Exhibit 99.1
| News Release | ||||
CONTACT: | Bradley S. Adams (Analysts) (513) 534-0983 Roberta R. Jennings (Media) (513) 579-4153 | FOR IMMEDIATE RELEASE July 15, 2004 | ||
FIFTH THIRD BANCORP REPORTS 11 PERCENT INCREASE
IN SECOND QUARTER EARNINGS PER SHARE
Fifth Third Bancorp’s 2004 second quarter earnings per diluted share were $.79, an increase of 11 percent over $.71 per diluted share for the same period in 2003. Second quarter net income totaled $447,525,000, an eight percent increase over second quarter 2003’s net income of $415,275,000. Second quarter return on average assets (ROA) and return on average equity (ROE) were 1.91 percent and 21.0 percent, respectively, compared to 1.92 percent and 18.6 percent in 2003’s second quarter.
“Second quarter results reflect favorable momentum across nearly all of Fifth Third’s businesses,” stated George A. Schaefer, Jr., President and CEO of Fifth Third Bancorp. “Strong sales results from our investment advisors and electronic payment processing businesses and continued strength in commercial and retail, including mortgage banking, offer reason for optimism as the economy shows more strength. Credit quality trends continue to improve and expenses remain well controlled as a result of our focus on productivity initiatives. Our focus for the remainder of 2004 and into 2005 continues to be on investing in our larger markets to build a best-in-class branch network and generating growth on every street corner we serve.”
“While the direction of the economy and the numerous changes in market sentiment remain well beyond our control, I continue to be very pleased with the successes we have achieved in terms of hiring talented and experienced sales people and the level of investment we have made in our larger markets. The environment will continue to offer challenges as the industry navigates a period of rising interest rates, however, Fifth Third’s strong capital base and conservatively positioned balance sheet, diversified business mix, large core deposit funding base and, most importantly, a proven sales culture, position us well to manage in this climate. We believe these strengths, combined with the tremendous amount of upside we have in our larger markets and successful de-novo growth, provide Fifth Third the ability to compete very aggressively in any rate environment.”
Noninterest Income
Recent strong business line revenue growth trends continued in the second quarter with Noninterest Income increasing 21 percent over the same quarter last year.
Investment Advisory revenues increased 17 percent over the same quarter last year and 17 percent on a year-to-date basis primarily as a result of strong sales momentum across numerous product lines including retail brokerage, institutional asset management and private client services. 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 $171 billion in assets under care.
Fifth Third Processing Solutions, our electronic payment processing division, delivered a five percent increase in revenues over the second quarter of last year. Comparisons to prior periods are impacted by the April 1, 2004 sale of certain out-of-footprint third-party sourced merchant processing contracts acquired through previous acquisitions that neither met Fifth Third’s return requirements nor offered additional sales opportunities. The revenue previously realized from these sold merchant contracts along with the reduction of approximately $7 million in revenue from the MasterCard®/Visa® settlement combined to represent a reduction of approximately $29 million in quarterly revenue that was previously reported as a component of electronic payment processing revenues. Exclusive of the impact of the above referenced items, second quarter revenues increased by 25 percent on a core basis over the same quarter last year reflective of strong new business acquisition and improved retail sales volume activity; comparisons being provided to supplement an understanding of these fundamental revenue trends.
Successful sales of retail and commercial deposit accounts and corporate treasury management products fueled an increase in deposit service revenues of nine percent over the same quarter last year and 26 percent on an annualized sequential basis. The second quarter results were highlighted by a 21 percent increase in commercial deposit based revenues over the same quarter last year on the strength of Fifth Third’s continuing focus on new customer acquisition and cross-sell initiatives within its core middle-market commercial banking franchise. Retail-based deposit revenues rebounded from the seasonal lows typically seen in the first quarter and posted 41 percent annualized sequential growth.
Mortgage Banking net service revenue totaled $60.7 million in the second quarter compared to $43.9 million last quarter and $92.8 million in 2003’s second quarter. Including net realized securities gains resulting from the sale of the remaining securities portfolio established to partially hedge against volatility related to the value of mortgage servicing rights, mortgage banking net service revenue totaled $94.6 million in the second quarter of last year. Mortgage originations totaled $2.8 billion in the second quarter versus $2.0 billion last quarter and $4.9 billion in the second quarter of last year. Second quarter mortgage banking net service revenue was comprised of $70.0 million in total mortgage banking fees and loan sales, plus $33.7
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million in net valuation adjustments and amortization on mortgage servicing rights and less $43.0 million of losses and mark-to-market adjustments on both settled and outstanding free-standing derivative financial instruments. The mark-to-market adjustments and settlement of free-standing derivative financial instruments and corresponding valuation adjustments resulted from interest rate volatility and the resulting impact of changing prepayment speeds on the mortgage servicing portfolio. The mortgage servicing asset, net of the valuation reserve, was $341.4 million at June 30, 2004, compared to $274.4 million last quarter, on a servicing portfolio of $23.9 billion.
Other noninterest income totaled $268.6 million in the second quarter, a 93 percent increase from the second quarter last year and a 91 percent increase from last quarter. Second quarter 2004 results include a pre-tax gain of approximately $148 million ($84.6 million after-tax) on the previously mentioned sale of certain out-of-footprint third-party sourced merchant processing contracts representing approximately $22 million in quarterly revenue.
Balance Sheet Trends
Loan and lease balances exhibited very strong growth with period end loans and leases held for investment increasing by $2.2 billion from last quarter, excluding loans acquired as a result of the completion of the Franklin Financial acquisition, or 16 percent on an annualized sequential basis, driven primarily by strong results in both consumer and commercial lending. On an average basis, total loans and leases increased by nine percent over the same quarter last year. Direct installment loan originations accelerated during the second quarter and totaled $2.0 billion, compared to $1.5 billion last quarter, with period-end balances, excluding acquired loans, increasing by 11 percent over the second quarter of last year and 10 percent on an annualized sequential basis. Consumer loan 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 securitization and sale of $750 million of automotive loans in the second quarter of 2004. Exclusive of the impact of these transactions, consumer loan growth increased 21 percent over the same quarter last year; comparisons being provided to supplement an understanding of the fundamental trends in consumer lending. Period end commercial loan and lease balances, excluding acquired loans, increased by 11 percent over the same quarter last year and by $900 million from last quarter.
Commercial customer additions and net new retail checking account growth, mitigated by attrition in higher balance interest bearing accounts, resulted in modest deposit trends for Fifth Third in the second quarter of 2004. Compared to the same quarter last year, average interest checking balances and average demand deposit balances, excluding acquired deposits, increased by four percent and 22 percent, respectively, with average transaction account balances, excluding acquired deposits, increasing by six percent. On an overall basis, the level of average transaction account balances increased at an annualized rate of eight percent despite continued moderation in higher balance interest bearing accounts given the low level of interest rates.
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Fifth Third is confident in its ability to competitively price and generate growth in customers and deposit balances in an increasing interest rate environment.
Compared to the second quarter of 2003, net interest income on a fully-taxable equivalent basis increased three percent resulting from eight percent growth in average earning assets despite a 15 basis point (bp) decrease in the net interest margin. The previously disclosed implementation of SFAS No. 150 during the third quarter of 2003 and the resulting reclassification of approximately $10 million of quarterly minority interest expense into interest expense, impacted net interest income and margin performance comparisons to the second quarter of 2003. Sequentially, net interest income on a fully-taxable equivalent basis increased seven percent on an annualized basis despite 6 bp of contraction in the net interest margin due to strong growth in average earning assets. The contraction in the net interest margin from last quarter resulted from seasonality factors and efforts to improve the overall funding position for a rising interest rate environment. These factors more than offset the margin benefit realized from the early retirement of approximately $1 billion of Federal Home Loan Bank advances during the second quarter of 2004. Fifth Third expects that margin and net interest income trends in coming periods will continue to benefit from the steepness in the short end of the yield curve and moderation in the level of prepayment activity with absolute results 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 will aggressively pursue deposit growth as the key determinant to future margin and net interest income performance trends.
On June 11, 2004, Fifth Third completed the purchase of Franklin Financial Corporation and its subsidiary, Franklin National Bank, headquartered in Franklin, Tennessee, acquiring approximately $581 million in total loans and $767 million in total deposits. The total transaction value was approximately $317 million. Fifth Third Bank, N.A., a national bank headquartered in Franklin, Tennessee, now has approximately $1.3 billion in total assets, including approximately $880 million in total loans and leases and $840 million in total deposits.
Fifth Third repurchased approximately 8.5 million shares of its common stock for a total of approximately $459 million in the second quarter of 2004. With increasing capital levels and continued stability in earning asset yields anticipated in the remainder of 2004, Fifth Third continues to view share repurchases as an effective means of delivering value to shareholders. As of June 30, 2004, the remaining authority under the plan authorized by the Board of Directors in June of 2004 is slightly less than 40 million shares.
Credit Quality
Credit quality metrics and trends continued to improve in the second quarter. Second quarter net charge-offs as a percentage of average loans and leases were 43 bp, compared to 54 bp last quarter and 64 bp in the second quarter of last year. Nonperforming assets were 50 bp of total loans, leases and other assets,
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including other real estate owned at June 30, 2004, improved from 57 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 for the quarter were $58.9 million, compared to $70.8 million last quarter and $77.5 million in the second quarter of 2003. The second quarter provision for loan and lease losses totaled $87.9 million, compared to $83.2 million last quarter and $108.9 million in the same quarter last year, including a $29.0 million increase in the credit loss reserve from last quarter which represents 1.43 percent of total loans and leases outstanding as of June 30, 2004, compared to 1.49 percent as of June 30, 2003.
Noninterest Expense
Second quarter noninterest expense increased 20 percent over the same period last year and 14 percent from last quarter. Comparisons to the same period last year are impacted by (i) the implementation of FASB Interpretation No. 46 in the third quarter of 2003, resulting in the recognition of $32 million of depreciation expense in the 2004 second quarter on operating lease assets captured as a component of noninterest expense; (ii) 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; (iii) a $30.8 million pre-tax recovery in the second quarter of 2003 of previously charged-off treasury clearing and settlement account balances; and (iv) a charge of $78.1 million related to the early retirement of approximately $1 billion of Federal Home Loan Bank advances in the second quarter of 2004. Excluding the impact of these items, noninterest expense was essentially unchanged from the same quarter last year; comparisons being provided to supplement an understanding of the fundamental trends in noninterest expense.
Fifth Third’s second quarter efficiency ratio was 48.9 percent, compared to 47.1 percent last quarter and 45.5 percent in the second quarter of last year. Fifth Third is continuing to focus on efficiency initiatives 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. Fifth Third is also continuing to invest significantly in its retail distribution network as evidenced by the opening of 42 new banking centers that did not involve consolidation of existing facilities since the beginning of the year and the plans for a similar number in the second half of 2004.
Conference Call
Fifth Third will host a conference call to discuss these second quarter financial results at 9:00 a.m. (Eastern Daylight 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 for approximately seven days by dialing 800-642-1687 for domestic access and 706-645-9291 for international access (passcode: 8591645#).
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Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company has $95.6 billion in assets, operates 17 affiliates with 992 full-service Banking Centers, including 130 Bank Mart® locations open seven days a week inside select grocery stores and 1,844 Jeanie® ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee and West Virginia. The financial strength of Fifth Third’s Ohio and Michigan 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” 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 origination and 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) changes and trends in the securities markets; (7) legislative or regulatory changes or actions, or significant litigation, adversely affect us or the businesses in which we are engaged; and (8) the impact of reputational risk created by the developments discussed above on such matters as business generation and retention, funding and liquidity. 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.
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FIFTH THIRD BANCORP AND SUBSIDIARIES Quarterly Financial Review for June 30, 2004 | ||
| Table of Contents | Page | |
Earnings Review: | ||
| 8-9 | ||
| 10-11 | ||
| 12 | ||
Condensed Consolidated Quarterly Statements of Income (Taxable Equivalent) | 13 | |
| 14 | ||
Financial Condition: | ||
| 15 | ||
| 16 | ||
Consolidated Average Balance Sheets, Yields (Taxable Equivalent) and Rates | 17-18 | |
| 19 | ||
| 20 | ||
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Financial Highlights
(unaudited)
| For the Three Months Ended | ||||||||
| June 30, 2004 | June 30, 2003 | Percent Change | ||||||
Earnings ($ in thousands, except per share data) | ||||||||
Net Interest Income (Taxable Equivalent) | $ | 771,187 | 749,011 | 3.0 | ||||
Net Income Available to Common Shareholders | 447,525 | 415,275 | 7.8 | |||||
Earnings Per Share: | ||||||||
Basic | 0.80 | 0.72 | 11.1 | |||||
Diluted | 0.79 | 0.71 | 11.3 | |||||
Key Ratios (percent) | ||||||||
Return on Average Assets (ROA) | 1.91% | 1.92 | (0.5 | ) | ||||
Return on Average Equity (ROE) | 21.0 | 18.6 | 12.9 | |||||
Net Interest Margin (Taxable Equivalent) | 3.54 | 3.69 | (4.1 | ) | ||||
Efficiency | 48.9 | 45.5 | 7.5 | |||||
Average Shareholders’ Equity to Average Assets | 9.09 | 10.34 | (12.1 | ) | ||||
Risk-Based Capital (a): | ||||||||
Tier 1 Capital | 10.56 | 11.47 | (7.9 | ) | ||||
Total Capital | 12.81 | 13.97 | (8.3 | ) | ||||
Tier 1 Leverage | 8.95 | 9.29 | (3.7 | ) | ||||
Common Stock Data | ||||||||
Cash Dividends Declared Per Share | $ | 0.32 | 0.29 | 10.3 | ||||
Book Value Per Share | 14.97 | 15.25 | (1.8 | ) | ||||
Market Price Per Share: | ||||||||
High | 57.00 | 60.49 | (5.8 | ) | ||||
Low | 51.13 | 47.24 | 8.2 | |||||
End of Period | 53.78 | 57.42 | (6.3 | ) | ||||
Price/Earnings Ratio (b) | 17.75 | 21.19 | (16.2 | ) | ||||
| For the Six Months Ended | ||||||||
| June 30, 2004 | June 30, 2003 | Percent Change | ||||||
Earnings ($ in thousands, except per share data) | ||||||||
Net Interest Income (Taxable Equivalent) | $ | 1,530,054 | 1,465,155 | 4.4 | ||||
Net Income Available to Common Shareholders | 877,656 | 805,036 | 9.0 | |||||
Earnings Per Share: | ||||||||
Basic | 1.56 | 1.40 | 11.4 | |||||
Diluted | 1.54 | 1.38 | 11.6 | |||||
Key Ratios (percent) | ||||||||
Return on Average Assets (ROA) | 1.90% | 1.91 | (0.5 | ) | ||||
Return on Average Equity (ROE) | 20.4 | 18.3 | 11.5 | |||||
Net Interest Margin (Taxable Equivalent) | 3.57 | 3.71 | (3.8 | ) | ||||
Efficiency | 48.0 | 46.3 | 3.7 | |||||
Average Shareholders’ Equity to Average Assets | 9.32 | 10.45 | (10.8 | ) | ||||
Common Stock Data | ||||||||
Cash Dividends Declared Per Share | $ | 0.64 | 0.55 | 16.4 | ||||
Market Price Per Share: | ||||||||
High | 60.00 | 62.15 | (3.5 | ) | ||||
Low | 51.13 | 47.05 | 8.7 | |||||
| (a) | June 30, 2004 risk-based capital ratios are estimated. |
| (b) | Based on the most recent twelve-month earnings per diluted share and end of period stock prices. |
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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 | |||||||||||||
1999 | $ | 9.78 | $ | 9.64 | $ | 9.63 | $ | 9.91 | $ | 38.58 | $ | 50.29 | ||||||
2000 | 10.07 | 10.42 | 10.82 | 11.83 | 29.33 | 60.88 | ||||||||||||
2001 | 12.33 | 12.40 | 12.97 | 13.31 | 45.69 | 64.77 | ||||||||||||
2002 | 13.59 | 14.31 | 14.69 | 14.98 | 55.26 | 69.70 | ||||||||||||
2003 | 15.31 | 15.25 | 15.24 | 15.29 | 47.05 | 62.15 | ||||||||||||
2004 | 15.77 | 14.97 | 51.13 | 60.00 | ||||||||||||||
| Earnings Per Share, Basic | ||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||
| March 31 | June 30 | September 30 | December 31 | Year-to-Date | ||||||||||||||
1999 | $ | 0.42 | $ | 0.41 | $ | 0.42 | $ | 0.30 | $ | 1.55 | ||||||||
2000 | 0.43 | 0.39 | 0.51 | 0.53 | 1.86 | |||||||||||||
2001 | 0.49 | 0.18 | 0.44 | 0.63 | 1.74 | |||||||||||||
2002 | 0.63 | 0.65 | 0.67 | 0.69 | 2.64 | |||||||||||||
2003 | 0.68 | 0.72 | 0.73 | 0.78 | 2.91 | |||||||||||||
2004 | 0.76 | 0.80 | 1.56 | |||||||||||||||
| Earnings Per Share, Diluted | ||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||
| March 31 | June 30 | September 30 | December 31 | Year-to-Date | ||||||||||||||
1999 | $ | 0.41 | $ | 0.40 | $ | 0.41 | $ | 0.30 | $ | 1.53 | ||||||||
2000 | 0.43 | 0.38 | 0.50 | 0.52 | 1.83 | |||||||||||||
2001 | 0.48 | 0.18 | 0.43 | 0.61 | 1.70 | |||||||||||||
2002 | 0.62 | 0.64 | 0.66 | 0.67 | 2.59 | |||||||||||||
2003 | 0.67 | 0.71 | 0.72 | 0.77 | 2.87 | |||||||||||||
2004 | 0.75 | 0.79 | 1.54 | |||||||||||||||
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited) ($ in thousands, except per share data)
| For the Three Months Ended | ||||||
June 30, 2004 | June 30, 2003 | |||||
Interest Income | ||||||
Interest and Fees on Loans and Leases | $ | 682,661 | 690,106 | |||
Interest on Securities: | ||||||
Taxable | 305,408 | 315,841 | ||||
Exempt from Income Taxes | 11,412 | 12,889 | ||||
Total Interest on Securities | 316,820 | 328,730 | ||||
| Interest on Other Short-Term Investments | 649 | 1,082 | ||||
Total Interest Income | 1,000,130 | 1,019,918 | ||||
Interest Expense | ||||||
Interest on Deposits: | ||||||
Interest Checking | 35,493 | 45,961 | ||||
Savings | 11,479 | 16,544 | ||||
Money Market | 6,103 | 7,836 | ||||
Other Time | 40,945 | 54,799 | ||||
Certificates - $100,000 and Over | 7,646 | 15,414 | ||||
Foreign Office | 11,435 | 11,151 | ||||
Total Interest on Deposits | 113,101 | 151,705 | ||||
Interest on Federal Funds Purchased | 17,076 | 21,902 | ||||
Interest on Short-Term Bank Notes | 2,774 | - | ||||
Interest on Other Short-Term Borrowings | 17,397 | 14,336 | ||||
| Interest on Long-Term Debt | 87,821 | 92,647 | ||||
| Total Interest Expense | 238,169 | 280,590 | ||||
Net Interest Income | 761,961 | 739,328 | ||||
| Provision for Credit Losses | 87,922 | 108,877 | ||||
Net Interest Income After Provision for Credit Losses | 674,039 | 630,451 | ||||
Noninterest Income | ||||||
Electronic Payment Processing Revenue | 148,427 | 141,501 | ||||
Service Charges on Deposits | 131,147 | 120,826 | ||||
Mortgage Banking Net Revenue | 60,749 | 92,826 | ||||
Investment Advisory Revenue | 96,606 | 82,843 | ||||
Other Noninterest Income | 268,564 | 139,163 | ||||
Operating Lease Revenue | 43,522 | - | ||||
Securities Gains, Net | 111 | 38,860 | ||||
| Securities Gains, Net - Non-Qualifying Hedges on Mortgage Servicing | - | 1,793 | ||||
Total Noninterest Income | 749,126 | 617,812 | ||||
Noninterest Expense | ||||||
Salaries, Wages and Incentives | 254,062 | 269,365 | ||||
Employee Benefits | 65,637 | 64,737 | ||||
Equipment Expenses | 19,309 | 20,341 | ||||
Net Occupancy Expenses | 46,897 | 37,837 | ||||
Operating Lease Expenses | 31,720 | - | ||||
| Other Noninterest Expense | 326,038 | 228,964 | ||||
| Total Noninterest Expense | 743,663 | 621,244 | ||||
Income from Continuing Operations Before Income Taxes and Minority Interest | 679,502 | 627,019 | ||||
| Applicable Income Taxes | 231,792 | 202,466 | ||||
Income from Continuing Operations Before Minority Interest | 447,710 | 424,553 | ||||
| Minority Interest, Net of Tax | - | (10,229 | ) | |||
Income from Continuing Operations | 447,710 | 414,324 | ||||
| Income from Discontinued Operations, Net of Tax | - | 1,136 | ||||
Net Income | 447,710 | 415,460 | ||||
| Dividend on Preferred Stock | 185 | 185 | ||||
| Net Income Available to Common Shareholders | $ | 447,525 | 415,275 | |||
Basic Earnings Per Share: | ||||||
Income from Continuing Operations | $0.80 | 0.72 | ||||
Income from Discontinued Operations | - | - | ||||
Net Income | $ | 0.80 | 0.72 | |||
Diluted Earnings Per Share: | ||||||
Income from Continuing Operations | $0.79 | 0.71 | ||||
Income from Discontinued Operations | - | - | ||||
Net Income | $ | 0.79 | 0.71 | |||
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited) ($ in thousands, except per share data)
| For the Six Months Ended | ||||||
June 30, 2004 | June 30, 2003 | |||||
Interest Income | ||||||
Interest and Fees on Loans and Leases | $ | 1,351,992 | 1,366,164 | |||
Interest on Securities: | ||||||
Taxable | 613,880 | 626,664 | ||||
Exempt from Income Taxes | 23,220 | 25,534 | ||||
Total Interest on Securities | 637,100 | 652,198 | ||||
| Interest on Other Short-Term Investments | 1,163 | 1,854 | ||||
Total Interest Income | 1,990,255 | 2,020,216 | ||||
Interest Expense | ||||||
Interest on Deposits: | ||||||
Interest Checking | 72,030 | 101,228 | ||||
Savings | 20,414 | 37,578 | ||||
Money Market | 12,739 | 17,045 | ||||
Other Time | 85,027 | 116,908 | ||||
Certificates - $100,000 and Over | 13,018 | 27,732 | ||||
Foreign Office | 26,401 | 20,718 | ||||
Total Interest on Deposits | 229,629 | 321,209 | ||||
Interest on Federal Funds Purchased | 35,030 | 41,522 | ||||
Interest on Short-Term Bank Notes | 4,033 | - | ||||
Interest on Other Short-Term Borrowings | 32,988 | 26,845 | ||||
| Interest on Long-Term Debt | 176,871 | 185,069 | ||||
| Total Interest Expense | 478,551 | 574,645 | ||||
Net Interest Income | 1,511,704 | 1,445,571 | ||||
| Provision for Credit Losses | 171,162 | 193,694 | ||||
Net Interest Income After Provision for Credit Losses | 1,340,542 | 1,251,877 | ||||
Noninterest Income | ||||||
Electronic Payment Processing Revenue | 296,661 | 271,638 | ||||
Service Charges on Deposits | 254,394 | 235,149 | ||||
Mortgage Banking Net Revenue | 104,687 | 169,675 | ||||
Investment Advisory Revenue | 189,771 | 162,580 | ||||
Other Noninterest Income | 409,143 | 297,525 | ||||
Operating Lease Revenue | 95,174 | - | ||||
Securities Gains, Net | 25,701 | 63,769 | ||||
| Securities Gains, Net - Non-Qualifying Hedges on Mortgage Servicing | - | 2,809 | ||||
Total Noninterest Income | 1,375,531 | 1,203,145 | ||||
Noninterest Expense | ||||||
Salaries, Wages and Incentives | 499,500 | 538,075 | ||||
Employee Benefits | 141,198 | 125,387 | ||||
Equipment Expenses | 39,196 | 40,053 | ||||
Net Occupancy Expenses | 92,545 | 76,234 | ||||
Operating Lease Expenses | 70,002 | - | ||||
| Other Noninterest Expense | 553,290 | 455,423 | ||||
| Total Noninterest Expense | 1,395,731 | 1,235,172 | ||||
Income from Continuing Operations Before Income Taxes and Minority Interest | 1,320,342 | 1,219,850 | ||||
| Applicable Income Taxes | 442,316 | 395,934 | ||||
Income from Continuing Operations Before Minority Interest | 878,026 | 823,916 | ||||
| Minority Interest, Net of Tax | - | (20,458 | ) | |||
Income from Continuing Operations | 878,026 | 803,458 | ||||
| Income from Discontinued Operations, Net of Tax | - | 1,948 | ||||
Net Income | 878,026 | 805,406 | ||||
| Dividend on Preferred Stock | 370 | 370 | ||||
| Net Income Available to Common Shareholders | $ | 877,656 | 805,036 | |||
Basic Earnings Per Share: | ||||||
Income from Continuing Operations | $1.56 | 1.40 | ||||
Income from Discontinued Operations | - | - | ||||
Net Income | $1.56 | 1.40 | ||||
Diluted Earnings Per Share: | ||||||
Income from Continuing Operations | $1.54 | 1.38 | ||||
Income from Discontinued Operations | - | - | ||||
Net Income | $1.54 | 1.38 | ||||
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders’ Equity
(unaudited) ($ in thousands, except per share data)
| For the Three Months Ended | |||||||
June 30, 2004 | June 30, 2003 | ||||||
Total Shareholders’ Equity, Beginning | $ | 8,863,757 | 8,798,282 | ||||
Net Income | 447,710 | 415,460 | |||||
Nonowner Changes in Equity, Net of Tax: | |||||||
Change in Unrealized Gains and (Losses) on Securities Available-for-Sale and Qualifying Cash Flow Hedges | (652,916 | ) | (60,635 | ) | |||
Net Income and Nonowner Changes in Equity | (205,206 | ) | 354,825 | ||||
Cash Dividends Declared: | |||||||
Common Stock (2004 - $.32 per share and 2003 - $.29 per share) | (179,872 | ) | (165,377 | ) | |||
Preferred Stock | (185 | ) | (185 | ) | |||
Stock Options Exercised Including Treasury Shares Issued | 34,439 | 31,604 | |||||
Stock-Based Compensation Expense | 20,102 | 26,650 | |||||
Loans Issued Related to Exercise of Stock Options, Net | (1,149 | ) | (20,102 | ) | |||
Change in Corporate Tax Benefit Related to Stock-Based Compensation | 2,730 | (2,365 | ) | ||||
Shares Purchased | (458,503 | ) | (329,359 | ) | |||
Acquisitions | 316,633 | - | |||||
| Other | (42 | ) | (3,198 | ) | |||
| Total Shareholders’ Equity, Ending | $ | 8,392,704 | 8,690,775 | ||||
| For the Six Months Ended | |||||||
June 30, 2004 | June 30, 2003 | ||||||
Total Shareholders’ Equity, Beginning | $ | 8,667,003 | 8,604,392 | ||||
Net Income | 878,026 | 805,406 | |||||
Nonowner Changes in Equity, Net of Tax: | |||||||
Change in Unrealized Gains and (Losses) on Securities Available-for-Sale and Qualifying Cash Flow Hedges | (433,444 | ) | (132,909 | ) | |||
Net Income and Nonowner Changes in Equity | 444,582 | 672,497 | |||||
Cash Dividends Declared: | |||||||
Common Stock (2004 - $.64 per share and 2003 - $.55 per share) | (359,773 | ) | (314,886 | ) | |||
Preferred Stock | (370 | ) | (370 | ) | |||
Stock Options Exercised Including Treasury Shares Issued | 63,620 | 55,277 | |||||
Stock-Based Compensation Expense | 42,670 | 62,558 | |||||
Loans Issued Related to Exercise of Stock Options, Net | (1,468 | ) | (20,102 | ) | |||
Change in Corporate Tax Benefit Related to Stock-Based Compensation | 3,186 | (3,587 | ) | ||||
Shares Purchased | (783,913 | ) | (361,819 | ) | |||
Acquisitions | 316,633 | - | |||||
| Other | 534 | (3,185 | ) | ||||
| Total Shareholders’ Equity, Ending | $ | 8,392,704 | 8,690,775 | ||||
12
FIFTH THIRD BANCORP AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income (Taxable Equivalent)
(unaudited) ($ in thousands)
| For the Three Months Ended | |||||||||||||
June 30, 2004 | March 31, 2004 | December 31, 2003 | September 30, 2003 | June 30, 2003 | |||||||||
Interest Income | $ | 1,000,130 | 990,125 | 987,874 | 982,978 | 1,019,918 | |||||||
| Taxable Equivalent Adjustment | 9,226 | 9,124 | 9,629 | 9,661 | 9,683 | ||||||||
Interest Income (Taxable Equivalent) | 1,009,356 | 999,249 | 997,503 | 992,639 | 1,029,601 | ||||||||
| Interest Expense | 238,169 | 240,382 | 252,921 | 258,075 | 280,590 | ||||||||
Net Interest Income (Taxable Equivalent) | 771,187 | 758,867 | 744,582 | 734,564 | 749,011 | ||||||||
| Provision for Credit Losses | 87,922 | 83,240 | 93,654 | 112,082 | 108,877 | ||||||||
Net Interest Income After Provision for Credit Losses (Taxable Equivalent) | 683,265 | 675,627 | 650,928 | 622,482 | 640,134 | ||||||||
Noninterest Income | 749,126 | 626,405 | 599,342 | 680,341 | 617,812 | ||||||||
| Noninterest Expense | 743,663 | 652,068 | 658,034 | 657,019 | 621,244 | ||||||||
Income from Continuing Operations Before Income Taxes, Minority Interest and Cumulative Effect (Taxable Equivalent) | 688,728 | 649,964 | 592,236 | 645,804 | 636,702 | ||||||||
Applicable Income Taxes | 231,792 | 210,524 | 182,087 | 208,670 | 202,466 | ||||||||
| Taxable Equivalent Adjustment | 9,226 | 9,124 | 9,629 | 9,661 | 9,683 | ||||||||
Income from Continuing Operations Before Minority Interest and Cumulative Effect | 447,710 | 430,316 | 400,520 | 427,473 | 424,553 | ||||||||
| Minority Interest, Net of Tax | - | - | - | - | (10,229 | ) | |||||||
Income from Continuing Operations Before Cumulative Effect | 447,710 | 430,316 | 400,520 | 427,473 | 414,324 | ||||||||
| Income from Discontinued Operations, Net of Tax | - | - | 41,001 | 947 | 1,136 | ||||||||
Income Before Cumulative Effect | 447,710 | 430,316 | 441,521 | 428,420 | 415,460 | ||||||||
Cumulative Effect of Change in Accounting Principle, Net of Tax | - | - | - | (10,762 | ) | - | |||||||
Net Income | 447,710 | 430,316 | 441,521 | 417,658 | 415,460 | ||||||||
| Dividend on Preferred Stock | 185 | 185 | 185 | 185 | 185 | ||||||||
| Net Income Available to Common Shareholders | $ | 447,525 | 430,131 | 441,336 | 417,473 | 415,275 | |||||||
13
FIFTH THIRD BANCORP AND SUBSIDIARIES
Noninterest Income and Noninterest Expense
(unaudited) ($ in thousands)
| For the Three Months Ended | |||||||||||
| June 30, 2004 | March 31, 2004 | December 31, 2003 | September 30, 2003 | June 30, 2003 | |||||||
Noninterest Income | |||||||||||
Electronic Payment Processing Revenue | $ | 148,427 | 148,234 | 160,178 | 143,210 | 141,501 | |||||
Service Charges on Deposits | 131,147 | 123,247 | 124,838 | 125,130 | 120,826 | ||||||
Mortgage Banking Net Revenue | 60,749 | 43,938 | 57,229 | 74,830 | 92,826 | ||||||
Investment Advisory Revenue | 96,606 | 93,165 | 84,860 | 84,726 | 82,843 | ||||||
Other Noninterest Income | 268,564 | 140,579 | 112,522 | 171,328 | 139,163 | ||||||
Operating Lease Revenue | 43,522 | 51,652 | 57,900 | 65,809 | - | ||||||
Securities Gains, Net | 111 | 25,590 | 1,815 | 15,308 | 38,860 | ||||||
Securities Gains, Net - Non-Qualifying Hedges on Mortgage Servicing | - | - | - | - | 1,793 | ||||||
| Total Noninterest Income | 749,126 | 626,405 | 599,342 | 680,341 | 617,812 | ||||||
Noninterest Expense | |||||||||||
Salaries, Wages and Incentives | 254,062 | 245,438 | 244,167 | 248,731 | 269,365 | ||||||
Employee Benefits | 65,637 | 75,562 | 53,291 | 61,087 | 64,737 | ||||||
Equipment Expenses | 19,309 | 19,888 | 20,911 | 21,046 | 20,341 | ||||||
Net Occupancy Expenses | 46,897 | 45,648 | 46,552 | 36,279 | 37,837 | ||||||
Operating Lease Expenses | 31,720 | 38,282 | 43,967 | 49,558 | - | ||||||
| Other Noninterest Expense (a) | 326,038 | 227,250 | 249,146 | 240,318 | 228,964 | ||||||
| Total Noninterest Expense | $ | 743,663 | 652,068 | 658,034 | 657,019 | 621,244 | |||||
Full-Time Equivalent Employees | 18,937 | 18,583 | 18,899 | 19,770 | 19,830 | ||||||
| Banking Centers | 992 | 960 | 952 | 942 | 943 | ||||||
| (a) | Includes intangible amortization expense of $6.2 million, $8.8 million, $9.5 million, $9.5 million and $11.6 million for the three months ended June 30, 2004, March 31, 2004, December 31, 2003, September 30, 2003 and June 30, 2003, respectively. |
14
FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited) ($ in thousands, except share data)
| As of | |||||||
June 30, 2004 | June 30, 2003 | ||||||
Assets | |||||||
Cash and Due from Banks | $ | 2,357,814 | 1,776,334 | ||||
Securities Available-for-Sale (a) | 30,179,952 | 29,051,531 | |||||
Securities Held-to-Maturity (b) | 211,919 | 106,310 | |||||
Trading Securities | 96,806 | 48,997 | |||||
Other Short-Term Investments | 257,900 | 233,059 | |||||
Loans Held for Sale | 577,154 | 3,245,470 | |||||
Loans and Leases: | |||||||
Commercial Loans | 15,243,691 | 14,014,557 | |||||
Construction Loans | 4,107,787 | 3,361,687 | |||||
Commercial Mortgage Loans | 7,541,022 | 6,297,335 | |||||
Commercial Lease Financing | 4,472,120 | 3,935,160 | |||||
Residential Mortgage Loans | 5,873,079 | 3,745,059 | |||||
Consumer Loans | 18,301,808 | 16,374,055 | |||||
Consumer Lease Financing | 2,558,419 | 2,837,880 | |||||
Unearned Income | (1,418,685 | ) | (1,209,234 | ) | |||
Total Loans and Leases | 56,679,241 | 49,356,499 | |||||
| Reserve for Credit Losses | (811,820 | ) | (734,756 | ) | |||
Total Loans and Leases, net | 55,867,421 | 48,621,743 | |||||
Bank Premises and Equipment | 1,167,922 | 947,664 | |||||
Operating Lease Equipment | 525,330 | - | |||||
Accrued Interest Receivable | 397,122 | 428,069 | |||||
Goodwill | 978,975 | 738,054 | |||||
Intangible Assets | 163,534 | 222,044 | |||||
Servicing Rights | 358,490 | 244,413 | |||||
| Other Assets | 2,473,200 | 2,639,223 | |||||
| Total Assets | $ | 95,613,539 | 88,302,911 | ||||
Liabilities | |||||||
Deposits: | |||||||
Demand | $ | 13,036,825 | 11,633,492 | ||||
Interest Checking | 19,242,566 | 18,432,242 | |||||
Savings | 7,972,740 | 7,980,833 | |||||
Money Market | 2,854,152 | 3,298,811 | |||||
Other Time | 6,531,176 | 7,065,932 | |||||
Certificates - $100,000 and Over | 2,312,971 | 4,302,135 | |||||
Foreign Office | 5,957,024 | 3,161,618 | |||||
Total Deposits | 57,907,454 | 55,875,063 | |||||
Federal Funds Purchased | 3,851,019 | 5,840,359 | |||||
Short-Term Bank Notes | 1,275,000 | - | |||||
Other Short-Term Borrowings | 6,391,156 | 5,687,128 | |||||
Accrued Taxes, Interest and Expenses | 1,970,871 | 2,470,321 | |||||
Other Liabilities | 1,050,134 | 918,960 | |||||
| Long-Term Debt | 14,775,201 | 8,338,341 | |||||
Total Liabilities | 87,220,835 | 79,130,172 | |||||
Minority Interest | - | 481,964 | |||||
| Total Shareholders’ Equity (c) | 8,392,704 | 8,690,775 | |||||
| Total Liabilities and Shareholders’ Equity | $ | 95,613,539 | 88,302,911 | ||||
| (a) | Amortized cost: June 30, 2004 - $30,857,040 and June 30, 2003 - $28,594,278 |
| (b) | Market values: June 30, 2004 - $211,919 and June 30, 2003 - $106,310 |
| (c) | Common Shares: Stated value $2.22 per share; authorized 1,300,000,000; outstanding June 30, 2004 - 560,804,042 |
| (excluding | 22,647,649 treasury shares) and June 30, 2003 - 569,963,718 (excluding 13,487,973 treasury shares). |
15
FIFTH THIRD BANCORP AND SUBSIDIARIES
Loans and Leases Serviced
(unaudited) ($ in thousands)
| As of | |||||||||||
June 30, 2004 | March 31, 2004 | December 31, 2003 | September 30, 2003 | June 30, 2003 | |||||||
Commercial: | |||||||||||
Commercial Loans | $ | 15,243,688 | 14,468,571 | 14,209,122 | 13,824,371 | 14,014,541 | |||||
Mortgage | 7,541,022 | 7,197,126 | 6,893,742 | 6,590,021 | 6,297,335 | ||||||
Construction | 3,768,271 | 3,492,951 | 3,301,082 | 3,143,315 | 3,052,459 | ||||||
Leases | 3,274,626 | 3,327,404 | 3,263,145 | 3,160,839 | 3,021,888 | ||||||
Subtotal | 29,827,607 | 28,486,052 | 27,667,091 | 26,718,546 | 26,386,223 | ||||||
Consumer: | |||||||||||
Consumer Loans | 17,522,414 | 17,036,512 | 16,670,948 | 17,090,372 | 15,785,717 | ||||||
Mortgage & Construction | 6,212,595 | 5,263,941 | 4,760,317 | 4,820,026 | 4,054,287 | ||||||
Credit Card | 779,394 | 757,450 | 761,545 | 619,893 | 588,338 | ||||||
Leases | 2,337,231 | 2,368,319 | 2,447,952 | 2,557,602 | 2,541,934 | ||||||
| Subtotal | 26,851,634 | 25,426,222 | 24,640,762 | 25,087,893 | 22,970,276 | ||||||
Total Loans and Leases | 56,679,241 | 53,912,274 | 52,307,853 | 51,806,439 | 49,356,499 | ||||||
Loans Held for Sale | 577,154 | 1,660,669 | 1,881,127 | 1,528,137 | 3,245,470 | ||||||
Operating Lease Equipment (a) | 525,330 | 657,756 | 766,762 | 899,348 | - | ||||||
Loans and Leases Serviced for Others: | |||||||||||
Residential Mortgage (b) | 23,941,909 | 24,115,268 | 24,494,643 | 24,379,988 | 24,990,054 | ||||||
Commercial Mortgage (c) | 2,104,295 | 2,146,607 | 2,084,710 | 2,017,717 | 2,008,982 | ||||||
Commercial Loans (d) | 1,913,345 | 1,952,943 | 1,790,257 | 1,925,655 | 1,813,106 | ||||||
Commercial Leases (c) | 216,824 | 225,818 | 185,138 | 177,606 | 159,617 | ||||||
Consumer Loans (e) | 1,510,983 | 831,846 | 866,156 | 909,090 | - | ||||||
Consumer Leases (a) | - | - | - | - | 1,127,470 | ||||||
| Total Loans and Leases Serviced for Others | 29,687,356 | 29,272,482 | 29,420,904 | 29,410,056 | 30,099,229 | ||||||
| Total Loans and Leases Serviced | $ | 87,469,081 | 85,503,181 | 84,376,646 | 83,643,980 | 82,701,198 | |||||
| (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 commercial leases 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 and retains servicing responsibilities. |
16
FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields (Taxable Equivalent) and Rates
(unaudited) ($ in thousands)
| For the Three Months Ended | ||||||||||
| June 30, 2004 | June 30, 2003 | |||||||||
| Average Balance | Average Yield/Rate | Average Balance | Average Yield/Rate | |||||||
Assets | ||||||||||
Interest-Earning Assets: | ||||||||||
Loans and Leases | $56,325,877 | 4.90% | 51,813,001 | 5.37% | ||||||
Taxable Securities | 29,986,620 | 4.10 | 28,003,069 | 4.52 | ||||||
Tax Exempt Securities | 919,928 | 7.59 | 1,062,162 | 7.36 | ||||||
Other Short-Term Investments | 265,931 | 0.98 | 457,813 | 0.95 | ||||||
Total Interest-Earning Assets | 87,498,356 | 4.64 | 81,336,045 | 5.08 | ||||||
Cash and Due from Banks | 2,105,560 | 1,398,767 | ||||||||
Other Assets | 5,447,269 | 4,676,423 | ||||||||
| Reserve for Credit Losses | (790,619 | ) | (712,265 | ) | ||||||
| Total Assets | $94,260,566 | 86,698,970 | ||||||||
Liabilities | ||||||||||
Interest-Bearing Liabilities: | ||||||||||
Interest Checking | $19,267,531 | 0.74% | 18,526,746 | 1.00% | ||||||
Savings | 7,803,109 | 0.59 | 8,082,459 | 0.82 | ||||||
Money Market | 2,965,324 | 0.83 | 2,989,252 | 1.05 | ||||||
Other Time | 6,428,896 | 2.56 | 7,299,279 | 3.01 | ||||||
Certificates-$100,000 and Over | 2,229,378 | 1.38 | 4,258,784 | 1.45 | ||||||
Foreign Office Deposits | 4,488,015 | 1.02 | 3,528,689 | 1.27 | ||||||
Federal Funds Purchased | 6,689,129 | 1.03 | 6,886,002 | 1.28 | ||||||
Short-Term Bank Notes | 1,045,055 | 1.07 | - | - | ||||||
Other Short-Term Borrowings | 7,440,953 | 0.94 | 4,543,856 | 1.27 | ||||||
Long-Term Debt | 12,317,005 | 2.87 | 8,109,156 | 4.58 | ||||||
Total Interest-Bearing Liabilities | 70,674,395 | 1.36 | 64,224,223 | 1.75 | ||||||
Demand Deposits | 12,251,169 | 10,055,036 | ||||||||
| Other Liabilities | 2,768,914 | 2,979,097 | ||||||||
Total Liabilities | 85,694,478 | 77,258,356 | ||||||||
Minority Interest | - | 476,980 | ||||||||
| Shareholders’ Equity | 8,566,088 | 8,963,634 | ||||||||
| Total Liabilities and Shareholders’ Equity | $94,260,566 | 86,698,970 | ||||||||
Average Common Shares Outstanding: | ||||||||||
Basic | 560,976,289 | 573,887,821 | ||||||||
Diluted | 568,715,944 | 581,663,343 | ||||||||
Ratios: | ||||||||||
Net Interest Margin (Taxable Equivalent) | 3.54% | 3.69% | ||||||||
Net Interest Rate Spread (Taxable Equivalent) | 3.28% | 3.33% | ||||||||
Interest-Bearing Liabilities to Interest-Earning Assets | 80.77% | 78.96% | ||||||||
17
FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields (Taxable Equivalent) and Rates
(unaudited) ($ in thousands)
| For the Six Months Ended | ||||||||||
| June 30, 2004 | June 30, 2003 | |||||||||
| Average Balance | Average Yield/Rate | Average Balance | Average Yield/Rate | |||||||
Assets | ||||||||||
Interest-Earning Assets: | ||||||||||
Loans and Leases | $55,507,005 | 4.92% | 50,924,369 | 5.44% | ||||||
Taxable Securities | 29,420,317 | 4.20 | 27,150,287 | 4.65 | ||||||
Tax Exempt Securities | 957,500 | 7.42 | 1,074,607 | 7.24 | ||||||
Other Short-Term Investments | 248,456 | 0.94 | 382,995 | 0.98 | ||||||
Total Interest-Earning Assets | 86,133,278 | 4.69 | 79,532,258 | 5.17 | ||||||
Cash and Due from Banks | 2,075,832 | 1,477,756 | ||||||||
Other Assets | 5,637,322 | 4,595,290 | ||||||||
| Reserve for Credit Losses | (781,741 | ) | (703,175 | ) | ||||||
| Total Assets | $93,064,691 | 84,902,129 | ||||||||
Liabilities | ||||||||||
Interest-Bearing Liabilities: | ||||||||||
Interest Checking | $19,410,019 | 0.75% | 18,365,370 | 1.11% | ||||||
Savings | 7,548,685 | 0.54 | 8,144,359 | 0.93 | ||||||
Money Market | 3,057,241 | 0.84 | 3,002,562 | 1.14 | ||||||
Other Time | 6,509,530 | 2.63 | 7,563,278 | 3.12 | ||||||
Certificates-$100,000 and Over | 1,816,091 | 1.44 | 3,632,030 | 1.54 | ||||||
Foreign Office Deposits | 5,211,515 | 1.02 | 3,241,661 | 1.29 | ||||||
Federal Funds Purchased | 6,940,713 | 1.01 | 6,564,856 | 1.28 | ||||||
Short-Term Bank Notes | 772,527 | 1.05 | - | - | ||||||
Other Short-Term Borrowings | 7,138,750 | 0.93 | 4,251,809 | 1.27 | ||||||
Long-Term Debt | 11,305,368 | 3.15 | 8,119,279 | 4.60 | ||||||
Total Interest-Bearing Liabilities | 69,710,439 | 1.38 | 62,885,204 | 1.84 | ||||||
Demand Deposits | 11,826,318 | 9,793,281 | ||||||||
| Other Liabilities | 2,855,612 | 2,877,120 | ||||||||
Total Liabilities | 84,392,369 | 75,555,605 | ||||||||
Minority Interest | - | 471,640 | ||||||||
| Shareholders’ Equity | 8,672,322 | 8,874,884 | ||||||||
| Total Liabilities and Shareholders’ Equity | $93,064,691 | 84,902,129 | ||||||||
Average Common Shares Outstanding: | ||||||||||
Basic | 562,279,783 | 574,125,658 | ||||||||
Diluted | 570,164,208 | 582,232,579 | ||||||||
Ratios: | ||||||||||
Net Interest Margin (Taxable Equivalent) | 3.57% | 3.71% | ||||||||
Net Interest Rate Spread (Taxable Equivalent) | 3.31% | 3.33% | ||||||||
Interest-Bearing Liabilities to Interest-Earning Assets | 80.93% | 79.07% | ||||||||
18
FIFTH THIRD BANCORP AND SUBSIDIARIES
Regulatory Capital
(unaudited) ($ in thousands)
June 30, 2004 (a) | March 31, 2004 | December 31, 2003 | September 30, 2003 | June 30, 2003 | ||||||||||||
Tier 1 Capital: | ||||||||||||||||
Shareholders’ Equity | $ | 8,392,704 | 8,863,757 | 8,667,003 | 8,693,805 | 8,690,775 | ||||||||||
Goodwill and Certain Other Intangibles | (1,142,509 | ) | (892,831 | ) | (932,622 | ) | (941,613 | ) | (950,604 | ) | ||||||
Unrealized Losses/(Gains) | 490,812 | (162,103 | ) | 57,369 | (42,829 | ) | (288,328 | ) | ||||||||
Other | 587,993 | 585,218 | 480,101 | 472,519 | 556,967 | |||||||||||
| Total Tier 1 Capital | $ | 8,329,000 | 8,394,041 | 8,271,851 | 8,181,882 | 8,008,810 | ||||||||||
Total Capital: | ||||||||||||||||
Tier 1 Capital | $ | 8,329,000 | 8,394,041 | 8,271,851 | 8,181,882 | 8,008,810 | ||||||||||
Qualifying Reserves for Credit Losses | 830,769 | 800,607 | 787,143 | 788,381 | 755,103 | |||||||||||
Qualifying Subordinated Notes | 940,231 | 926,479 | 1,037,333 | 1,056,981 | 991,441 | |||||||||||
| Total Risk-Based Capital | $ | 10,100,000 | 10,121,127 | 10,096,327 | 10,027,244 | 9,755,354 | ||||||||||
Risk-Weighted Assets | $ | 78,868,000 | 77,056,425 | 74,724,731 | 72,892,618 | 69,849,411 | ||||||||||
Ratios (percent): | ||||||||||||||||
Average Shareholders’ Equity to Average Assets | 9.09% | 9.56 | 9.61 | 9.57 | 10.34 | |||||||||||
Risk-Based Capital: | ||||||||||||||||
Tier 1 Capital | 10.56% | 10.89 | 11.07 | 11.22 | 11.47 | |||||||||||
Total Capital | 12.81% | 13.13 | 13.51 | 13.76 | 13.97 | |||||||||||
Tier 1 Leverage | 8.95% | 9.23 | 9.23 | 9.21 | 9.29 | |||||||||||
| (a) | June 30, 2004 regulatory capital data and ratios are estimated. |
19
FIFTH THIRD BANCORP AND SUBSIDIARIES
Asset Quality
(unaudited) ($ in thousands)
| Summary of Credit Loss Experience | For the Three Months Ended | |||||||||||||||
June 30, 2004 | March 31, 2004 | December 31, 2003 | September 30, 2003 | June 30, 2003 | ||||||||||||
Losses Charged Off: | ||||||||||||||||
Commercial, Financial and Agricultural Loans | $ | (20,851 | ) | (31,520 | ) | (56,936 | ) | (39,385 | ) | (29,259 | ) | |||||
Real Estate - Commercial Mortgage Loans | (2,697 | ) | (3,070 | ) | (1,678 | ) | (4,622 | ) | (1,218 | ) | ||||||
Real Estate - Construction Loans | (2,720 | ) | (558 | ) | (898 | ) | (2,162 | ) | (410 | ) | ||||||
Real Estate - Residential Mortgage Loans | (3,219 | ) | (4,399 | ) | (8,562 | ) | (3,266 | ) | (3,195 | ) | ||||||
Consumer Loans | (37,079 | ) | (39,560 | ) | (36,828 | ) | (33,560 | ) | (31,802 | ) | ||||||
Lease Financing | (9,632 | ) | (8,803 | ) | (8,828 | ) | (9,364 | ) | (25,721 | ) | ||||||
Total Losses | (76,198 | ) | (87,910 | ) | (113,730 | ) | (92,359 | ) | (91,605 | ) | ||||||
Recoveries of Losses Previously Charged Off: | ||||||||||||||||
Commercial, Financial and Agricultural Loans | 2,743 | 4,136 | 5,355 | 4,111 | 2,379 | |||||||||||
Real Estate - Commercial Mortgage Loans | 1,440 | 928 | 597 | 390 | 418 | |||||||||||
Real Estate - Construction Loans | 84 | 19 | 44 | 231 | 33 | |||||||||||
Real Estate - Residential Mortgage Loans | 30 | 26 | 20 | 134 | 11 | |||||||||||
Consumer Loans | 10,530 | 9,919 | 10,867 | 10,037 | 8,393 | |||||||||||
Lease Financing | 2,463 | 2,054 | 1,878 | 2,327 | 2,896 | |||||||||||
Total Recoveries | 17,290 | 17,082 | 18,761 | 17,230 | 14,130 | |||||||||||
Net Losses Charged Off: | ||||||||||||||||
Commercial, Financial and Agricultural Loans | (18,108 | ) | (27,384 | ) | (51,581 | ) | (35,274 | ) | (26,880 | ) | ||||||
Real Estate - Commercial Mortgage Loans | (1,257 | ) | (2,142 | ) | (1,081 | ) | (4,232 | ) | (800 | ) | ||||||
Real Estate - Construction Loans | (2,636 | ) | (539 | ) | (854 | ) | (1,931 | ) | (377 | ) | ||||||
Real Estate - Residential Mortgage Loans | (3,189 | ) | (4,373 | ) | (8,542 | ) | (3,132 | ) | (3,184 | ) | ||||||
Consumer Loans | (26,549 | ) | (29,641 | ) | (25,961 | ) | (23,523 | ) | (23,409 | ) | ||||||
Lease Financing | (7,169 | ) | (6,749 | ) | (6,950 | ) | (7,037 | ) | (22,825 | ) | ||||||
| Total Net Losses Charged Off | $ | (58,908 | ) | (70,828 | ) | (94,969 | ) | (75,129 | ) | (77,475 | ) | |||||
Reserve for Credit Losses, Beginning | $ | 782,806 | 770,394 | 771,709 | 734,756 | 703,354 | ||||||||||
Total Net Losses Charged Off | (58,908 | ) | (70,828 | ) | (94,969 | ) | (75,129 | ) | (77,475 | ) | ||||||
| Provision Charged to Operations | 87,922 | 83,240 | 93,654 | 112,082 | 108,877 | |||||||||||
| Reserve for Credit Losses, Ending | $ | 811,820 | 782,806 | 770,394 | 771,709 | 734,756 | ||||||||||
| Nonperforming and Underperforming Assets | ||||||||||||||||
| As of | ||||||||||||||||
| June 30, 2004 | March 31, 2004 | December 31, 2003 | September 30, 2003 | June 30, 2003 | ||||||||||||
Nonaccrual Loans and Leases (a) | $ | 216,205 | 233,042 | 241,505 | 271,256 | 273,293 | ||||||||||
Renegotiated Loans and Leases | 2,861 | 883 | 8,286 | - | - | |||||||||||
| Other Assets, Including Other Real Estate Owned | 63,927 | 74,364 | 68,540 | 52,053 | 33,212 | |||||||||||
Total Nonperforming Assets | 282,993 | 308,289 | 318,331 | 323,309 | 306,505 | |||||||||||
| Ninety Days Past Due Loans and Leases (a) | 132,057 | 132,300 | 145,243 | 145,643 | 137,503 | |||||||||||
| Total Underperforming Assets | $ | 415,050 | 440,589 | 463,574 | 468,952 | 444,008 | ||||||||||
Average Loans and Leases (b) | $ | 54,959,526 | 52,927,264 | 52,401,684 | 50,615,070 | 48,561,158 | ||||||||||
Loans and Leases (b) | 56,679,241 | 53,912,274 | 52,307,853 | 51,806,439 | 49,356,499 | |||||||||||
Ratios | ||||||||||||||||
Net Losses Charged Off as a Percent of Average Loans and Leases | 0.43% | 0.54 | 0.72 | 0.59 | 0.64 | |||||||||||
Reserve as a Percent of Loans and Leases | 1.43% | 1.45 | 1.47 | 1.49 | 1.49 | |||||||||||
Nonperforming Assets as a Percent of Loans, Leases and Other Assets, Including Other Real Estate Owned | 0.50% | 0.57 | 0.61 | 0.62 | 0.62 | |||||||||||
Underperforming Assets as a Percent of Loans, Leases and Other Assets, Including Other Real Estate Owned | 0.73% | 0.82 | 0.89 | 0.90 | 0.90 | |||||||||||
| (a) | Nonaccrual includes $21.2 million and Ninety Days Past Due includes $41.4 million of residential mortgage loans as of June 30, 2004. |
| (b) | Excludes loans held for sale. |
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