Exhibit 99.1
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Fifth Third Bancorp has developed the document attached as Exhibit 99.1
containing a general trend overview of Fifth Third's objectives, financial
condition and results of operations for the first quarter of 2002.
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Management Discussion of Trends
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Service Income
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In general, management expects growth trends in service income to continue at
very strong levels. Specifically, by major category:
Electronic Payment Processing
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Fifth Third believes that recent year-over-year growth rates in excess of 25
percent, exclusive of the impact of the acquisition of Universal Companies
(USB), $85 million on an annualized proforma basis to Fifth Third's 2001
operating revenues, are sustainable in early 2002 given revenue growth potential
from new products and continued momentum in attracting new significant customer
relationships. Overall, first quarter Electronic Payment Processing revenues
are expected to exhibit strong year-over-year growth and remain essentially flat
to last quarter despite the significant seasonal increases in transaction
volumes typically seen in the fourth quarter.
Investment Advisory
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Management expects first quarter investment advisory revenues to exhibit a mid
double-digit growth rate over the fourth quarter of 2001 on the strength of
improved financial market performance and continued growth in non-market
sensitive businesses.
Other Services
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. Retail and Commercial deposit account service revenues are expected to
continue at recent sequential growth rates as deposit account sales
campaigns have continued to generate significant numbers of new accounts in
new and existing markets.
. Commercial treasury management service revenues are expected to continue at
recent accelerated year-over-year growth rates fueled by Fifth Third's
emphasis on deposit accounts as the core commercial relationship product,
and the success of new comprehensive cash management products.
. Mortgage banking revenues in the first quarter are expected to remain at
levels similar to those seen in the fourth quarter of 2001.
Expenses
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. First quarter operating expenses are expected to show modest sequential
improvement on the strength of headcount reductions in redundant back
office operations and divested businesses. Realized operating synergies
related to recent acquisitions are mitigated by the addition of sales
officers in the Investment Advisory division, incremental expenses
associated with the
acquisition of USB ($80 million on an annualized proforma basis to Fifth
Third's 2001 operating expenses) and the addition of back-office personnel
in response to increased transaction volumes. First quarter operating
expenses also exhibit a reduction related to the implementation of
Statement of Financial Accounting Standards No. 142 (approximately $40
million on an annualized basis included in 2001 operating expenses).
Balance Sheet Trends and Net Interest Income
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Management expects high single-digit percentage growth in net interest income
over last year's first quarter fueled by a modest increase in the net interest
margin. Management currently expects a relatively stable net interest margin in
the first half of 2002 with later periods dependant upon the magnitude of loan
demand and the path of interest rates in the overall economy. Other balance
sheet trends:
. Lower overall funding costs due to lower interest rates of all categories.
. Positive trends in the mix of deposits are expected to continue in the near
term, highlighted by sequential and year-over-year transaction deposit
growth rates similar to recent periods.
. Fifth Third's deposit pricing, though lowered in recent periods, remains
highly competitive with financial market conditions.
. Average total loans and leases, earning assets, and diluted shares
outstanding are expected to remain relatively flat to fourth quarter
levels.
Credit Quality
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With indicators mixed as to the path of the economy and the tendency for credit
cycles to lag economic recovery, we are realistic about credit quality trends
throughout the industry and at Fifth Third. Fifth Third's long history of low
exposure limits, avoidance of national or sub-prime lending businesses,
centralized risk management, and diversified portfolio position us well to
effectively weather cycles and reduce the likelihood of significant unexpected
losses. First quarter credit quality metrics are expected to be indicative of
modest trend improvement in the financial condition of middle-market commercial
customers within the Bank's Midwestern footprint.
. First quarter net charge-offs are expected to be in the range of 50-55 bp
as a percentage of average loans and leases, consistent with the 52 bp
level seen last quarter.
. The amount of nonperforming assets as a percentage of loans and leases is
expected to be in the range of 55-60 bp, consistent with last quarter's 57
bp.
Other
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. Fifth Third will report first quarter earnings on April 16, 2002 prior to
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the market opening and will again host a conference call to be held the
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morning of the release.
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This document contains forward-looking statements about Fifth Third Bancorp
which we believe are within the meaning of the Private Securities Litigation
Reform Act of 1995. This document contains certain forward-looking statements
with respect to the financial condition, results of operations, plans,
objectives, future performance and business of Fifth Third including statements
preceded by, followed by or that include the words "believes," "expects,"
"anticipates" or similar expressions. These forward-looking statements involve
certain risks and uncertainties. There are a number of important factors that
could cause future results to differ materially from historical performance and
these forward-looking statements. Factors that might cause such a difference
include, but are not limited to: (1) competitive pressures among depository
institutions increase significantly; (2) changes in the interest rate
environment reduce interest margins; (3) prepayment speeds, loan sale volumes,
charge-offs and loan loss provisions; (4) general economic conditions, either
national or in the states in which Fifth Third does business, are less favorable
than expected; (5) legislative or regulatory changes adversely affect the
businesses in which Fifth Third is engaged; (6) changes in the securities
markets. Further information on other factors which could affect the financial
results of Fifth Third are included in Fifth Third's filings with the Securities
and Exchange Commission. These documents are available free of charge at the
Commission's website at http://www.sec.gov and/or from Fifth Third.