us to refine our focus and reinvest in our core businesses that provide the best return to our shareholders. As a result of this sale and cessation of any continuing involvement in the operations of the corporate trust business, the results
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of these operations and the corresponding gain are being reported as discontinued operations in the current and all prior periods. The following table summarizes the results of operations of this business.
| ($ millions) | | 4Q03
| | 3Q03
| | 2Q03
| | 1Q03
| | 4Q02
| | 3Q02
| | 2Q02
| | 1Q02
|
Total Revenues | | $ | 3.3 | | $ | 2.9 | | $ | 3.2 | | $ | 2.9 | | $ | 3.2 | | $ | 2.7 | | $ | 2.9 | | $ | 3.5 |
Total Expenses | | | 1.8 | | | 1.5 | | | 1.5 | | | 1.6 | | | 1.7 | | | 1.4 | | | 1.2 | | | 1.9 |
|
Pre-tax Income | | | 1.5 | | | 1.4 | | | 1.7 | | | 1.3 | | | 1.5 | | | 1.3 | | | 1.7 | | | 1.6 |
Taxes | | | 0.5 | | | 0.5 | | | 0.6 | | | 0.4 | | | 0.5 | | | 0.4 | | | 0.6 | | | 0.6 |
|
After-tax Income | | $ | 1.0 | | $ | 0.9 | | $ | 1.1 | | $ | 0.9 | | $ | 1.0 | | $ | 0.9 | | $ | 1.1 | | $ | 1.0 |
|
Conference Call
Fifth Third will host a conference call to discuss these fourth quarter financial results at 9:30 a.m. (Eastern Standard Time) today. Investors, analysts and other interested parties may dial into the conference call at 877-309-0967 for domestic access and 706-679-3977 for international access (password: Fifth Third). A replay of the conference call will be available until 11:59 p.m. January 22, 2004 by dialing 800-642-1687 for domestic access and 706-645-9291 for international access (passcode: 4784914#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company has $91 billion in assets, operates 17 affiliates with 960 full-service Banking Centers, including 133 Bank Mart® locations open seven days a week inside select grocery stores and 1,905 Jeanie® ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee and West Virginia. The financial strength of Fifth Third’s affiliate banks continues to be recognized by rating agencies with deposit ratings of AA- and Aa1 from Standard & Poor’s and Moody’s, respectively. Additionally, Fifth Third Bancorp continues to maintain the highest short-term ratings available at A-1+ and Prime-1 and is recognized by Moody’s with one of the highest senior debt ratings for any U.S. bank holding company of Aa2. Fifth Third operates four main businesses: Retail, Commercial, Investment Advisors and Fifth Third Processing Solutions. Investor information and press releases can be viewed at www.53.com. Fifth Third’s common stock is traded through the Nasdaq National Market System under the symbol “FITB.”
This release may contain forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder, that involve inherent risks and uncertainties. This press release may contain certain forward-looking statements with respect to our financial condition, results of operations, plans, objectives, future performance and business including statements preceded by, followed by or that include the words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trend,” “objective,” “continue,” “remain,” “pattern” or similar expressions or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) competitive pressures among depository institutions increase significantly; (2) changes in the interest rate environment reduce interest margins; (3) prepayment speeds, loan sale volumes, charge-offs and loan loss provisions; (4) general economic conditions, either national or in the states in which we do business, are less favorable than expected; (5) political developments, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; (6) legislative or regulatory changes or actions adversely affect the businesses in which we are engaged; (7) changes and trends in the securities markets; (8) a delayed or incomplete resolution of regulatory issues; (9) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity; and (10) the outcome of regulatory and legal proceedings. We undertake no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release. Further information on other factors which could affect the financial results of Fifth Third are included in Fifth Third’s filings with the Securities and Exchange Commission. These documents are available free of charge at the Commission’s website at http://www.sec.gov and/or from Fifth Third.
# # #
5
FIFTH THIRD BANCORP AND SUBSIDIARIES
Quarterly Financial Review for December 31, 2003
Table of Contents
| | | Page |
|
Earnings Review: | | |
Financial Highlights | | 7-8 |
Consolidated Statements of Income | | 9-10 |
Consolidated Statements of Changes in Shareholders’ Equity | | 11 |
Condensed Consolidated Quarterly Statements of Income (Taxable Equivalent) | | 12 |
Other Operating Income and Operating Expenses | | 13 |
| |
Financial Condition: | | |
Consolidated Balance Sheets | | 14 |
Loans and Leases Serviced | | 15 |
Consolidated Average Balance Sheets, Yields (Taxable Equivalent) and Rates | | 16-17 |
Regulatory Capital | | 18 |
Asset Quality | | 19 |
6
FIFTH THIRD BANCORP AND SUBSIDIARIES
Financial Highlights
(unaudited)
|
| | |
| | | For the Three Months Ended
| | | |
| | | December 31,
2003 | | | December 31,
2002 | | Percent
Change | |
|
Earnings ($ in thousands, except per share) | | | | | | | | | |
Net Interest Income (Taxable Equivalent) | | $ | 744,582 | | | 708,621 | | 5.1 | |
Net Income Available to Common Shareholders | | | 460,499 | | | 423,372 | | 8.8 | |
| | | |
Earnings Per Share: | | | | | | | | | |
Basic | | | 0.81 | | | 0.73 | | 11.0 | |
Diluted | | | 0.80 | | | 0.72 | | 11.1 | |
| | | |
Key Ratios (percent) | | | | | | | | | |
Return on Average Assets (ROA) | | | 2.02 | % | | 2.11 | | (4.3 | ) |
Return on Average Equity (ROE) | | | 21.3 | | | 19.8 | | 7.6 | |
Net Interest Margin (Taxable Equivalent) | | | 3.54 | | | 3.80 | | (6.8 | ) |
Efficiency | | | 47.3 | | | 44.0 | | 7.5 | |
Average Shareholders’ Equity to Average Assets | | | 9.46 | | | 10.63 | | (11.0 | ) |
Risk-Based Capital (a): | | | | | | | | | |
Tier 1 Capital | | | 10.99 | | | 11.70 | | (6.1 | ) |
Total Capital | | | 13.44 | | | 13.51 | | (0.5 | ) |
Tier 1 Leverage | | | 9.10 | | | 9.73 | | (6.5 | ) |
| | | |
Common Stock Data | | | | | | | | | |
Cash Dividends Declared Per Share | | $ | 0.29 | | | 0.26 | | 11.5 | |
Book Value Per Share | | | 15.04 | | | 14.76 | | 1.9 | |
Market Price Per Share: | | | | | | | | | |
High | | | 60.01 | | | 66.47 | | (9.7 | ) |
Low | | | 55.47 | | | 55.40 | | 0.1 | |
End of Period | | | 59.10 | | | 58.55 | | 0.9 | |
Price/Earnings Ratio (b) | | | 19.50 | | | 21.21 | | (8.1 | ) |
|
| | |
| | | For the Twelve Months Ended
| | | |
| | | December 31,
2003 | | | December 31,
2002 | | Percent
Change | |
|
Earnings ($ in thousands, except per share) | | | | | | | | | |
Net Interest Income (Taxable Equivalent) | | $ | 2,944,300 | | | 2,738,195 | | 7.5 | |
Net Income Available to Common Shareholders | | | 1,754,004 | | | 1,633,973 | | 7.3 | |
| | | |
Earnings Per Share: | | | | | | | | | |
Basic | | | 3.07 | | | 2.82 | | 8.9 | |
Diluted | | | 3.03 | | | 2.76 | | 9.8 | |
| | | |
Key Ratios (percent) | | | | | | | | | |
Return on Average Assets (ROA) | | | 2.01 | % | | 2.18 | | (7.8 | ) |
Return on Average Equity (ROE) | | | 20.4 | | | 19.9 | | 2.5 | |
Net Interest Margin (Taxable Equivalent) | | | 3.62 | | | 3.96 | | (8.6 | ) |
Efficiency | | | 45.0 | | | 44.9 | | 0.2 | |
Average Shareholders’ Equity to Average Assets | | | 9.85 | | | 10.93 | | (9.9 | ) |
| | | |
Common Stock Data | | | | | | | | | |
Cash Dividends Declared Per Share | | $ | 1.13 | | | 0.98 | | 15.3 | |
Market Price Per Share: | | | | | | | | | |
High | | | 62.15 | | | 69.70 | | (10.8 | ) |
Low | | | 47.05 | | | 55.26 | | (14.9 | ) |
|
| (a) | December 31, 2003 risk-based capital ratios are estimated. |
| (b) | Based on the most recent twelve-month earnings per diluted share and end of period stock prices. |
7
FIFTH THIRD BANCORP AND SUBSIDIARIES
Financial Highlights
(unaudited)
Values Per Share
|
| | |
| | | Book Value Per Share | | Market Price Range Per Share |
| |
|
| | | March 31 | | June 30 | | September 30 | | December 31 | | Low | | High |
|
1998 | | $ | 8.87 | | $ | 9.27 | | $ | 9.43 | | $ | 9.64 | | $ | 31.67 | | $ | 49.42 |
1999 | | | 9.74 | | | 9.59 | | | 9.56 | | | 9.84 | | | 38.58 | | | 50.29 |
2000 | | | 9.99 | | | 10.33 | | | 10.72 | | | 11.71 | | | 29.33 | | | 60.88 |
2001 | | | 12.19 | | | 12.26 | | | 12.81 | | | 13.11 | | | 45.69 | | | 64.77 |
2002 | | | 13.39 | | | 14.10 | | | 14.48 | | | 14.76 | | | 55.26 | | | 69.70 |
2003 | | | 15.07 | | | 15.01 | | | 15.00 | | | 15.04 | | | 47.05 | | | 62.15 |
|
|
| Earnings Per Share, Basic |
| | | For the Three Months Ended
| | |
| | | March 31 | | June 30 | | September 30 | | December 31 | | Year-to-Date |
|
1998 | | $ | 0.38 | | $ | 0.18 | | $ | 0.45 | | $ | 0.43 | | $1.44 |
1999 | | | 0.45 | | | 0.45 | | | 0.45 | | | 0.33 | | 1.68 |
2000 | | | 0.47 | | | 0.44 | | | 0.55 | | | 0.56 | | 2.02 |
2001 | | | 0.52 | | | 0.22 | | | 0.48 | | | 0.67 | | 1.90 |
2002 | | | 0.67 | | | 0.69 | | | 0.72 | | | 0.73 | | 2.82 |
2003 | | | 0.73 | | | 0.76 | | | 0.77 | | | 0.81 | | 3.07 |
|
|
| Earnings Per Share, Diluted |
| | | For the Three Months Ended
| | |
| | | March 31 | | June 30 | | September 30 | | December 31 | | Year-to-Date |
|
1998 | | $ | 0.37 | | $ | 0.18 | | $ | 0.44 | | $ | 0.43 | | $1.42 |
1999 | | | 0.44 | | | 0.44 | | | 0.44 | | | 0.33 | | 1.66 |
2000 | | | 0.46 | | | 0.43 | | | 0.54 | | | 0.55 | | 1.98 |
2001 | | | 0.51 | | | 0.22 | | | 0.47 | | | 0.65 | | 1.86 |
2002 | | | 0.66 | | | 0.68 | | | 0.70 | | | 0.72 | | 2.76 |
2003 | | | 0.72 | | | 0.75 | | | 0.76 | | | 0.80 | | 3.03 |
|
8
FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited) ($ in thousands, except per share)
|
| | | For the Three Months Ended
| |
| | | December 31,
2003 | | December 31,
2002 | |
|
Interest Income | | | | | | |
Interest and Fees on Loans and Leases | | $ | 668,479 | | 705,913 | |
Interest on Securities: | | | | | | |
Taxable | | | 306,560 | | 307,021 | |
Exempt from Income Taxes | | | 12,604 | | 13,682 | |
|
Total Interest on Securities | | | 319,164 | | 320,703 | |
Interest on Other Short-Term Investments | | | 231 | | 1,236 | |
|
Total Interest Income | | | 987,874 | | 1,027,852 | |
Interest Expense | | | | | | |
Interest on Deposits: | | | | | | |
Interest Checking | | | 45,246 | | 68,664 | |
Savings | | | 11,739 | | 36,656 | |
Money Market | | | 7,594 | | 4,607 | |
Other Time | | | 47,217 | | 70,591 | |
Certificates-$100,000 and Over | | | 5,804 | | 9,025 | |
Foreign Office | | | 14,310 | | 9,118 | |
|
Total Interest on Deposits | | | 131,910 | | 198,661 | |
Interest on Federal Funds Borrowed | | | 19,316 | | 18,244 | |
Interest on Short-Term Bank Notes | | | 233 | | — | |
Interest on Other Short-Term Borrowings | | | 14,410 | | 16,241 | |
Interest on Long-Term Debt | | | 87,052 | | 96,480 | |
|
Total Interest Expense | | | 252,921 | | 329,626 | |
|
Net Interest Income | | | 734,953 | | 698,226 | |
Provision for Credit Losses | | | 93,654 | | 72,085 | |
|
Net Interest Income After Provision for Credit Losses | | | 641,299 | | 626,141 | |
| | |
Other Operating Income | | | | | | |
Electronic Payment Processing Income | | | 160,178 | | 147,343 | |
Service Charges on Deposits | | | 124,838 | | 112,646 | |
Mortgage Banking Net Revenue | | | 57,229 | | 66,689 | |
Investment Advisory Income | | | 84,860 | | 74,156 | |
Other Service Charges and Fees | | | 112,522 | | 164,013 | |
Operating Lease Income | | | 57,900 | | — | |
Securities Gains, Net | | | 1,815 | | 14,731 | |
Securities Gains, Net - Non-Qualifying Hedges on Mortgage Servicing | | | — | | 783 | |
|
Total Other Operating Income | | | 599,342 | | 580,361 | |
Operating Expenses | | | | | | |
Salaries, Wages and Incentives | | | 221,155 | | 241,887 | |
Employee Benefits | | | 53,291 | | 59,532 | |
Equipment Expenses | | | 20,911 | | 19,860 | |
Net Occupancy Expenses | | | 46,552 | | 36,671 | |
Operating Lease Expenses | | | 43,967 | | — | |
Other Operating Expenses | | | 249,146 | | 209,589 | |
|
Total Operating Expenses | | | 635,022 | | 567,539 | |
|
Income from Continuing Operations Before Income Taxes and Minority Interest | | | 605,619 | | 638,963 | |
Applicable Income Taxes | | | 185,936 | | 206,953 | |
|
Income from Continuing Operations Before Minority Interest | | | 419,683 | | 432,010 | |
Minority Interest, Net of Tax | | | — | | (9,400 | ) |
|
Income from Continuing Operations | | | 419,683 | | 422,610 | |
Income from Discontinued Operations, Net of Tax | | | 41,001 | | 947 | |
|
Net Income | | | 460,684 | | 423,557 | |
Dividend on Preferred Stock | | | 185 | | 185 | |
|
Net Income Available to Common Shareholders | | $ | 460,499 | | 423,372 | |
|
Basic Earnings Per Share: | | | | | | |
Income from Continuing Operations | | $ | 0.74 | | 0.73 | |
Income from Discontinued Operations | | | 0.07 | | — | |
|
Net Income | | $ | 0.81 | | 0.73 | |
|
Diluted Earnings Per Share: | | | | | | |
Income from Continuing Operations | | $ | 0.73 | | 0.72 | |
Income from Discontinued Operations | | | 0.07 | | — | |
|
Net Income | | $ | 0.80 | | 0.72 | |
|
9
FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited) ($ in thousands, except per share)
|
| | | For the Twelve Months Ended
| |
| | | December 31,
2003 | | | December 31,
2002 | |
|
Interest Income | | | | | | | |
Interest and Fees on Loans and Leases | | $ | 2,711,271 | | | 2,810,102 | |
Interest on Securities: | | | | | | | |
Taxable | | | 1,226,166 | | | 1,257,579 | |
Exempt from Income Taxes | | | 50,658 | | | 55,897 | |
|
Total Interest on Securities | | | 1,276,824 | | | 1,313,476 | |
Interest on Other Short-Term Investments | | | 2,973 | | | 5,834 | |
|
Total Interest Income | | | 3,991,068 | | | 4,129,412 | |
Interest Expense | | | | | | | |
Interest on Deposits: | | | | | | | |
Interest Checking | | | 189,488 | | | 296,402 | |
Savings | | | 63,680 | | | 158,210 | |
Money Market | | | 32,097 | | | 27,376 | |
Other Time | | | 213,391 | | | 356,846 | |
Certificates - $100,000 and Over | | | 45,060 | | | 54,706 | |
Foreign Office | | | 43,800 | | | 34,546 | |
|
Total Interest on Deposits | | | 587,516 | | | 928,086 | |
Interest on Federal Funds Borrowed | | | 80,038 | | | 54,090 | |
Interest on Short-Term Bank Notes | | | 233 | | | 54 | |
Interest on Other Short-Term Borrowings | | | 55,055 | | | 67,000 | |
Interest on Long-Term Debt | | | 362,800 | | | 381,130 | |
|
Total Interest Expense | | | 1,085,642 | | | 1,430,360 | |
|
Net Interest Income | | | 2,905,426 | | | 2,699,052 | |
Provision for Credit Losses | | | 399,429 | | | 246,611 | |
|
Net Interest Income After Provision for Credit Losses | | | 2,505,997 | | | 2,452,441 | |
| | |
Other Operating Income | | | | | | | |
Electronic Payment Processing Income | | | 575,025 | | | 512,054 | |
Service Charges on Deposits | | | 485,116 | | | 431,076 | |
Mortgage Banking Net Revenue | | | 301,734 | | | 187,919 | |
Investment Advisory Income | | | 332,166 | | | 325,162 | |
Other Service Charges and Fees | | | 581,376 | | | 579,727 | |
Operating Lease Income | | | 123,709 | | | — | |
Securities Gains, Net | | | 80,893 | | | 113,579 | |
Securities Gains, Net - Non-Qualifying Hedges on Mortgage Servicing | | | 2,809 | | | 33,525 | |
|
Total Other Operating Income | | | 2,482,828 | | | 2,183,042 | |
Operating Expenses | | | | | | | |
Salaries, Wages and Incentives | | | 922,011 | | | 902,112 | |
Employee Benefits | | | 239,765 | | | 200,915 | |
Equipment Expenses | | | 82,010 | | | 79,344 | |
Net Occupancy Expenses | | | 159,064 | | | 142,310 | |
Operating Lease Expenses | | | 93,525 | | | — | |
Other Operating Expenses | | | 944,887 | | | 885,273 | |
|
Total Operating Expenses | | | 2,441,262 | | | 2,209,954 | |
|
Income from Continuing Operations Before Income Taxes, Minority Interest and Cumulative Effect | | | 2,547,563 | | | 2,425,529 | |
Applicable Income Taxes | | | 805,495 | | | 757,115 | |
|
Income from Continuing Operations Before Minority Interest and Cumulative Effect | | | 1,742,068 | | | 1,668,414 | |
Minority Interest, Net of Tax | | | (20,458 | ) | | (37,680 | ) |
|
Income from Continuing Operations Before Cumulative Effect | | | 1,721,610 | | | 1,630,734 | |
Income from Discontinued Operations, Net of Tax | | | 43,896 | | | 3,979 | |
|
Income Before Cumulative Effect | | | 1,765,506 | | | 1,634,713 | |
Cumulative Effect of Change in Accounting Principle, Net of Tax | | | (10,762 | ) | | — | |
|
Net Income | | | 1,754,744 | | | 1,634,713 | |
Dividend on Preferred Stock | | | 740 | | | 740 | |
|
Net Income Available to Common Shareholders | | $ | 1,754,004 | | | 1,633,973 | |
|
Basic Earnings Per Share: | | | | | | | |
Income from Continuing Operations | | $ | 3.01 | | | 2.81 | |
Income from Discontinued Operations | | | 0.08 | | | 0.01 | |
Cumulative Effect of Change in Accounting Principle, Net | | | (0.02 | ) | | — | |
|
Net Income | | $ | 3.07 | | | 2.82 | |
|
Diluted Earnings Per Share: | | | | | | | |
Income from Continuing Operations | | $ | 2.97 | | | 2.75 | |
Income from Discontinued Operations | | | 0.08 | | | 0.01 | |
Cumulative Effect of Change in Accounting Principle, Net | | | (0.02 | ) | | — | |
|
Net Income | | $ | 3.03 | | | 2.76 | |
|
10
FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders’ Equity
(unaudited) ($ in thousands, except per share)
|
| | | For the Three Months Ended
| |
| | | December 31, 2003 | | | December 31, 2002 | |
|
Total Shareholders’ Equity, Beginning | | $ | 8,553,786 | | | 8,375,738 | |
Net Income | | | 460,684 | | | 423,557 | |
Nonowner Changes in Equity, Net of Tax: | | | | | | | |
Change in Unrealized Gains and (Losses) on Securities Available-for-Sale and Qualifying Cash Flow Hedges | | | (100,198 | ) | | 101,479 | |
Change in Additional Minimum Pension Liability | | | (11,097 | ) | | (52,235 | ) |
|
Net Income and Nonowner Changes in Equity | | | 349,389 | | | 472,801 | |
Cash Dividends Declared: | | | | | | | |
Common Stock (2003 - $.29 per share and 2002 - $.26 per share) | | | (164,392 | ) | | (149,470 | ) |
Preferred Stock | | | (185 | ) | | (185 | ) |
Stock Options Exercised Including Treasury Shares Issued | | | 28,780 | | | 10,137 | |
Loans Repaid Related to Exercise of Stock Options, Net | | | 3,057 | | | — | |
Corporate Tax Benefit Related to Exercise of Non-Qualified Stock Options | | | 24,063 | | | 26,066 | |
Shares Purchased | | | (270,716 | ) | | (261,100 | ) |
Other | | | 807 | | | 1,030 | |
|
Total Shareholders’ Equity, Ending | | $ | 8,524,589 | | | 8,475,017 | |
|
| |
| | | For the Twelve Months Ended
| |
| | | December 31, 2003 | | | December 31, 2002 | |
|
Total Shareholders’ Equity, Beginning | | $ | 8,475,017 | | | 7,639,277 | |
Net Income | | | 1,754,744 | | | 1,634,713 | |
Nonowner Changes in Equity, Net of Tax: | | | | | | | |
Change in Unrealized Gains and (Losses) on Securities Available-for-Sale and Qualifying Cash Flow Hedges | | | (478,606 | ) | | 413,414 | |
Change in Additional Minimum Pension Liability | | | (11,097 | ) | | (52,235 | ) |
|
Net Income and Nonowner Changes in Equity | | | 1,265,041 | | | 1,995,892 | |
Cash Dividends Declared: | | | | | | | |
Common Stock (2003 - $1.13 per share and 2002 - $.98 per share) | | | (644,838 | ) | | (567,519 | ) |
Preferred Stock | | | (740 | ) | | (740 | ) |
Stock Options Exercised Including Treasury Shares Issued | | | 96,939 | | | 103,574 | |
Loans Issued Related to Exercise of Stock Options, Net | | | (34,127 | ) | | — | |
Corporate Tax Benefit Related to Exercise of Non-Qualified Stock Options | | | 24,372 | | | 26,474 | |
Shares Purchased | | | (654,850 | ) | | (719,518 | ) |
Other | | | (2,225 | ) | | (2,423 | ) |
|
Total Shareholders’ Equity, Ending | | $ | 8,524,589 | | | 8,475,017 | |
|
11
FIFTH THIRD BANCORP AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income (Taxable Equivalent)
(unaudited) ($ in thousands, except per share)
|
| |
| | | For the Three Months Ended
| |
| | | December 31, 2003 | | September 30, 2003 | | | June 30, 2003 | | | March 31, 2003 | | | December 31, 2002 | |
|
Interest Income | | $ | 987,874 | | 982,978 | | | 1,019,918 | | | 1,000,298 | | | 1,027,852 | |
Taxable Equivalent Adjustment | | | 9,629 | | 9,661 | | | 9,683 | | | 9,902 | | | 10,395 | |
|
Interest Income (Taxable Equivalent) | | | 997,503 | | 992,639 | | | 1,029,601 | | | 1,010,200 | | | 1,038,247 | |
Interest Expense | | | 252,921 | | 258,075 | | | 280,590 | | | 294,055 | | | 329,626 | |
|
Net Interest Income (Taxable Equivalent) | | | 744,582 | | 734,564 | | | 749,011 | | | 716,145 | | | 708,621 | |
Provision for Credit Losses | | | 93,654 | | 112,082 | | | 108,877 | | | 84,817 | | | 72,085 | |
|
Net Interest Income After Provision for Credit Losses (Taxable Equivalent) | | | 650,928 | | 622,482 | | | 640,134 | | | 631,328 | | | 636,536 | |
Other Operating Income | | | 599,342 | | 680,341 | | | 617,812 | | | 585,333 | | | 580,361 | |
Operating Expenses | | | 635,022 | | 633,401 | | | 594,663 | | | 578,177 | | | 567,539 | |
|
Income from Continuing Operations Before Income Taxes, Minority Interest and Cumulative Effect (Taxable Equivalent) | | | 615,248 | | 669,422 | | | 663,283 | | | 638,484 | | | 649,358 | |
Applicable Income Taxes | | | 185,936 | | 212,563 | | | 206,834 | | | 200,162 | | | 206,953 | |
Taxable Equivalent Adjustment | | | 9,629 | | 9,661 | | | 9,683 | | | 9,902 | | | 10,395 | |
|
Income from Continuing Operations Before Minority Interest and Cumulative Effect | | | 419,683 | | 447,198 | | | 446,766 | | | 428,420 | | | 432,010 | |
Minority Interest, Net of Tax | | | — | | — | | | (10,229 | ) | | (10,229 | ) | | (9,400 | ) |
|
Income from Continuing Operations Before Cumulative Effect | | | 419,683 | | 447,198 | | | 436,537 | | | 418,191 | | | 422,610 | |
Income from Discontinued Operations, Net of Tax | | | 41,001 | | 947 | | | 1,136 | | | 813 | | | 947 | |
|
Income Before Cumulative Effect | | | 460,684 | | 448,145 | | | 437,673 | | | 419,004 | | | 423,557 | |
Cumulative Effect of Change in Accounting Principle, Net of Tax | | | — | | (10,762 | ) | | — | | | — | | | — | |
|
Net Income | | | 460,684 | | 437,383 | | | 437,673 | | | 419,004 | | | 423,557 | |
Dividend on Preferred Stock | | | 185 | | 185 | | | 185 | | | 185 | | | 185 | |
|
Net Income Available to Common Shareholders | | $ | 460,499 | | 437,198 | | | 437,488 | | | 418,819 | | | 423,372 | |
|
12
FIFTH THIRD BANCORP AND SUBSIDIARIES
Other Operating Income and Operating Expenses
(unaudited) ($ in thousands)
|
| | | For the Three Months Ended
|
| | | December 31, 2003 | | September 30, 2003 | | June 30, 2003 | | March 31, 2003 | | December 31, 2002 |
|
Other Operating Income | | | | | | | | | | | |
Electronic Payment Processing Income | | $ | 160,178 | | 143,210 | | 141,501 | | 130,138 | | 147,343 |
Service Charges on Deposits | | | 124,838 | | 125,130 | | 120,826 | | 114,322 | | 112,646 |
Mortgage Banking Net Revenue | | | 57,229 | | 74,830 | | 92,826 | | 76,849 | | 66,689 |
Investment Advisory Income | | | 84,860 | | 84,726 | | 82,843 | | 79,737 | | 74,156 |
Other Service Charges and Fees | | | 112,522 | | 171,328 | | 139,163 | | 158,363 | | 164,013 |
Operating Lease Income | | | 57,900 | | 65,809 | | — | | — | | — |
Securities Gains, Net | | | 1,815 | | 15,308 | | 38,860 | | 24,909 | | 14,731 |
Securities Gains, Net - Non-Qualifying Hedges on Mortgage Servicing | | | — | | — | | 1,793 | | 1,015 | | 783 |
|
Total Other Operating Income | | | 599,342 | | 680,341 | | 617,812 | | 585,333 | | 580,361 |
|
Operating Expenses | | | | | | | | | | | |
Salaries, Wages and Incentives | | | 221,155 | | 225,113 | | 242,784 | | 232,959 | | 241,887 |
Employee Benefits | | | 53,291 | | 61,087 | | 64,737 | | 60,650 | | 59,532 |
Equipment Expenses | | | 20,911 | | 21,046 | | 20,341 | | 19,712 | | 19,860 |
Net Occupancy Expenses | | | 46,552 | | 36,279 | | 37,837 | | 38,397 | | 36,671 |
Operating Lease Expenses | | | 43,967 | | 49,558 | | — | | — | | — |
Other Operating Expenses (a) | | | 249,146 | | 240,318 | | 228,964 | | 226,459 | | 209,589 |
|
Total Operating Expenses | | $ | 635,022 | | 633,401 | | 594,663 | | 578,177 | | 567,539 |
|
Full-Time Equivalent Employees | | | 18,899 | | 19,770 | | 19,830 | | 19,573 | | 19,119 |
Banking Centers | | | 952 | | 942 | | 943 | | 941 | | 930 |
|
| (a) | Includes intangible amortization expense of $9.5 million, $9.5 million, $11.6 million, $9.3 million and $9.4 million for the three months ended December 31, 2003, September 30, 2003, June 30, 2003, March 31, 2003 and December 31, 2002, respectively. |
13
FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited) ($ in thousands, except share data)
|
| |
| | | As of
| |
| | | December 31, 2003 | | | December 31, 2002 | |
|
Assets | | | | | | | |
Cash and Due from Banks | | $ | 2,359,371 | | | 1,890,809 | |
Securities Available-for-Sale (a) | | | 28,999,168 | | | 25,464,056 | |
Securities Held-to-Maturity (b) | | | 135,215 | | | 51,768 | |
Trading Securities | | | 55,393 | | | 18,286 | |
Other Short-Term Investments | | | 268,092 | | | 293,657 | |
Loans Held for Sale | | | 1,881,127 | | | 3,357,507 | |
Loans and Leases: | | | | | | | |
Commercial Loans | | | 14,209,129 | | | 12,742,832 | |
Construction Loans | | | 3,635,977 | | | 3,327,026 | |
Commercial Mortgage Loans | | | 6,893,742 | | | 5,885,544 | |
Commercial Lease Financing | | | 4,429,605 | | | 3,985,896 | |
Residential Mortgage Loans | | | 4,425,421 | | | 3,494,606 | |
Consumer Loans | | | 17,432,495 | | | 15,116,254 | |
Consumer Lease Financing | | | 2,708,511 | | | 2,637,926 | |
Unearned Income | | | (1,427,027 | ) | | (1,261,948 | ) |
|
Total Loans and Leases | | | 52,307,853 | | | 45,928,136 | |
Reserve for Credit Losses | | | (770,394 | ) | | (683,193 | ) |
|
Total Loans and Leases, net | | | 51,537,459 | | | 45,244,943 | |
Bank Premises and Equipment | | | 1,061,191 | | | 890,934 | |
Operating Lease Equipment | | | 766,762 | | | — | |
Accrued Income Receivable | | | 415,387 | | | 460,838 | |
Goodwill | | | 699,981 | | | 702,051 | |
Intangible Assets | | | 194,569 | | | 236,144 | |
Servicing Rights | | | 298,564 | | | 263,499 | |
Other Assets | | | 2,470,744 | | | 2,019,956 | |
|
Total Assets | | $ | 91,143,023 | | | 80,894,448 | |
|
Liabilities | | | | | | | |
Deposits: | | | | | | | |
Demand | | $ | 12,141,582 | | | 10,095,225 | |
Interest Checking | | | 19,757,044 | | | 17,878,326 | |
Savings | | | 7,375,486 | | | 10,055,639 | |
Money Market | | | 3,201,398 | | | 1,044,371 | |
Other Time | | | 6,685,935 | | | 8,179,520 | |
Certificates - $100,000 and Over | | | 1,370,717 | | | 1,180,765 | |
Foreign Office | | | 6,563,147 | | | 3,774,581 | |
|
Total Deposits | | | 57,095,309 | | | 52,208,427 | |
Federal Funds Borrowed | | | 6,928,505 | | | 4,748,568 | |
Short-Term Bank Notes | | | 500,000 | | | — | |
Other Short-Term Borrowings | | | 5,742,202 | | | 4,074,576 | |
Accrued Taxes, Interest and Expenses | | | 2,303,948 | | | 2,307,717 | |
Other Liabilities | | | 985,640 | | | 439,934 | |
Long-Term Debt | | | 9,062,830 | | | 8,178,704 | |
|
Total Liabilities | | | 82,618,434 | | | 71,957,926 | |
Minority Interest | | | — | | | 461,505 | |
Total Shareholders’ Equity (c) | | | 8,524,589 | | | 8,475,017 | |
|
Total Liabilities and Shareholders’ Equity | | $ | 91,143,023 | | | 80,894,448 | |
|
| (a) | Amortized cost: December 31, 2003 - $29,075,805 and December 31, 2002 - $24,790,289 |
| (b) | Market values: December 31, 2003 - $135,215 and December 31, 2002 - $51,768 |
| (c) | Common Shares: Stated value $2.22 per share; authorized 1,300,000,000; outstanding December 31, 2003 - 566,685,301 (excluding 16,766,390 treasury shares) and December 31, 2002 - 574,355,247 (excluding 9,071,857 treasury shares). |
14
FIFTH THIRD BANCORP AND SUBSIDIARIES
Loans and Leases Serviced
(unaudited) ($ in thousands)
|
| | | As of
|
| | | December 31, 2003 | | September 30, 2003 | | June 30, 2003 | | March 31, 2003 | | December 31, 2002 |
|
Commercial | | | | | | | | | | | |
Commercial Loans | | $ | 14,209,122 | | 13,824,371 | | 14,014,541 | | 13,380,264 | | 12,742,725 |
Mortgage | | | 6,893,742 | | 6,590,021 | | 6,297,335 | | 5,983,988 | | 5,885,544 |
Construction | | | 3,301,082 | | 3,143,315 | | 3,052,459 | | 3,064,878 | | 3,009,113 |
Leases | | | 3,263,145 | | 3,160,839 | | 3,021,888 | | 2,998,208 | | 3,019,190 |
|
Subtotal | | | 27,667,091 | | 26,718,546 | | 26,386,223 | | 25,427,338 | | 24,656,572 |
Consumer | | | | | | | | | | | |
Consumer Loans | | | 16,670,948 | | 17,090,372 | | 15,785,717 | | 14,862,765 | | 14,578,705 |
Mortgage & Construction | | | 4,760,317 | | 4,820,026 | | 4,054,287 | | 3,966,160 | | 3,812,518 |
Credit Card | | | 761,545 | | 619,893 | | 588,338 | | 562,335 | | 537,549 |
Leases | | | 2,447,952 | | 2,557,602 | | 2,541,934 | | 2,448,098 | | 2,342,792 |
|
Subtotal | | | 24,640,762 | | 25,087,893 | | 22,970,276 | | 21,839,358 | | 21,271,564 |
|
Total Loans and Leases | | | 52,307,853 | | 51,806,439 | | 49,356,499 | | 47,266,696 | | 45,928,136 |
| | | | | |
Loans Held for Sale | | | 1,881,127 | | 1,528,137 | | 3,245,470 | | 3,011,377 | | 3,357,507 |
| | | | | |
Operating Lease Equipment (a) | | | 766,762 | | 899,348 | | — | | — | | — |
| | | | | |
Loans and Leases Serviced for Others: | | | | | | | | | | | |
Residential Mortgage (b) | | | 24,494,643 | | 24,379,988 | | 24,990,054 | | 25,848,335 | | 26,467,761 |
Commercial Mortgage (c) | | | 2,084,710 | | 2,017,717 | | 2,008,982 | | 1,990,481 | | 1,959,290 |
Commercial Loans (d) | | | 1,790,257 | | 1,925,655 | | 1,813,106 | | 1,831,119 | | 1,762,564 |
Consumer Loans (e) | | | 866,156 | | 909,090 | | — | | — | | — |
Consumer Leases (a) | | | — | | — | | 1,127,470 | | 1,309,487 | | 1,475,219 |
|
Total Loans and Leases Serviced for Others | | | 29,235,766 | | 29,232,450 | | 29,939,612 | | 30,979,422 | | 31,664,834 |
|
Total Loans and Leases Serviced | | $ | 84,191,508 | | 83,466,374 | | 82,541,581 | | 81,257,495 | | 80,950,477 |
|
| (a) | Prior to January 1, 2002, Fifth Third sold to and subsequently leased back from an unrelated asset-backed special purpose entity (SPE) certain consumer auto lease assets, subject to credit recourse and with servicing retained. Fifth Third adopted the provisions of FASB Interpretation No. 46 and consolidated this SPE effective July 1, 2003, as Fifth Third was deemed the primary beneficiary under the provisions of this Interpretation. |
| (b) | Fifth Third sells certain residential mortgage loans, primarily conforming and fixed-rate in nature, and retains servicing responsibilities. |
| (c) | Fifth Third sells certain commercial mortgage loans and retains servicing responsibilities. |
| (d) | Fifth Third transfers, subject to credit recourse and with servicing retained, certain investment grade commercial loans to an unconsolidated qualified special purpose entity (QSPE), which is wholly-owned by an independent third party. |
| (e) | Fifth Third sells certain consumer loans that are primarily variable rate in nature and retains servicing responsibilities. |
15
FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields (Taxable Equivalent) and Rates
(unaudited) ($ in thousands)
|
| | | For the Three Months Ended | |
| |
|
| | | December 31, 2003 | | | December 31, 2002 | |
|
| | | Average Balance | | | Average Yield/Rate | | | Average Balance | | | Average Yield/Rate | |
| |
|
Assets | | | | | | | | | | | | | |
Interest-Earning Assets: | | | | | | | | | | | | | |
Loans and Leases | | $ | 53,886,159 | | | 4.94 | % | | 48,478,420 | | | 5.81 | % |
Taxable Securities | | | 28,362,419 | | | 4.29 | | | 24,151,000 | | | 5.04 | |
Tax Exempt Securities | | | 1,026,499 | | | 7.41 | | | 1,071,417 | | | 7.63 | |
Other Short-Term Investments | | | 205,667 | | | 0.45 | | | 355,263 | | | 1.38 | |
|
Total Interest-Earning Assets | | | 83,480,744 | | | 4.74 | | | 74,056,100 | | | 5.56 | |
Cash and Due from Banks | | | 2,043,667 | | | | | | 1,533,686 | | | | |
Other Assets | | | 5,825,052 | | | | | | 4,730,153 | | | | |
Reserve for Credit Losses | | | (771,129 | ) | | | | | (663,809 | ) | | | |
|
Total Assets | | $ | 90,578,334 | | | | | | 79,656,130 | | | | |
|
Liabilities | | | | | | | | | | | | | |
Interest-Bearing Liabilities: | | | | | | | | | | | | | |
Interest Checking | | $ | 19,302,847 | | | 0.93 | % | | 17,671,001 | | | 1.54 | % |
Savings | | | 7,699,512 | | | 0.60 | | | 10,479,879 | | | 1.39 | |
Money Market | | | 3,388,175 | | | 0.89 | | | 1,013,143 | | | 1.80 | |
Other Time | | | 6,728,502 | | | 2.78 | | | 8,392,695 | | | 3.34 | |
Certificates-$100,000 and Over | | | 1,527,837 | | | 1.51 | | | 1,346,626 | | | 2.66 | |
Foreign Office Deposits | | | 5,605,733 | | | 1.01 | | | 2,515,241 | | | 1.44 | |
Federal Funds Borrowed | | | 7,503,360 | | | 1.02 | | | 4,943,602 | | | 1.46 | |
Short-Term Bank Notes | | | 86,957 | | | 1.06 | | | — | | | — | |
Other Short-Term Borrowings | | | 6,664,002 | | | 0.86 | | | 3,966,693 | | | 1.62 | |
Long-Term Debt | | | 9,148,606 | | | 3.78 | | | 8,142,349 | | | 4.70 | |
|
Total Interest-Bearing Liabilities | | | 67,655,531 | | | 1.48 | | | 58,471,229 | | | 2.24 | |
Demand Deposits | | | 11,459,535 | | | | | | 9,675,356 | | | | |
Other Liabilities | | | 2,896,161 | | | | | | 2,588,700 | | | | |
|
Total Liabilities | | | 82,011,227 | | | | | | 70,735,285 | | | | |
Minority Interest | | | — | | | | | | 456,535 | | | | |
Shareholders’ Equity | | | 8,567,107 | | | | | | 8,464,310 | | | | |
|
Total Liabilities and Shareholders’ Equity | | $ | 90,578,334 | | | | | | 79,656,130 | | | | |
|
Average Common Shares (in thousands): | | | | | | | | | | | | | |
Outstanding | | | 568,104 | | | | | | 576,471 | | | | |
Diluted | | | 576,881 | | | | | | 586,809 | | | | |
|
Ratios (percent): | | | | | | | | | | | | | |
Net Interest Margin (Taxable Equivalent) | | | | | | 3.54 | % | | | | | 3.80 | % |
Net Interest Rate Spread (Taxable Equivalent) | | | | | | 3.26 | % | | | | | 3.32 | % |
Interest-Bearing Liabilities to Interest-Earning Assets | | | | | | 81.04 | % | | | | | 78.96 | % |
|
16
FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields (Taxable Equivalent) and Rates
(unaudited) ($ in thousands)
|
| |
| | | For the Twelve Months Ended
| |
| | | December 31, 2003 | | | December 31, 2002 | |
|
| | | Average Balance | | | Average Yield/Rate | | | Average Balance | | | Average Yield/Rate | |
| |
|
Assets | | | | | | | | | | | | | |
Interest-Earning Assets: | | | | | | | | | | | | | |
Loans and Leases | | $ | 52,413,721 | | | 5.20 | % | | 45,538,622 | | | 6.20 | % |
Taxable Securities | | | 27,583,911 | | | 4.45 | | | 22,144,951 | | | 5.68 | |
Tax Exempt Securities | | | 1,056,342 | | | 7.26 | | | 1,101,334 | | | 7.40 | |
Other Short-Term Investments | | | 306,537 | | | 0.97 | | | 338,575 | | | 1.72 | |
|
Total Interest-Earning Assets | | | 81,360,511 | | | 4.95 | | | 69,123,482 | | | 6.03 | |
Cash and Due from Banks | | | 1,600,392 | | | | | | 1,551,031 | | | | |
Other Assets | | | 5,211,663 | | | | | | 4,968,991 | | | | |
Reserve for Credit Losses | | | (729,568 | ) | | | | | (644,886 | ) | | | |
|
Total Assets | | $ | 87,442,998 | | | | | | 74,998,618 | | | | |
|
Liabilities | | | | | | | | | | | | | |
Interest-Bearing Liabilities: | | | | | | | | | | | | | |
Interest Checking | | $ | 18,679,204 | | | 1.01 | % | | 16,239,081 | | | 1.83 | % |
Savings | | | 8,019,808 | | | 0.79 | | | 9,464,772 | | | 1.67 | |
Money Market | | | 3,188,949 | | | 1.01 | | | 1,162,401 | | | 2.36 | |
Other Time | | | 7,167,421 | | | 2.98 | | | 9,402,798 | | | 3.80 | |
Certificates-$100,000 and Over | | | 3,089,987 | | | 1.46 | | | 1,689,641 | | | 3.24 | |
Foreign Office Deposits | | | 3,862,375 | | | 1.13 | | | 2,017,723 | | | 1.71 | |
Federal Funds Borrowed | | | 7,000,957 | | | 1.14 | | | 3,261,948 | | | 1.66 | |
Short-Term Bank Notes | | | 21,918 | | | 1.06 | | | 1,584 | | | 3.40 | |
Other Short-Term Borrowings | | | 5,350,047 | | | 1.03 | | | 3,926,780 | | | 1.71 | |
Long-Term Debt | | | 8,747,063 | | | 4.15 | | | 7,640,253 | | | 4.99 | |
|
Total Interest-Bearing Liabilities | | | 65,127,729 | | | 1.67 | | | 54,806,981 | | | 2.61 | |
Demand Deposits | | | 10,482,003 | | | | | | 8,952,858 | | | | |
Other Liabilities | | | 2,982,375 | | | | | | 2,601,863 | | | | |
|
Total Liabilities | | | 78,592,107 | | | | | | 66,361,702 | | | | |
Minority Interest | | | 233,882 | | | | | | 440,075 | | | | |
Shareholders’ Equity | | | 8,617,009 | | | | | | 8,196,841 | | | | |
|
Total Liabilities and Shareholders’ Equity | | $ | 87,442,998 | | | | | | 74,998,618 | | | | |
|
Average Common Shares (in thousands): | | | | | | | | | | | | | |
Outstanding | | | 571,590 | | | | | | 580,327 | | | | |
Diluted | | | 580,003 | | | | | | 592,020 | | | | |
|
Ratios (percent): | | | | | | | | | | | | | |
Net Interest Margin (Taxable Equivalent) | | | | | | 3.62 | % | | | | | 3.96 | % |
Net Interest Rate Spread (Taxable Equivalent) | | | | | | 3.28 | % | | | | | 3.42 | % |
Interest-Bearing Liabilities to Interest-Earning Assets | | | | | | 80.05 | % | | | | | 79.29 | % |
|
17
FIFTH THIRD BANCORP AND SUBSIDIARIES
Regulatory Capital
(unaudited) ($ in thousands)
|
| | | December 31, 2003 (a) | | | September 30, 2003 | | | June 30, 2003 | | | March 31, 2003 | | | December 31, 2002 | |
|
Tier 1 Capital: | | | | | | | | | | | | | | | | |
Shareholders’ Equity | | $ | 8,524,589 | | | 8,553,786 | | | 8,554,234 | | | 8,663,744 | | | 8,475,017 | |
Goodwill and Certain Other Intangibles | | | (894,550 | ) | | (903,540 | ) | | (912,531 | ) | | (923,607 | ) | | (932,646 | ) |
Unrealized Losses/(Gains) | | | 57,369 | | | (42,829 | ) | | (288,328 | ) | | (348,963 | ) | | (421,237 | ) |
Other | | | 473,890 | | | 472,519 | | | 556,967 | | | 546,319 | | | 535,118 | |
|
Total Tier 1 Capital | | $ | 8,161,298 | | | 8,079,936 | | | 7,910,342 | | | 7,937,493 | | | 7,656,252 | |
|
Total Capital: | | | | | | | | | | | | | | | | |
Tier 1 Capital | | $ | 8,161,298 | | | 8,079,936 | | | 7,910,342 | | | 7,937,493 | | | 7,656,252 | |
Qualifying Reserves for Credit Losses | | | 787,143 | | | 788,381 | | | 755,103 | | | 708,122 | | | 691,567 | |
Qualifying Subordinated Notes | | | 1,036,779 | | | 1,056,981 | | | 991,441 | | | 491,655 | | | 496,427 | |
|
Total Risk-Based Capital | | $ | 9,985,220 | | | 9,925,298 | | | 9,656,886 | | | 9,137,270 | | | 8,844,246 | |
|
Risk-Weighted Assets | | | 74,272,000 | | | 72,863,148 | | | 69,849,411 | | | 66,737,471 | | | 65,444,076 | |
Ratios (percent): | | | | | | | | | | | | | | | | |
Average Shareholders’ Equity to Average Assets | | | 9.46 | % | | 9.42 | | | 10.19 | | | 10.42 | | | 10.63 | |
Risk-Based Capital: | | | | | | | | | | | | | | | | |
Tier 1 Capital | | | 10.99 | % | | 11.09 | | | 11.32 | | | 11.89 | | | 11.70 | |
Total Capital | | | 13.44 | % | | 13.62 | | | 13.83 | | | 13.69 | | | 13.51 | |
Tier 1 Leverage | | | 9.10 | % | | 9.10 | | | 9.18 | | | 9.67 | | | 9.73 | |
|
| (a) | December 31, 2003 regulatory capital data and ratios are estimated. |
18
FIFTH THIRD BANCORP AND SUBSIDIARIES
Asset Quality
(unaudited) ($ in thousands)
|
| Summary of Credit Loss Experience | | For the Three Months Ended
| |
| | | December 31, 2003 | | | September 30, 2003 | | | June 30, 2003 | | | March 31, 2003 | | | December 31, 2002 | |
|
Losses Charged Off: | | | | | | | | | | | | | | | | |
Commercial, Financial and Agricultural Loans | | $ | (56,936 | ) | | (39,385 | ) | | (29,259 | ) | | (27,140 | ) | | (17,236 | ) |
Real Estate - Commercial Mortgage Loans | | | (1,678 | ) | | (4,622 | ) | | (1,218 | ) | | (1,061 | ) | | (5,591 | ) |
Real Estate - Construction Loans | | | (898 | ) | | (2,162 | ) | | (410 | ) | | (198 | ) | | (1,167 | ) |
Real Estate - Residential Mortgage Loans | | | (8,562 | ) | | (3,266 | ) | | (3,195 | ) | | (8,806 | ) | | (3,467 | ) |
Consumer Loans | | | (36,828 | ) | | (33,560 | ) | | (31,802 | ) | | (33,266 | ) | | (31,397 | ) |
Lease Financing | | | (8,828 | ) | | (9,364 | ) | | (25,721 | ) | | (12,007 | ) | | (11,038 | ) |
|
Total Losses | | | (113,730 | ) | | (92,359 | ) | | (91,605 | ) | | (82,478 | ) | | (69,896 | ) |
Recoveries of Losses Previously Charged Off: | | | | | | | | | | | | | | | | |
Commercial, Financial and Agricultural Loans | | | 5,355 | | | 4,111 | | | 2,379 | | | 4,489 | | | 3,736 | |
Real Estate - Commercial Mortgage Loans | | | 597 | | | 390 | | | 418 | | | 686 | | | 830 | |
Real Estate - Construction Loans | | | 44 | | | 231 | | | 33 | | | 176 | | | 237 | |
Real Estate - Residential Mortgage Loans | | | 20 | | | 134 | | | 11 | | | 2 | | | 1 | |
Consumer Loans | | | 10,867 | | | 10,037 | | | 8,393 | | | 10,159 | | | 12,501 | |
Lease Financing | | | 1,878 | | | 2,327 | | | 2,896 | | | 2,310 | | | 3,074 | |
|
Total Recoveries | | | 18,761 | | | 17,230 | | | 14,130 | | | 17,822 | | | 20,379 | |
Net Losses Charged Off: | | | | | | | | | | | | | | | | |
Commercial, Financial and Agricultural Loans | | | (51,581 | ) | | (35,274 | ) | | (26,880 | ) | | (22,651 | ) | | (13,500 | ) |
Real Estate - Commercial Mortgage Loans | | | (1,081 | ) | | (4,232 | ) | | (800 | ) | | (375 | ) | | (4,761 | ) |
Real Estate - Construction Loans | | | (854 | ) | | (1,931 | ) | | (377 | ) | | (22 | ) | | (930 | ) |
Real Estate - Residential Mortgage Loans | | | (8,542 | ) | | (3,132 | ) | | (3,184 | ) | | (8,804 | ) | | (3,466 | ) |
Consumer Loans | | | (25,961 | ) | | (23,523 | ) | | (23,409 | ) | | (23,107 | ) | | (18,896 | ) |
Lease Financing | | | (6,950 | ) | | (7,037 | ) | | (22,825 | ) | | (9,697 | ) | | (7,964 | ) |
|
Total Net Losses Charged Off | | $ | (94,969 | ) | | (75,129 | ) | | (77,475 | ) | | (64,656 | ) | | (49,517 | ) |
|
Reserve for Credit Losses, Beginning | | $ | 771,709 | | | 734,756 | | | 703,354 | | | 683,193 | | | 660,934 | |
Total Net Losses Charged Off | | | (94,969 | ) | | (75,129 | ) | | (77,475 | ) | | (64,656 | ) | | (49,517 | ) |
Provision Charged to Operations | | | 93,654 | | | 112,082 | | | 108,877 | | | 84,817 | | | 72,085 | |
Acquired Institutions and Other | | | — | | | — | | | — | | | — | | | (309 | ) |
|
Reserve for Credit Losses, Ending | | $ | 770,394 | | | 771,709 | | | 734,756 | | | 703,354 | | | 683,193 | |
|
| | | | | |
| Nonperforming and Underperforming Assets | | | | | | | | | | | | | | | |
|
| | | As of
| |
| | | December 31, 2003 | | | September 30, 2003 | | | June 30, 2003 | | | March 31, 2003 | | | December 31, 2002 | |
|
Nonaccrual Loans and Leases (a) | | $ | 241,505 | | | 271,256 | | | 273,293 | | | 277,452 | | | 246,986 | |
Renegotiated Loans and Leases | | | 8,286 | | | — | | | — | | | — | | | — | |
Other Assets, Including Other Real Estate Owned | | | 68,540 | | | 52,053 | | | 33,212 | | | 29,221 | | | 25,618 | |
|
Total Nonperforming Assets | | | 318,331 | | | 323,309 | | | 306,505 | | | 306,673 | | | 272,604 | |
Ninety Days Past Due Loans and Leases (a) | | | 145,243 | | | 145,643 | | | 137,503 | | | 134,024 | | | 162,213 | |
|
Total Underperforming Assets | | $ | 463,574 | | | 468,952 | | | 444,008 | | | 440,697 | | | 434,817 | |
|
Average Loans and Leases (b) | | $ | 52,401,684 | | | 50,615,070 | | | 48,561,158 | | | 47,154,837 | | | 45,272,569 | |
Loans and Leases (b) | | | 52,307,853 | | | 51,806,439 | | | 49,356,499 | | | 47,266,696 | | | 45,928,136 | |
Ratios | | | | | | | | | | | | | | | | |
Net Losses Charged Off as a Percent of Average Loans and Leases | | | 0.72 | % | | 0.59 | | | 0.64 | | | 0.56 | | | 0.43 | |
Reserve as a Percent of Loans and Leases | | | 1.47 | % | | 1.49 | | | 1.49 | | | 1.49 | | | 1.49 | |
Nonperforming Assets as a Percent of Loans, Leases and Other Assets, Including Other Real Estate Owned | | | 0.61 | % | | 0.62 | | | 0.62 | | | 0.65 | | | 0.59 | |
Underperforming Assets as a Percent of Loans, Leases and Other Assets, Including Other Real Estate Owned | | | 0.89 | % | | 0.90 | | | 0.90 | | | 0.93 | | | 0.95 | |
|
| (a) | Nonaccrual includes $23.6 million and Ninety Days Past Due includes $46.2 million of residential mortgage loans as of December 31, 2003. |
| (b) | Excludes loans held for sale. |
19
