Exhibit 99.1
| | | | |
| | | | | News Release |
| | |
| CONTACT: | | Bradley S. Adams (Analysts) | | FOR IMMEDIATE RELEASE |
| | | (513) 534-0983 | | January 18, 2005 |
| | | Roberta R. Jennings (Media) | | |
| | | (513) 579-4153 | | |
FIFTH THIRD BANCORP REPORTS 2004 RESULTS
Fifth Third Bancorp’s 2004 fourth quarter earnings per diluted share were $.31, compared to $.77 per diluted share for the same period in 2003. Fourth quarter net income totaled $176 million compared to fourth quarter 2003’s net income of $442 million. Fourth quarter return on average assets (ROA) and return on average equity (ROE) were .72 percent and 7.6 percent, respectively, compared to 1.93 percent and 20.1 percent in 2003’s fourth quarter. Earnings per diluted share for the full year 2004 were $2.68, a decrease of seven percent over last year’s earnings of $2.87. ROA for the full year 2004 was 1.61 percent and ROE was 17.2 percent, compared to 1.90 percent and 19.0 percent, respectively, in 2003. Fourth quarter and full year earnings were negatively impacted by $326 million in total pre-tax ($208 million after-tax) termination charges and securities losses, or $.37 per diluted share, related to initiatives undertaken to better position the balance sheet for current and expected market conditions.
“2004 was a disappointing year in terms of the bottom line but we feel that we have taken the right steps to improve future results,” stated George A. Schaefer, Jr., President and CEO of Fifth Third Bancorp. “The prolonged nature and absolute low level of interest rates dramatically affected our financial statements. In 2004, we experienced significant declines in asset yields, net interest margin and returns on capital that ultimately led us to the decision to reposition the balance sheet. While this negatively impacted fourth quarter and full-year results, we believe it was in the best long-term interests of Fifth Third and its shareholders. The repositioning reflects the realization that a portion of our balance sheet was not earning an acceptable return on invested capital and served as an obstacle to the future earnings potential of Fifth Third. As a result of our actions this quarter, the balance sheet is now better positioned as the economy trends toward what we feel will be a more normalized interest rate environment.”
“Despite the difficulties encountered this year, I feel that we have accomplished many things to improve our competitive positioning and drive revenue and earnings growth in the years to come. In addition to continued momentum in loan generation and renewed strength in deposit growth, Fifth Third added 76 new banking center locations in 2004, excluding relocations, as a cost effective method of expansion in our largest
affiliate markets. The acquisition and integration of Franklin Financial, combined with continuing de-novo expansion, provides entry into the attractive Nashville market, and with $1.9 billion in assets, is now the 13th largest affiliate in the Fifth Third network. The acquisition of First National Bankshares, a $5.7 billion asset bank holding company located primarily in the fast-growing markets of Orlando, Tampa Bay, Sarasota, Naples and Fort Myers, was announced in 2004 and subsequently completed early in 2005. First National was the largest bank holding company headquartered in the state of Florida and provides Fifth Third with a tremendous platform in some of the fastest growing deposit markets in the United States. We also invested significantly in information technology including the launch of an improved internet banking platform, meaningfully expanded our sales force and completed numerous automation and infrastructure improvements that will all serve to ensure the scalability and strength of your company.”
Balance Sheet Trends
Retail transaction account growth and commercial customer additions resulted in strong deposit trends in the second half of 2004. Compared to the same quarter last year, average transaction account balances increased by $3.3 billion, or eight percent, highlighted by strong growth in average demand deposits. Compared to the third quarter of 2004, average transaction account balances increased by $1.3 billion, or 12 percent on an annualized sequential basis. Average demand deposits increased by $569 million from the third quarter 2004, or 18 percent on an annualized sequential basis and increased by $1.6 billion, or 14 percent compared to the same quarter last year. Fifth Third is intensely focused on generating growth in customers and deposit balances and remains confident in its ability to competitively price and generate growth in an increasing interest rate environment. Deposit comparisons to 2003 are impacted by the second quarter 2004 acquisition of Franklin Financial Corporation. Exclusive of the impact of this transaction, average transaction account balances increased by seven percent over the same quarter last year; comparisons being provided to supplement an understanding of the fundamental deposit trends.
Loan and lease balances exhibited continued strength with period end loans and leases held for investment increasing by $1.8 billion from last quarter, or 12 percent on an annualized sequential basis. On an average basis, total loans and leases, including held for sale, increased by 10 percent over the same quarter last year and by nine percent for the full year. Period end commercial loan and lease balances increased by 14 percent over the same quarter last year and by $1.1 billion, or 15 percent on an annualized sequential basis. Installment loan originations remained solid during the fourth quarter and totaled $1.6 billion, compared to $1.8 billion last quarter, with period-end loan and lease balances increasing by 15 percent over the fourth quarter of last year and nine percent on an annualized sequential basis. Loan and lease comparisons to prior year periods are impacted by the addition of approximately $581 million in total loans in conjunction with the acquisition of Franklin Financial. Exclusive of the impact of this transaction, total commercial loan and lease balances increased 12 percent and total consumer loan and lease balances, excluding residential mortgages,
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increased five percent over last year; comparisons being provided to supplement an understanding of fundamental lending trends.
Compared to the third quarter of 2004, net interest income on a fully-taxable equivalent basis decreased two percent, or $15 million, due to a seven basis point (bp) decrease in the net interest margin on essentially flat average earning assets. As previously announced, Fifth Third has completed several significant initiatives in the fourth quarter of 2004 to improve its long-term profile, reduce the risks associated with increasing interest rates and improve returns on invested capital. These actions included: (i) sale of approximately $6.4 billion in the available-for-sale securities portfolio, or approximately 20 percent from the September 30, 2004 balance of $31.6 billion, with securities sold having a weighted average coupon of approximately 3.2 percent; (ii) the early retirement of approximately $2.8 billion of long-term debt with a weighted average rate of approximately 5.4 percent and a weighted average remaining maturity of approximately six years and; (iii) the termination of $2.8 billion in notional of receive-fixed/pay-variable interest rate swaps maturing through July 2007. These actions resulted in pre-tax securities losses of $79 million and pre-tax termination charges included in other noninterest expense related to the early retirement of long-term debt of $247 million in the fourth quarter. Additionally, Fifth Third reduced certain other wholesale borrowings in order to further decrease the speed at which liabilities reprice relative to earning assets in response to further anticipated increases in interest rates by the Federal Reserve. These actions stabilized and improved the net interest margin during the latter part of the fourth quarter and resulted in improved balance sheet positioning. Margin trends in 2005 will depend upon the speed of further interest rate changes, the level and mix of earning asset and deposit growth and the impact of capital management activities.
Fifth Third repurchased approximately 3.9 million shares of its common stock for $183 million in the fourth quarter of 2004 and 18.5 million shares for $987 million in all of 2004. As of December 31, 2004, the remaining authority under the share repurchase plan authorized by the Board of Directors was approximately 35.7 million shares. Subsequent to the end of the fourth quarter, Fifth Third repurchased 35.5 million shares of its common stock, approximately six percent of total outstanding shares, in an overnight share repurchase transaction on January 10, 2005. Fifth Third has historically operated with significant capital and liquidity on the balance sheet in order to maintain the flexibility to respond to changing economic conditions and the ability to execute strategic acquisitions. With current available short-term alternative investment options, an improving economy and a firming interest rate outlook, Fifth Third views the repurchase of common stock to be an attractive investment and an effective means of delivering value to shareholders. Tangible capital levels will decline as a result of this transaction but will remain strong on an overall basis and improve with expected earnings growth in 2005.
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Noninterest Income
Fifth Third Processing Solutions, our electronic payment processing division, delivered an eight percent increase in revenues on both a fourth quarter and full year basis. Comparisons to prior periods are impacted by the sale of certain small merchant processing contracts in the second and third quarters of 2004. Excluding the revenue impact in the prior year periods, approximately $25 million in the fourth quarter and $70 million for all of 2004, fourth quarter and full year 2004 revenues increased by 28 percent and 23 percent over the same periods last year, respectively; comparisons being provided to supplement an understanding of these fundamental revenue trends. Fourth quarter trends are representative of continuing momentum in attracting new customer relationships and good results in the level of retail sales activity. Fifth Third continues to see significant opportunities to attract new financial institution customers and retailers.
Sales of commercial deposit accounts and corporate treasury management products led to an increase in deposit service revenues of six percent on a full year basis and one percent over the same quarter last year. Commercial deposit based revenues increased 14 percent on a full year basis and eight percent over the same quarter last year on the strength of Fifth Third’s continuing focus on sales force additions, new customer acquisition and cross-sell initiatives within its core middle-market commercial banking franchise. Retail deposit based revenues were essentially unchanged from prior year levels with modest increases in overdraft revenue largely offset by decreases in monthly account maintenance charges.
Investment Advisory revenues decreased by three percent over the same quarter last year and increased eight percent on a full year basis. The decrease in service revenue in the fourth quarter relative to last year and the third quarter of 2004 resulted primarily from declines in retail brokerage related revenues. The increase in revenue compared to last year resulted primarily from strengthening sales results in Retirement Plan Services and improved institutional asset management revenues. Fifth Third expects near and intermediate term revenue growth to be driven by the degree of success in continuing to grow the institutional money management business and in penetrating a large middle market commercial customer base with retirement and wealth planning services. Fifth Third Investment Advisors, among the largest money managers in the Midwest, has $34 billion in assets under management and $182 billion in assets under care.
Mortgage Banking net service revenue totaled $24 million in the fourth quarter and $178 million on a full year 2004 basis compared to $57 million in 2003’s fourth quarter and $302 million in all of 2003. Mortgage originations totaled $2.0 billion in the fourth quarter versus $1.7 billion last quarter and $1.9 billion in the fourth quarter of last year. Fourth quarter mortgage banking net service revenue was comprised of $41 million in total mortgage banking fees and loan sales, less $8 million of losses and mark-to-market adjustments on both settled and outstanding free-standing derivative financial instruments and less $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 interest rate volatility and the resulting impact of changing prepayment speeds on the mortgage
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servicing portfolio. Despite increased mortgage originations, fourth quarter mortgage net revenue experienced a $25 million decline relative to the third quarter of 2004 due to a $33 million unfavorable change in the mark-to-market adjustments and settlement of free-standing derivative financial instruments. Fifth Third continues to maintain its posture with regard to hedging activity to manage over time the risk associated with impairment changes incurred on its mortgage servicing rights portfolio. The mortgage servicing asset, net of the valuation reserve, was $339 million at December 31, 2004 on a servicing portfolio of $23 billion, compared to $334 million last quarter on a servicing portfolio of $23.5 billion.
Other noninterest income totaled $125 million in the fourth quarter and $671 million on a full year basis, compared to $112 million in the same quarter last year and $581 million for all of 2003. 2004 results included a total pre-tax gain of approximately $157 million ($91 million after-tax) on the second and third quarter sales of certain third-party sourced merchant processing contracts. 2003 results were impacted by a $22 million third quarter gain on the securitization and sale of $903 million of home equity lines of credit. Exclusive of these items, full-year other noninterest income experienced modest decreases across nearly all sub-categories with the largest declines concentrated in loan and lease fees relative to last year, and, on a sequential quarter basis, modest declines across consumer lending related revenue categories were offset by very strong growth in commercial banking revenue.
Credit Quality
Credit quality metrics and trends remained fairly consistent in the fourth quarter and improved significantly on a full year basis. Net charge-offs as a percentage of average loans and leases were 44 bp in the fourth quarter and 45 bp in all of 2004, compared to 72 bp in the fourth quarter of last year and 63 bp in all of 2003. Nonperforming assets were 51 bp of total loans and leases and other real estate owned at December 31, 2004, up slightly from 48 bp last quarter and improved from the 61 bp posted a year ago. 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 $65 million in the fourth quarter and $252 million in 2004, compared to $96 million in the same quarter last year and $312 million in all of 2003. The provision for loan and lease losses totaled $65 million in the fourth quarter and $268 million for the full year, compared to $94 million in the same quarter last year and $399 million in the full year 2003. Fifth Third expects credit quality trends in 2005 to remain similar to those seen in recent periods. Fifth Third previously included a reserve for unfunded commitments to lend within the “Reserve for Credit Losses.” As of December 31, 2004, the reserve for unfunded commitments to lend, totaling $72 million, has been reclassified to other liabilities.
Noninterest Expense
Total noninterest expense increased 42 percent over the fourth quarter last year and 17 percent on a full year basis with direct comparisons to prior periods impacted by the following factors: (i) the previously
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mentioned $247 million in charges related to the early retirement of approximately $2.8 billion of long-term debt in the fourth quarter of 2004; (ii) a charge of $78 million related to the early retirement of approximately $1 billion of Federal Home Loan Bank advances in the second quarter of 2004; (iii) a charge of $20 million related to the early retirement of approximately $200 million of Federal Home Loan Bank advances in the second quarter of 2003; and (iv) a $31 million pre-tax recovery in the second quarter of 2003 of previously charged-off treasury clearing and settlement account balances. Excluding the impact of these items, noninterest expense increased by approximately five percent from the fourth quarter of 2003 and by three percent on a full year basis; comparisons being provided to supplement an understanding of the fundamental trends in noninterest expense. Fifth Third’s efficiency ratio was 76.0 percent in the fourth quarter and 53.9 percent on a full year basis compared to 49.0 percent and 47.0 percent in the same periods last year. Expense trends were further impacted by significant investments in the sales force and retail distribution network as evidenced by the addition of almost 600 full time equivalent employees in the fourth quarter and the opening of 76 new banking centers that did not involve consolidation of existing facilities since the beginning of the year.
Conference Call
Fifth Third will host a conference call to discuss these fourth quarter financial results at 8:30 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 for approximately seven days by dialing 800-642-1687 for domestic access and 706-645-9291 for international access (passcode: 3295299#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company has $94.5 billion in assets as of December 31, 2004. The Company operates 17 affiliates with 1,088 full-service Banking Centers, including 129 Bank Mart® locations open seven days a week inside select grocery stores and 1,976 Jeanie® ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia and Pennsylvania. 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.”
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This release may contain forward-looking statements about Fifth Third Bancorp and/or the company as combined with Franklin Financial Corporation and/or First National Bankshares of Florida, Inc. 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 the financial condition, results of operations, plans, objectives, future performance and business of Fifth Third Bancorp and/or the combined company 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 Fifth Third, Franklin Financial Corporation, First National Bankshares and/or the combined company 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 Fifth Third, Franklin Financial Corporation, First National Bankshares and/or the combined company or the businesses in which Fifth Third, First National Bankshares and/or the combined company are engaged; (8) difficulties in combining the operations of Franklin Financial Corporation, First National Bankshares and/or other acquired entities and (9) 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, Franklin Financial’s and First National Bankshares’ 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
Financial Highlights
(unaudited)
| | | | | | | | | |
| | | For the Three Months Ended
| | | |
| | | December 31,
2004 | | | December 31,
2003 | | Percent Change | |
Earnings ($ in millions, except per share data) | | | | | | | | | |
Net Interest Income (Taxable Equivalent) | | $ | 752 | | | 745 | | 0.9 | |
Net Income | | | 176 | | | 442 | | (60.1 | ) |
| | | |
Earnings Per Share | | | | | | | | | |
Basic | | | 0.31 | | | 0.78 | | (60.3 | ) |
Diluted | | | 0.31 | | | 0.77 | | (59.7 | ) |
| | | |
Key Ratios (percent) | | | | | | | | | |
Return on Average Assets | | | 0.72 | % | | 1.93 | | (62.7 | ) |
Return on Average Equity | | | 7.6 | | | 20.1 | | (62.2 | ) |
Net Interest Margin (Taxable Equivalent) | | | 3.35 | | | 3.54 | | (5.4 | ) |
Efficiency | | | 76.0 | | | 49.0 | | 55.1 | |
Average Shareholders’ Equity to Average Assets | | | 9.51 | | | 9.61 | | (1.0 | ) |
Regulatory Capital (a): | | | | | | | | | |
Tier 1 Capital | | | 10.45 | | | 11.11 | | (5.9 | ) |
Total Capital | | | 12.50 | | | 13.56 | | (7.8 | ) |
Tier 1 Leverage | | | 8.89 | | | 9.23 | | (3.7 | ) |
| | | |
Common Stock Data | | | | | | | | | |
Cash Dividends Declared Per Share | | $ | 0.35 | | | 0.29 | | 20.7 | |
Book Value Per Share | | | 16.00 | | | 15.29 | | 4.6 | |
Market Price Per Share: | | | | | | | | | |
High | | | 52.34 | | | 60.01 | | (12.8 | ) |
Low | | | 45.32 | | | 55.47 | | (18.3 | ) |
End of Period | | | 47.30 | | | 59.10 | | (20.0 | ) |
Price/Earnings Ratio (b) | | | 17.65 | | | 20.59 | | (14.3 | ) |
| | | For the Year Ended
| | | |
| | | December 31,
2004 | | | December 31,
2003 | | Percent
Change | |
Earnings ($ in millions, except per share data) | | | | | | | | | |
Net Interest Income (Taxable Equivalent) | | $ | 3,048 | | | 2,944 | | 3.5 | |
Net Income | | | 1,525 | | | 1,665 | | (8.4 | ) |
| | | |
Earnings Per Share | | | | | | | | | |
Basic | | | 2.72 | | | 2.91 | | (6.5 | ) |
Diluted | | | 2.68 | | | 2.87 | | (6.6 | ) |
| | | |
Key Ratios (percent) | | | | | | | | | |
Return on Average Assets | | | 1.61 | % | | 1.90 | | (15.3 | ) |
Return on Average Equity | | | 17.2 | | | 19.0 | | (9.5 | ) |
Net Interest Margin (Taxable Equivalent) | | | 3.48 | | | 3.62 | | (3.9 | ) |
Efficiency | | | 53.9 | | | 47.0 | | 14.7 | |
Average Shareholders’ Equity to Average Assets | | | 9.34 | | | 10.01 | | (6.7 | ) |
| | | |
Common Stock Data | | | | | | | | | |
Cash Dividends Declared Per Share | | $ | 1.31 | | | 1.13 | | 15.9 | |
Market Price Per Share: | | | | | | | | | |
High | | | 60.00 | | | 62.15 | | (3.5 | ) |
Low | | | 45.32 | | | 47.05 | | (3.7 | ) |
| (a) | December 31, 2004 regulatory 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 | | | 16.11 | | | 16.00 | | | 45.32 | | | 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 | | | 0.84 | | | 0.31 | | | | | | 2.72 |
| | | | | | |
| 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 | | | 0.83 | | | 0.31 | | | | | | 2.68 |
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited) ($ in millions, except per share data)
| | | | | | |
| | | For the Three Months Ended
|
| | | December 31,
2004 | | | December 31,
2003 |
Interest Income | | | | | | |
Interest and Fees on Loans and Leases | | $ | 775 | | | 668 |
Interest on Securities: | | | | | | |
Taxable | | | 293 | | | 307 |
Exempt from Income Taxes | | | 11 | | | 13 |
Total Interest on Securities | | | 304 | | | 320 |
| Interest on Other Short-Term Investments | | | 2 | | | - |
Total Interest Income | | | 1,081 | | | 988 |
Interest Expense | | | | | | |
Interest on Deposits: | | | | | | |
Interest Checking | | | 56 | | | 45 |
Savings | | | 21 | | | 12 |
Money Market | | | 16 | | | 8 |
Other Time | | | 45 | | | 44 |
Certificates - $100,000 and Over | | | 13 | | | 10 |
Foreign Office | | | 20 | | | 14 |
Total Interest on Deposits | | | 171 | | | 133 |
Interest on Federal Funds Purchased | | | 24 | | | 19 |
Interest on Short-Term Bank Notes | | | 6 | | | - |
Interest on Other Short-Term Borrowings | | | 22 | | | 14 |
| Interest on Long-Term Debt | | | 115 | | | 87 |
| Total Interest Expense | | | 338 | | | 253 |
Net Interest Income | | | 743 | | | 735 |
| Provision for Loan and Lease Losses | | | 65 | | | 94 |
Net Interest Income After Provision for Loan and Lease Losses | | | 678 | | | 641 |
Noninterest Income | | | | | | |
Electronic Payment Processing Revenue | | | 173 | | | 160 |
Service Charges on Deposits | | | 126 | | | 125 |
Mortgage Banking Net Revenue | | | 24 | | | 57 |
Investment Advisory Revenue | | | 82 | | | 85 |
Other Noninterest Income | | | 125 | | | 112 |
Operating Lease Revenue | | | 27 | | | 58 |
| Securities (Losses) Gains, Net | | | (78 | ) | | 2 |
Total Noninterest Income | | | 479 | | | 599 |
Noninterest Expense | | | | | | |
Salaries, Wages and Incentives | | | 266 | | | 244 |
Employee Benefits | | | 56 | | | 53 |
Equipment Expense | | | 23 | | | 21 |
Net Occupancy Expense | | | 48 | | | 47 |
Operating Lease Expense | | | 20 | | | 44 |
| Other Noninterest Expense | | | 522 | | | 248 |
| Total Noninterest Expense | | | 935 | | | 657 |
Income from Continuing Operations Before Income Taxes | | | 222 | | | 583 |
| Applicable Income Taxes | | | 46 | | | 182 |
Income from Continuing Operations | | | 176 | | | 401 |
| Income from Discontinued Operations, Net of Tax | | | - | | | 41 |
| Net Income | | $ | 176 | | | 442 |
| Net Income Available to Common Shareholders (a) | | $ | 176 | | | 441 |
Basic Earnings Per Share: | | | | | | |
Income from Continuing Operations | | $ | 0.31 | | | 0.71 |
Income from Discontinued Operations | | | - | | | 0.07 |
Net Income | | $ | 0.31 | | | 0.78 |
Diluted Earnings Per Share: | | | | | | |
Income from Continuing Operations | | $ | 0.31 | | | 0.70 |
Income from Discontinued Operations | | | - | | | 0.07 |
Net Income | | $ | 0.31 | | | 0.77 |
| (a) | Dividend on Preferred Stock is $.185 million for the three months ended December 31, 2004 and 2003. |
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited) ($ in millions, except per share data)
| | | | | | | | |
| | | For the Year Ended
| |
| | | December 31,
2004 | | | December 31,
2003 | |
Interest Income | | | | | | | | |
Interest and Fees on Loans and Leases | | $ | 2,847 | | | | 2,711 | |
Interest on Securities: | | | | | | | | |
Taxable | | | 1,217 | | | | 1,226 | |
Exempt from Income Taxes | | | 45 | | | | 51 | |
Total Interest on Securities | | | 1,262 | | | | 1,277 | |
| Interest on Other Short-Term Investments | | | 5 | | | | 3 | |
Total Interest Income | | | 4,114 | | | | 3,991 | |
Interest Expense | | | | | | | | |
Interest on Deposits: | | | | | | | | |
Interest Checking | | | 174 | | | | 189 | |
Savings | | | 58 | | | | 64 | |
Money Market | | | 39 | | | | 32 | |
Other Time | | | 162 | | | | 196 | |
Certificates - $100,000 and Over | | | 48 | | | | 63 | |
Foreign Office | | | 58 | | | | 44 | |
Total Interest on Deposits | | | 539 | | | | 588 | |
Interest on Federal Funds Purchased | | | 77 | | | | 80 | |
Interest on Short-Term Bank Notes | | | 15 | | | | - | |
Interest on Other Short-Term Borrowings | | | 78 | | | | 55 | |
| Interest on Long-Term Debt | | | 393 | | | | 363 | |
| Total Interest Expense | | | 1,102 | | | | 1,086 | |
Net Interest Income | | | 3,012 | | | | 2,905 | |
| Provision for Loan and Lease Losses | | | 268 | | | | 399 | |
Net Interest Income After Provision for Loan and Lease Losses | | | 2,744 | | | | 2,506 | |
Noninterest Income | | | | | | | | |
Electronic Payment Processing Revenue | | | 622 | | | | 575 | |
Service Charges on Deposits | | | 515 | | | | 485 | |
Mortgage Banking Net Revenue | | | 178 | | | | 302 | |
Investment Advisory Revenue | | | 360 | | | | 332 | |
Other Noninterest Income | | | 671 | | | | 581 | |
Operating Lease Revenue | | | 156 | | | | 124 | |
Securities (Losses) Gains, Net | | | (37 | ) | | | 81 | |
| Securities Gains, Net - Non-Qualifying Hedges on Mortgage Servicing | | | - | | | | 3 | |
Total Noninterest Income | | | 2,465 | | | | 2,483 | |
Noninterest Expense | | | | | | | | |
Salaries, Wages and Incentives | | | 1,018 | | | | 1,031 | |
Employee Benefits | | | 261 | | | | 240 | |
Equipment Expense | | | 84 | | | | 82 | |
Net Occupancy Expense | | | 185 | | | | 159 | |
Operating Lease Expense | | | 114 | | | | 94 | |
| Other Noninterest Expense | | | 1,310 | | | | 945 | |
| Total Noninterest Expense | | | 2,972 | | | | 2,551 | |
Income from Continuing Operations Before Income Taxes, Minority Interest and Cumulative Effect | | | 2,237 | | | | 2,438 | |
| Applicable Income Taxes | | | 712 | | | | 786 | |
Income from Continuing Operations Before Minority Interest and Cumulative Effect | | | 1,525 | | | | 1,652 | |
| Minority Interest, Net of Tax | | | - | | | | (20 | ) |
Income from Continuing Operations Before Cumulative Effect | | | 1,525 | | | | 1,632 | |
| Income from Discontinued Operations, Net of Tax | | | - | | | | 44 | |
Income Before Cumulative Effect | | | 1,525 | | | | 1,676 | |
| Cumulative Effect of Change in Accounting Principle, Net of Tax | | | - | | | | (11 | ) |
| Net Income | | $ | 1,525 | | | | 1,665 | |
| Net Income Available to Common Shareholders (a) | | $ | 1,524 | | | | 1,664 | |
Basic Earnings Per Share: | | | | | | | | |
Income from Continuing Operations | | $ | 2.72 | | | | 2.85 | |
Income from Discontinued Operations | | | - | | | | 0.08 | |
Cumulative Effect of Change in Accounting Principle, Net | | | - | | | | (0.02 | ) |
Net Income | | $ | 2.72 | | | | 2.91 | |
Diluted Earnings Per Share: | | | | | | | | |
Income from Continuing Operations | | $ | 2.68 | | | | 2.81 | |
Income from Discontinued Operations | | | - | | | | 0.08 | |
Cumulative Effect of Change in Accounting Principle, Net | | | - | | | | (0.02 | ) |
Net Income | | $ | 2.68 | | | $ | 2.87 | |
| (a) | Dividend on Preferred Stock is $.740 million for the year ended December 31, 2004 and 2003. |
12
FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders’ Equity
(unaudited) ($ in millions, except per share data)
| | | | | | | |
| | | For the Three Months Ended
| |
| | | December 31, 2004 | | | December 31, 2003 | |
Total Shareholders’ Equity, Beginning | | $ | 9,040 | | | 8,694 | |
Net Income | | | 176 | | | 442 | |
Other Comprehensive Income, Net of Tax: | | | | | | | |
Change in Unrealized Gains and (Losses) on Available-for-Sale Securities, Qualifying Cash Flow Hedges and Additional Pension Liability | | | 49 | | | (111 | ) |
Net Income and Other Comprehensive Income | | | 225 | | | 331 | |
Cash Dividends Declared: | | | �� | | | | |
Common Stock (2004 - $.35 per share and 2003 - $.29 per share) | | | (195 | ) | | (164 | ) |
Preferred Stock (a) | | | - | | | - | |
Stock Options Exercised Including Treasury Shares Issued | | | 11 | | | 29 | |
Stock-Based Compensation Expense | | | 23 | | | 23 | |
Loans Repaid Related to Exercise of Stock Options, Net | | | 2 | | | 3 | |
Change in Corporate Tax Benefit Related to Stock-Based Compensation | | | 2 | | | 22 | |
Shares Purchased | | | (183 | ) | | (271 | ) |
| Other | | | (1 | ) | | - | |
| Total Shareholders’ Equity, Ending | | $ | 8,924 | | | 8,667 | |
| (a) | Dividend on Preferred Stock is $.185 million for the three months ended December 31, 2004 and 2003. |
| | | | | | | |
| | | For the Year Ended
| |
| | | December 31, 2004 | | | December 31, 2003 | |
Total Shareholders’ Equity, Beginning | | $ | 8,667 | | | 8,604 | |
Net Income | | | 1,525 | | | 1,665 | |
Other Comprehensive Income, Net of Tax: | | | | | | | |
Change in Unrealized Gains and (Losses) on Available-for-Sale Securities, Qualifying Cash Flow Hedges and Additional Pension Liability | | | (49 | ) | | (489 | ) |
Net Income and Other Comprehensive Income | | | 1,476 | | | 1,176 | |
Cash Dividends Declared: | | | | | | | |
Common Stock (2004 - $1.31 per share and 2003 - $1.13 per share) | | | (735 | ) | | (645 | ) |
Preferred Stock (b) | | | (1 | ) | | (1 | ) |
Stock Options Exercised Including Treasury Shares Issued | | | 89 | | | 97 | |
Stock-Based Compensation Expense | | | 87 | | | 110 | |
Loans Issued Related to Exercise of Stock Options, Net | | | - | | | (34 | ) |
Change in Corporate Tax Benefit Related to Stock-Based Compensation | | | 11 | | | 18 | |
Shares Purchased | | | (987 | ) | | (655 | ) |
Acquisitions | | | 317 | | | - | |
| Other | | | - | | | (3 | ) |
| Total Shareholders’ Equity, Ending | | $ | 8,924 | | | 8,667 | |
| (b) | Dividend on Preferred Stock is $.740 million for the year ended December 31, 2004 and 2003. |
13
FIFTH THIRD BANCORP AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income (Taxable Equivalent)
(unaudited) ($ in millions)
| | | | | | | | | | | |
| | | For the Three Months Ended
|
| | | December 31, 2004 | | September 30, 2004 | | June 30, 2004 | | March 31, 2004 | | December 31, 2003 |
Interest Income | | $ | 1,081 | | 1,043 | | 1,000 | | 990 | | 988 |
| Taxable Equivalent Adjustment | | | 9 | | 9 | | 9 | | 9 | | 10 |
Interest Income (Taxable Equivalent) | | | 1,090 | | 1,052 | | 1,009 | | 999 | | 998 |
| Interest Expense | | | 338 | | 286 | | 238 | | 240 | | 253 |
Net Interest Income (Taxable Equivalent) | | | 752 | | 766 | | 771 | | 759 | | 745 |
| Provision for Loan and Lease Losses | | | 65 | | 26 | | 90 | | 87 | | 94 |
Net Interest Income After Provision for Loan and Lease Losses (Taxable Equivalent) | | | 687 | | 740 | | 681 | | 672 | | 651 |
Noninterest Income | | | 479 | | 611 | | 749 | | 626 | | 599 |
| Noninterest Expense | | | 935 | | 648 | | 742 | | 648 | | 657 |
Income from Continuing Operations Before Income Taxes (Taxable Equivalent) | | | 231 | | 703 | | 688 | | 650 | | 593 |
Applicable Income Taxes | | | 46 | | 223 | | 231 | | 211 | | 182 |
| Taxable Equivalent Adjustment | | | 9 | | 9 | | 9 | | 9 | | 10 |
Income from Continuing Operations | | | 176 | | 471 | | 448 | | 430 | | 401 |
| Income from Discontinued Operations, Net of Tax | | | - | | - | | - | | - | | 41 |
| Net Income | | $ | 176 | | 471 | | 448 | | 430 | | 442 |
| Net Income Available to Common Shareholders (a) | | $ | 176 | | 471 | | 448 | | 430 | | 441 |
| (a) | Dividend on Preferred Stock is $.185 million for all quarters presented. |
14
FIFTH THIRD BANCORP AND SUBSIDIARIES
Noninterest Income and Noninterest Expense
(unaudited) ($ in millions)
| | | | | | | | | | | | |
| | | For the Three Months Ended
|
| | | December 31, 2004 | | | September 30, 2004 | | June 30, 2004 | | March 31, 2004 | | December 31, 2003 |
Noninterest Income | | | | | | | | | | | | |
Electronic Payment Processing Revenue | | $ | 173 | | | 152 | | 148 | | 148 | | 160 |
Service Charges on Deposits | | | 126 | | | 134 | | 131 | | 123 | | 125 |
Mortgage Banking Net Revenue | | | 24 | | | 49 | | 61 | | 44 | | 57 |
Investment Advisory Revenue | | | 82 | | | 88 | | 97 | | 93 | | 85 |
Other Noninterest Income | | | 125 | | | 137 | | 268 | | 141 | | 112 |
Operating Lease Revenue | | | 27 | | | 35 | | 44 | | 52 | | 58 |
| Securities (Losses) Gains, Net | | | (78 | ) | | 16 | | - | | 25 | | 2 |
| Total Noninterest Income | | $ | 479 | | | 611 | | 749 | | 626 | | 599 |
Noninterest Expense | | | | | | | | | | | | |
Salaries, Wages and Incentives | | $ | 266 | | | 252 | | 254 | | 245 | | 244 |
Employee Benefits | | | 56 | | | 64 | | 66 | | 76 | | 53 |
Equipment Expense | | | 23 | | | 22 | | 19 | | 20 | | 21 |
Net Occupancy Expense | | | 48 | | | 45 | | 47 | | 46 | | 47 |
Operating Lease Expense | | | 20 | | | 24 | | 32 | | 38 | | 44 |
| Other Noninterest Expense (a) | | | 522 | | | 241 | | 324 | | 223 | | 248 |
| Total Noninterest Expense | | $ | 935 | | | 648 | | 742 | | 648 | | 657 |
| | | | | |
Full-Time Equivalent Employees | | | 19,659 | | | 19,061 | | 18,937 | | 18,583 | | 18,899 |
| Banking Centers | | | 1,011 | | | 1,005 | | 992 | | 960 | | 952 |
| (a) | Includes intangible amortization expense of $7 million, $7 million, $6 million, $9 million and $10 million for the three months ended December 31, 2004, September 30, 2004, June 30, 2004, March 31, 2004 and December 31, 2003, respectively. |
15
FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited) ($ in millions, except share data)
| | | | | | | |
| | | As of
| |
| | | December 31, 2004 | | | December 31, 2003 | |
Assets | | | | | | | |
Cash and Due from Banks | | $ | 2,561 | | | 2,359 | |
Available-for-Sale Securities (a) | | | 24,687 | | | 28,999 | |
Held-to-Maturity Securities (b) | | | 255 | | | 135 | |
Trading Securities | | | 77 | | | 55 | |
Other Short-Term Investments | | | 532 | | | 268 | |
Loans Held for Sale | | | 559 | | | 1,881 | |
Loans and Leases: | | | | | | | |
Commercial Loans | | | 16,058 | | | 14,209 | |
Construction Loans | | | 4,726 | | | 3,636 | |
Commercial Mortgage Loans | | | 7,636 | | | 6,894 | |
Commercial Lease Financing | | | 4,634 | | | 4,430 | |
Residential Mortgage Loans | | | 6,988 | | | 4,425 | |
Consumer Loans | | | 18,923 | | | 17,432 | |
Consumer Lease Financing | | | 2,273 | | | 2,709 | |
Unearned Income | | | (1,430 | ) | | (1,427 | ) |
Total Loans and Leases | | | 59,808 | | | 52,308 | |
| Reserve for Loan and Lease Losses | | | (713 | ) | | (697 | ) |
Total Loans and Leases, net | | | 59,095 | | | 51,611 | |
Bank Premises and Equipment | | | 1,315 | | | 1,061 | |
Operating Lease Equipment | | | 304 | | | 767 | |
Accrued Interest Receivable | | | 397 | | | 408 | |
Goodwill | | | 979 | | | 738 | |
Intangible Assets | | | 150 | | | 195 | |
Servicing Rights | | | 352 | | | 299 | |
| Other Assets | | | 3,193 | | | 2,478 | |
| Total Assets | | $ | 94,456 | | | 91,254 | |
| | |
Liabilities | | | | | | | |
Deposits: | | | | | | | |
Demand | | $ | 13,486 | | | 12,142 | |
Interest Checking | | | 19,481 | | | 19,757 | |
Savings | | | 8,310 | | | 7,375 | |
Money Market | | | 4,321 | | | 3,201 | |
Other Time | | | 6,837 | | | 6,201 | |
Certificates - $100,000 and Over | | | 2,121 | | | 1,856 | |
Foreign Office | | | 3,670 | | | 6,563 | |
Total Deposits | | | 58,226 | | | 57,095 | |
Federal Funds Purchased | | | 4,714 | | | 6,928 | |
Short-Term Bank Notes | | | 775 | | | 500 | |
Other Short-Term Borrowings | | | 4,537 | | | 5,742 | |
Accrued Taxes, Interest and Expenses | | | 2,216 | | | 2,200 | |
Other Liabilities | | | 1,081 | | | 1,059 | |
| Long-Term Debt | | | 13,983 | | | 9,063 | |
Total Liabilities | | | 85,532 | | | 82,587 | |
| Total Shareholders’ Equity (c) | | | 8,924 | | | 8,667 | |
| Total Liabilities and Shareholders’ Equity | | $ | 94,456 | | | 91,254 | |
| (a) | Amortized cost: December 31, 2004 - $24,801 and December 31, 2003 - $29,076 |
| (b) | Market values: December 31, 2004 - $255 and December 31, 2003 - $135 |
| (c) | Common Shares: Stated value $2.22 per share; authorized 1,300,000,000; outstanding December 31, 2004 - 557,648,989 |
| | (excluding 25,802,702 treasury shares) and December 31, 2003 - 566,685,301 (excluding 16,766,390 treasury shares). |
16
FIFTH THIRD BANCORP AND SUBSIDIARIES
Loans and Leases Serviced
(unaudited) ($ in millions)
| | | | | | | | | | | |
| | | As of
|
| | | December 31, 2004 | | September 30, 2004 | | June 30, 2004 | | March 31, 2004 | | December 31, 2003 |
Commercial: | | | | | | | | | | | |
Commercial Loans | | $ | 16,058 | | 15,259 | | 15,244 | | 14,469 | | 14,209 |
Mortgage | | | 7,636 | | 7,644 | | 7,541 | | 7,197 | | 6,894 |
Construction | | | 4,348 | | 4,077 | | 3,768 | | 3,493 | | 3,301 |
Leases | | | 3,426 | | 3,357 | | 3,275 | | 3,327 | | 3,264 |
Subtotal | | | 31,468 | | 30,337 | | 29,828 | | 28,486 | | 27,668 |
Consumer: | | | | | | | | | | | |
Consumer Loans | | | 18,080 | | 17,829 | | 17,522 | | 17,037 | | 16,670 |
Mortgage & Construction | | | 7,366 | | 6,852 | | 6,213 | | 5,264 | | 4,760 |
Credit Card | | | 843 | | 809 | | 779 | | 757 | | 762 |
Leases | | | 2,051 | | 2,209 | | 2,337 | | 2,368 | | 2,448 |
| Subtotal | | | 28,340 | | 27,699 | | 26,851 | | 25,426 | | 24,640 |
Total Loans and Leases | | | 59,808 | | 58,036 | | 56,679 | | 53,912 | | 52,308 |
| | | | | |
Loans Held for Sale | | | 559 | | 452 | | 577 | | 1,661 | | 1,881 |
| | | | | |
Operating Lease Equipment | | | 304 | | 394 | | 525 | | 658 | | 767 |
| | | | | |
Loans and Leases Serviced for Others: | | | | | | | | | | | |
Residential Mortgage (a) | | | 23,026 | | 23,458 | | 23,943 | | 24,114 | | 24,495 |
Commercial Mortgage (b) | | | 2,045 | | 2,091 | | 2,104 | | 2,147 | | 2,085 |
Commercial Loans (c) | | | 1,941 | | 2,033 | | 1,913 | | 1,953 | | 1,790 |
Commercial Leases (b) | | | 323 | | 220 | | 217 | | 226 | | 185 |
Consumer Loans (d) | | | 1,298 | | 1,407 | | 1,511 | | 832 | | 866 |
| Total Loans and Leases Serviced for Others | | | 28,633 | | 29,209 | | 29,688 | | 29,272 | | 29,421 |
| Total Loans and Leases Serviced | | $ | 89,304 | | 88,091 | | 87,469 | | 85,503 | | 84,377 |
| (a) | Fifth Third sells certain residential mortgage loans, primarily conforming and fixed-rate in nature, and retains servicing responsibilities. |
| (b) | Fifth Third sells certain commercial mortgage loans and commercial leases and retains servicing responsibilities. |
| (c) | 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. |
| (d) | Fifth Third sells certain consumer loans and retains servicing responsibilities. |
17
FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields (Taxable Equivalent) and Rates
(unaudited) ($ in millions)
| | | | | | | | | | | | |
| | | For the Three Months Ended
|
| | | December 31, 2004 | | December 31, 2003 |
| | | Average Balance
| | | Average
Yield/Rate
| | Average Balance
| | | Average
Yield/Rate
|
Assets | | | | | | | | | | | | |
Interest-Earning Assets: | | | | | | | | | | | | |
Loans and Leases | | $ | 59,440 | | | 5.20% | | $ | 53,886 | | | 4.94% |
Taxable Securities | | | 28,379 | | | 4.11 | | | 28,362 | | | 4.29 |
Tax Exempt Securities | | | 866 | | | 7.37 | | | 1,026 | | | 7.41 |
Other Short-Term Investments | | | 480 | | | 2.00 | | | 206 | | | 0.45 |
Total Interest-Earning Assets | | | 89,165 | | | 4.86 | | | 83,480 | | | 4.74 |
Cash and Due from Banks | | | 2,445 | | | | | | 2,044 | | | |
Other Assets | | | 6,171 | | | | | | 5,863 | | | |
| Reserve for Loan and Lease Losses | | | (719 | ) | | | | | (771 | ) | | |
| Total Assets | | $ | 97,062 | | | | | $ | 90,616 | | | |
| | | | |
Liabilities | | | | | | | | | | | | |
Interest-Bearing Liabilities: | | | | | | | | | | | | |
Interest Checking | | $ | 19,345 | | | 1.14% | | $ | 19,303 | | | 0.93% |
Savings | | | 8,447 | | | 1.01 | | | 7,700 | | | 0.60 |
Money Market | | | 4,227 | | | 1.53 | | | 3,388 | | | 0.89 |
Other Time | | | 6,681 | | | 2.71 | | | 6,086 | | | 2.81 |
Certificates-$100,000 and Over | | | 2,106 | | | 2.41 | | | 2,170 | | | 1.82 |
Foreign Office Deposits | | | 4,073 | | | 1.94 | | | 5,606 | | | 1.01 |
Federal Funds Purchased | | | 4,880 | | | 1.98 | | | 7,503 | | | 1.02 |
Short-Term Bank Notes | | | 1,188 | | | 1.97 | | | 87 | | | 1.06 |
Other Short-Term Borrowings | | | 5,140 | | | 1.67 | | | 6,664 | | | 0.86 |
Long-Term Debt | | | 15,585 | | | 2.92 | | | 9,149 | | | 3.78 |
Total Interest-Bearing Liabilities | | | 71,672 | | | 1.87 | | | 67,656 | | | 1.48 |
Demand Deposits | | | 13,107 | | | | | | 11,460 | | | |
| Other Liabilities | | | 3,054 | | | | | | 2,792 | | | |
Total Liabilities | | | 87,833 | | | | | | 81,908 | | | |
| Shareholders’ Equity | | | 9,229 | | | | | | 8,708 | | | |
| Total Liabilities and Shareholders’ Equity | | $ | 97,062 | | | | | $ | 90,616 | | | |
| | | | |
Average Common Shares Outstanding: | | | | | | | | | | | | |
Basic | | | 560,161,550 | | | | | | 568,104,211 | | | |
Diluted | | | 566,107,746 | | | | | | 576,881,193 | | | |
| | | | |
Ratios: | | | | | | | | | | | | |
Net Interest Margin (Taxable Equivalent) | | | | | | 3.35% | | | | | | 3.54% |
Net Interest Rate Spread (Taxable Equivalent) | | | | | | 2.99% | | | | | | 3.26% |
Interest-Bearing Liabilities to Interest-Earning Assets | | | | | | 80.38% | | | | | | 81.04% |
18
FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields (Taxable Equivalent) and Rates
(unaudited) ($ in millions)
| | | | | | | | | | | | | | |
| | | For the Year Ended
| |
| | | December 31, 2004 | | | December 31, 2003 | |
| | | Average Balance
| | | Average Yield/Rate
| | | Average Balance
| | | Average
Yield/Rate
| |
Assets | | | | | | | | | | | | | | |
Interest-Earning Assets: | | | | | | | | | | | | | | |
Loans and Leases | | $ | 57,042 | | | 5.01 | % | | $ | 52,414 | | | 5.20 | % |
Taxable Securities | | | 29,365 | | | 4.15 | | | | 27,584 | | | 4.45 | |
Tax Exempt Securities | | | 917 | | | 7.44 | | | | 1,056 | | | 7.26 | |
Other Short-Term Investments | | | 315 | | | 1.48 | | | | 307 | | | 0.97 | |
Total Interest-Earning Assets | | | 87,639 | | | 4.73 | | | | 81,361 | | | 4.95 | |
Cash and Due from Banks | | | 2,216 | | | | | | | 1,600 | | | | |
Other Assets | | | 5,763 | | | | | | | 5,250 | | | | |
| Reserve for Loan and Lease Losses | | | (722 | ) | | | | | | (730 | ) | | | |
| Total Assets | | $ | 94,896 | | | | | | $ | 87,481 | | | | |
| | | | |
Liabilities | | | | | | | | | | | | | | |
Interest-Bearing Liabilities: | | | | | | | | | | | | | | |
Interest Checking | | $ | 19,434 | | | 0.89 | % | | $ | 18,679 | | | 1.01 | % |
Savings | | | 7,941 | | | 0.72 | | | | 8,020 | | | 0.79 | |
Money Market | | | 3,473 | | | 1.12 | | | | 3,189 | | | 1.01 | |
Other Time | | | 6,208 | | | 2.62 | | | | 6,426 | | | 3.04 | |
Certificates-$100,000 and Over | | | 2,403 | | | 1.99 | | | | 3,832 | | | 1.65 | |
Foreign Office Deposits | | | 4,449 | | | 1.31 | | | | 3,862 | | | 1.13 | |
Federal Funds Purchased | | | 5,896 | | | 1.30 | | | | 7,001 | | | 1.14 | |
Short-Term Bank Notes | | | 1,003 | | | 1.46 | | | | 22 | | | 1.06 | |
Other Short-Term Borrowings | | | 6,640 | | | 1.17 | | | | 5,350 | | | 1.03 | |
Long-Term Debt | | | 13,323 | | | 2.95 | | | | 8,747 | | | 4.15 | |
Total Interest-Bearing Liabilities | | | 70,770 | | | 1.56 | | | | 65,128 | | | 1.67 | |
Demand Deposits | | | 12,327 | | | | | | | 10,482 | | | | |
| Other Liabilities | | | 2,939 | | | | | | | 2,883 | | | | |
Total Liabilities | | | 86,036 | | | | | | | 78,493 | | | | |
Minority Interest | | | - | | | | | | | 234 | | | | |
| Shareholders’ Equity | | | 8,860 | | | | | | | 8,754 | | | | |
| Total Liabilities and Shareholders’ Equity | | $ | 94,896 | | | | | | $ | 87,481 | | | | |
| | | | |
Average Common Shares Outstanding: | | | | | | | | | | | | | | |
Basic | | | 561,258,539 | | | | | | | 571,590,128 | | | | |
Diluted | | | 568,234,313 | | | | | | | 580,003,074 | | | | |
| | | | |
Ratios: | | | | | | | | | | | | | | |
Net Interest Margin (Taxable Equivalent) | | | | | | 3.48 | % | | | | | | 3.62 | % |
Net Interest Rate Spread (Taxable Equivalent) | | | | | | 3.17 | % | | | | | | 3.28 | % |
Interest-Bearing Liabilities to Interest-Earning Assets | | | | | | 80.75 | % | | | | | | 80.05 | % |
19
FIFTH THIRD BANCORP AND SUBSIDIARIES
Regulatory Capital
(unaudited) ($ in millions)
| | | | | | | | | | | | | | | | |
| | | December 31, 2004 (a) | | | September 30, 2004 | | | June 30, 2004 | | | March 31, 2004 | | | December 31, 2003 | |
Tier 1 Capital: | | | | | | | | | | | | | | | | |
Shareholders’ Equity | | $ | 8,924 | | | 9,040 | | | 8,393 | | | 8,864 | | | 8,667 | |
Goodwill and Certain Other Intangibles | | | (1,129 | ) | | (1,137 | ) | | (1,143 | ) | | (893 | ) | | (933 | ) |
Unrealized Losses/(Gains) | | | 101 | | | 146 | | | 491 | | | (162 | ) | | 57 | |
Other | | | 627 | | | 617 | | | 605 | | | 585 | | | 481 | |
| Total Tier 1 Capital | | $ | 8,523 | | | 8,666 | | | 8,346 | | | 8,394 | | | 8,272 | |
Total Capital: | | | | | | | | | | | | | | | | |
Tier 1 Capital | | $ | 8,523 | | | 8,666 | | | 8,346 | | | 8,394 | | | 8,272 | |
Qualifying Reserves for Credit Losses | | | 805 | | | 806 | | | 831 | | | 801 | | | 787 | |
Qualifying Subordinated Notes | | | 868 | | | 868 | | | 932 | | | 926 | | | 1,037 | |
| Total Risk-Based Capital | | $ | 10,196 | | | 10,340 | | | 10,109 | | | 10,121 | | | 10,096 | |
Risk-Weighted Assets | | $ | 81,536 | | | 80,749 | | | 78,779 | | | 76,587 | | | 74,477 | |
Ratios (percent): | | | | | | | | | | | | | | | | |
Average Shareholders’ Equity to Average Assets | | | 9.51% | | | 9.21 | | | 9.08 | | | 9.55 | | | 9.61 | |
Regulatory Capital: | | | | | | | | | | | | | | | | |
Tier 1 Capital | | | 10.45% | | | 10.73 | | | 10.59 | | | 10.96 | | | 11.11 | |
Total Capital | | | 12.50% | | | 12.81 | | | 12.83 | | | 13.22 | | | 13.56 | |
Tier 1 Leverage | | | 8.89% | | | 9.13 | | | 8.97 | | | 9.23 | | | 9.23 | |
| (a) | December 31, 2004 regulatory capital data and ratios are estimated. |
20
FIFTH THIRD BANCORP AND SUBSIDIARIES
Asset Quality
(unaudited) ($ in millions)
| | | | | | | | | | | | | | | | |
| Summary of Credit Loss Experience | | For the Three Months Ended
| |
| | | December 31,
2004 | | | September 30,
2004 | | | June 30,
2004 | | | March 31,
2004 | | | December 31,
2003 | |
Losses Charged Off: | | | | | | | | | | | | | | | | |
Commercial, Financial and Agricultural Loans | | $ | (19 | ) | | (24 | ) | | (21 | ) | | (31 | ) | | (57 | ) |
Real Estate - Commercial Mortgage Loans | | | (7 | ) | | (1 | ) | | (2 | ) | | (3 | ) | | (2 | ) |
Real Estate - Construction Loans | | | (3 | ) | | - | | | (3 | ) | | (1 | ) | | (1 | ) |
Real Estate - Residential Mortgage Loans | | | (4 | ) | | (3 | ) | | (3 | ) | | (4 | ) | | (9 | ) |
Consumer Loans | | | (42 | ) | | (37 | ) | | (38 | ) | | (40 | ) | | (37 | ) |
Lease Financing | | | (9 | ) | | (7 | ) | | (9 | ) | | (9 | ) | | (9 | ) |
Total Losses | | | (84 | ) | | (72 | ) | | (76 | ) | | (88 | ) | | (115 | ) |
Recoveries of Losses Previously Charged Off: | | | | | | | | | | | | | | | | |
Commercial, Financial and Agricultural Loans | | | 4 | | | 3 | | | 3 | | | 4 | | | 5 | |
Real Estate - Commercial Mortgage Loans | | | 1 | | | 1 | | | 1 | | | 1 | | | 1 | |
Real Estate - Construction Loans | | | - | | | - | | | - | | | - | | | - | |
Real Estate - Residential Mortgage Loans | | | - | | | - | | | - | | | - | | | - | |
Consumer Loans | | | 12 | | | 9 | | | 11 | | | 10 | | | 11 | |
Lease Financing | | | 2 | | | 2 | | | 2 | | | 2 | | | 2 | |
Total Recoveries | | | 19 | | | 15 | | | 17 | | | 17 | | | 19 | |
Net Losses Charged Off: | | | | | | | | | | | | | | | | |
Commercial, Financial and Agricultural Loans | | | (15 | ) | | (21 | ) | | (18 | ) | | (27 | ) | | (52 | ) |
Real Estate - Commercial Mortgage Loans | | | (6 | ) | | - | | | (1 | ) | | (2 | ) | | (1 | ) |
Real Estate - Construction Loans | | | (3 | ) | | - | | | (3 | ) | | (1 | ) | | (1 | ) |
Real Estate - Residential Mortgage Loans | | | (4 | ) | | (3 | ) | | (3 | ) | | (4 | ) | | (9 | ) |
Consumer Loans | | | (30 | ) | | (28 | ) | | (27 | ) | | (30 | ) | | (26 | ) |
Lease Financing | | | (7 | ) | | (5 | ) | | (7 | ) | | (7 | ) | | (7 | ) |
| Total Net Losses Charged Off | | $ | (65 | ) | | (57 | ) | | (59 | ) | | (71 | ) | | (96 | ) |
Reserve for Loan and Lease Losses, Beginning | | $ | 713 | | | 744 | | | 713 | | | 697 | | | 772 | |
Total Net Losses Charged Off | | | (65 | ) | | (57 | ) | | (59 | ) | | (71 | ) | | (96 | ) |
Provision for Loan and Lease Losses | | | 65 | | | 26 | | | 90 | | | 87 | | | 94 | |
| Reclassification of Reserve Related to Unfunded Commitments (a) | | | - | | | - | | | - | | | - | | | (73 | ) |
Reserve for Loan and Lease Losses, Ending | | | 713 | | | 713 | | | 744 | | | 713 | | | 697 | |
Reserve for Unfunded Commitments, Beginning | | | 72 | | | 68 | | | 70 | | | 73 | | | - | |
Change - Other Noninterest Expense | | | - | | | 4 | | | (2 | ) | | (3 | ) | | - | |
| Reclassification of Reserve Related to Unfunded Commitments (a) | | | - | | | - | | | - | | | - | | | 73 | |
Reserve for Unfunded Commitments, Ending | | | 72 | | | 72 | | | 68 | | | 70 | | | 73 | |
| | | | | |
Components of Reserve for Credit Losses: | | | | | | | | | | | | | | | | |
Reserve for Loan and Lease Losses | | | 713 | | | 713 | | | 744 | | | 713 | | | 697 | |
Reserve for Unfunded Commitments (a) | | | 72 | | | 72 | | | 68 | | | 70 | | | 73 | |
| Total Reserve for Credit Losses | | $ | 785 | | | 785 | | | 812 | | | 783 | | | 770 | |
| | | | | |
| Nonperforming and Underperforming Assets | | | | | | | | | | | | | | | |
| | | As of
| |
| | | December 31,
2004 | | | September 30,
2004 | | | June 30,
2004 | | | March 31,
2004 | | | December 31,
2003 | |
Nonaccrual Loans and Leases (b) | | $ | 228 | | | 207 | | | 216 | | | 233 | | | 242 | |
Renegotiated Loans and Leases | | | 1 | | | 3 | | | 3 | | | 1 | | | 8 | |
| Other Assets, Including Other Real Estate Owned | | | 74 | | | 72 | | | 64 | | | 74 | | | 69 | |
Total Nonperforming Assets | | | 303 | | | 282 | | | 283 | | | 308 | | | 319 | |
| Ninety Days Past Due Loans and Leases (b) | | | 142 | | | 137 | | | 132 | | | 133 | | | 145 | |
| Total Underperforming Assets | | $ | 445 | | | 419 | | | 415 | | | 441 | | | 464 | |
Average Loans and Leases (c) | | $ | 58,714 | | | 57,160 | | | 54,960 | | | 52,927 | | | 52,402 | |
Loans and Leases (c) | | | 59,808 | | | 58,036 | | | 56,679 | | | 53,912 | | | 52,308 | |
Ratios | | | | | | | | | | | | | | | | |
Net Losses Charged Off as a Percent of Average Loans and Leases | | | 0.44% | | | 0.40 | | | 0.43 | | | 0.54 | | | 0.72 | |
Reserve for Loan and Lease Losses as a Percent of Loans and Leases | | | 1.19% | | | 1.23 | | | 1.31 | | | 1.32 | | | 1.33 | |
Reserve for Credit Losses as a Percent of Loans and Leases | | | 1.31% | | | 1.35 | | | 1.43 | | | 1.45 | | | 1.47 | |
Nonperforming Assets as a Percent of Loans, Leases and Other Assets, Including Other Real Estate Owned | | | 0.51% | | | 0.48 | | | 0.50 | | | 0.57 | | | 0.61 | |
Underperforming Assets as a Percent of Loans, Leases and Other Assets, Including Other Real Estate Owned | | | 0.74% | | | 0.72 | | | 0.73 | | | 0.82 | | | 0.89 | |
| (a) | As of December 31, 2004, the reserve for unfunded commitments has been reclassified from the reserve for loan and lease losses to other liabilities. Amounts presented in all periods shown have been reclassified to conform to the current presentation. |
| (b) | Nonaccrual includes $22 million and Ninety Days Past Due includes $39 million of residential mortgage loans as of December 31, 2004. |
| (c) | Excludes loans held for sale. |
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