FIFTH THIRD BANCORP AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
1993 1992 % Change
- -----------------------------------------------------------------------------------------------------------------------
Earnings and Dividends ($000's)
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $196,447 164,092 19.7
Cash Dividends Declared . . . . . . . . . . . . . . . . . . . . . . . 61,544 53,758 14.5
- ----------------------------------------------------------------------------------------------------------------------
PER SHARE
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.28 2.75 19.3
Cash Dividends Declared . . . . . . . . . . . . . . . . . . . . . . . 1.02 .90 13.3
Year-End Book Value . . . . . . . . . . . . . . . . . . . . . . . . . 19.50 16.80 16.1
Year-End Market Price . . . . . . . . . . . . . . . . . . . . . . . . 51.75 54.00 (4.2)
- ----------------------------------------------------------------------------------------------------------------------
AT YEAR END ($ in millions)
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,966 10,213 17.2
Loans and Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 8,811 7,475 17.9
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,628 7,532 14.6
Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . 1,198 1,005 19.2
- ----------------------------------------------------------------------------------------------------------------------
KEY RATIOS
Return on Average Assets . . . . . . . . . . . . . . . . . . . . . . 1.80% 1.74 3.4
Return on Average Equity . . . . . . . . . . . . . . . . . . . . . . 18.2 17.3 5.2
Net Interest Margin . . . . . . . . . . . . . . . . . . . . . . . . . 4.51 4.73 (4.7)
- ----------------------------------------------------------------------------------------------------------------------
Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 61,402,257 59,831,540 2.6
Number of Stockholders . . . . . . . . . . . . . . . . . . . . . . . 11,302 10,437 8.3
Number of Banking Locations . . . . . . . . . . . . . . . . . . . . . 289 249 16.1
Number of Full-Time Equivalent Employees . . . . . . . . . . . . . . 4,938 4,579 7.8
- ----------------------------------------------------------------------------------------------------------------------
FIFTH THIRD BANCORP
STOCKHOLDER AND CORPORATE INFORMATION
STOCK DATA DIVIDENDS
PAID PER
Year Period High Low SHARE
- --------------------------------------------------------
1992 First Quarter $50 3/8 $43 $.20
Second Quarter 46 3/4 40 1/8 .22
Third Quarter 52 3/4 40 3/4 .22
Fourth Quarter 54 46 3/4 .22
- --------------------------------------------------------
1993 FIRST QUARTER $55 1/8 $49 7/8 $.24
SECOND QUARTER 58 1/2 50 1/4 .24
THIRD QUARTER 54 5/8 51 1/4 .24
FOURTH QUARTER 54 49 3/4 .27
- --------------------------------------------------------
<FN>
The common stock of Fifth Third Bancorp is traded in the over-the-counter
market and is listed under the symbol ''FITB'' on the NASDAQ National Market
System.
RATINGS STANDARD
MOODY'S & POOR'S FITCH
- --------------------------------------------------------
FIFTH THIRD BANCORP
Commercial Paper P1 A1+ F1+
- --------------------------------------------------------
FIFTH THIRD BANK--CINCINNATI
Short-Term Deposit P1 A1+ F1
Long-Term Deposit Aa2 AA- AA
Medium-Term Deposit Aa2 AA- AA
- --------------------------------------------------------
FIFTH THIRD BANK OF NORTHWESTERN OHIO, N.A.
Short-Term Deposit - A1+ -
Long-Term Deposit - AA- -
- --------------------------------------------------------
CORPORATE OFFICE
The Corporate Office is located at Fifth Third Center, 38 Fountain Square
Plaza, Cincinnati, Ohio 45263. The telephone number is (513) 579-5300.
ANNUAL MEETING
The Annual Meeting of Stockholders will be held at 11:30 a.m. on Tuesday, March
15, 1994, on the fifth floor of the Corporate Office.
FORM 10-K
Any individual requesting general information or a copy of the Corporation's
1993 Form 10-K Report (to be filed with the Securities and Exchange Commission
before March 31, 1994) may obtain these by writing to Investor Relations at the
Corporate Office.
DIVIDEND REINVESTMENT
For the convenience of stockholders, the Corporation has established a plan
whereby stockholders may have their dividends automatically reinvested in Fifth
Third Bancorp common stock. Details of the plan will be sent on request (see
back page).
TRANSFER AGENT AND REGISTRAR
Transfer agent and registrar is Fifth Third Bank,
Fifth Third Center, Cincinnati, Ohio 45263.
1
FIFTH THIRD BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31 ($000's) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Interest and Fees on Loans and Leases . . . . . . . . . . . . . . . . . . . $611,509 556,423 558,557
- ---------------------------------------------------------------------------------------------------------------------
Interest on Securities
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,019 123,633 127,026
Exempt from Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . 12,559 10,789 12,521
- ---------------------------------------------------------------------------------------------------------------------
Total Interest on Securities . . . . . . . . . . . . . . . . . . . . . . . 115,578 134,422 139,547
- ---------------------------------------------------------------------------------------------------------------------
Interest on Other Short-Term Investments . . . . . . . . . . . . . . . . . 262 3,615 15,397
- ---------------------------------------------------------------------------------------------------------------------
Total Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . 727,349 694,460 713,501
- ---------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on Deposits
Interest Checking . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,647 26,145 31,275
Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,497 13,673 15,460
Money Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,271 43,056 60,837
Other Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141,088 147,924 171,441
Certificates-$100,000 and Over . . . . . . . . . . . . . . . . . . . . . 15,622 23,456 57,021
Foreign Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,030 1,714 756
- ---------------------------------------------------------------------------------------------------------------------
Total Interest on Deposits . . . . . . . . . . . . . . . . . . . . . . . . 240,155 255,968 336,790
Interest on Federal Funds Borrowed . . . . . . . . . . . . . . . . . . . . 18,963 17,316 16,760
Interest on Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . 19,314 23,380 26,110
Interest on Long-Term Debt and Notes . . . . . . . . . . . . . . . . . . . 12,528 3,602 1,620
- ---------------------------------------------------------------------------------------------------------------------
Total Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . 290,960 300,266 381,280
- ---------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436,389 394,194 332,221
Provision for Credit Losses . . . . . . . . . . . . . . . . . . . . . . . . 44,487 65,315 55,744
- ---------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES . . . . . . . . . . . 391,902 328,879 276,477
- ---------------------------------------------------------------------------------------------------------------------
OTHER OPERATING INCOME
Trust Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,603 47,033 40,263
Service Charges on Deposits . . . . . . . . . . . . . . . . . . . . . . . . 55,468 49,856 41,673
Data Processing Income . . . . . . . . . . . . . . . . . . . . . . . . . . 53,582 45,842 40,601
Other Service Charges and Fees . . . . . . . . . . . . . . . . . . . . . . 60,433 55,851 45,221
Securities Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,492 1,471 4,153
- ---------------------------------------------------------------------------------------------------------------------
Total Other Operating Income . . . . . . . . . . . . . . . . . . . . . . . 226,578 200,053 171,911
- ---------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Salaries and Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119,046 107,816 95,718
Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,578 29,732 25,652
Equipment Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,173 13,354 12,256
Net Occupancy Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 23,222 20,833 18,729
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 133,368 117,541 97,437
- ---------------------------------------------------------------------------------------------------------------------
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 323,387 289,276 249,792
- ---------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . 295,093 239,656 198,596
Applicable Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 98,646 75,564 60,446
- ---------------------------------------------------------------------------------------------------------------------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $196,447 164,092 138,150
- ---------------------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . . . $3.28 2.75 2.33
- ---------------------------------------------------------------------------------------------------------------------
AVERAGE SHARES OUTSTANDING (000's) . . . . . . . . . . . . . . . . . . . . 59,952 59,632 59,200
CASH DIVIDENDS DECLARED PER SHARE . . . . . . . . . . . . . . . . . . . . . $1.02 .90 .78
- ---------------------------------------------------------------------------------------------------------------------
<FN>
See Notes to Consolidated Financial Statements.
15
FIFTH THIRD BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31 ($000's) 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------------------------------------------------
Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $580,936 565,948
- ---------------------------------------------------------------------------------------------------------------------
Securities Available for Sale (at market) . . . . . . . . . . . . . . . . . . . . 815,986 --
- ---------------------------------------------------------------------------------------------------------------------
Securities Held to Maturity (Market Value 1993--$1,515,255 and 1992--$1,960,300). 1,487,322 1,933,008
- ---------------------------------------------------------------------------------------------------------------------
Other Short-Term Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 2,773 790
- ---------------------------------------------------------------------------------------------------------------------
Loans and Leases
Commercial Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,679,611 2,485,310
Construction Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322,910 308,781
Commercial Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . 634,495 495,818
Residential Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . 2,157,969 1,935,254
Consumer Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,459 1,631,496
Commercial Lease Financing . . . . . . . . . . . . . . . . . . . . . . . . 350,306 282,579
Consumer Lease Financing . . . . . . . . . . . . . . . . . . . . . . . . . 819,925 454,607
Unearned Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (154,636) (118,986)
Reserve for Credit Losses . . . . . . . . . . . . . . . . . . . . . . . . . (135,097) (114,751)
- ---------------------------------------------------------------------------------------------------------------------
Total Loans and Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,675,942 7,360,108
- ---------------------------------------------------------------------------------------------------------------------
Bank Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 156,051 120,650
- ---------------------------------------------------------------------------------------------------------------------
Accrued Income Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92,825 76,000
- ---------------------------------------------------------------------------------------------------------------------
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154,165 156,816
- ---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,966,000 10,213,320
- ---------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------------------------------------------
Deposits
Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,462,712 1,306,766
Interest Checking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,365,462 1,185,660
Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609,533 491,764
Money Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,460,271 1,405,469
Other Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,255,347 2,672,344
Certificates--$100,000 and Over . . . . . . . . . . . . . . . . . . . . . . 305,530 399,210
Foreign Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169,643 70,733
- ---------------------------------------------------------------------------------------------------------------------
Total Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,628,498 7,531,946
Federal Funds Borrowed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,031,564 466,889
Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 570,653 762,902
Accrued Taxes, Interest and Expenses . . . . . . . . . . . . . . . . . . . . . . 172,884 106,728
Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,891 85,629
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,119 111,768
Convertible Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . . . 142,745 142,293
- ---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,768,354 9,208,155
- ---------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (a)
- ---------------------------------------------------------------------------------------------------------------------
Common Stock (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136,313 132,859
Capital Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243,377 201,887
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 805,726 670,823
Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (404)
Unrealized Gains on Securities Available for Sale . . . . . . . . . . . . . . . . 12,230 --
- ---------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,197,646 1,005,165
- ---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . $11,966,000 10,213,320
- ---------------------------------------------------------------------------------------------------------------------
<FN>
(a) 500,000 shares of no par value preferred stock are authorized of which none have been issued.
(b) Stated value $2.22 per share; authorized 100,000,000; outstanding 1993--61,402,257 and 1992--59,831,540, (excluding 14,763
treasury shares at December 31, 1992).
See Notes to Consolidated Financial Statements.
16
FIFTH THIRD BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
COMMON STOCK
-------------------------
SHARES CAPITAL RETAINED TREASURY UNREALIZED
($000's) OUTSTANDING AMOUNT SURPLUS EARNINGS STOCK GAINS TOTAL
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 1, 1991 ........... 39,386,956 $ 87,439 182,473 512,786 -- -- 782,698
Net Income ........................... 138,150 138,150
Cash Dividends Declared at
$.78 Per Share ..................... (46,216) ( 46,216)
Shares Acquired for Treasury ......... (43,650) (2,426) ( 2,426)
Stock Options Exercised,
Including Treasury Shares Issued ... 226,134 427 3,770 2,022 6,219
Corporate Tax Benefit Related to
Exercise of Non-Qualified
Stock Options ...................... 467 467
Stock Issued in Acquisition
(Previously Held in Escrow) ........ 14,069 31 527 558
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1991 ......... 39,583,509 87,897 187,237 604,720 ( 404) -- 879,450
Net Income ........................... 164,092 164,092
Cash Dividends Declared at
$.90 Per Share ..................... ( 53,758) ( 53,758)
Three-for-Two Stock Split Effected ...
in the Form of a Stock Dividend .... 19,791,755 43,937 ( 43,937) --
Shares Acquired for Treasury ......... ( 11,980) ( 491) ( 491)
Stock Options Exercised,
Including Treasury Shares Issued ... 212,533 422 3,269 491 4,182
Corporate Tax Benefit Related to
Exercise of Non-Qualified
Stock Options ...................... 56 56
Fractional Shares Purchased in
Stock Split Effected in the Form
of a Stock Dividend ................ ( 106) ( 106)
Stock Issued in Acquisitions
and Other .......................... 255,723 603 11,325 ( 188) 11,740
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1992 ......... 59,831,540 132,859 201,887 670,823 ( 404) -- 1,005,165
Net Income ........................... 196,447 196,447
Cash Dividends Declared
at $1.02 Per Share ................. ( 61,544) ( 61,544)
Shares Acquired for Treasury ......... ( 440) ( 22) ( 22)
Stock Options Exercised,
Including Treasury Shares Issued ... 214,843 443 3,599 426 4,468
Corporate Tax Benefit Related to
Exercise of Non-Qualified
Stock Options ...................... 286 286
Stock Issued in Acquisition
and Other .......................... 1,356,314 3,011 37,605 40,616
Effect of Change in Accounting for
Securities Available for Sale ...... 12,230 12,230
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993 ......... 61,402,257 $136,313 243,377 805,726 -- 12,230 1,197,646
- ----------------------------------------------------------------------------------------------------------------------------
<FN>
See Notes to Consolidated Financial Statements.
17
FIFTH THIRD BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31 ($000's) 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 196,447 164,092 138,150
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities
Provision for Credit Losses . . . . . . . . . . . . . . . . . . . . 44,487 65,315 55,744
Depreciation, Amortization and Accretion . . . . . . . . . . . . . 30,396 33,087 15,116
Provision for Deferred Income Taxes . . . . . . . . . . . . . . . . 24,094 4,783 ( 3,341)
Realized Securities Gains . . . . . . . . . . . . . . . . . . . . . ( 6,640) ( 1,687) ( 4,352)
Realized Securities Losses . . . . . . . . . . . . . . . . . . . . 148 216 199
Proceeds from Sales of Residential Mortgage Loans Held for Sale . . 706,701 155,487 76,779
Gains from Sales of Residential Mortgage Loans Held for Sale . . . ( 10,993) ( 2,932) ( 2,873)
Net Increase in Residential Mortgage Loans Held for Sale . . . . . ( 826,788) ( 177,427) ( 91,623)
Decrease (Increase) in Accrued Income Receivable . . . . . . . . . ( 16,825) 135 8,453
Decrease (Increase) in Other Assets . . . . . . . . . . . . . . . . 10,002 26,802 ( 63,143)
Increase (Decrease) in Accrued Taxes, Interest and Expenses . . . . 31,307 ( 29,835) ( 3,637)
Increase (Decrease) in Other Liabilities . . . . . . . . . . . . . ( 6,005) ( 531) 44,522
- --------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . . . . . . . . . . . 176,331 237,505 169,994
- --------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from Sales of Securities Available for Sale . . . . . . . . . . . . . 230,277 -- --
Proceeds from Calls, Paydowns and Maturities of Securities Available for Sale . 213,299 -- --
Purchases of Securities Available for Sale . . . . . . . . . . . . . . . . . . ( 274,911) -- --
Proceeds from Calls, Paydowns and Maturities of Securities Held to Maturity . . 760,613 -- --
Purchases of Securities Held to Maturity . . . . . . . . . . . . . . . . . . . ( 844,663) -- --
Proceeds from Sales of Securities . . . . . . . . . . . . . . . . . . . . . . . -- 249,565 270,165
Proceeds from Calls, Paydowns and Maturities of Securities . . . . . . . . . . -- 1,102,605 609,479
Purchases of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- ( 994,850) (1,584,498)
Net Decrease (Increase) in Other Short-Term Investments . . . . . . . . . . . . ( 1,884) 223,795 145,315
Net Increase in Loans and Leases . . . . . . . . . . . . . . . . . . . . . . . (1,336,333) (1,646,561) ( 322,254)
Purchases of Bank Premises and Equipment . . . . . . . . . . . . . . . . . . . ( 43,418) ( 17,353) ( 13,491)
Proceeds from Disposals of Bank Premises and Equipment . . . . . . . . . . . . 2,017 4,088 1,626
Net Cash Acquired (Paid) in Purchases of Subsidiaries . . . . . . . . . . . . . ( 11,207) 13,536 10,604
- --------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . (1,306,210) (1,065,175) ( 883,054)
- --------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net Increase in Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 509,647 234,147 31,945
Purchases of Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290,857 277,717 224,425
Net Increase in Federal Funds Borrowed . . . . . . . . . . . . . . . . . . . . 564,675 98,731 109,479
Net Increase (Decrease) in Other Short-Term Borrowings . . . . . . . . . . . . ( 193,584) 88,494 325,540
Proceeds from Issuance of Long-Term Debt and Notes . . . . . . . . . . . . . . 40,000 241,194 --
Repayment of Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . ( 12,124) ( 221) ( 669)
Payment of Cash Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 59,325) ( 51,273) ( 44,979)
Exercise of Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,754 4,238 6,686
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 33) ( 597) ( 2,426)
- --------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES . . . . . . . . . . . . . . . . . . . 1,144,867 892,430 650,001
- --------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND DUE FROM BANKS . . . . . . . . . . . . . . . . 14,988 64,760 ( 63,059)
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR . . . . . . . . . . . . . . . . . 565,948 501,188 564,247
- --------------------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF YEAR . . . . . . . . . . . . . . . . . . . . $ 580,936 565,948 501,188
- --------------------------------------------------------------------------------------------------------------------------
<FN>
Note: The Bancorp paid Federal income taxes of $73,400,000, $62,839,000 and $57,774,000 in 1993, 1992 and 1991, respectively.
The Bancorp paid interest of $277,266,000, $307,513,000 and $386,482,000 in 1993, 1992 and 1991, respectively.
The Bancorp had noncash investing activities consisting of the securitization and transfer to securities of $291,586,000
and $120,813,000 of residential mortgage loans in 1993 and 1992, respectively.
The Bancorp had noncash activities consisting of the reclassification of $851,725,000 in securities as available
for sale in 1993.
See Notes to Consolidated Financial Statements.
18
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
The following is a summary of the significant policies:
BASIS OF PRESENTATION
The Consolidated Financial Statements include the accounts of Fifth
Third Bancorp (Bancorp) and its subsidiaries. All material intercompany
transactions and balances have been eliminated. Certain prior period data has
been reclassified to conform to current period presentation.
SECURITIES
Statement of Financial Accounting Standards (SFAS) No. 115,
''Accounting for Certain Investments in Debt and Equity Securities'' requires
securities to be classified as held to maturity, available for sale or trading.
Only those securities classified as held to maturity are reported at amortized
cost, with those available for sale and trading reported at fair value with
unrealized gains and losses included in stockholders' equity or income,
respectively. The Bancorp adopted this Statement effective December 31, 1993.
Prior to 1993, all securities were classified in a single portfolio accounted
for at amortized cost. Securities gains or losses are shown separately as other
operating income in the Consolidated Statements of Income. The cost of
securities sold is based on the specific identification method.
LOANS
Residential mortgage loans held for sale are valued at the lower of
aggregate cost or market value and were $174,314,000 and $58,049,000 at
December 31, 1993 and 1992, respectively.
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan''
requires that impaired loans be measured based on the present value of
expected future cash flows discounted at the loan's effective interest rate or
the fair value of the underlying collateral. SFAS No. 114 is effective for
fiscal years beginning after December 15, 1994 and, although not yet
quantified, the effect on the Consolidated Financial Statements is not
expected to be material.
RESERVE FOR CREDIT LOSSES
The reserve is maintained at a level management considers to be
adequate to absorb potential loan and lease losses.
Credit losses are charged and recoveries are credited to the reserve.
Provisions for credit losses are charged to operating expenses and are based on
management's review of the historical credit loss experience and such other
factors which, in management's judgment, deserve recognition under existing
economic conditions in estimating potential credit losses.
BANK PREMISES AND EQUIPMENT
Bank premises and equipment, including leasehold improvements, are
stated at cost less accumulated depreciation and amortization. Depreciation is
computed on the straight-line method over the estimated useful lives of the
related assets. Amortization of leasehold improvements is computed on the
straight-line method over the lives of the related leases or useful lives of
the related assets, whichever is shorter. Maintenance, repairs and minor
improvements are charged to operating expenses as incurred.
INTANGIBLE ASSETS
Goodwill and other intangible assets are amortized on
a straight-line basis generally over a period of 15 years.
REVENUE RECOGNITION
Interest income on loans is based on the principal balance
outstanding, with the exception of interest on discount basis loans which is
computed using a method which approximates the interest method. The accrual of
interest for commercial, construction and mortgage loans is discontinued when
there is a clear indication that the borrower's cash flow may not be sufficient
to meet payments as they become due. Such loans are also placed on nonaccrual
status when principal or interest is past due ninety days or more, unless the
loan is well secured and in the process of collection.
Loan origination and commitment fees and certain direct loan
origination costs are deferred and the net amount amortized over the estimated
life of the related loans or commitments as a yield adjustment.
Income on direct financing leases is recognized on a basis to achieve a
constant periodic rate of return on the outstanding investment. Income on
leveraged leases is recognized on a basis to achieve a constant rate of return
on the outstanding investment in the lease, net of the related deferred tax
liability, in the years in which the net investment is positive.
Trust income is recognized on the accrual basis.
NET INCOME PER SHARE
Net income per share is calculated by dividing net income for the
period by the weighted average number of shares of common stock outstanding
during the period. The assumed conversion of convertible subordinated notes and
the exercise of stock options would not have a materially dilutive effect.
OTHER
Securities and other property held by the Trust Division of the
banking subsidiaries in a fiduciary or agency capacity are not included in the
Consolidated Balance Sheets since such items are not assets of the banks.
NOTE 2--SECURITIES
Securities available for sale as of December 31, 1993:
- --------------------------------------------------------
Amortized Unrealized Unrealized Market
($000's) Cost Gains Losses Value
- --------------------------------------------------------
U.S. Government
and agencies
obligations .. $195,950 3,536 -- 199,486
Agency mortgage-
backed
securities ... 504,237 9,067 259 513,045
Other bonds,
notes and
debentures ... 96,068 314 13 96,369
Other securities 915 6,171 -- 7,086
- --------------------------------------------------------
Total securities $797,170 19,088 272 815,986
- --------------------------------------------------------
19
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Securities held to maturity as of December 31, 1993:
- -------------------------------------------------------------
Book Unrealized Unrealized Market
($000's) Value Gains Losses Value
- -------------------------------------------------------------
Obligations of
states and
political
subdivisions . $ 327,636 6,725 -- 334,361
Agency mortgage-
backed
securities . . 1,008,555 22,802 -- 1,031,357
Other bonds,
notes and
debentures . . 141,661 40 1,634 140,067
Other securities 9,470 -- -- 9,470
- -------------------------------------------------------------
Total securities $1,487,322 29,567 1,634 1,515,255
- -------------------------------------------------------------
Securities as of December 31, 1992:
- -------------------------------------------------------------
Book Unrealized Unrealized Market
($000's) Value Gains Losses Value
- -------------------------------------------------------------
U.S. Government
and agencies
obligations .. $ 275,726 9,875 21 285,580
Obligations of
states and
political
subdivisions.. 222,015 4,708 238 226,485
Agency mortgage-
backed
securities ... 1,271,645 16,006 2,635 1,285,016
Other bonds,
notes and
debentures ... 152,085 549 952 151,682
Other securities 11,537 -- -- 11,537
- -------------------------------------------------------------
Total securities $1,933,008 31,138 3,846 1,960,300
- -------------------------------------------------------------
The amortized cost, book value and approximate market value of
securities at December 31, 1993, by contractual maturity, are shown in the
following table. Actual maturities may differ from contractual maturities when
there exists a right to call or prepay obligations with or without call or
prepayment penalties. Maturities of mortgage-backed securities were estimated
based on historical and expected future prepayment trends.
- ---------------------------------------------------------
Available for Sale Held to Maturity
------------------- ---------------------
Amortized Market Book Market
($000's) Cost Value Value Value
- ---------------------------------------------------------
Debt securities:
Under 1 year $163,210 166,320 $ 131,790 133,858
1-5 years 456,529 466,164 1,145,843 1,168,452
6-10 years 165,774 165,238 151,711 155,002
Over 10 years 10,742 11,178 48,508 48,473
Other securities 915 7,086 9,470 9,470
- ---------------------------------------------------------
Total securities $797,170 815,986 $1,487,322 1,515,255
- ---------------------------------------------------------
At December 31, 1993 and 1992, securities with an amortized cost or
book value of $1,150,319,000 and $1,162,568,000, respectively, were pledged to
secure securities sold under agreements to repurchase, public deposits, trust
funds and for other purposes as required or permitted by law.
NOTE 3--RESERVE FOR CREDIT LOSSES
Transactions in the reserve for credit losses for the years ended
December 31:
- ------------------------------------------------------------
($000's) 1993 1992 1991
- ------------------------------------------------------------
Balance at January 1 . . . $114,751 90,324 85,025
Losses charged off . . . . ( 35,985) ( 53,240) (58,113)
Recoveries of losses previously
charged off . . . . . . 9,722 8,554 7,370
- ------------------------------------------------------------
Net charge-offs . . . . . . ( 26,263) ( 44,686) (50,743)
Provision charged to operations 44,487 65,315 55,744
Reserve of acquired banks . 2,122 3,798 298
- ------------------------------------------------------------
Balance at December 31 . . $135,097 114,751 90,324
- ------------------------------------------------------------
For calendar years 1993, 1992 and 1991, interest income of $368,000,
$565,000 and $1,579,000, respectively, was recorded on nonaccrual and
renegotiated loans and leases. Additional interest income of $1,169,000,
$4,012,000 and $7,639,000 would have been recorded if the nonaccrual and
renegotiated loans and leases had been current in accordance with their
original terms.
NOTE 4--LEASE FINANCING
A summary of the gross investment in lease financing at December 31:
- --------------------------------------------------------
($000's) 1993 1992
- --------------------------------------------------------
Direct financing leases . . . . . .$1,131,016 695,187
Leveraged leases . . . . . . . . . 39,215 41,999
- --------------------------------------------------------
Total lease financing . . . . . . .$1,170,231 737,186
- --------------------------------------------------------
The components of the investment in lease financing at December 31:
- ---------------------------------------------------------------
($000's) 1993 1992
- ---------------------------------------------------------------
Rentals receivable, net of principal and
interest on the nonrecourse debt . . . $ 779,034 515,793
Estimated residual value of leased assets. 391,197 221,393
- ---------------------------------------------------------------
Gross investment in lease financing . . . 1,170,231 737,186
Unearned income . . . . . . . . . . . . . ( 147,280) (105,706)
- ---------------------------------------------------------------
Total net investment in lease financing . $1,022,951 631,480
- ---------------------------------------------------------------
NOTE 5--BANK PREMISES AND EQUIPMENT
A summary of bank premises and equipment at December 31:
- -----------------------------------------------------------
Estimated
($000's) Useful Life 1993 1992
- -----------------------------------------------------------
Land and improvements . . $ 29,090 17,645
Buildings . . . . . . . . 18 to 50 yrs. 120,394 98,814
Equipment . . . . . . . . 3 to 20 yrs. 85,564 81,281
Leasehold improvements . 6 to 25 yrs. 23,418 17,843
Accumulated depreciation
and amortization . . . (102,415) ( 94,933)
- -----------------------------------------------------------
Total bank premises and
equipment . . . . . . . $156,051 120,650
- -----------------------------------------------------------
Depreciation and amortization expense related to bank premises and
equipment was $13,307,000 in 1993, $11,652,000 in 1992 and $11,025,000 in 1991.
Occupancy expense has been reduced by rental income from leased
premises, including the Bancorp's pro rata interest in the rental income from
Fifth Third Center, of $8,314,000 in 1993, $7,067,000 in 1992 and $6,829,000 in
1991.
20
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The banking subsidiaries have entered into a number of noncancelable
lease agreements with respect to bank premises and equipment. A summary of the
minimum annual rental commitments under these leases, exclusive of taxes and
other charges payable by the lessee:
- --------------------------------------------------------
Land and
($000's) Buildings Equipment Total
- --------------------------------------------------------
1994 . . . . . . . . . $ 6,902 486 7,388
1995 . . . . . . . . . 6,120 352 6,472
1996 . . . . . . . . . 5,250 270 5,520
1997 . . . . . . . . . 4,242 257 4,499
1998 . . . . . . . . . 3,978 8 3,986
1999 and subsequent years 22,433 -- 22,433
- --------------------------------------------------------
Total . . . . . . . . . $48,925 1,373 50,298
- --------------------------------------------------------
Rental expense for cancelable and noncancelable
leases was $9,670,000 for 1993, $8,287,000 for 1992
and $7,466,000 for 1991.
NOTE 6--INTANGIBLES
Intangibles, net of accumulated amortization, included in Other Assets
in the Consolidated Balance Sheets at December 31:
- --------------------------------------------------------
($000's) 1993 1992
- --------------------------------------------------------
Goodwill . . . . . . . . . . . . . $32,569 34,688
Premium on purchased deposits . . . 21,468 20,144
Purchased mortgage servicing rights 404 810
Other intangibles . . . . . . . . . -- 911
- --------------------------------------------------------
Total intangibles . . . . . . . . . $54,441 56,553
- --------------------------------------------------------
NOTE 7--FEDERAL FUNDS BORROWED AND OTHER SHORT-TERM BORROWINGS
A summary of Federal funds borrowed and other short-term borrowings at
December 31:
- --------------------------------------------------------
1993 1992
---------------- ----------------
($000's) Amount Rate Amount Rate
- --------------------------------------------------------
Federal funds
borrowed . . . $1,031,564 2.90% $ 466,889 3.29%
- --------------------------------------------------------
Securities sold under
agreements to
repurchase . . 416,023 2.66 564,806 3.08
Commercial paper 56,296 3.11 99,622 3.22
U.S. Treasury demand
notes . . . . 98,334 2.60 98,474 2.66
- --------------------------------------------------------
Other short-term
borrowings . . 570,653 2.69 762,902 3.04
- --------------------------------------------------------
Total . . . . . . $1,602,217 2.83% $1,229,791 3.14%
- --------------------------------------------------------
Average outstanding $1,275,568 $1,173,253
Maximum month-end
balance . . . $1,602,217 $1,436,203
Weighted average
interest rate 3.00% 3.47%
- --------------------------------------------------------
At December 31, 1993, the Bancorp had unused lines of credit of
$100,000,000 available to support commercial paper transactions and other
corporate requirements.
NOTE 8--LONG-TERM DEBT AND CONVERTIBLE SUBORDINATED NOTES
At December 31, 1993 and 1992, the Bancorp had $142,745,000 and
$142,293,000, respectively, net of discount, in 4 1/4% convertible subordinated
notes due 1998. The notes are convertible into Bancorp common stock at $63.625
per share and are redeemable in whole or in part at 101.70% from January 22,
1996 to January 21, 1997, and at 100.85% thereafter, until maturity.
At December 31, 1993 and 1992, the Bancorp had $99,603,000 and
$99,134,000, respectively, net of discount, in 4% medium-term bank notes due
1994, with interest payable semiannually, under a $200,000,000 facility.
At December 31, 1993, the Bancorp had $40,000,000 in notes payable to
the Federal Home Loan Bank (FHLB) which bear interest of 3.90% to 4.55%. The
FHLB notes mature quarterly in $5,000,000 installments beginning in December
1994 and interest is payable monthly. The FHLB notes are secured by certain
residential mortgage loans (book value of $237,458,000 at December 31, 1993) of
a subsidiary bank.
The Bancorp has issued other promissory notes which bear interest of
approximately 7-9% and are payable as follows: $110,000 for 1994, $115,000 for
1995, $90,000 for 1996, $100,000 for 1997 and $105,000 for 1998.
NOTE 9--INCOME TAXES
The Bancorp and its subsidiaries file a consolidated Federal income
tax return. A summary of applicable income taxes included in the Consolidated
Statements of Income:
- ----------------------------------------------------------
($000's) 1993 1992 1991
- ----------------------------------------------------------
Current U.S. income taxes . $72,524 69,226 62,290
State and local income taxes 2,028 1,555 1,497
- ----------------------------------------------------------
Total . . . . . . . . . . . 74,552 70,781 63,787
- ----------------------------------------------------------
Deferred U.S. income taxes
resulting from temporary
differences . . . . . . 24,094 4,783 ( 3,341)
- ----------------------------------------------------------
Applicable income taxes $98,646 75,564 60,446
- ----------------------------------------------------------
Deferred income taxes are included in the Consolidated Balance Sheets
in the caption ''Accrued Taxes, Interest and Expenses'' and are comprised of
the following temporary differences at December 31:
- ---------------------------------------------------------
($000's) 1993 1992
- ---------------------------------------------------------
Lease financing . . . . . . . . . . $111,402 78,686
Reserve for credit losses . . . . . ( 43,797) ( 37,189)
Bank premises and equipment . . . . 4,600 4,298
Unrealized gains on securities
available for sale . . . . . . . 6,586 --
Other . . . . . . . . . . . . . . . ( 2,658) ( 3,954)
- ---------------------------------------------------------
Total net deferred tax liability . $ 76,133 41,841
- ---------------------------------------------------------
The effect on deferred taxes of the increase in statutory tax rates
during 1993 was $1,039,000. A reconciliation between the statutory U.S. income
tax rate and the Bancorp's effective tax rate:
- ----------------------------------------------------------
1993 1992 1991
- ----------------------------------------------------------
Statutory tax rate . . . . . . 35.0% 34.0 34.0
Increase (decrease) resulting from:
Tax exempt interest . . . . ( 2.8) ( 3.1) ( 4.5)
Other--net . . . . . . . . . 1.2 .6 .9
- ----------------------------------------------------------
Effective tax rate . . . . . . 33.4% 31.5 30.4
- ----------------------------------------------------------
21
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10--OTHER SERVICE CHARGES AND FEES AND OTHER OPERATING EXPENSES
The major components for the years ended December 31 are:
- ----------------------------------------------------------------
($000's) 1993 1992 1991
- ----------------------------------------------------------------
Other Service Charges and Fees:
Bank card operations . . . $ 10,742 11,040 12,376
Consumer loan fees . . . . 10,279 8,659 6,922
Commercial loan and
commitment fees . . . . 10,785 10,392 7,547
Mortgage banking . . . . . 19,612 9,857 5,937
Other . . . . . . . . . . 9,015 15,903 12,439
- ----------------------------------------------------------------
Total other service charges and fees $ 60,433 55,851 45,221
- ----------------------------------------------------------------
Other Operating Expenses:
Marketing and communications $ 21,587 19,451 17,218
FDIC insurance . . . . . . 17,236 16,145 13,419
Franchise taxes . . . . . 10,312 9,809 9,718
Other . . . . . . . . . . 84,233 72,136 57,082
- ----------------------------------------------------------------
Total other operating expenses $133,368 117,541 97,437
- ----------------------------------------------------------------
NOTE 11--STOCK OPTIONS
Options have been granted under the Bancorp's Stock Option Plans to
key employees and directors of the Bancorp and its subsidiaries. A summary of
option transactions during 1993, 1992 and 1991:
- --------------------------------------------------------------------------
1993 1992 1991
----------------- ------------------- -------------------
Average Average Average
Option Option Option
Shares Price Shares Price Shares Price
- --------------------------------------------------------------------------
Outstanding,
beginning
of year. 1,152,006 $32.50 $1,079,093 $24.27 1,149,390 $19.57
Exercised.. ( 214,843) 20.80 ( 212,533) 19.50 ( 339,201) 17.94
Expired ... ( 34,011) 47.08 ( 17,694) 32.80 ( 32,971) 21.20
Granted ... 503,599 52.33 303,140 52.67 301,875 34.73
- --------------------------------------------------------------------------
Outstanding,
end of
year ... 1,406,751 $41.03 1,152,006 $32.50 1,079,093 $24.27
- --------------------------------------------------------------------------
At December 31, 1993, there were 1,015,844 incentive options and
390,907 nonqualified options outstanding. At December 31, 1993, options to
purchase 908,912 shares were exercisable and 946,725 shares were available for
granting additional options.
NOTE 12--RETIREMENT PLAN AND BENEFIT PLANS
The Bancorp maintains a noncontributory retirement plan covering
substantially all regular full-time employees and providing defined benefits
based on years of credited service and compensation level, partially offset by
social security benefits. Contributions to the plan are based on the entry age
actuarial cost method and are limited to amounts currently deductible for
income tax purposes.
In determining the actuarial present value of the projected benefit
obligation, the weighted average discount rate was 7.25% in 1993 and 7.75% in
1992, and the rate of increase in future compensation levels was 5.5% in both
years. The expected long-term rate of return on retirement plan assets was 9.0%
in 1993 and in 1992.
A summary of the plan's funded status at December 31:
- --------------------------------------------------------
($000's) 1993 1992
- --------------------------------------------------------
Vested benefit obligation . . . . . . $19,716 18,417
Non-vested benefit obligation . . . . 1,323 1,709
- --------------------------------------------------------
Accumulated benefit obligation . . . $21,039 20,126
- --------------------------------------------------------
Plan assets at fair value, primarily common
funds managed by The Fifth Third Bank,
listed stocks and U.S. bonds . . . $45,822 48,891
Projected benefit obligation for service
rendered to date . . . . . . . . . 25,157 23,723
- --------------------------------------------------------
Plan assets in excess of projected benefit
obligation . . . . . . . . . . . . 20,665 25,168
Less:
Unrecognized transition assets being
amortized over 15.6 years . . . 2,254 2,665
Unrecognized reduction in prior
service cost . . . . . . . . . 4,377 4,970
Unrecognized net gain . . . . . . 2,918 10,021
- --------------------------------------------------------
Prepaid pension cost . . . . . . . . $11,116 7,512
- --------------------------------------------------------
A summary of the components of the provision for retirement cost for
the years ended December 31:
- --------------------------------------------------------
($000's) 1993 1992 1991
- --------------------------------------------------------
Service cost for current year $ 1,453 1,462 1,285
Interest cost . . . . . . . 1,928 1,971 1,917
Actual return on plan assets ( 104) (2,548) (9,324)
Amortization, primarily of initial
unrecognized asset and prior
service cost . . . . . . (1,004) (1,227) ( 896)
Net gain (loss)--deferred . (4,284) (1,907) 5,803
- --------------------------------------------------------
Net retirement income . . . $(2,011) (2,249) (1,215)
- --------------------------------------------------------
The Bancorp sponsors an unfunded Supplemental Retirement Income Plan
that provides certain officers with defined pension benefits in excess of the
limits imposed on the qualified plan by federal tax law. At December 31, 1993
and 1992, the projected benefit obligations under this nonqualified plan were
$5,479,000 and $1,596,000, respectively. Pension costs for the plan were
$433,000 in 1993, $335,000 in 1992 and $287,000 in 1991.
The Bancorp has a profit sharing plan covering substantially all
regular full-time employees. The contribution to the plan is an amount
determined annually by the Board of Directors and was $15,400,000 for 1993,
$14,560,000 for 1992 and $11,550,000 for 1991.
NOTE 13--COMMITMENTS AND CONTINGENT LIABILITIES
The Bancorp is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers in Ohio, Kentucky and Indiana. These financial instruments primarily
include commitments to extend credit, letters of credit and foreign exchange
forward contracts and involve, to varying degrees, elements of credit risk in
excess of the amount recognized in the Consolidated Balance Sheets. The
contract amounts of these instruments reflect the extent of involvement the
Bancorp has in particular classes of financial instruments. Creditworthiness
for all instruments is evaluated on a case-by-case basis in
22
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
accordance with Bancorp credit policies. Collateral, if deemed necessary, is
based on management's credit evaluation of the counterparty and may include
business assets of commercial borrowers as well as personal property and real
estate of individual borrowers or guarantors.
A summary of significant commitments at December 31:
- --------------------------------------------------------
Contract Amount
----------------------
($000's) 1993 1992
- --------------------------------------------------------
Commitments to extend credit . $3,449,185 3,397,531
Letters of credit (including
standby letters of credit) . 416,702 356,810
Forward contracts:
Foreign exchange--buy and sell 161,237 94,929
Other commitments to sell . 106,000 --
- --------------------------------------------------------
Commitments to extend credit are agreements to lend. The Bancorp's
credit loss in the event of nonperformance by the other party is represented by
the contractual amount. Commitments generally have fixed expiration dates or
other termination clauses and may require payment of a fee. Total commitment
amounts do not necessarily represent future cash requirements.
Letters of credit, which totalled $17,712,000 at December 31, 1993, are
issued to commercial customers for a duration of one year or less to facilitate
trade payments in domestic and foreign transactions. Standby letters of credit
are conditional commitments issued to guarantee the performance of a customer
to a third party. At December 31, 1993, approximately $213,981,000 of standby
letters of credit will expire within one year, $142,658,000 expire between one
to five years and $42,351,000 expire thereafter. The Bancorp's exposure to
credit loss in the event of nonperformance by the other party for letters of
credit is represented by the contractual amount.
Forward contracts are contracts for future delivery of foreign
currency or residential mortgage loans at a specified price or yield. Risks
arise from the possible inability of counterparties to meet the terms of their
contracts and from any resultant exposure to movement in foreign exchange rates
and interest rates, rather than from loss of the notional principal or contract
amount. The Bancorp reduces its market risk for foreign exchange forward
contracts by entering into offsetting contracts.
There are claims pending against the Bancorp and its subsidiaries.
Based on a review of such litigation with legal counsel, management believes
that any resulting liability would not have a material effect upon the
Bancorp's consolidated financial position or results of operations.
NOTE 14--ACQUISITIONS
- -------------------------------------------------------------------
Consideration
-----------------
Common
Date Cash Shares Method of
Consummated ($000's) Issued Accounting
- --------------------------------------------------------------------
THE TRISTATE BANCORP 12/23/93 $ 12 1,356,314 Pooling
CINCINNATI, OHIO
First Federal Savings and 9/08/92 -- 49,096 Purchase
Loan Association of Lima
Lima, Ohio
Pinnacle Bancorp, Inc. 3/27/92 23 206,627 Purchase
Middletown, Ohio
Sovereign Savings Bank, FSB 9/16/91 800 -- Purchase
Palm Harbor, Florida
The Farmers Exchange Bank 8/16/91 3,000 -- Purchase
Millersburg, Kentucky
- ----------------------------------------------------------------
The Consolidated Financial Statements have not been restated to
include the acquisition of The TriState Bancorp, which was accounted for as a
pooling of interests, because of immateriality.
In January, 1994, the Bancorp entered into a merger agreement with The
Cumberland Federal Bancorporation, Inc., a savings and loan holding company
with $1.1 billion in assets headquartered in Louisville, Kentucky. This
transaction is expected to be completed in mid-1994, will be accounted for as a
pooling of interests and is subject to approval by shareholders and appropriate
regulatory agencies.
NOTE 15--REGULATORY MATTERS
The principal source of income and funds for the Bancorp (parent
company) are dividends from the banking subsidiaries. During the year 1994, the
amount of dividends that the banking subsidiaries can pay to the Bancorp
without prior approval of bank regulatory agencies is limited to their 1994
eligible net profits, as defined, and $154,963,000, the adjusted retained 1993
and 1992 net income of the banking subsidiaries.
The banks must maintain noninterest-bearing cash balances on reserve
with the Federal Reserve Bank. In 1993 and 1992, the banks were required to
maintain average reserve balances of $167,682,000 and $137,164,000,
respectively.
NOTE 16--RELATED PARTY TRANSACTIONS
At December 31, 1993 and 1992, certain directors, executive officers,
principal holders of Bancorp common stock and any associates of such persons
were indebted to the banking subsidiaries in the aggregate amount of
$171,493,000 and $112,608,000, respectively. During 1993, new loans aggregating
$111,172,000 were made to such parties and loans aggregating $52,287,000 were
repaid. Such indebtedness was incurred in the ordinary course of business on
substantially the same terms as those prevailing at the time of comparable
transactions with unrelated parties.
NOTE 17--FAIR VALUE OF FINANCIAL INSTRUMENTS
Carrying amounts and estimated fair values for financial instruments
as of December 31:
- --------------------------------------------------------------
1993
----------------------
Carrying Fair
($000's) Amount Value
- --------------------------------------------------------------
FINANCIAL ASSETS:
Cash and due from banks . . $ 580,936 580,936
Securities available for sale 815,986 815,986
Securities held to maturity 1,487,322 1,515,255
Other short-term investments 2,773 2,773
Loans, net . . . . . . . . . 7,652,991 7,831,331
FINANCIAL LIABILITIES:
Deposits . . . . . . . . . . 8,628,498 8,679,517
Federal funds borrowed . . . 1,031,564 1,031,564
Other short-term borrowings 570,653 570,653
Long-term debt . . . . . . . 140,119 140,227
Convertible subordinated notes 142,745 142,399
OFF-BALANCE-SHEET FINANCIAL
INSTRUMENTS:
Commitments to extend credit -- 7,576
Letters of credit . . . . -- 4,167
Forward contracts:
Foreign exchange--buy and sell -- 169
Other commitments to sell -- 476
- --------------------------------------------------------------
23
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------
1992
---------------------
Carrying Fair
($000's) Amount Value
- --------------------------------------------------------
Financial Assets:
Cash and due from banks . . $ 565,948 565,948
Securities . . . . . . . . . 1,933,008 1,960,300
Other short-term investments 790 790
Loans, net . . . . . . . . . 6,728,628 6,975,628
Financial Liabilities:
Deposits . . . . . . . . . . 7,531,946 7,560,614
Federal funds borrowed . . . 466,889 466,889
Other short-term borrowings 762,902 762,902
Long-term debt . . . . . . . 111,768 111,768
Convertible subordinated notes 142,293 142,293
Off-Balance-Sheet Financial
Instruments:
Commitments to extend credit -- 6,348
Letters of credit . . . . -- 3,746
Foreign exchange forward
contracts--buy and sell -- 44
- --------------------------------------------------------
Fair values for financial instruments were based on various
assumptions and estimates as of a specific point in time, are essentially
liquidation values and may vary significantly from amounts that will be
realized in actual transactions. In addition, certain financial instruments and
all non-financial instruments were excluded from the fair value disclosure
requirements. Therefore, the fair values presented above should not be
construed as the underlying value of the Bancorp.
The following methods and assumptions were used in determining the fair
value of selected financial instruments:
Short-term financial assets and liabilities-for financial instruments
with short or no stated maturity, prevailing market rates and limited credit
risk, carrying amounts approximate fair value. Those financial instruments
include cash and due from banks, other short-term investments, certain deposits
(demand, interest checking, savings and money market), Federal funds borrowed
and other short-term borrowings.
Securities, available for sale and held to maturity-fair values were
based on quoted market prices, dealer quotes and prices obtained from
independent pricing services.
Loans-fair values of loans were estimated by discounting the future
cash flows using the current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining maturities.
Deposits-fair values for other time, certificates of deposit-$100,000
and over and foreign office were estimated using a discounted cash flow
calculation that applies interest rates currently being offered for deposits of
similar remaining maturities.
Long-term debt and convertible subordinated notes-fair value of
convertible subordinated notes was based on quoted market prices. Fair value of
long-term debt was based on quoted market prices, when available, and a
discounted cash flow calculation using prevailing market rates for borrowings
of similar terms.
Off-balance-sheet financial instruments-fair values of commitments to
extend credit and letters of credit were based on fees currently charged to
enter into similar agreements with similar remaining maturities. Fair values of
forward contracts were estimated using quoted market prices of comparable
instruments.
NOTE 18-PARENT COMPANY FINANCIAL STATEMENTS
The condensed financial statements of the Bancorp ($000's):
- -------------------------------------------------------------
CONDENSED STATEMENTS OF INCOME
(PARENT COMPANY ONLY)
For the Years Ended December 31 1993 1992 1991
- --------------------------------------------------------------
INCOME
Dividends from Subsidiaries . . . $63,777 141,799 54,000
Interest on Loans to Subsidiaries . 15,890 6,508 11,558
Other . . . . . . . . . . . . . . . 50 1,601 181
- --------------------------------------------------------------
TOTAL INCOME . . . . . . . . . . . 79,717 149,908 65,739
- --------------------------------------------------------------
EXPENSES
Interest . . . . . . . . . . . . . 9,494 4,255 5,723
Other . . . . . . . . . . . . . . . 2,456 2,441 2,893
- --------------------------------------------------------------
TOTAL EXPENSES . . . . . . . . . . 11,950 6,696 8,616
- --------------------------------------------------------------
INCOME BEFORE TAXES AND CHANGE
IN UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES . . . . . . . . . . 67,767 143,212 57,123
Applicable Income Taxes . . . . . . 1,640 20 74
- --------------------------------------------------------------
INCOME BEFORE CHANGE IN
UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES . . . . . . . . . . 66,127 143,192 57,049
Increase in Undistributed
Earnings of Subsidiaries . . . . 130,320 20,900 81,101
- --------------------------------------------------------------
NET INCOME . . . . . . . . . . . . $196,447 164,092 138,150
- --------------------------------------------------------------
- --------------------------------------------------------
CONDENSED BALANCE SHEETS (PARENT COMPANY ONLY)
December 31 1993 1992
- --------------------------------------------------------
ASSETS
Cash . . . . . . . . . . . . . . $1,771 902
Securities Held to Maturity . . . 90 1,480
Loans to Subsidiaries . . . . . . 374,506 445,931
Investment in Subsidiaries . . . 1,017,846 798,017
Dividends Receivable from Subsidiaries 6,176 --
Excess of Cost Over Equity in
Purchased Subsidiaries . . . . 13,154 15,518
Other Assets . . . . . . . . . . 2,496 154
- --------------------------------------------------------
TOTAL ASSETS . . . . . . . . . . $1,416,039 1,262,002
- --------------------------------------------------------
LIABILITIES
Other Short-Term Borrowings . . . $56,296 99,622
Accrued Expenses and Other Liabilities 19,352 14,922
Convertible Subordinated Notes . 142,745 142,293
- --------------------------------------------------------
TOTAL LIABILITIES . . . . . . . . 218,393 256,837
- --------------------------------------------------------
STOCKHOLDERS' EQUITY . . . . . . 1,197,646 1,005,165
- --------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY . . . . . . $1,416,039 1,262,002
- --------------------------------------------------------
24
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------
CONDENSED STATEMENTS OF CASH FLOWS (Parent Company Only)
For the Years Ended December 31 1993 1992 1991
- -------------------------------------------------------------------------
OPERATING ACTIVITIES
Net Income ............................ $196,447 164,092 138,150
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities
Amortization ...................... 1,236 810 554
Provision for Deferred
Income Taxes ................... ( 1,099) ( 171) 724
Realized Securities Gains ......... -- ( 25) ( 57)
Realized Securities Losses ........ -- 123 97
Net Decrease (Increase) in
Dividends Receivable
from Subsidiaries .............. ( 6,176) 23,800 22,934
Decrease (Increase) in
Other Assets .................. 741 ( 7,884) 2,854
Increase (Decrease) in
Accrued Expenses and
Other Liabilities .............. 3,071 4,560 ( 2,488)
Increase in Undistributed
Earnings of Subsidiaries ....... (130,320) ( 20,900) ( 81,101)
- -------------------------------------------------------------------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES ................ 63,900 164,405 81,667
- -------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from Maturities of
Securities Held to Maturity ......... 475 -- --
Proceeds from Sales of Securities ...... -- 740 2,891
Proceeds from Maturities of
Securities .......................... -- 450 650
Purchases of Securities ................ -- ( 700) --
Net Decrease (Increase) in
Loans to Subsidiaries ............... 71,425 (242,051) ( 30,935)
Capital Contributions to
Subsidiaries ........................ ( 37,000) ( 22,401) ( 23,000)
Purchases of Subsidiaries .............. ( 12) ( 23) ( 3,800)
Proceeds from Liquidation of
Subsidiaries ........................ -- 3,018 --
- -------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES ................. 34,888 (260,967) ( 54,194)
- -------------------------------------------------------------------------
FINANCING ACTIVITIES
Net Increase (Decrease)in
Other Short-Term Borrowings .......... ( 43,326) 1,921 13,610
Repayment of Long-Term Debt ............. -- -- ( 372)
Proceeds from Issuance of
Convertible Subordinated Notes ....... -- 142,207 --
Payment of Cash Dividends ............... ( 59,325) ( 51,273) ( 44,979)
Shares Acquired for Treasury ............ ( 22) ( 491) ( 2,426)
Fractional Shares Purchased in
Stock Split .......................... -- ( 106) --
Exercise of Stock Options ............... 4,754 4,238 6,686
- -------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES ................. ( 97,919) 96,496 ( 27,481)
- -------------------------------------------------------------------------
INCREASE (DECREASE)IN CASH .............. 869 ( 66) ( 8)
CASH AT BEGINNING OF YEAR ............... 902 968 976
- -------------------------------------------------------------------------
CASH AT END OF YEAR ..................... $ 1,771 902 968
- -------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of Fifth Third Bancorp:
We have audited the accompanying consolidated balance sheets of Fifth
Third Bancorp and subsidiaries as of December 31, 1993 and 1992 and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1993. These
financial statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Companies at
December 31, 1993 and 1992, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1993 in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the Consolidated Financial Statements, the
Bancorp changed its method of accounting for debt and equity securities
effective December 31, 1993.
/s/ Deloitte & Touche
Cincinnati, Ohio
January 14, 1994
25
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In the following pages, Management discusses its analysis of the
Bancorp's financial condition and results of operations in 1993 compared to
prior years. The data presented in this discussion should be read in
conjunction with the audited Consolidated Financial Statements on pages 15 to
25 of this report.
RESULTS OF OPERATIONS
SUMMARY
Net income advanced in 1993 for the twentieth consecutive year. The
Bancorp's net income to average assets, referred to as return on assets, has
gradually increased for the last five years as has return on average
stockholders' equity. The table below summarizes these measures:
- -----------------------------------------------------------------------------
1993 1992 1991 1990 1989
- -----------------------------------------------------------------------------
Net Income ($000's)....... $196,447 164,092 138,150 120,411 108,318
Net income per share (a).. $ 3.28 2.75 2.33 2.05 1.86
Return on assets ......... 1.80% 1.74 1.68 1.64 1.62
Return on equity ......... 18.2% 17.3 16.6 16.2 16.5
- -----------------------------------------------------------------------------
<FN>
(a) Per share amounts reflect the three-for-two stock splits effected in the
form of stock dividends paid April 15, 1992 and January 13, 1990.
NET INTEREST INCOME
The largest source of the Bancorp's income is net interest income. Net
interest income is the spread between income on interest-earning assets, such
as loans and securities, and the interest expense on liabilities used to fund
those assets, such as deposits and funds borrowed. Net interest income is
affected by both changes in the level of interest rates and changes in the
amount and composition of interest-earning assets and interest-bearing
liabilities. Changes in net interest income are frequently measured by two
statistics--net interest margin and net interest rate spread. Net interest
margin is expressed as net interest income divided by average earning assets.
Net interest rate spread is the difference between the average rate earned on
earning assets and the average rate incurred on interest-bearing liabilities.
Both of these measures are reported on a taxable equivalent basis. Net interest
margin is greater than net interest rate spread due to the interest income
earned on assets funded by non-interest-bearing liabilities, primarily demand
deposits and stockholders' equity.
TABLE 1. CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF NET INTEREST INCOME
For the Years Ended December 31 (Taxable Equivalent Basis)
- ---------------------------------------------------------------------------------------------------------------------
1993 1992
-------------------------------- -------------------------------
Average Average Average Average
Out- Revenue/ Yield/ Out- Revenue/ Yield/
(000's) standing Cost Rate standing Cost Rate
- ----------------------------------------------------------------------------------------------------------------------
ASSETS
Interest-Earning Assets
Loans and Leases ........................... $ 8,186,873 $625,652 7.64% $6,616,396 $568,564 8.59%
Securities
Taxable .................................. 1,675,545 103,019 6.15 1,775,634 123,633 6.96
Exempt from Income Taxes ................. 267,247 18,797 7.03 203,418 15,801 7.77
Other Short-Term Investments ............... 8,338 262 3.14 106,402 3,615 3.40
- --------------------------------------------------------------------------------------------------------------------
Total Interest-Earning Assets ................ 10,138,003 747,730 7.38 8,701,850 711,613 8.18
- --------------------------------------------------------------------------------------------------------------------
Cash and Due from Banks ...................... 479,775 429,467
Other Assets ................................. 403,960 385,480
Reserve for Credit Loses ..................... ( 127,130) ( 102,841)
- --------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS ................................. $10,894,608 $9,413,956
- --------------------------------------------------------------------------------------------------------------------
Liabilities
Interest-Bearing Liabilities
Interest Checking .......................... $ 1,224,662 26,647 2.18 $1,008,998 26,145 2.59
Savings .................................... 554,287 13,497 2.44 442,433 13,673 3.09
Money Market ............................... 1,415,419 35,271 2.49 1,364,221 43,056 3.16
Other Time Deposits ........................ 2,937,394 141,088 4.80 2,612,961 147,924 5.66
Certificates - $100,000 and Over ........... 441,882 15,622 3.54 490,293 23,456 4.78
Foreign Office Deposits .................... 242,245 8,030 3.31 48,200 1,714 3.56
Federal Funds Borrowed ..................... 622,068 18,963 3.05 529,201 17,316 3.27
Other Short-Term Borrowings ................ 653,500 19,314 2.96 644,052 23,380 3.63
Long-Term Debt and Convertible
Subordinated Notes ....................... 260,608 12,528 4.81 56,137 3,602 6.42
- --------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Liabilities ........... 8,352,065 290,960 3.48 7,196,496 300,266 4.17
- --------------------------------------------------------------------------------------------------------------------
Demand Deposits .............................. 1,264,384 1,067,377
Other Liabilities ............................ 197,226 202,419
- --------------------------------------------------------------------------------------------------------------------
Total Liabilities ............................ 9,813,675 8,466,292
- --------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY ......................... 1,080,933 947,664
- --------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ... $10,894,608 $9,413,956
- --------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME
MARGIN ON A TAXABLE EQUIVALENT BASIS ....... $456,770 4.51% $411,347 4.73%
- --------------------------------------------------------------------------------------------------------------------
NET INTEREST RATE SPREAD ..................... 3.90% 4.01%
- --------------------------------------------------------------------------------------------------------------------
INTEREST-BEARING LIABILITIES
TO INTEREST-EARNING ASSETS ................. 82.38% 82.70%
- --------------------------------------------------------------------------------------------------------------------
26
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Table 1, Consolidated Average Balance Sheets and Analysis of Net
Interest Income, computes the net interest income, net interest margin and net
interest rate spread for the five years 1989 through 1993 by comparing interest
revenue and interest-earning assets outstanding with interest cost and
interest-bearing liabilities outstanding. All three of these measures are
reported on a taxable equivalent basis. Nonaccrual loans have been included in
the loan balances.
The Bancorp's net interest income grew $45.4 million to $456.8 million
in 1993, an increase of 11.0% over the $411.3 million earned during 1992. Net
interest income grew by $60.0 million or 17.1% in 1992 over 1991. For 1993, the
increase was attributable to an increase in average interest-earning assets,
changes in earning asset mix and lower funding costs due to the overall lower
interest rate environment.
During 1993, average interest-earning assets grew $1.44 billion to
$10.14 billion, up 16.5% over 1992. Most of this growth occurred in the retail
loan and lease portfolios. Average loans and leases were up $1.57 billion or
23.7% over 1992 and represented 80.8% of total average interest-earning assets
as compared to 76.0% for 1992. The shift from shorter-term investments to
higher yielding loans and leases positively impacted net interest income.
Average interest-earning asset growth in 1992 consisted primarily of a $956.8
million or 16.9% increase in average loans and leases and a $225.2 million or
14.5% increase in average taxable securities.
Average interest-bearing liabilities grew $1.16 billion to $8.35
billion in 1993, up 16.1% over 1992, including higher interest-bearing deposit
growth, up $848.8 million or 14.2% over 1992. Overall interest expense declined
despite higher balances due to continued repricing downward of deposit rates.
The net interest margin declined to 4.51% in 1993, down 22 basis
points (bp) (a basis point is equivalent to .01%) from 4.73% in 1992. This
decline resulted from the reduced impact of free funding sources and from
long-term interest rates falling faster than short-term interest rates.
Although free funding (average non-interest-bearing sources) increased during
1993, lower average yields reduced their favorable impact on net interest
margin, providing 61 bp in 1993 versus 72 bp in 1992.
The net interest margin increased 15 bp during 1992 over 1991, due in
large part to a 183 bp decline in funding costs. The decline in funding costs
was attributable to dramatic decreases in overall deposit rates as well as the
issuance of long-term financing.
- ---------------------------------------------------------------------------------------------------------
1991 1990 1989
- ------------------------------- ------------------------------- -------------------------------
Average Average Average Average Average Average
Out- Revenue/ Yield/ Out- Revenue/ Yield/ Out- Revenue/ Yield/
standing Cost Rate standing Cost Rate standing Cost Rate
- ---------------------------------------------------------------------------------------------------------
$5,659,608 $571,985 10.11% $5,250,014 $579,632 11.04% $4,805,763 $549,230 11.43%
1,550,389 127,026 8.19 1,029,449 87,955 8.54 899,438 73,765 8.20
204,329 18,216 8.92 161,943 15,610 9.64 157,296 16,581 10.54
255,154 15,397 6.03 315,985 26,076 8.25 264,174 23,233 8.79
- -------------------------------------------------------------------------------------------------------
7,669,480 732,624 9.55 6,757,391 709,273 10.50 6,126,671 662,809 10.82
- -------------------------------------------------------------------------------------------------------
369,998 383,148 368,845
296,380 287,887 254,622
( 88,867) ( 82,836) ( 72,830)
- -------------------------------------------------------------------------------------------------------
$8,246,991 $7,345,590 $6,677,308
- -------------------------------------------------------------------------------------------------------
$ 763,561 31,275 4.10 $ 665,265 31,217 4.69 $ 573,292 26,974 4.71
346,698 15,460 4.46 362,443 17,732 4.89 397,005 19,480 4.91
1,217,193 60,837 5.00 1,117,560 71,762 6.42 1,011,737 67,901 6.71
2,355,902 171,441 7.28 2,064,217 167,855 8.13 1,674,374 135,734 8.11
876,369 57,021 6.51 935,769 75,921 8.11 889,802 78,938 8.87
13,079 756 5.78 2,313 187 8.08 5,596 526 9.40
298,923 16,760 5.61 166,788 13,323 7.99 200,057 18,173 9.08
467,937 26,110 5.58 294,525 23,219 7.88 282,378 25,486 9.03
13,552 1,620 11.95 14,081 1,710 12.14 12,876 1,529 11.87
- -------------------------------------------------------------------------------------------------------
6,353,214 381,280 6.00 5,622,961 402,926 7.17 5,047,117 374,741 7.42
- -------------------------------------------------------------------------------------------------------
890,162 823,186 816,564
169,524 155,951 157,247
- -------------------------------------------------------------------------------------------------------
7,412,900 6,602,098 6,020,928
- -------------------------------------------------------------------------------------------------------
834,091 743,492 656,380
- -------------------------------------------------------------------------------------------------------
$8,246,991 $7,345,590 $6,677,308
- -------------------------------------------------------------------------------------------------------
$351,344 4.58% $306,347 4.53% $288,068 4.70%
- -------------------------------------------------------------------------------------------------------
3.55% 3.33% 3.40%
- -------------------------------------------------------------------------------------------------------
82.84% 83.21% 82.38%
- -------------------------------------------------------------------------------------------------------
27
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TABLE 2.--ANALYSIS OF NET INTEREST INCOME CHANGES (TAXABLE EQUIVALENT BASIS)
- -------------------------------------------------------------------------------------------------------------------------------
1993 Compared to 1992 1992 Compared to 1991
------------------------------------ -----------------------------------------
($000's) Volume Yield/Rate Mix Total Volume Yield/Rate Mix Total
- -------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Interest Income
Loans and Leases . . . . . . . . . . . . $134,955 $(62,930) $(14,937) $57,088 $96,697 $( 85,640) $(14,478) $( 3,421)
Securities
Taxable . . . . . . . . . . . . . . . ( 6,969) (14,460) 815 (20,614) 18,455 ( 19,077) ( 2,771) ( 3,393)
Exempt from Income Taxes . . . . . . 4,958 ( 1,493) ( 469) 2,996 ( 81) ( 2,344) 10 ( 2,415)
Other Short-Term Investments . . . . . . ( 3,331) ( 272) 250 ( 3,353) ( 8,976) ( 6,728) 3,922 (11,782)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME CHANGE . . . . . . . 129,613 (79,155) (14,341) 36,117 106,095 (113,789) (13,317) (21,011)
- -------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Interest Expense
Interest Checking . . . . . . . . . . . 5,588 ( 4,191) ( 895) 502 10,053 ( 11,490) ( 3,693) ( 5,130)
Savings . . . . . . . . . . . . . . . . 3,457 ( 2,900) ( 733) ( 176) 4,269 ( 4,746) ( 1,310) ( 1,787)
Money Market . . . . . . . . . . . . . . 1,616 ( 9,061) ( 340) ( 7,785) 7,349 ( 22,422) ( 2,708) (17,781)
Other Time Deposits . . . . . . . . . . 18,367 (22,419) ( 2,784) ( 6,836) 18,706 ( 38,069) ( 4,154) (23,517)
Certificates-$100,000 and Over . . . . . ( 2,316) ( 6,123) 605 ( 7,834) (25,120) ( 15,095) 6,650 (33,565)
Foreign Office Deposits . . . . . . . . 6,900 ( 116) ( 468) 6,316 2,030 ( 291) ( 781) 958
Federal Funds Borrowed . . . . . . . . . 3,039 ( 1,184) ( 208) 1,647 12,911 ( 6,979) ( 5,376) 556
Other Short-Term Borrowings . . . . . . 343 ( 4,345) ( 64) ( 4,066) 9,827 ( 9,123) ( 3,434) ( 2,730)
Long-Term Debt and Convertible
Subordinated Notes . . . . . . . 13,120 ( 903) ( 3,291) 8,926 5,091 ( 750) ( 2,359) 1,982
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE CHANGE . . . . . . . 50,114 (51,242) ( 8,178) ( 9,306) 45,116 (108,965) (17,165) (81,014)
- -------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE)IN NET INTEREST
INCOME ON A TAXABLE EQUIVALENT BASIS . . $ 79,499 $(27,913) $( 6,163) 45,423 $60,979 $( 4,824) $ 3,848 60,003
- -------------------------------------------------------------------------------------------------------------------------------
DECREASE (INCREASE) IN TAXABLE
EQUIVALENT ADJUSTMENT . . . . . . . . . ( 3,228) 1,970
- -------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME CHANGE . . . . . . . . $42,195 $ 61,973
- -------------------------------------------------------------------------------------------------------------------------------
Table 2, the Analysis of Net Interest Income Changes, separates the
Bancorp's change in net interest income into its three components: (1) volume
of average assets and liabilities outstanding; (2) average yields on
interest-earning assets and average rates for interest-bearing liabilities; and
(3) combined volume and yield/rate effects.
Table 2 shows the income impact of balance sheet changes and changes in
interest rate levels which occurred during 1993 and 1992. The increase in net
interest income during 1993 was due primarily to the increase in average
interest-earning assets in excess of the increase in average interest-bearing
liabilities offset by the lower overall interest rates. The increase in net
interest income during 1992 was due almost entirely to the increase in average
interest-earning assets in excess of the increase in average interest-bearing
liabilities, as the changes in interest rates were offset by changes in the
balance sheet mix.
OTHER OPERATING INCOME
The table below shows the components of other operating income for the
five years ending December 31, 1993. Total other operating income excluding
securities gains and losses has increased over 10% each year during this
five-year period, up 10.8% in 1993 over 1992 and up 18.4% in 1992 over 1991.
Trust income totalled $50,603,000 in 1993, an increase of 7.6% over
1992's $47,033,000. During 1992, trust income increased 16.8% over 1991. Both
increases can be attributed to the increase in the market value of total assets
under care (both managed or in custody), with market value increases of 6.7% in
1993 and 11.3% in 1992, fueled by our customers' increased interest in
alternative investment options such as mutual funds.
Service charges on deposits totalled $55,468,000 in 1993 and
$49,856,000 in 1992, up 11.3% and 19.6% over 1992 and 1991, respectively.
Contributing to these increases were the escalating numbers of customer
accounts, due in part to deposit purchases from Savings of America, First
National Bank of Dayton and World Savings and Loan Association in 1993 and Chase
Bank of Ohio in 1992 and the acquisitions of First Federal Savings and Loan
Association of Lima and Pinnacle Bancorp, Inc. in 1992. The acquisition of The
TriState Bancorp in December, 1993 occurred too late in the year to have an
impact.
Data processing income in 1993 totalled $53,582,000, an increase of
16.9% over 1992's $45,842,000. The past two years' increases of over 12% have
been due to several factors, including higher automated teller machine
transaction
- -----------------------------------------------------------------------------------
($000's) 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------
Trust income ...................... $ 50,603 47,033 40,263 34,428 31,599
Service charges on deposits ....... 55,468 49,856 41,673 35,013 28,297
Data processing income ............ 53,582 45,842 40,601 34,830 29,856
Other service charges and fees .... 60,433 55,851 45,221 40,646 34,342
- ------------------------------------------------------------------------------------
Subtotal .......................... 220,086 198,582 167,758 144,917 124,094
- ------------------------------------------------------------------------------------
Securities gains (losses) ......... 6,492 1,471 4,153 ( 52) 757
- ------------------------------------------------------------------------------------
Total ............................. $226,578 200,053 171,911 144,865 124,851
- ------------------------------------------------------------------------------------
After-tax securities gains (losses) $ 4,213 1,002 2,735 ( 117) 508
- ------------------------------------------------------------------------------------
28
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
processsing with the addition of 40 new member institutions in 1993 and growth
in credit card and retail merchant activity.
Other service charges and fees in 1993 were $60,433,000, an increase
of 8.2% over 1992. Mortgage banking fee income, which includes servicing fee
income, gains on sales of residential mortgage loans and other mortgage loan
fees, increased $9,755,000 or 99.0% over 1992. At December 31, 1993, the
Bancorp was servicing $3.5 billion in residential mortgage loans. Consumer loan
fees were also up, $1,620,000 or 18.7% over 1992, consistent with the increase
in average consumer loan balances.
Other service charges and fees in 1992 totalled $55,851,000, an
increase of $10,630,000 or 23.5% over 1991. Included in this increase is
mortgage banking fee income, increasing $3,920,000 or 66.0%. Another component
of the increase was a $1,104,000 gain on the sale of Fifth Third Travel, Inc.
OPERATING EXPENSES
The Bancorp's profitability levels over the last several years have
been achieved in large part due to successful expense control. Contributing
factors include efficient staffing, a comprehensive budgeting process and
centralization of various internal functions such as data processing and loan
operations.
One measure of this success is the overhead ratio (operating expenses
divided by the sum of taxable equivalent net interest income and other
operating income). This ratio, at or under 50%, has remained well below peer
group ratios over the past five years.
Total operating expenses for 1993 were up 11.8% over 1992, and 1992
was up 15.8% over 1991. Banking Center growth over the last two years, with the
addition of 40 locations in 1993 and 23 locations in 1992 through acquisitions
and other expansion, has impacted all categories of expenses. The table below
shows the dollar amounts and the components of other operating expenses for the
last five years.
Salaries, wages and employee benefits, which comprised 47.2% and 47.5%
of total operating expenses in 1993 and 1992, respectively, increased 11.0% in
1993 and 13.3% in 1992 over the previous year. Climbing costs of employee
benefits including medical insurance, payroll taxes and profit sharing were
augmented by an increase of 359 full-time equivalent (FTE) employees during
1993 and 420 during 1992. The Bancorp's productivity ratios (average earning
assets and net income per FTE employee), which measure the degree of efficiency
of our employees, have shown continued improvement since 1988. Average earning
assets per employee has increased 61% since 1988, while net income per employee
has increased 66%.
Equipment and net occupancy expenses increased 9.4% in 1993 and 10.3%
in 1992. Increased rental property costs, utilities and real estate taxes, due
in part to the expanded number of locations, and increased expenses such as
depreciation associated with the purchase of the remaining interest in Fifth
Third Center in 1993, contributed to the higher expenditures.
Other operating expenses of $133,368,000 in 1993 were up 13.5% over
1992. Contributing factors to this increase were FDIC insurance, up $1,091,000
or 6.8% and marketing and communications expenses, up $2,136,000 or 11.0%. The
effect on deferred taxes of the increase in statutory tax rates during 1993 was
$1,039,000. Other real estate owned expenses were $802,000 in 1993, $1,707,000
in 1992 and $629,000 in 1991.
Other operating expenses of $117,541,000 in 1992 increased 20.6% over
1991. FDIC insurance was up $2,726,000 or 20.3% over 1991. Other contributors
to the increase were increased communication charges related to data processing
income, increased postage expenses and the generally expanded volume of Bancorp
activities.
____________________________________________________________________________________________________________________
($000's) 1993 1992 1991 1990 1989
____________________________________________________________________________________________________________________
Salaries and wages . . . . . . . . . . . . . . . $119,046 107,816 95,718 88,981 83,543
Employee benefits . . . . . . . . . . . . . . . . 33,578 29,732 25,652 23,223 21,104
Equipment expenses . . . . . . . . . . . . . . . 14,173 13,354 12,256 12,608 13,935
Net occupancy expenses . . . . . . . . . . . . . 23,222 20,833 18,729 15,341 12,866
Other operating expenses . . . . . . . . . . . . 133,368 117,541 97,437 83,171 76,079
____________________________________________________________________________________________________________________
Total . . . . . . . . . . . . . . . . . . . . . . $323,387 289,276 249,792 223,324 207,527
____________________________________________________________________________________________________________________
There are three bar graphs at the bottom of the page which are based on the
information in the following tables:
($ in millions) 1988 1989 1990 1991 1992 1993
Other operating income $106.9 $124.9 $144.9 $171.9 $200.1 $226.6
<FN>
Five Year Growth Rate: 16.2%
1988 1989 1990 1991 1992 1993
Growth in Net Income Per Employee 100% 116% 125% 139% 150% 166%
<FN>
1988 Base Year = 100
1988 1989 1990 1991 1992 1993
Fifth Third 49.4 50.3 49.5 47.7 47.3 47.3
Peer Group 64.3 64.1 66.1 63.9 62.6 --
29
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
SECURITIES
The investment portfolio is comprised largely of fixed and floating
rate mortgage related securities, predominantly underwritten to the standards
of and guaranteed by the government sponsored agencies of FHLMC and FNMA. These
securities differ primarily from traditional debt securities in that they have
uncertain maturity dates and are priced based on estimated prepayment rates on
the underlying mortgages. We have estimated the average life of the portfolio
at 3.5 years based on current prepayment expectations.
During 1993 and 1992, the Bancorp securitized $291,586,000 and
$120,813,000 fixed and adjustable rate residential mortgages, respectively.
These securitizations are a means to improve liquidity ratios, reduce the
reserve for credit loss requirement and increase risk-based capital ratios.
This activity is expected to continue in 1994.
SECURITIES AT DECEMBER 31
- ------------------------------------------------------------------------------------------------------------
($000's) 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------
SECURITIES HELD TO MATURITY:
U.S. Treasury ............................... $ -- 111,268 295,404 536,307 622,274
- ------------------------------------------------------------------------------------------------------------
U.S. Government agencies and corporations ... -- 164,458 254,543 212,008 169,696
- ------------------------------------------------------------------------------------------------------------
States and political subdivisions ........... 327,636 222,015 207,049 187,921 149,189
- ------------------------------------------------------------------------------------------------------------
Agency mortgage-backed securities ........... 1,008,555 1,271,645 1,255,494 333,042 55,616
- ------------------------------------------------------------------------------------------------------------
Other bonds, notes and debentures ........... 141,661 152,085 43,101 75,476 50,849
- ------------------------------------------------------------------------------------------------------------
Other securities ............................ 9,470 11,537 8,175 10,212 11,580
- ------------------------------------------------------------------------------------------------------------
SECURITIES AVAILABLE FOR SALE:
U.S. Treasury ............................... 63,183 -- -- -- --
- ------------------------------------------------------------------------------------------------------------
U.S. Government agencies and corporations ... 136,303 -- -- -- --
- ------------------------------------------------------------------------------------------------------------
Agency mortgage-backed securities ........... 513,045 -- -- -- --
- ------------------------------------------------------------------------------------------------------------
Other bonds, notes and debentures ........... 96,369 -- -- -- --
- ------------------------------------------------------------------------------------------------------------
Other securities ............................ 7,086 -- -- -- --
- ------------------------------------------------------------------------------------------------------------
SECURITIES AT DECEMBER 31, 1993
- ------------------------------------------------------------------------------------------------------------------
MATURITY 1-5 YEAR 6-10 YEAR OVER 10
UNDER 1 YEAR MATURITY MATURITY YEAR MATURITY TOTAL
-------------- --------------- --------------- -------------- -----------------
(000's) AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
- --------------------------------------------------------------------------------------------------------------------------
SECURITIES HELD TO MATURITY:
States and political
subdivisions (a) ......... $97,967 6.93% $168,325 7.81% $ 53,165 7.58% $ 8,179 8.82% $ 327,636 7.53%
- --------------------------------------------------------------------------------------------------------------------------
Agency mortgage-backed
securities (b) .......... 30,961 6.89 839,341 6.02 98,046 5.54 40,207 4.11 1,008,555 5.92
- -------------------------------------------------------------------------------------------------------------------------
Other bonds, notes and
debentures (c) .......... 2,862 4.01 138,177 6.06 500 7.90 122 5.50 141,661 6.02
- -------------------------------------------------------------------------------------------------------------------------
SECURITIES AVAILABLE FOR SALE:
U.S. Treasury .............. 38,284 7.24 24,899 5.67 -- -- -- -- 63,183 6.62
- -------------------------------------------------------------------------------------------------------------------------
U.S. Government agencies
and corporations ....... 93,821 7.33 39,465 7.14 3,017 6.39 -- -- 136,303 7.25
- -------------------------------------------------------------------------------------------------------------------------
Agency mortgage-backed
securities ............ 34,215 5.65 319,199 6.27 148,453 6.00 11,178 6.28 513,045 6.15
- -------------------------------------------------------------------------------------------------------------------------
Other bonds, notes and
debentures (d) ......... -- -- 82,601 4.74 13,768 4.78 -- -- 96,369 4.74
- -------------------------------------------------------------------------------------------------------------------------
<FN>
Maturities of mortgage-backed securities were estimated based on historical and predicted prepayment trends.
(a) taxable equivalent yield.
(b) included in agency mortgage-backed securities held to maturity are floating rate investments totalling $455,117,000.
(c) included in other bonds, notes and debentures held to maturity are floating rate investments totalling $1,305,000.
(d) other bonds, notes and debentures available for sale are floating rate investments.
30
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LOANS AND LEASES
The following table shows the history of commercial and consumer loans
and leases by major category at December 31.
LOAN AND LEASE PORTFOLIOS
______________________________________________________________________________________________________________________
1993 1992 1991 1990 1989
________________ _________________ ________________ ________________ ________________
($ IN MILLIONS) Amount % Amount % Amount % Amount % Amount %
______________________________________________________________________________________________________________________
Commercial:
Commercial . . . . . . $2,674 30.3% $2,476 33.1% $2,196 37.8% $2,258 41.1% $2,229 43.2%
Mortgage . . . . . . . 634 7.2 496 6.6 435 7.5 381 6.9 341 6.6
Construction . . . . . 323 3.7 309 4.1 281 4.8 244 4.4 274 5.3
Leases . . . . . . . . 302 3.4 236 3.2 201 3.5 192 3.5 170 3.3
______________________________________________________________________________________________________________________
3,933 44.6 3,517 47.0 3,113 53.6 3,075 55.9 3,014 58.4
______________________________________________________________________________________________________________________
Consumer:
Installment . . . . . 1,792 20.3 1,450 19.4 1,229 21.2 1,170 21.3 1,016 19.7
Mortgage . . . . . . . 2,158 24.5 1,935 25.9 1,071 18.4 873 15.9 747 14.4
Credit Card . . . . . 207 2.4 178 2.4 197 3.4 216 3.9 203 3.9
Leases . . . . . . . . 721 8.2 395 5.3 197 3.4 163 3.0 184 3.6
______________________________________________________________________________________________________________________
4,878 55.4 3,958 53.0 2,694 46.4 2,422 44.1 2,150 41.6
______________________________________________________________________________________________________________________
TOTAL . . . . . . . . . . $8,811 100.0% $7,475 100.0% $5,807 100.0% $5,497 100.0% $5,164 100.0%
______________________________________________________________________________________________________________________
The most significant increase in the loan and lease portfolio during
1993 was in consumer leases and installment loans. Installment loans increased
$342,000,000 or 23.6% and consumer leases increased $326,000,000 or 82.5%.
Although leasing has become a popular alternative means of automobile
financing, the current low-interest rate environment has enabled installment
lending to remain strong. Consumer mortgages continued to grow, up $223,000,000
or 11.5% in 1993; however, excluding the securitization and transfer to
securities of $291,586,000 and $120,813,000 of mortgages in 1993 and 1992,
respectively, consumer mortgages actually rose 19.2% over 1992. This growth was
aided by the acquisition of The Tristate Bancorp, which contributed
approximately $189,000,000 in outstandings.
Commercial loans and leases were up 11.8% in 1993. Commercial leasing
was a notable contributor, up $66,000,000 or 28.0% over 1992. Commercial
mortgages also showed solid growth, up 27.8% over 1992, and consisted primarily
of credits located within our primary market areas of Ohio, Kentucky and
Indiana. Commercial mortgages consist principally of owner-occupied commercial
mortgages, loans on properties occupied by the principal borrower.
In 1992, robust gains in consumer mortgages and consumer leases led
the portfolio with growth of 80.7% and 100.5% over 1991, respectively.
Consumer mortgage growth was aided by acquisitions which contributed
approximately $200,000,000 in outstandings.
PROVISION AND RESERVE FOR CREDIT LOSSES
The Bancorp provides as an expense an amount which reflects expected
credit losses. This provision is based on the growth of the loan and lease
portfolio and on recent loss experience and is called the provision for credit
losses in the Consolidated Statements of Income. Actual losses on loans and
leases are charged against the reserve built up on the Consolidated Balance
Sheets through the provision for credit losses. The amount of loans and leases
actually removed as assets from the Consolidated Balance Sheets is referred to
as charge-offs and, after netting out recoveries on previously charged-off
assets, becomes net charge-offs.
Net charge-offs have declined over the last three years, with 1993's
$26,263,000 down 41.2% over 1992's $44,686,000, which had marked an 11.9%
decrease over 1991. The provision for credit losses of $44,487,000 in 1993 was
down from the $65,315,000 in 1992.
The reserve for credit losses as a percent of loans and leases
outstanding was 1.53% and 1.54% for December 31, 1993 and 1992, respectively.
The table below presents credit loss data for the most recent five year period.
RESERVE FOR CREDIT LOSSES FIVE YEAR HISTORY
_________________________________________________________________________________________________________________________
($000'S) 1993 1992 1991 1990 1989
_________________________________________________________________________________________________________________________
Balance at January 1 . . . . . . . . . . . . $ 114,751 90,324 85,025 79,956 67,412
Provision for credit losses . . . . . . . . . 44,487 65,315 55,744 39,879 36,468
Losses charged off . . . . . . . . . . . . . ( 35,985) ( 53,240) ( 58,113) ( 42,220) ( 32,840)
Recoveries of losses previously charged off . 9,722 8,554 7,370 7,410 7,743
Reserve of acquired banks . . . . . . . . . . 2,122 3,798 298 -- 1,173
_________________________________________________________________________________________________________________________
Balance at December 31 . . . . . . . . . . . $ 135,097 114,751 90,324 85,025 79,956
_________________________________________________________________________________________________________________________
Loans and leases outstanding at December 31 . $8,811,039 $7,474,859 $5,806,612 $5,496,990 $5,163,840
Reserve as a percent of loans and leases outstanding 1.53% 1.54% 1.56% 1.55% 1.55%
Average loans and leases . . . . . . . . . . $8,186,873 $6,616,396 $5,659,608 $5,250,014 $4,805,763
Net charge-offs as a percent of average loans and
leases outstanding . . . . . . . . . . . . .32% .68% .90% .66% .52%
Reserve as a percent of total nonperforming assets 559.76% 214.48% 92.61% 90.74% 220.96%
Reserve as a percent of total under-performing assets 399.33% 153.24% 72.59% 72.30% 150.26%
_________________________________________________________________________________________________________________________
31
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
UNDER-PERFORMING ASSETS
Under-performing assets consist of (1) nonaccrual loans and leases on
which the ultimate collectibility of the full amount of interest is uncertain,
(2) loans and leases which have been renegotiated to provide for a reduction or
deferral of interest or principal because of a deterioration in the financial
position of the borrower, (3) loans and leases past due ninety days or more as
to principal or interest and (4) other real estate owned. A summary of
under-performing assets at December 31 follows:
- ---------------------------------------------------------------------
($000's) 1993 1992 1991
- ---------------------------------------------------------------------
Nonaccrual loans and leases .......... $15,709 29,273 65,253
Renegotiated loans and leases ........ 377 402 793
Other real estate owned .............. 8,049 23,826 31,490
- ---------------------------------------------------------------------
Total nonperforming assets ........... 24,135 53,501 97,536
Ninety days past due loans and leases. 9,696 21,382 26,898
- ---------------------------------------------------------------------
Total under-performing assets ........ $33,831 74,883 124,434
- ---------------------------------------------------------------------
Nonperforming assets as a percent
of total loans, leases and other
real estate owned ................. .27% .71 1.67
Under-performing assets as a
percent of total loans, leases
and other real estate owned ....... .38% 1.00 2.13
- ---------------------------------------------------------------------
Of the total under-performing assets at December 31, 1993, $23,240,000
is to borrowers or projects in the Cincinnati-Dayton market area, $1,495,000 in
the Toledo market area, $3,585,000 in Columbus, $2,485,000 distributed in the
market areas of our smaller affiliate banks and $3,026,000 outside of the
Ohio-Kentucky-Indiana area.
Of the total nonperforming assets at December 31, 1993, $14,825,000 or
61.4% was related to commercial real estate. Nonaccrual commercial real estate
loans and leases were $7,394,000, a decrease of 58.8% from 1992's $17,937,000.
At December 31, 1993 and 1992, there were no renegotiated commercial real
estate loans and leases. Commercial other real estate owned decreased from
$22,404,000 in 1992 to $7,431,000 in 1993, a decline of 66.8%.
DEPOSITS
Primarily core deposits are used to fund interest-earning assets. The
deregulation of deposits has caused a change in the deposit mix of financial
institutions as funds have flowed from non-interest-bearing deposits and
passbook-type savings deposits into higher market rate deposits which earn
interest at money market rates. The accompanying tables show the relative
composition of the Bancorp's average deposits and the change in average deposit
sources during the last five years. Other time deposits is comprised primarily
of consumer certificates of deposit.
The Company completed $568,574,000 in deposit acquisitions during the
last two years ($290,857,000 in 1993 and $277,717,000 in 1992). Core deposit
growth has been slower than previous years due to the low absolute rate levels.
The Bancorp would expect these growth rates to increase as interest rates
increase.
DISTRIBUTION OF AVERAGE DEPOSITS
- ----------------------------------------------------------
1993 1992 1991 1990 1989
- ----------------------------------------------------------
Demand . . 15.6% 15.2 13.8 13.8 15.2
Interest
checking 15.2 14.3 11.8 11.1 10.7
Savings . . 6.9 6.3 5.4 6.1 7.4
Money
market . 17.5 19.4 18.8 18.7 18.8
Other time 36.3 37.1 36.5 34.6 31.2
Certificates-
$100,000
and over 5.5 7.0 13.6 15.7 16.6
Foreign office 3.0 .7 .1 -- .1
- ----------------------------------------------------------
Total . . . 100.0% 100.0 100.0 100.0 100.0
- ----------------------------------------------------------
CHANGE IN AVERAGE DEPOSIT SOURCES
- ---------------------------------------------------------------
($000) 1993 1992 1991 1990 1989
- ---------------------------------------------------------------
Demand .... $ 197,007 177,215 66,976 6,622 35,587
Interest
Checking 215,664 245,437 98,296 91,973 52,446
Savings .... 111,854 95,735 ( 15,745) ( 34,562) ( 2,580)
Money
Market... 51,198 147,028 99,633 105,823 70,624
Other Time 324,433 257,059 291,685 389,843 368,227
Certificates-
$100,000
and Over. ( 48,411) (386,076) ( 59,400) 45,967 221,016
Foreign
Office... 194,045 35,121 10,766 ( 3,283) ( 1,911)
- ---------------------------------------------------------------
Total Change $1,045,790 571,519 492,211 602,383 743,409
- ---------------------------------------------------------------
FEDERAL FUNDS BORROWED AND OTHER
SHORT-TERM BORROWINGS
These primarily represent the borrowing of short-term excess funds
from correspondent banks, securities sold under agreements to repurchase and
commercial paper issuance. The Bancorp resells the funds or may retain a
portion to fund short-term, rate-sensitive interest-earning asset growth. The
increase in borrowed funds is in part a result of the Bancorp's strategy to
shift large certificate of deposit customers into non-FDIC assessed products.
As the following table of average funds borrowed and average Federal funds
loaned indicates, the Bancorp was a net borrower of funds of $1,268,314,000 in
1993, up from $1,099,709,000 in 1992:
- ------------------------------------------------------------------
($000's) 1993 1992 1991 1990 1989
- ------------------------------------------------------------------
Federal
funds
borrowed
and other
short-term
borrowings... $1,275,568 1,173,253 766,860 461,313 482,435
Federal
funds
loaned ..... $ 7,254 73,544 220,064 275,058 228,564
- ------------------------------------------------------------------
Net funds
borrowed ... $1,268,314 1,099,709 546,796 186,255 253,871
- ------------------------------------------------------------------
32
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAPITAL RESOURCES
The Bancorp maintains a relatively high level of capital as a margin
of safety for its depositors and stockholders. At December 31, 1993,
stockholders' equity was $1,197,646,000 compared to $1,005,165,000 at December
31, 1992, an increase of $192,481,000 or 19.1%. This increase in capital
resulted primarily from the retention of earnings.
During 1990, the Federal Reserve Board adopted a minimum leverage
ratio of 3.0% for bank holding companies. The Bancorp's leverage ratio
(defined as stockholders' equity less unrealized gains on securities available
for sale, goodwill and certain other intangibles divided by average quarterly
assets) was 9.9% at December 31, 1993 and 9.5% at December 31, 1992, well above
the Federal Reserve Board's ''well capitalized'' level of 5%.
The Federal Reserve Board has adopted risk-based capital guidelines
which assign risk weightings to assets and off-balance sheet items. The
guidelines also define and set minimum capital requirements (risk-based capital
ratios) which increased over a transition period ending in 1992. Under the
final 1992 rules, all banks are required to have core capital (Tier 1) of at
least 4.0% of risk-weighted assets and total capital of 8.0% of risk-weighted
assets. Tier 1 capital consists principally of stockholders' equity less
unrealized gains on securities available for sale, goodwill and certain other
intangibles, while total capital consists of core capital, certain debt
instruments and a portion of the reserve for credit losses. The guidelines also
define well capitalized levels of Tier 1 and total capital as 6% and 10%,
respectively. The Bancorp had Tier 1 capital ratios of 11.4% and 11.2% and
total capital ratios of 13.8% and 14.1% for December 31, 1993 and 1992,
respectively, computed using the final 1992 rules. The Bancorp and its
affiliate banks had Tier 1 and total capital ratios above the well capitalized
levels at December 31, 1993.
The Federal Reserve Board has proposed regulations which would revise
the current risk-based capital guidelines to include a measurement of interest
rate risk. Based on an analysis of the Bancorp's current interest rate
sensitivity, management feels there would be no adverse affects caused by the
adoption of these new capital guidelines.
The following table shows several capital and liquidity ratios for the
last three years:
- ---------------------------------------------------------
1993 1992 1991
- ---------------------------------------------------------
Average stockholders' equity to
Average assets . . . . . . 9.92% 10.07% 10.11%
Average deposits . . . . . 13.38 13.47 12.91
Average loans and leases . 13.20 14.32 14.74
Risk-based capital ratio (a)
Tier 1 . . . . . . . . . . 11.41 11.20 12.49
Total . . . . . . . . . . 13.82 14.12 13.74
- ---------------------------------------------------------
<FN>
(a) Based on year-end 1992 guidelines.
LIQUIDITY AND INTEREST RATE SENSITIVITY
The objective of the Bancorp's Asset/Liability Management function is
to maintain consistent growth in net interest income within the Bancorp's
policy guidelines. This objective is accomplished through flexible management
of the Bancorp's balance sheet liquidity and interest rate risk exposures due
to changes in economic conditions, interest rate levels and customer
preferences.
The goal of liquidity management is to provide adequate funds to meet
changes in loan demand or any potential unexpected deposit withdrawals. This
goal is accomplished primarily by maintaining sufficient liquid assets along
with consistent core deposit growth to fund earning assets and the availability
of unused capacity to purchase funds in the national money markets.
At year end 1993, the Bancorp had approximately $1.2 billion in
securities and other short-term investments maturing within one year compared
to $653 million at year end 1992. Additional asset liquidity is provided by the
remainder of the securities portfolio and selected securitizable loan assets.
The Bancorp has a practice of maintaining core deposits as the primary means of
funding interest-earning assets. Average core deposits, defined as all deposits
except certificates-$100,000 and over, fund approximately 73% of total average
interest-earning assets at December 31, 1993. This, in addition to the
Bancorp's 10% average equity capital base, serves as a stable funding base. The
Bancorp has significant unused national money market funding capability. The
Bancorp maintains A1+/P1 Standard & Poor's and Moody's ratings on its commercial
paper and its lead bank, The Fifth Third Bank, in Cincinnati, Ohio, maintains
an Aa2 Moody's rating for long-term deposits. The Bancorp's affiliate in
Toledo, The Fifth Third Bank of Northwestern Ohio, N.A., maintains A1+ and AA-
Standard and Poor's ratings on its short-term and long-term deposits,
respectively. These ratings, along with capital ratios significantly above the
current regulatory guidelines, provide the Bancorp additional liquidity.
Management does not rely on any one source of liquidity and has managed these
levels in response to other balance sheet factors.
During 1993, the Bancorp accessed a new funding source to supplement
its core deposit funding. The Bancorp, through one of its affiliate banks,
issued $40,000,000 in notes payable to the Federal Home Loan Bank (FHLB). The
notes mature quarterly beginning in 1994 and bear interest of 3.90% to 4.55%.
The Bancorp expects to utilize the FHLB as an additional funding source for its
affiliate banks in the future.
The Bancorp employs a variety of measurement techniques to identify
and manage its exposure to changing interest rates. The Bancorp uses simulation
techniques which attempt to measure the net interest income volatility of
changes in the level of interest rates, basic banking interest rate spreads,
the shape of the yield curve and changing product growth patterns. The table
which follows shows the Bancorp's interest rate sensitivity analysis for the
year ended December 31, 1993. The assets and liabilities are distributed to
reflect expected cash flows and are based on historical deposit rate
relationships to changes in market interest over long-term rate changes. The
Bancorp would anticipate very limited exposure to rising interest rates during
1994.
33
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RATE SENSITIVITY ANALYSIS December 31, 1993
- --------------------------------------------------------------------------------------------------------------------
Maturing or Repricing
-------------------------------------------------------------------------
Total Non-Rate
1-30 31-90 91-180 181-365 1 Year Sensitive &
($ in millions) Days Days Days Days & Under Over 1 Year Total
- --------------------------------------------------------------------------------------------------------------------
Interest-Earning Assets
Loans and leases . . . . . . . . . . $2,259 375 519 831 3,984 4,827 8,811
Securities available for sale . . . 64 120 239 388 811 5 816
Securities held to maturity . . . . 28 65 85 162 340 1,147 1,487
Other short-term investments . . . . 3 -- -- -- 3 -- 3
- --------------------------------------------------------------------------------------------------------------------
Total Interest-Earning Assets . . . . . 2,354 560 843 1,381 5,138 5,979 11,117
Other assets . . . . . . . . . . . . . -- -- -- -- -- 849 849
- --------------------------------------------------------------------------------------------------------------------
Total Assets . . . . . . . . . . . . . 2,354 560 843 1,381 5,138 6,828 11,966
- --------------------------------------------------------------------------------------------------------------------
Interest-Bearing Liabilities
Interest checking . . . . . . . . . 273 -- -- -- 273 1,092 1,365
Savings . . . . . . . . . . . . . . 122 -- -- -- 122 488 610
Money market . . . . . . . . . . . . 876 -- -- -- 876 584 1,460
Certificates-$100,000 and over . . . 268 112 55 27 462 13 475
Other time deposits . . . . . . . . 612 306 500 691 2,109 1,146 3,255
Federal funds borrowed . . . . . . . 1,032 -- -- -- 1,032 -- 1,032
Other short-term borrowings . . . . 522 19 15 15 571 -- 571
Long-term debt and convertible
subordinated notes . . . . . . . . -- -- -- 100 100 183 283
- --------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Liabilities . . 3,705 437 570 833 5,545 3,506 9,051
- --------------------------------------------------------------------------------------------------------------------
Demand deposits . . . . . . . . . . -- -- -- -- -- 1,463 1,463
Other liabilities . . . . . . . . . -- -- -- -- -- 254 254
Stockholders' equity . . . . . . . . -- -- -- -- -- 1,198 1,198
- --------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity 3,705 437 570 833 5,545 6,421 11,966
- --------------------------------------------------------------------------------------------------------------------
Rate Sensitivity Gap . . . . . . . . . (1,351) 123 273 548 ( 407) 407
- --------------------------------------------------------------------------------------------------------------------
Cumulative Gap . . . . . . . . . . . . $(1,351) (1,228) (955) ( 407)
- --------------------------------------------------------------------------------------------------------------------
Cumulative Gap as a Percentage of Total
Assets . . . . . . . . . . . . . . . ( 11.3)% ( 10.3)% (8.0)% ( 3.4)%
- --------------------------------------------------------------------------------------------------------------------
34
FIFTH THIRD BANCORP AND SUBSIDIARIES
CONSOLIDATED SIX YEAR SUMMARY OF OPERATIONS
- --------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31 ($000's) 1993 1992 1991 1990 1989 1988
- --------------------------------------------------------------------------------------------------------------------
Interest Income . . . . . . . . . . . . . . . . $727,349 694,460 713,501 689,547 643,444 509,484
Interest Expense . . . . . . . . . . . . . . . 290,960 300,266 381,280 402,926 374,741 277,594
- --------------------------------------------------------------------------------------------------------------------
Net Interest Income . . . . . . . . . . . . . . 436,389 394,194 332,221 286,621 268,703 231,890
Provision for Credit Losses . . . . . . . . . . 44,487 65,315 55,744 39,879 36,468 38,910
- --------------------------------------------------------------------------------------------------------------------
Net Interest Income After
Provision for Credit Losses . . . . . . . . 391,902 328,879 276,477 246,742 232,235 192,980
Other Operating Income . . . . . . . . . . . . 226,578 200,053 171,911 144,865 124,851 106,849
Operating Expenses . . . . . . . . . . . . . . 323,387 289,276 249,792 223,324 207,527 179,083
- --------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes . . . . . . . . . . 295,093 239,656 198,596 168,283 149,559 120,746
Applicable Income Taxes . . . . . . . . . . . . 98,646 75,564 60,446 47,872 41,241 29,643
- --------------------------------------------------------------------------------------------------------------------
Net Income . . . . . . . . . . . . . . . . . . $196,447 164,092 138,150 120,411 108,318 91,103
- --------------------------------------------------------------------------------------------------------------------
Net Income Per Share (a) . . . . . . . . . . . $3.28 2.75 2.33 2.05 1.86 1.61
- --------------------------------------------------------------------------------------------------------------------
Cash Dividends Declared Per Share (a) . . . . . $1.02 .90 .78 .68 .60 .52
- --------------------------------------------------------------------------------------------------------------------
<FN>
(a) Per share amounts reflect the three-for-two stock splits effected in the form of stock dividends paid April 15, 1992
and January 13, 1990.
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
- -----------------------------------------------------------------------------------------------------------------------
As of December 31 ($000's) 1993 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------
Securities . . . . . . . . . . . . . . . . . . $ 2,303,308 1,933,008 2,063,766 1,354,966 1,059,204 980,420
Loans and Leases . . . . . . . . . . . . . . . 8,811,039 7,474,859 5,806,612 5,496,990 5,163,840 4,541,692
Assets . . . . . . . . . . . . . . . . . . . . 11,966,000 10,213,320 8,826,130 7,955,808 7,142,972 6,379,182
Deposits . . . . . . . . . . . . . . . . . . . 8,628,498 7,531,946 6,687,262 6,385,221 5,783,527 5,060,001
Funds Borrowed (b) . . . . . . . . . . . . . . 1,602,217 1,229,791 1,042,566 607,047 479,219 561,285
Long-Term Debt and Convertible Subordinated
Notes. . . . . . . . . . . . . . . . . . . . . 282,864 254,061 12,848 13,517 12,607 12,232
Stockholders' Equity . . . . . . . . . . . . . 1,197,646 1,005,165 879,450 782,698 699,261 610,541
- -----------------------------------------------------------------------------------------------------------------------
<FN>
(b) Funds borrowed combines Federal funds borrowed and other short-term borrowings from the Consolidated Financial Statements.
SUMMARIZED QUARTERLY FINANCIAL INFORMATION
- -----------------------------------------------------------------------------------------------------------------------
1993 1992
------------------------------------------ --------------------------------------------
Fourth Third Second First Fourth Third Second First
(Unaudited)($000's) Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------------------------------------------------
Interest income . . . . . $185,587 182,402 182,657 176,703 177,190 175,006 173,493 168,771
Net interest income . . . 111,856 109,491 109,283 105,759 106,009 101,420 95,854 90,911
Provision for credit
losses . . . . . . . . . 6,918 10,244 14,730 12,595 18,733 14,025 16,379 16,178
Income before income
taxes. . . . . . . . . . 78,365 77,774 71,656 67,298 64,877 63,785 58,776 52,218
Net income . . . . . . . 52,323 51,580 47,907 44,637 44,258 43,217 40,443 36,174
Net income per share . . .87 .86 .80 .75 .74 .72 .68 .61
- -----------------------------------------------------------------------------------------------------------------------
35
FIFTH THIRD BANCORP AND SUBSIDIARIES
CONSOLIDATED TEN YEAR COMPARISON
AVERAGE ASSETS ($000'S)
- --------------------------------------------------------------------------------------------------------------------
Interest-Earning Assets
-----------------------------------------------------------------
Federal Interest Bearing Cash and Total
Loans and Funds Deposits Due from Other Average
Year Leases Loaned(a) Securities in Banks(a) Total Banks Assets Assets
- --------------------------------------------------------------------------------------------------------------------
1993 $8,186,873 $ 7,254 $1,942,792 $ 1,084 $10,138,003 $479,775 $403,960 $10,894,608
1992 6,616,396 73,544 1,979,052 32,858 8,701,850 429,467 385,480 9,413,956
1991 5,659,608 220,064 1,754,718 35,090 7,669,480 369,998 296,380 8,246,991
1990 5,250,014 275,058 1,191,392 40,927 6,757,391 383,148 287,887 7,345,590
1989 4,805,763 228,564 1,056,734 35,610 6,126,671 368,845 254,622 6,677,308
1988 4,027,892 225,702 930,222 44,788 5,228,604 354,450 222,047 5,744,579
1987 3,307,991 362,985 853,436 31,432 4,555,844 325,653 193,183 5,025,479
1986 2,673,693 416,181 857,261 29,818 3,976,953 279,783 198,680 4,414,316
1985 2,198,521 406,269 839,200 25,226 3,469,216 238,731 172,406 3,847,322
1984 1,771,612 345,890 761,975 37,560 2,917,037 217,024 145,532 3,254,679
- --------------------------------------------------------------------------------------------------------------------
AVERAGE DEPOSITS AND FUNDS BORROWED ($000'S)
- --------------------------------------------------------------------------------------------------------------------
Deposits
-----------------------------------------------------------------------------------
Certificates-
Interest Money Other $100,000 Foreign Funds
Year Demand Checking Savings Market Time and Over Office Total Borrowed(b) Total
- --------------------------------------------------------------------------------------------------------------------
1993 $1,264,384 $1,224,662 $554,287 $1,415,419 $2,937,394 $441,882 $242,245 $8,080,273 $1,275,568 $9,355,841
1992 1,067,377 1,008,998 442,433 1,364,221 2,612,961 490,293 48,200 7,034,483 1,173,253 8,207,736
1991 890,162 763,561 346,698 1,217,193 2,355,902 876,369 13,079 6,462,964 766,860 7,229,824
1990 823,186 665,265 362,443 1,117,560 2,064,217 935,769 2,313 5,970,753 461,313 6,432,066
1989 816,564 573,292 397,005 1,011,737 1,674,374 889,802 5,596 5,368,370 482,435 5,850,805
1988 780,977 520,846 399,585 941,113 1,306,147 668,786 7,507 4,624,961 402,799 5,027,760
1987 728,098 455,972 372,903 850,926 1,045,727 497,977 3,130 3,954,733 422,576 4,377,309
1986 659,135 358,990 299,133 752,305 981,865 346,774 3,851 3,402,053 409,792 3,811,845
1985 588,882 258,693 275,571 615,225 943,349 266,887 3,914 2,952,521 390,179 3,342,700
1984 521,429 174,352 251,785 502,008 808,426 222,137 3,483 2,483,620 357,867 2,841,487
- --------------------------------------------------------------------------------------------------------------------
INCOME
- --------------------------------------------------------------------------------------------------------------------
Per Share(d)
-------------------------------
Originally
Other Reported Dividends
Interest Interest Operating Operating Net Net Dividends Net Paid as % of
Year Income(c) Expense(c) Income(c) Expense(c) Income(c) Income Declared Income Net Income
- --------------------------------------------------------------------------------------------------------------------
1993 $727,349 $290,960 $226,578 $323,387 $196,447 $3.28 $1.02 $3.28 30.2%
1992 694,460 300,266 200,053 289,276 164,092 2.75 .90 2.75 31.2
1991 713,501 381,280 171,911 249,792 138,150 2.33 .78 2.33 32.6
1990 689,547 402,926 144,865 223,324 120,411 2.05 .68 2.05 32.3
1989 643,444 374,741 124,851 207,527 108,318 1.86 .60 1.86 30.5
1988 509,484 277,594 106,849 179,083 91,103 1.61 .52 1.75 32.5
1987 423,883 224,733 92,323 163,473 82,868 1.48 .45 1/3 1.52 31.0
1986 389,863 213,423 77,144 147,135 70,809 1.28 .39 1.29 29.5
1985 370,882 217,147 66,106 128,451 61,569 1.15 .32 2/3 1.11 28.6
1984 333,377 208,994 53,386 106,407 51,494 1.03 .27 2/3 .96 29.2
- --------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS AT DECEMBER 31
- --------------------------------------------------------------------------------------------------------------------
Stockholders' Equity
-----------------------------------------------------------------------------
Number of Reserve
Shares of Stock Common Capital Retained Treasury Per for Credit
Year Outstanding(d) Stock(c) Surplus(c) Earnings(c)(e) Stock(c) Total(c) Share Losses(c)
- --------------------------------------------------------------------------------------------------------------------
1993 61,402,257 $136,313 $243,377 $817,956 $ -- $1,197,646 $19.50 $135,097
1992 59,831,540 132,859 201,887 670,823 (404) 1,005,165 16.80 114,751
1991 59,375,264 87,897 187,237 604,720 (404) 879,450 14.81 90,324
1990 59,080,434 87,439 182,473 512,786 -- 782,698 13.25 85,025
1989 58,712,297 86,894 179,918 432,449 -- 699,261 11.91 79,956
1988 57,647,276 56,879 170,042 383,620 -- 610,541 10.59 67,412
1987 56,089,377 55,342 152,892 322,337 -- 530,571 9.46 55,120
1986 55,929,977 36,789 151,963 284,287 -- 473,039 8.46 44,512
1985 52,383,497 22,971 114,168 247,157 -- 384,296 7.33 38,408
1984 52,203,254 22,892 113,540 198,185 -- 334,617 6.41 29,129
- --------------------------------------------------------------------------------------------------------------------
<FN>
(a) Federal funds loaned and interest bearing deposits in banks are combined in other short-term investments in the
Consolidated Financial Statements.
(b) Funds borrowed combines Federal funds borrowed and other short-term borrowings from the Consolidated Financial Statements.
(c) Thousands of dollars.
(d) Number of shares outstanding and per share data reflect stock splits in 1992, 1990, 1987, 1986 and 1985.
(e) Includes unrealized gains on securities available for sale.
36
Appendix A
In accordance with Rule 304 of Regulation S-T, the following graphic material
was omitted from this electronic exhibit and is more fully described on page
29 of Exhibit 13:
Certain graphs contained on page 29 of the 1993 Annual Report to
Stockholders have been omitted from this electronic exhibit and are
described in tabular form on page 29 of this Exhibit 13.