EX-99.3 2 l88925aex99-3.txt EXHIBIT 99.3 1 EXHIBIT 99.3 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION The following Unaudited Pro Forma Condensed Combined Financial Information is based on the historical financial statements of Fifth Third and Old Kent, and has been prepared to illustrate the effects of the acquisition described below. The Unaudited Pro Forma Condensed Combined Financial Information is presented for illustration purposes only in accordance with the assumptions set forth below, and is not necessarily indicative of the operating results or financial position that would have occurred if Fifth Third's merger with Old Kent had been consummated nor is it necessarily indicative of future operating results or financial position of the combined company. The Unaudited Pro Forma Condensed Combined Financial Information reflects the April 2, 2001 merger of Fifth Third and Old Kent using the pooling-of-interests method of accounting. The Unaudited Pro Forma Condensed Combined Balance Sheet assumes Fifth Third's merger with Old Kent was consummated on March 31, 2001. The Unaudited Pro Forma Condensed Combined Statements of Income for the three months ended March 31, 2001 and the year ended December 31, 2000 present the combined results of operations of Fifth Third and Old Kent as if the merger had been effective at the beginning of each period presented. The Unaudited Pro Forma Condensed Combined Financial Information should be read in conjunction with Fifth Third's Consolidated Financial Statements and notes thereto and Old Kent's Consolidated Financial Statements and notes thereto. Fifth Third expects that substantial benefits will be achieved from the merger with Old Kent including operating cost savings and revenue enhancements. The pro forma earnings do not reflect any potential savings or revenue enhancements which are expected to result from the consolidation of operations of Fifth Third and Old Kent and are not necessarily indicative of the results of future operations. No assurances can be given with respect to the ultimate level of expense savings and revenue enhancements to be realized. 2 FIFTH THIRD BANCORP AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF MARCH 31, 2001 ($000's)
FIFTH THIRD BANCORP OLD KENT AND FINANCIAL PRO FORMA PRO FORMA SUBSIDIARIES CORPORATION ADJUSTMENTS COMBINED -------------- -------------- ------------- ------------- ASSETS Cash and Due from Banks $ 754,924 $ 667,119 $ -- $ 1,422,043 Securities Available for Sale 15,805,505 3,475,902 -- 19,281,407 Securities Held to Maturity 22,444 5,642 -- 28,086 Other Short-Term Investments 121,068 88,211 -- 209,279 Loans Held for Sale 893,905 2,574,676 -- 3,468,581 Loans and Leases 26,767,086 16,355,521 (15,800)(4) 43,106,807 Reserve for Credit Losses (395,693) (244,004) (42,000)(3) (681,697) ------------ ------------ --------- ------------ Net Loans and Leases 26,371,393 16,111,517 (57,800) 42,425,110 Bank Premises and Equipment 540,094 271,605 (42,000)(3) 769,699 Accrued Income Receivable 372,311 163,482 -- 535,793 Other Assets 2,133,103 1,136,317 (10,000)(3) 3,234,337 (25,083)(4) ------------ ------------ --------- ------------ Total Assets $ 47,014,747 $ 24,494,471 $(134,883) $ 71,374,335 ============ ============ ========= ============ LIABILITIES AND SHAREHOLDERS' EQUITY Total Deposits $ 28,724,097 $ 17,199,247 $ -- $ 45,923,344 Federal Funds Borrowed 3,580,027 1,830,540 -- 5,410,567 Other Short-Term Borrowings 2,756,828 2,709,838 -- 5,466,666 Accrued Taxes, Interest and Expenses 1,481,585 406,392 141,000 (3) 2,028,977 Other Liabilities 375,315 83,741 (40,883)(4) 418,173 Long-Term Debt 4,723,442 449,802 -- 5,173,244 Guaranteed Preferred Beneficial Interests in Convertible Preferred Debentures 172,500 -- -- 172,500 ------------ ------------ --------- ------------ Total Liabilities 41,813,794 22,679,560 100,117 64,593,471 ------------ ------------ --------- ------------ SHAREHOLDERS' EQUITY Preferred Stock: Series D Perpetual -- 7,250 -- 7,250 Series E Perpetual -- 2,000 -- 2,000 Common Stock 1,046,875 140,331 90,205 (2) 1,277,411 Capital Surplus 683,429 649,542 (90,205)(2) 1,242,766 Retained Earnings 3,421,127 988,331 (235,000)(3) 4,174,458 Net Unrealized Gains on Securities Available for Sale 49,522 27,457 -- 76,979 ------------ ------------ --------- ------------ Total Shareholders' Equity 5,200,953 1,814,911 (235,000) 6,780,864 ------------ ------------ --------- ------------ Total Liabilities and Shareholder's Equity $ 47,014,747 $ 24,494,471 $(134,883) $ 71,374,335 ============ ============ ========= ============
See accompanying notes to the unaudited pro forma condensed combined financial information. 3 FIFTH THIRD BANCORP AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2001 ($000'S, EXCEPT SHARES AND PER SHARE DATA)
FIFTH THIRD BANCORP OLD KENT AND FINANCIAL PRO FORMA PRO FORMA SUBSIDIARIES CORPORATION ADJUSTMENTS COMBINED --------------- --------------- -------------- ------------- Interest Income $ 817,648 $ 441,542 $ -- $ 1,259,190 Interest Expense 424,713 246,073 -- 670,786 ------------ ------------ ------------- ------------ Net Interest Income 392,935 195,469 -- 588,404 Provision for Credit Losses 30,290 35,649 -- 65,939 ------------ ------------ ------------- ------------ Net Interest Differential 362,645 159,820 -- 522,465 Other Operating Income: Service Charges on Deposits 56,168 21,661 -- 77,829 Other Operating Income 236,324 95,488 3,539 (4) 335,351 ------------ ------------ ------------- ------------ Total Other Income 292,492 117,149 3,539 413,180 Operating Expenses: Salaries, Wages and Benefits 139,063 95,510 6,515 (4) 241,088 Equipment and Occupancy Expenses 34,235 27,254 -- 61,489 Other Operating Expenses 120,360 65,418 (2,976)(4) 182,802 ------------ ------------ ------------- ------------ Total Operating Expenses 293,658 188,182 3,539 485,379 ------------ ------------ ------------- ------------ Earnings Before Income Taxes 361,479 88,787 -- 450,266 Applicable Income Taxes 117,175 26,691 -- 143,866 ------------ ------------ ------------- ------------ Net Income Before Cumulative Effect of Adopting SFAS 133 and Dividend on Preferred Stock 244,304 62,096 -- 306,400 Cumulative Effect of Adopting SFAS 133 -- 6,781 -- 6,781 Dividend on Preferred Stock -- 185 -- 185 ------------ ------------ ------------- ------------ Net Income Available to Common Shareholders $ 244,304 $ 55,130 $ -- $ 299,434 ============ ============ ============= ============ Average Shares Outstanding: Basic 467,532,082 140,067,000 571,181,662 Diluted 482,023,317 141,661,000 586,852,457 Earnings Per Share: Basic $ 0.52 $ 0.39 $ 0.52 Diluted $ 0.51 $ 0.39 $ 0.51
See accompanying notes to the unaudited pro forma condensed combined financial information. 4 FIFTH THIRD BANCORP AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2000 ($000'S, EXCEPT SHARES AND PER SHARE DATA)
FIFTH THIRD BANCORP OLD KENT AND FINANCIAL PRO FORMA PRO FORMA SUBSIDIARIES CORPORATION ADJUSTMENTS COMBINED ---------------- ---------------- --------------- -------------- Interest Income $ 3,263,371 $ 1,684,001 $ -- $ 4,947,372 Interest Expense 1,793,055 899,795 -- 2,692,850 ------------ ------------ ------------- ------------ Net Interest Income 1,470,316 784,206 -- 2,254,522 Provision for Credit Losses 89,037 48,624 -- 137,661 ------------ ------------ ------------- ------------ Net Interest Differential 1,381,279 735,582 -- 2,116,861 Other Operating Income: Service Charges on Deposits 216,940 81,449 -- 298,389 Other Operating Income 795,766 375,344 12,775 (4) 1,183,885 ------------ ------------ ------------- ------------ Total Other Income 1,012,706 456,793 12,775 1,482,274 Operating Expenses: Salaries, Wages and Benefits 522,374 377,917 27,654 (4) 927,945 Equipment and Occupancy Expenses 127,077 110,384 -- 237,461 Other Operating Expenses 435,822 245,514 (14,879)(4) 666,457 Merger-Related and Special Charges 33,548 53,425 -- 86,973 ------------ ------------ ------------- ------------ Total Operating Expenses 1,118,821 787,240 12,775 1,918,836 ------------ ------------ ------------- ------------ Earnings Before Income Taxes 1,275,164 405,135 -- 1,680,299 Applicable Income Taxes 412,279 126,787 -- 539,066 ------------ ------------ ------------- ------------ Net Income 862,885 278,348 -- 1,141,233 Dividend on Preferred Stock -- 740 -- 740 ------------ ------------ ------------- ------------ Net Income Available to Common Shareholders $ 862,885 $ 277,608 $ -- $ 1,140,493 ============ ============ ============= ============ Average Shares Outstanding: Basic 463,846,392 137,621,061 565,685,977 Diluted 475,978,172 139,182,639 578,973,325 Earnings Per Share: Basic $ 1.86 $ 2.02 $ 2.02 Diluted $ 1.83 $ 2.00 $ 1.98
See accompanying notes to the unaudited pro forma condensed combined financial information. 5 FIFTH THIRD BANCORP AND SUBSIDIARIES NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION NOTE 1 - BASIS OF PRESENTATION The Unaudited Pro Forma Condensed Combined Financial Information reflects Fifth Third's merger with Old Kent, which was accounted for under the pooling-of-interests method of accounting and is based on the historical consolidated financial statements of Fifth Third and Old Kent. NOTE 2 - SHAREHOLDERS' EQUITY For the merger of Fifth Third and Old Kent, each share of Old Kent common stock outstanding immediately prior to the effective time of the merger was cancelled and converted into the right to receive .74 of a share of Fifth Third common stock. Old Kent had 140.3 million shares of common stock outstanding at March 31, 2001, which were exchanged for approximately 103.8 million shares of Fifth Third common stock. The common stock in the Unaudited Pro Forma Condensed Combined Balance Sheet has been adjusted to reflect the par value amount of the Fifth Third shares issued. Pro forma retained earnings reflects an adjustment for estimated merger-related charges as described in Note 3 below. NOTE 3 - MERGER RELATED CHARGES In connection with the merger of Fifth Third and Old Kent, the combined company expects to incur pretax merger-related charges of approximately $304 million. These charges are expected to include approximately $42 million for conforming Old Kent's loan quality measurements to those of Fifth Third, and for the change in intent in the management of certain commercial loans; $42 million in occupancy and equipment charges (including lease termination costs, elimination of duplicate facilities and write-off of equipment); $10 million in the write-off of capitalized software and other assets; $77 million in employee-related costs (including change-in-control and severance payments); $50 million in conversion costs and contract terminations; $47 million in balance sheet restructuring charges to comply with Fifth Third's asset liability management policies; and $36 million in other merger-related costs (including investment banker and other professional fees). The merger-related charges and the related tax effect have been reflected in the Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2001, and have not been reflected in the Unaudited Pro Forma Condensed Combined Statements of Income as they are not expected to have a continuing impact on the operations of the combined company. 9 6 NOTE 4 - RECLASSIFICATION ENTRIES In connection with the merger, Fifth Third and Old Kent performed a review of their respective accounting policies. As a result of this review, it was necessary to reclassify certain amounts in the financial statements of the combined company to conform accounting policies and practices.