-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ta8T+HEtVZ6kCU7k7ucESzaLl0UNacdqfI/M51M21mTfk8mFRufJ1ShIsdIFvJjI ZJaqP68PN+LAzp2HIct65A== 0000035527-96-000016.txt : 19961118 0000035527-96-000016.hdr.sgml : 19961118 ACCESSION NUMBER: 0000035527-96-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIFTH THIRD BANCORP CENTRAL INDEX KEY: 0000035527 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [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: 96663485 BUSINESS ADDRESS: STREET 1: 38 FOUNTAIN SQ PLZ STREET 2: FIFTH THIRD CENTER CITY: CINCINNATI STATE: OH ZIP: 45263 BUSINESS PHONE: 5135795300 10-Q 1 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 September 30, 1996 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 September 30, 1996 was 105,871,574 shares. FIFTH THIRD BANCORP INDEX Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets - September 30, 1996 and 1995 and December 31, 1995 3 Consolidated Statements of Income - Three and Nine Months Ended September 30, 1996 and 1995 4 Consolidated Statements of Cash Flows - Nine Months Ended September 30, 1996 and 1995 5 Consolidated Statements of Changes in Stockholders' Equity - Nine Months Ended September 30, 1996 and 1995 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 11 Fifth Third Bancorp and SubsidiariesSeptember 30, Dec. 31,September 30 Consolidated Balance Sheets 1996 1995 1995 ($000's) (unaudited) (unaudited) ASSETS Cash and Due from Banks $ 683,190 628,535 561,545 Securities Available for Sale (a) 6,098,576 4,151,178 2,069,427 Securities Held to Maturity (b) 166,145 187,091 2,561,074 Other Short-Term Investments 44,090 6,822 7,540 Loans and Leases Commercial Loans 4,159,484 3,584,124 3,565,736 Construction Loans 350,153 312,098 300,251 Commercial Mortgage Loans 787,340 794,267 783,633 Commercial Lease Financing 923,461 830,644 706,533 Residential Mortgage Loans 2,148,405 1,974,911 2,291,925 Consumer Loans 2,560,138 3,062,697 2,882,738 Consumer Lease Financing 1,869,250 1,457,929 1,346,874 Unearned Income (404,945) (326,027) (285,336 Reserve for Credit Losses (185,689) (177,388) (173,461 -------- -------- -------- Total Loans and Leases 12,207,597 11,513,255 11,418,893 Bank Premises and Equipment 227,562 195,990 188,028 Accrued Income Receivable 167,282 133,998 142,204 Other Assets 492,546 236,014 204,158 -------- -------- -------- Total Assets $ 20,086,988 17,052,883 17,152,869 LIABILITIES Deposits Demand $ 2,147,417 1,827,837 1,681,755 Interest Checking 1,790,561 1,558,506 1,449,289 Savings 1,864,773 795,799 707,583 Money Market 1,499,387 1,920,871 1,895,524 Other Time 5,679,443 4,621,401 4,654,969 Certificates - $100,000 and Over 898,702 704,968 861,813 Foreign Office 696,405 1,056,398 470,919 -------- -------- -------- Total Deposits 14,576,688 12,485,780 11,721,852 Federal Funds Borrowed 710,376 553,041 991,916 Short-Term Bank Notes 874,993 450,000 875,000 Other Short-Term Borrowings 1,136,369 1,002,454 1,058,000 Accrued Taxes, Interest and Expenses 389,640 315,026 328,514 Other Liabilities 90,480 96,611 101,595 Long-Term Debt 277,565 281,996 286,908 Convertible Subordinated Notes -- 143,400 143,706 -------- -------- -------- Total Liabilities 18,056,111 15,328,308 15,507,491 STOCKHOLDERS' EQUITY Common Stock (c) 235,035 222,939 222,808 Capital Surplus 523,625 338,555 262,143 Retained Earnings 1,304,898 1,148,279 1,171,094 Unrealized Losses (32,681) 14,802 (10,667 -------- -------- -------- Total Stockholders' Equity 2,030,877 1,724,575 1,645,378 Total Liabilities and Stockholders' Equity $ 20,086,988 17,052,883 17,152,869 See Notes to Consolidated Financial Statements Fifth Third Bancorp and Subsidiaries Consolidated Balance Sheets (continued) (a) Amortized cost: Sept. 30, 1996 - $6,148,857,000, Dec. 31, 1995 - $4,129,405,000 and Sept. 30, 1995 - $2,086,838,000. (b) Market value: Sept. 30, 1996 - $166,145,000, Dec. 31, 1995 - $187,091,000 and Sept. 30, 1995 - $2,575,318,000. (c) Stated value $2.22 per share; authorized 300,000,000; outstanding Sept. 30, 1996 - 105,871,574, Dec. 31, 1995 - 100,422,996 and Sept. 30, 1995 - 100,363,760. The number of shares outstanding at Dec. 31, 1995 and Sept. 30, 1995 have been adjusted for the three-for-two stock split effected in the form of a stock dividend paid January 12, 1996. See Notes to Consolidated Financial Statements. Fifth Third Bancorp and Subsidiaries Three Months Ended Consolidated Statements of Income (unaudited) September 30, ($000's) ----------------------- 1996 1995 ----------- ----------- Interest and Fees on Loans and Leases $254,019 228,046 Interest on Securities Taxable 99,411 68,411 Exempt from Income Taxes 5,352 5,941 ----------- ----------- Total Interest on Securities 104,763 74,352 Interest on Other Short-Term Investments 248 343 ----------- ----------- Total Interest Income 359,030 302,741 INTEREST EXPENSE ----------- ----------- Interest on Deposits Interest Checking 9,996 7,096 Savings 15,105 3,632 Money Market 13,351 15,971 Other Time 77,643 66,200 Certificates - $100,000 and Over 12,778 13,830 Foreign Office 9,858 7,577 ----------- ----------- Total Interest on Deposits 138,731 114,306 Interest on Federal Funds Borrowed 14,569 14,618 Interest on Short-Term Bank Notes 10,643 14,536 Interest on Other Short-Term Borrowings 13,197 10,971 Interest on Long-Term Debt and Notes 4,791 5,461 ----------- ----------- Total Interest Expense 181,931 159,892 ----------- ----------- NET INTEREST INCOME 177,099 142,849 Provision for Credit Losses 16,431 10,698 NET INTEREST INCOME AFTER ----------- ----------- PROVISION FOR CREDIT LOSSES 160,668 132,151 OTHER OPERATING INCOME Trust Income 18,486 15,619 Service Charges on Deposits 21,457 17,488 Data Processing Income 22,911 19,714 Other Service Charges and Fees 32,478 23,416 Securities Gains 18 4,081 ----------- ----------- Total Other Operating Income 95,350 80,318 OPERATING EXPENSES Salaries, Wages and Incentives 46,712 40,234 Employee Benefits 12,144 10,440 Equipment Expenses 4,899 4,051 Net Occupancy Expenses 9,080 7,060 Other Operating Expenses 48,216 37,803 One-Time SAIF Assessment 16,612 -- ----------- ----------- Total Operating Expenses 137,663 99,588 ----------- ----------- INCOME BEFORE INCOME TAXES 118,355 112,881 Applicable Income Taxes 39,300 37,692 ----------- ----------- NET INCOME $79,055 75,189 =========== =========== NET INCOME PER SHARE (a) $ .75 .75 AVERAGE SHARES OUTSTANDING (000's) (a) 105,789 99,680 CASH DIVIDENDS DECLARED PER SHARE (a) $ .29 .23 1/3 See Notes to Consolidated Financial Statements. Fifth Third Bancorp and Subsidiaries Nine Months Ended Consolidated Statements of Income (unaudited) September 30, ($000's) ----------------------- 1996 1995 ----------- ----------- Interest and Fees on Loans and Leases $742,627 657,972 Interest on Securities Taxable 266,390 183,663 Exempt from Income Taxes 16,067 17,227 ----------- ----------- Total Interest on Securities 282,457 200,890 Interest on Other Short-Term Investments 627 987 ----------- ----------- Total Interest Income 1,025,711 859,849 INTEREST EXPENSE ----------- ----------- Interest on Deposits Interest Checking 26,159 20,934 Savings 38,441 10,136 Money Market 44,553 44,709 Other Time 227,839 180,769 Certificates - $100,000 and Over 35,858 29,493 Foreign Office 22,872 40,414 ----------- ----------- Total Interest on Deposits 395,722 326,455 Interest on Federal Funds Borrowed 48,459 40,121 Interest on Short-Term Bank Notes 18,105 41,887 Interest on Other Short-Term Borrowings 36,222 29,655 Interest on Long-Term Debt and Notes 16,947 9,487 ----------- ----------- Total Interest Expense 515,455 447,605 ----------- ----------- NET INTEREST INCOME 510,256 412,244 Provision for Credit Losses 44,229 28,479 NET INTEREST INCOME AFTER ----------- ----------- PROVISION FOR CREDIT LOSSES 466,027 383,765 OTHER OPERATING INCOME Trust Income 54,943 45,649 Service Charges on Deposits 61,538 48,748 Data Processing Income 63,273 54,502 Other Service Charges and Fees 90,625 70,160 Securities Gains 390 4,110 ----------- ----------- Total Other Operating Income 270,769 223,169 OPERATING EXPENSES Salaries, Wages and Incentives 139,945 116,644 Employee Benefits 35,759 30,847 Equipment Expenses 14,911 12,277 Net Occupancy Expenses 26,883 20,878 Other Operating Expenses 141,179 111,284 One-Time SAIF Assessment 16,612 -- ----------- ----------- Total Operating Expenses 375,289 291,930 ----------- ----------- INCOME BEFORE INCOME TAXES 361,507 315,004 Applicable Income Taxes 120,063 105,183 ----------- ----------- NET INCOME $241,444 209,821 =========== =========== NET INCOME PER SHARE (a) $ 2.34 2.13 AVERAGE SHARES OUTSTANDING (000's) (a) 103,361 98,373 CASH DIVIDENDS DECLARED PER SHARE (a) $ .81 .70 See Notes to Consolidated Financial Statements. Fifth Third Bancorp and Subsidiaries Consolidated Statements of Cash Flows (unaudited) For the Six Months Ended June 30, ($000's) 1996 1995 ------------------------------------------------------------------------ Operating Activities ------------------------------------------------------------------------ Net Income $241,444 $209,821 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Provision for Credit Losses 44,229 28,479 Depreciation, Amortization and Accretion 38,842 19,391 Provision for Deferred Income Taxes 21,730 17,358 Realized Securities Gains (2,076) (4,119) Realized Securities Losses 1,686 9 Proceeds from Sales of Residential Mortgage Loans Held for Sale 401,356 203,272 Net Gains on Sales of Loans (6,496) (3,025) Net Increase in Residential Mortgage Loans Held for Sale (485,780) (275,132) Net Increase in Accrued Income Receivable (31,212) (24,633) Net Decrease (Increase) in Other Assets (75,779) 15,970 Net Increase in Accrued Taxes, Interest and Expenses 71,815 94,146 Net Decrease in Other Liabilities (34,510) (9,946) ------------------------------------------------------------------------ Net Cash Provided by Operating Activities 185,249 271,591 ------------------------------------------------------------------------ Investing Activities Proceeds from Sales of Securities Available for Sale 266,571 113,539 Proceeds from Calls, Paydowns and Maturities of Securities Available for Sale 666,104 152,470 Purchases of Securities Available for Sale (2,222,110) (460,025) Proceeds from Calls, Paydowns and Maturities of Securities Held to Maturity 243,849 415,922 Purchases of Securities Held to Maturity (223,447) (445,958) Net Decrease (Increase) in Other Short-Term Investments (33,780) 37,948 Purchase of Loans in Acquisitions (224,313) (177,904) Proceeds from Securitization of Automobile Loans 824,607 -- Net Increase in Loans and Leases (1,739,504)(1,157,890) Purchases of Bank Premises and Equipment (28,663) (19,680) Proceeds from Disposal of Bank Premises and Equipment 1,441 2,148 Net Cash Paid in Purchase of Subsidiaries (175,572) (30,313) ------------------------------------------------------------------------ Net Cash Used in Investing Activities (2,644,817)(1,569,743) ------------------------------------------------------------------------ Fifth Third Bancorp and Subsidiaries Consolidated Statements of Cash Flows (unaudited) For the Six Months Ended June 30, ($000's) (continued) 1996 1995 ------------------------------------------------------------------------ Financing Activities Purchase of Deposits 1,921,019 271,435 Net Increase in Core Deposits 222,274 187,064 Net Increase (Decrease) in CDs - $100,000 and Over, Including Foreign (268,524) 29,007 Net Increase in Federal Funds Borrowed 157,335 313,309 Net Increase in Short-Term Bank Notes 424,993 30,005 Net Increase in Other Short-Term Borrowings 133,915 146,105 Issuance of Long-Term Debt 10,125 266,556 Repayment of Long-Term Debt (15,257) (15,115) Payment of Cash Dividends (80,204) (65,713) Exercise of Stock Options 8,643 2,170 Other (96) (135) ------------------------------------------------------------------------ Net Cash Provided by Financing Activities 2,514,223 1,164,688 ------------------------------------------------------------------------ Increase (Decrease) in Cash and Due from Banks 54,655 (133,464) Cash and Due from Banks at Beginning of Period 628,535 695,009 ------------------------------------------------------------------------ Cash and Due from Banks at End of Period $683,190 561,545 ======================================================================== See Notes to Consolidated Financial Statements Fifth Third Bancorp and Subsidiaries Consolidated Statements of Changes In Stockholders' Equity (unaudited) For the Nine Months Ended September 30 ($000's) 1996 1995 ----------- ----------- Balance at January 1 $ 1,724,575 1,398,774 Net Income 241,444 209,821 Cash Dividends Declared (1996 - $.81 Per Share and 1995 - $.70 Per Share) (a) (84,797) (69,071) Stock Options Exercised, Including Treasury Shares Issued 8,643 2,170 Stock Issued in Conversion of Subordinated Notes 143,255 -- Shares Acquired for Treasury (53) (70) Fractional Shares Issued (36) -- Stock Issued in Acquisitions and Other 45,329 66,203 Change in Unrealized Gains/Losses on Securities Available for Sale (47,483) 37,551 ----------- ----------- Balance at September 30 $ 2,030,877 1,645,378 =========== =========== (a) Per share amounts and average shares outstanding have been adjusted for the three-for-two stock split effected in the form of a stock dividend paid January 12, 1996. See Notes to Consolidated Financial Statements FINANCIAL INFORMATION ITEM 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. 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 September 30, 1996 and 1995, and the results of operations for the three and nine months ended September 30, 1996 and 1995 and cash flows for the nine months ended September 30, 1996 and 1995. In accordance with generally accepted accounting principles for interim financial information, these statements do not include all of the information and footnotes required by generally accepted accounting principles for complete annual financial statements. Financial information as of December 31, 1995 has been derived from the audited consolidated financial statements of the Registrant. The results of operations and cash flows for the nine months ended September 30, 1996 and 1995 are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 1995, included in the Registrant's Annual Report on Form 10-K. 2. The Registrant adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," effective January 1, 1996. This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable. The adoption of SFAS No. 121 did not have a material effect on the Consolidated Financial Statements. 3. The Registrant adopted SFAS No. 123, "Accounting for Stock-Based Compensation," effective January 1, 1996. This statement encourages, but does not require, adoption of a fair-value-based accounting method for employee stock-based compensation arrangements. Management has elected to disclose in the 1996 annual Consolidated Financial Statements pro forma net income and net income per share as if the fair-value-based method had been applied in measuring compensation cost. 4. SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" was issued in June, 1996 and provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. SFAS No. 125 applies to transactions occurring after December 31, 1996. Management has not yet quantified the effect of this new standard on the Consolidated Financial Statements. ITEM 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 5. Residential mortgage loans held for sale, which are valued at the lower of aggregate cost or market value, were $10,216,000, $22,954,000 and $24,659,000 at September 30, 1996, December 31, 1995 and September 30, 1995, respectively. 6. In the first nine months of 1996, the Registrant paid $515,216,000 in interest and $80,500,000 in Federal income taxes. In the first nine months of 1995, the Registrant paid $411,120,000 in interest and $52,000,000 in Federal income taxes. In the first nine months of 1996 and 1995, respectively, the Registrant had noncash investing activities consisting of the securitization of $639,600,000 and $553,149,000 of residential mortgage loans. 7. On March 15, 1996, the Registrant acquired Kentucky Enterprise Bancorp, Inc., with assets of $276 million in a stock-for-stock exchange accounted for as a pooling of interests. The Consolidated Financial Statements for prior periods have not been restated due to immateriality. 8. On January 19, 1996, the Registrant purchased the deposits and fixed assets of the 28 offices of 1st Nationwide Bank in the Cleveland, Ohio area for $136 million. On February 23, 1996, the Registrant purchased the deposits, loans and fixed assets of First Chicago NBD Corporation's 25 office Columbus and Dayton, Ohio operations. 9. During the second quarter of 1996, the Registrant redeemed its 4 1/4% Convertible Subordinated Notes due 1998 by issuing 3.4 million common shares. As a result, $143.3 million was added to Stockholders' Equity. 10. 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 Third quarter 1996 results include a one-time, pre-tax charge of $16.6 million ($10.8 million, or $.10 per share after tax), mandated by recent federal legislation to recapitalize the Savings Association Insurance Fund (SAIF). The Registrant's net income was $79,055,000 for the third quarter, up 5.1%, and $241,444,000 for the first nine months of 1996, up 15.1%, compared to the same periods in 1995. Net income per share for the third quarter was $.75, unchanged from 1995's $.75 and $2.34 for the first nine months, up 9.9% over 1995's $2.13. The SAIF charge applies to approximately $2.7 billion of thrift deposits acquired by the ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Registrant over the years. In exchange for the charge this quarter, the Registrant expects ongoing deposit insurance premiums will be reduced by approximately $6.1 million annually. Excluding the impact of the one-time charge, return on average equity was 17.5% and return on average assets was 1.79% for the third quarter of 1996. The Registrant's net interest income on a fully taxable equivalent basis for the third quarter of 1996 was $186.6 million, a 23% increase over the $151.2 million for the same period of 1995. This increase resulted from a 20% increase in average interest-earning assets and an increase of 12 basis points in the net interest margin. Commercial loans and leases were up 15.8%, led by commercial leases, up 31.2%. Installment loan and consumer lease originations totalled $735 million this quarter and $2.3 billion for the nine months ended, compared to $595 million and $1.6 billion, respectively, for the same periods last year. Residential mortgage loan volume remained strong, with approximately $368 million originated in the third quarter and $1.2 billion for the nine months ended, compared to $330 million and $643 million, respectively, for the same periods in 1995. The Registrant sold or securitized nearly $150 million of mortgage loans during the quarter and over $1 billion during the first nine months of 1996. The Registrant also securitized and sold an additional $413 million of auto loans during the third quarter, which brings the total auto loans securitized during the nine months ended to over $820 million. Excluding the effect of sales and securitizations during the past twelve months, consumer loan outstandings have increased 39.4%. The provision for credit losses was $16.4 million in the third quarter of 1996 and $10.7 million in the third quarter of 1995. Net chargeoffs for the third quarter were .46% of average loans and leases, compared with .28% reported for the third quarter of 1995. Nonperforming assets as a percentage of total loans, leases and other real estate owned were .38% at September 30, 1996 and .24% at September 30, 1995. Although net chargeoffs have risen in 1996, the total net chargeoff ratio remains below the Registrant's historical 10-year average of .48% and the reserve for credit losses is in excess of three and one-half times nonperforming assets. Total other operating income, excluding securities gains, increased to $95.3 million for the third quarter of 1996, a 25% increase over the third quarter of 1995. Trust income and data processing income increased 18.4% and 16.2%, respectively, over the same period in 1995, while other service charges and fees increased 38.7% for the quarter, due largely to growth in cardholder fees, consumer loan fees and mortgage banking income. The overhead ratio (operating expenses-excluding the SAIF assessment- divided by the sum of taxable equivalent net interest income and other operating income) for the quarter improved to 42.9%, compared to 44.1% last quarter and 43% for the third quarter of 1995. Excluding the SAIF assessment, total operating expenses this quarter increased less than one percent over last quarter as management continues to scrutinize expenses and integrate acquisitions. Excluding the one-time charge, total operating expenses increased 21.6% over the same period of 1995. Salaries, wages, incentives and employee benefits increased 16.1%. The number of full-time equivalent employees (FTEs) increased 10.2% (or 605) over the same period in 1995 to 6,525 at September 30, 1996. Approximately one-half of the increase in FTEs is directly due to acquisitions. Equipment and net occupancy expenses increased 25.8% over 1995 due to the net addition of 33 locations, primarily from acquisitions, and upgrades of equipment to support growth and processing technology. Other operating expenses before the assessment increased 27.5% over 1995, due in large part to increases in expenses resulting from strong volume in all of our businesses, data processing and the amortization of intangibles. MATERIAL CHANGES IN FINANCIAL CONDITION The material changes that have occurred in the Registrant's financial condition during 1996 are as follows ($000's): Sept. 30, Dec. 31, 1996 1995 $ +/- % +/- --------- ----------- ------- ---- Securities Available for Sale $ 6,098,576 4,151,178 1,947,398 46.9 Loans and Leases 12,393,286 11,690,643 702,643 6.0 Other Assets 492,546 236,014 256,532 108.7 Core Deposits 12,981,581 10,724,414 2,257,167 21.0 CDs > $100,000, incl. Foreign 1,595,107 1,761,366 (166,259) (9.4) Federal Funds Borrowed 710,376 553,041 157,335 28.4 Short-Term Bank Notes 874,993 450,000 424,993 94.4 Convertible Subordinated Notes -- 143,400 (143,400)(100.0) The growth in securities available for sale was due primarily to the liquidity provided by core deposit acquisitions, which added a total of $2 billion in deposits. Loan and lease origination volume was strong, offset by securitizations and sales of $1.9 billion in residential mortgage and auto loans. Loan and lease volume was funded primarily through short-term borrowings including federal funds borrowed and short-term bank notes, which were also used to replace maturing foreign office deposits. Acquisitions also contributed over $199 million in intangibles (other assets). The decrease in Convertible Subordinated Notes is due to the conversion as previously discussed. 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 September 30, 1996, stockholders' equity was $2.031 billion, compared to $1.645 billion at September 30, 1995, an increase of $386 million, or 23.5%. Stockholders' equity as a percentage of total assets as of September 30, 1996 was 10.1%. The Federal Reserve Board has adopted risk-based capital guidelines which assign risk weightings to assets and off-balance sheet items and also define and set minimum capital requirements (risk-based capital ratios). The guidelines also define "well capitalized" ratios of Tier 1, total capital and leverage as 6%, 10% and 5%, respectively. The Registrant exceeded these "well capitalized" ratios at September 30, 1996 and 1995. At September 30, 1996, the Registrant had a Tier 1 risk-based capital ratio of 11.2%, a total risk-based capital ratio of 14% and a leverage ratio of 9%. At September 30, 1995, the Registrant had a Tier 1 risk-based capital ratio of 11%, total risk-based capital ratio of 14.4% and a leverage ratio of 9.5%. ITEM 6. EXHIBITS 1. Exhibit No. 11 - Computation of Consolidated Net Income Per Share for the Three and Nine Months Ended September 30, 1996 and 1995. Per share amounts and average shares have been adjusted for the three-for-two stock split effected in the form of a stock dividend paid January 12, 1996. 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: November 12, 1996 P. Michael Brumm, Executive Vice President and CFO EX-11 2 EXHIBIT 11 FIFTH THIRD BANCORP COMPUTATION OF CONSOLIDATED NET INCOME PER SHARE ($000's except per share data)
For the Three Months For the Nine Months Ended September 30, Ended September 30, 1996 1995 1996 1995 ------------ ------------ ------------ ------------ Net Income $ 79,055 75,189 $ 241,444 209,821 ============ ============ ============ ============ Net income per common share - assuming no dilution: Weighted average number of shares outstanding 105,789 99,680 103,361 98,373 ============ ============ ============ ============ Per share (net income divided by the weighted average number of shares outstanding) $ 0.75 0.75 $ 2.34 2.13 ============ ============ ============ ============ Net income per common and common equivalent share: Net income $ 79,055 75,189 $ 241,444 209,821 Add - Interest on 4 1/4% convertible subordinated notes due 1998, net of applicable income taxes -- 1,079 1,637 3,240 ------------ ------------ ------------ ------------ Adjusted net income $ 79,055 76,268 $ 243,081 213,061 ============ ============ ============ ============ Adjusted weighted average number of shares outstanding - after giving effect to the conversion of stock options and convertible subordinated notes 106,697 103,729 106,154 102,671 ============ ============ ============ ============ Per share (adjusted net income divided by the adjusted weighted average number of shares outstanding) $ 0.74 0.74 $ 2.29 2.08 ============ ============ ============ ============ Net income per common share - assuming full dilution: Adjusted net income $ 79,055 76,268 $ 243,081 213,061 ============ ============ ============ ============ Adjusted weighted average number of shares outstanding - after giving effect to the conversion of stock options and convertible subordinated notes 106,885 103,771 106,323 102,682 ============ ============ ============ ============ Per share (adjusted net income divided by the adjusted weighted average number of shares outstanding) $ 0.74 0.73 $ 2.29 2.07 ============ ============ ============ ============
EX-27 3
9 9-MOS DEC-31-1996 SEP-30-1996 683,196 29,735 14,355 0 6,098,576 166,145 166,145 12,393,286 185,689 20,086,988 14,576,688 2,721,738 480,120 277,565 0 0 235,035 1,795,842 20,086,988 742,627 282,457 627 1,025,711 395,722 515,455 510,256 44,229 390 375,289 361,507 241,444 0 0 241,444 2.29 2.29 3.99 40,127 31,315 863 0 177,388 56,991 15,225 185,689 185,689 0 0
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