-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, geI0+rw8ghjbnktAasTz3xcRaZLrHbnVx3lYJqwzhPMtlY4Q1NB85EK55Rql6alv PyTTFChBml/9BCfy/FMOjQ== 0000035527-94-000010.txt : 19940512 0000035527-94-000010.hdr.sgml : 19940512 ACCESSION NUMBER: 0000035527-94-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIFTH THIRD BANCORP CENTRAL INDEX KEY: 0000035527 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 310854434 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08076 FILM NUMBER: 94526558 BUSINESS ADDRESS: STREET 1: 38 FOUNTAIN SQ PLZ CITY: CINCINNATI STATE: OH ZIP: 45263 BUSINESS PHONE: 5135795300 10-Q 1 MARCH 31, 1994 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended March 31, 1994 Commission File Number 0-8076 FIFTH THIRD BANCORP (Exact name of Registrant as specified in its charter) Ohio 31-0854434 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) Fifth Third Center Cincinnati, Ohio 45263 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (513)579-5300 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO The number of shares outstanding of the Registrant's Common Stock, without par value, as of March 31, 1994 was 61,511,656 shares. FIFTH THIRD BANCORP INDEX Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets - March 31, 1994 and 1993 and December 31, 1993 3-4 Consolidated Statements of Income - Three Months Ended March 31, 1994 and 1993 5 Consolidated Statements of Cash Flows - Three Months Ended March 31, 1994 and 1993 6-7 Consolidated Statements of Changes in Stockholders' Equity - Three Months Ended March 31, 1994 and 1993 8 Notes to Consolidated Financial Statements 9-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-12 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 12 Item 5. Other Information 13 Item 6. Exhibits 13 2 Fifth Third Bancorp and Subsidiaries Mar. 31, Dec. 31, Mar. 31, Consolidated Balance Sheets 1994 1993 1993 ($000's) (unaudited) (unaudited) ----------- ----------- ----------- ASSETS Cash and Due from Banks $ 556,299 580,936 432,292 Securities Available for Sale (a) 1,102,933 815,986 633,159 Securities Held to Maturity (b) 1,532,583 1,487,322 1,446,884 Other Short-Term Investments 3,704 2,773 1,298 Loans and Leases Commercial Loans 2,852,380 2,679,611 2,576,010 Construction Loans 311,723 322,910 304,066 Commercial Mortgage Loans 651,139 634,495 522,908 Residential Mortgage Loans 2,070,097 2,157,969 1,919,285 Consumer Loans 2,049,112 2,000,459 1,679,039 Commercial Lease Financing 385,566 350,306 293,805 Consumer Lease Financing 863,996 819,925 542,390 Unearned Income (166,417) (154,636) (125,135) Reserve for Credit Losses (139,256) (135,097) (119,071) ----------- ----------- ----------- Total Loans and Leases 8,878,340 8,675,942 7,593,297 Bank Premises and Equipment 157,913 156,051 123,024 Accrued Income Receivable 84,238 92,825 77,281 Other Assets 187,341 154,165 188,436 ----------- ----------- ----------- Total Assets $ 12,503,351 11,966,000 10,495,671 =========== =========== =========== LIABILITIES Deposits Demand $ 1,416,687 1,462,712 1,271,857 Interest Checking 1,342,549 1,365,462 1,159,723 Savings 622,307 609,533 539,256 Money Market 1,497,335 1,460,271 1,430,989 Other Time 3,208,162 3,255,347 2,917,358 Certificates - $100,000 and Over 279,461 305,530 372,207 Foreign Office 257,088 169,643 192,541 ----------- ----------- ----------- Total Deposits 8,623,589 8,628,498 7,883,931 Federal Funds Borrowed 1,488,900 1,031,564 400,966 Other Short-Term Borrowings 610,911 570,653 668,429 Accrued Taxes, Interest and Expenses 198,208 172,884 186,776 Other Liabilities 84,253 81,891 64,700 Long-Term Debt 140,242 140,119 111,822 Convertible Subordinated Notes 142,887 142,745 142,309 ----------- ----------- ----------- Total Liabilities 11,288,990 10,768,354 9,458,933 ----------- ----------- ----------- STOCKHOLDERS' EQUITY Common Stock (c) 136,556 136,313 132,968 Capital Surplus 245,460 243,377 202,686 Retained Earnings 843,914 805,726 701,084 Unrealized Gains (Losses) on Securities Available for Sale (11,569) 12,230 -- ----------- ----------- ----------- Total Stockholders' Equity 1,214,361 1,197,646 1,036,738 Total Liabilities and ----------- ----------- ----------- Stockholders' Equity $ 12,503,351 11,966,000 10,495,671 =========== =========== =========== See Notes to Consolidated Financial Statements 3 Fifth Third Bancorp and Subsidiaries Consolidated Balance Sheets (Continued) (a) Amortized cost: Mar. 31, 1994 - $1,120,731,000 and Dec. 31, 1993 - $797,170,000. Market value at Mar. 31, 1993 - $668,000,000. (b) Securities Held to Maturity market values: Mar. 31, 1994 - $1,521,903,000, Dec. 31, 1993 - $1,515,255,000 and Mar. 31, 1993 - $1,477,400,000. (c) Stated value $2.22 per share; authorized 100,000,000; outstanding Mar. 31, 1994 - 61,511,656, Dec. 31, 1993 - 61,402,257 and Mar. 31, 1993 - 59,895,641. See Notes to Consolidated Financial Statements. 4 Fifth Third Bancorp and Subsidiaries Three Months Ended Consolidated Statements of Income (unaudited) March 31, ($000's) ----------- ----------- 1994 1993 INTEREST INCOME ----------- ----------- Interest and Fees on Loans and Leases $158,145 145,887 Interest on Securities Taxable 31,515 27,969 Exempt from Income Taxes 3,465 2,777 ----------- ----------- Total Interest on Securities 34,980 30,746 Interest on Other Short-Term Investments 101 70 ----------- ----------- Total Interest Income 193,226 176,703 INTEREST EXPENSE ----------- ----------- Interest on Deposits Interest Checking 5,597 6,761 Savings 3,007 3,418 Money Market 7,791 9,367 Other Time 37,433 34,709 Certificates - $100,000 and Over 3,367 4,057 Foreign Office 2,648 1,567 ----------- ----------- Total Interest on Deposits 59,843 59,879 Interest on Federal Funds Borrowed 8,826 2,390 Interest on Other Short-Term Borrowings 3,468 5,466 Interest on Long-Term Debt and Notes 3,238 3,209 ----------- ----------- Total Interest Expense 75,375 70,944 ----------- ----------- NET INTEREST INCOME 117,851 105,759 Provision for Credit Losses 8,796 12,595 NET INTEREST INCOME AFTER ----------- ----------- PROVISION FOR CREDIT LOSSES 109,055 93,164 OTHER OPERATING INCOME Trust Income 14,043 13,360 Service Charges on Deposits 13,811 13,047 Data Processing Income 13,855 11,629 Other Service Charges and Fees 17,754 15,264 Securities Gains 299 1,354 ----------- ----------- Total Other Operating Income 59,762 54,654 OPERATING EXPENSES Salaries and Wages 32,206 28,461 Employee Benefits 9,290 9,501 Equipment Expenses 3,779 3,430 Net Occupancy Expenses 5,878 5,405 Other Operating Expenses 35,294 33,723 ----------- ----------- Total Operating Expenses 86,447 80,520 ----------- ----------- INCOME BEFORE INCOME TAXES 82,370 67,298 Applicable Income Taxes 27,574 22,661 ----------- ----------- NET INCOME $54,796 44,637 =========== =========== NET INCOME PER SHARE $ .89 .75 AVERAGE SHARES OUTSTANDING (000's) 61,485 59,858 CASH DIVIDENDS DECLARED PER SHARE $ .27 .24 See Notes to Consolidated Financial Statements. 5 Fifth Third Bancorp and Subsidiaries Consolidated Statements of Cash Flows (unaudited) For the Three Months Ended March 31, ($000's) 1994 1993 - - ------------------------------------------------------------------------- Operating Activities - - ------------------------------------------------------------------------- Net Income $54,796 44,637 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Provision for Credit Losses 8,796 12,595 Depreciation, Amortization and Accretion 11,125 10,491 Provision for Deferred Income Taxes 3,684 1,051 Realized Securities Gains (551) (1,354) Realized Securities Losses 252 -- Proceeds from Sales of Residential Mortgage Loans Held for Sale 243,530 220,557 Gains from Sales of Residential Mortgage Loans Held for Sale (3,755) (4,791) Net Increase in Residential Mortgage Loans Held for Sale (153,125) (282,764) Decrease (Increase) in Accrued Income Receivable 8,587 (1,281) Increase in Other Assets (38,627) (31,678) Increase in Accrued Taxes, Interest and Expenses 34,455 78,654 Increase (Decrease) in Other Liabilities 2,333 (20,977) - - ------------------------------------------------------------------------- Net Cash Provided by Operating Activities 171,500 25,140 - - ------------------------------------------------------------------------- Investing Activities Proceeds from Sales of Securities Available for Sale 122,559 28,784 Proceeds from Calls, Paydowns and Maturities of Securities Available for Sale 138,908 -- Purchases of Securities Available for Sale (540,146) -- Proceeds from Sales of Securities Held to Maturity 62,487 -- Proceeds from Calls, Paydowns and Maturities of Securities Held to Maturity 128,716 198,241 Purchases of Securities Held to Maturity (270,952) (348,260) Net Increase in Other Short-Term Investments (931) (508) Net Increase in Loans and Leases (309,899) (206,701) Purchases of Bank Premises and Equipment (5,606) (3,585) Proceeds from Disposal of Bank Premises and Equipment 295 494 Net Cash Paid in Purchase of Subsidiary -- (5,768) - - ------------------------------------------------------------------------- Net Cash Used in Investing Activities (674,569) (337,303) - - ------------------------------------------------------------------------- 6 Fifth Third Bancorp and Subsidiaries Consolidated Statements of Cash Flows (unaudited) For the Three Months Ended March 31, ($000's) (Continued) 1994 1993 - - ------------------------------------------------------------------------- Financing Activities Net Increase (Decrease) in Deposits (4,909) 192,072 Purchases of Deposits -- 159,913 Net Increase (Decrease) in Federal Funds Borrowed 457,336 (65,923) Net Increase (Decrease) in Other Short-Term Borrowings 40,258 (94,473) Repayment of Long-Term Debt -- (33) Payment of Cash Dividends (16,579) (14,360) Exercise of Stock Options 2,326 1,311 - - ------------------------------------------------------------------------- Net Cash Provided by Financing Activities 478,432 178,507 - - ------------------------------------------------------------------------- Decrease in Cash and Due from Banks (24,637) (133,656) Cash and Due from Banks at Beginning of Period 580,936 565,948 - - ------------------------------------------------------------------------- Cash and Due from Banks at End of Period $556,299 432,292 ========================================================================= See Notes to Consolidated Financial Statements 7 Fifth Third Bancorp and Subsidiaries Consolidated Statements of Changes In Stockholders' Equity (unaudited) For the Three Months Ended March 31 ($000's) 1994 1993 ----------- ----------- Balance at January 1 $ 1,197,646 1,005,165 Net Income 54,796 44,637 Cash Dividends Declared (1994 - $.27 Per Share and 1993 - $.24 Per Share) (16,608) (14,375) Stock Options Exercised, Including Treasury Shares Issued 2,326 1,311 Change in Unrealized Gains/Losses on Securities Available for Sale (23,799) -- ----------- ----------- Balance at March 31 $ 1,214,361 1,036,738 =========== =========== See Notes to Consolidated Financial Statements 8 FINANCIAL INFORMATION ITEM 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Financial information as of December 31, 1993 has been derived from the audited consolidated financial statements of the Registrant. 2. In the opinion of management, the unaudited consolidated financial statements include all adjustments (which consist of only normal, recurring accruals) necessary to present fairly the consolidated financial position as of March 31, 1994 and 1993, and the results of operations and cash flows for the three months ended March 31, 1994 and 1993. 3. The results of operations and cash flows for the three months ended March 31, 1994 and 1993 are not necessarily indicative of the results to be expected for the full year. 4. The Registrant adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities," effective December 31, 1993. Unrealized gains and losses on securities available for sale are included in stockholders' equity net of the related income tax effect. Realized 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. 5. The Registrant adopted SFAS No. 112 "Employers' Accounting for Postemployment Benefits" effective January 1, 1994. This Statement requires the recognition of certain postemployment benefits over the employees' service period or when the payment of the benefits is probable and can be reasonably estimated. The effect of adopting SFAS No. 112 was not material to the Consolidated Financial Statements. 6. 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 of the Registrant is not expected to be material. 7. To manage interest rate risk during the first quarter of 1994, the Registrant sold $62,280,000 of GNMA Adjustable Rate Mortgage-backed (ARM) securities, which were classified as held to maturity at December 31, 1993, at an immaterial gain. As a result of this sale, the Registrant no longer holds any amount of this sector of securities, nor are future purchases expected. 9 ITEM 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 8. Residential mortgage loans held for sale, which are valued at the lower of aggregate cost or market value, were $75,609,000, $174,314,000 and $96,778,000 at March 31, 1994, December 31, 1993 and March 31, 1993, respectively. 9. In the first three months of 1994, the Registrant paid $69,112,000 in interest and no Federal income taxes. In the first three months of 1993, the Registrant paid $64,198,000 in interest and $2,000,000 in Federal income taxes. In the first three months of 1994 and 1993, the Registrant had noncash investing activities consisting of the securitization of $12,055,000 and $28,268,000 of residential mortgage loans, respectively. 10. In January 1994, the Registrant entered into a merger agreement with The Cumberland Federal Bancorporation, Inc., a savings and loan holding company with approximately $1.1 billion in assets. This transaction is expected to be completed during the third quarter of 1994. 11. Certain prior year's data has been reclassified to conform to current presentation. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of certain significant factors which have affected the Registrant's financial condition and results of operations during the periods included in the consolidated financial statements which are a part of this filing. RESULTS OF OPERATIONS The Registrant's net income was $54,796,000 for the first quarter of 1994, compared to $44,637,000 for the same period in 1993. First quarter earnings per share were $.89, an 18.7% increase over last year's $.75. Total assets were approximately $12.5 billion at quarter end, compared to 1993's first quarter-end assets of $10.5 billion. For the first quarter of 1994, return on average equity was 18.3% and return on average assets was 1.83%. The Registrant's net interest income on a fully taxable equivalent basis for the first quarter of 1994 was $123.3 million, an 11.6% increase over the $110.5 million realized in the same period of 1993. This increase resulted from a 19.2% increase in average interest earning assets and a decrease of 30 basis points in the net interest margin. 10 RESULTS OF OPERATIONS (CONTINUED) The provision for credit losses was $8.8 million in the first quarter of 1994 and $12.6 million in the first quarter of 1993. The reserve for credit losses as a percent of loans and leases outstanding was 1.54% at March 31, 1994 and March 31, 1993. Under-performing assets (including loans and leases ninety days past due) as a percent of total loans, leases and other real estate owned were .35% at March 31, 1994 and .60% at March 31, 1993. Total other operating income, excluding securities gains, increased to $59.5 million during the first quarter of 1994, an 11.6% increase over the first quarter of 1993. This growth was led by a 19.1% increase in data processing income compared to the same period in 1993. Other service charges and fees increased 16.3% over 1993, primarily due to a 22.3% increase in consumer loan fees and a 15.5% increase in commercial loan and commitment fees. Fifth Third Securities, Inc. service income for prior quarters has been reclassified to trust income from other service charges and fees to conform to current period presentation. Residential mortgage loan closings totalled approximately $285 million for the first quarter. As a result of this continuing volume, the Registrant sold or securitized approximately $252 million in residential mortgage loans held for sale during the quarter. The loans sold were 15- and 30-year fixed rate mortgages, and the strategy is to continue to minimize interest rate risk, maximize liquidity and maintain a strong capital position. Total securities gains for the first quarter were $299,000 or $194,000 after-tax. Total securities gains for the same period of 1993 were $1,354,000 or $893,000 after-tax. Total operating expenses increased 7.4% during the first quarter over the similar period of 1993. Salaries, wages and employee benefits increased 9.3% over 1993. The number of full-time equivalent employees increased 9.6% (or 439) to 5,007 at March 31, 1994. Equipment and net occupancy expenses increased 9.3% over 1993, and other operating expenses increased 4.7% over 1993. The overhead ratio (operating expenses divided by the sum of taxable equivalent net interest income and other operating income) was 47.2% for the first quarter 1994, as compared with 48.8% for the first quarter of 1993. 11 MATERIAL CHANGES IN FINANCIAL CONDITION The material changes that have occurred in the Registrant's financial condition during 1994 are as follows ($000's): Mar. 31, Dec. 31, 1994 1993 $ +/- % +/- ---------- --------- -------- ----- Securities Available for Sale $ 1,102,933 815,986 286,947 35.2 Loans and Leases 9,017,596 8,811,039 206,557 2.3 Federal Funds Borrowed 1,488,900 1,031,564 457,336 44.3 The growth in securities available for sale and loans and leases has been funded primarily through federal funds borrowed. LIQUIDITY AND CAPITAL RESOURCES The maintenance of an adequate level of liquidity is necessary to ensure that sufficient funds are available to meet customers' loan demand and deposit withdrawals. The banking subsidiaries' liquidity sources consist of short-term marketable securities, maturing loans and federal funds loaned and selected securitizable loan assets. Liquidity has also been obtained through liabilities such as customer-related core deposits, funds borrowed, certificates of deposit and public funds deposits. At March 31, 1994, stockholders' equity was $1.2 billion, compared to $1.0 billion at March 31, 1993, an increase of $177.6 million, or 17.1%. Stockholders' equity as a percentage of total assets as of March 31, 1994 was 9.7%. At March 31, 1994, the Registrant had a Tier 1 risk- based capital ratio of 11.4%, a total risk-based capital ratio of 13.5% and a leverage ratio of 9.7%. At March 31, 1993, the Registrant had a Tier 1 risk-based capital ratio of 11.1%, total risk-based capital ratio of 13.7% and a leverage ratio of 9.6%. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On March 15, 1994, the Registrant held its Annual Meeting of Stockholders for which the Board of Directors solicited proxies. At the Annual Meeting, the stockholders adopted all the proposals stated in the Proxy Statement dated February 10, 1994, which is incorporated herein by reference. The proposals voted on and approved by the stockholders are as follows: 1. The election of eight (8) Class II Directors to serve until the Annual Meeting of Stockholders in 1997. 2. Approval of the appointment of the firm of Deloitte & Touche to serve as independent auditors for the Company for the year 1994 by a vote of 53,161,655 for, 493,995 against and 58,645 abstaining. 12 ITEM 5. OTHER INFORMATION Stephen Stranahan retired from the Board of Directors effective as of the end of his term on March 15, 1994 and J. Kenneth Blackwell resigned from the Board of Directors in February, 1994 due to his appointment as Treasurer of the State of Ohio. ITEM 6. EXHIBITS 1. Proxy Statement dated February 10, 1994 relating to the Annual Meeting of Stockholders on March 15, 1994, was previously filed and is incorporated in this Form 10-Q by reference. 2. Exhibit No. 11 - Computation of Consolidated Net Income Per Share for the Three Months Ended March 31, 1994 and 1993. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Fifth Third Bancorp Registrant /s/ P. Michael Brumm Date: May 5, 1994 P. Michael Brumm, Senior Vice President and CFO 13 EX-11 2 COMPUTATION OF EARNING PER SHARE EXHIBIT 11 FIFTH THIRD BANCORP COMPUTATION OF CONSOLIDATED NET INCOME PER SHARE ($000's except per share data)
For the Three Months Ended March 31, 1994 1993 ------ ------ Net Income $ 54,796 44,637 ======== ======== Net income per common share - assuming no dilution: Weighted average number of shares outstanding 61,485 59,858 ======== ======== Per share (net income divided by the weighted average number of shares outstanding) $ 0.89 0.75 ======== ======== Net income per common and common equivalent share: Net income $ 54,796 44,637 Add - Interest on 4 1/4% convertible subordinated notes due 1998, net of applicable income taxes 1,083 1,109 -------- -------- Adjusted net income $ 55,879 45,746 ======== ======== Adjusted weighted average number of shares outstanding - after giving effect to the conversion of stock options and convertible subordinated notes 63,958 62,514 ======== ======== Per share (adjusted net income divided by the adjusted weighted average number of shares outstanding) $ 0.87 0.73 ======== ======== Net income per common share - assuming full dilution: Adjusted net income $ 55,879 45,746 ======== ======== Adjusted weighted average number of shares outstanding - after giving effect to the conversion of stock options and convertible subordinated notes 63,958 62,545 ======== ======== Per share (adjusted net income divided by the adjusted weighted average number of shares outstanding) $ 0.87 0.73 ======== ========
-----END PRIVACY-ENHANCED MESSAGE-----