10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

Or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 0-8076

FIFTH THIRD BANCORP

(Exact name of Registrant as specified in its charter)

Ohio	31-0854434
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

38 Fountain Square Plaza

Cincinnati, Ohio 45263

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:

(513) 534-5300

Securities registered pursuant to Section 12(g) of the Act:

Common Stock Without Par Value

(Title of Class)

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: ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes: x No: ¨

The Aggregate Market Value of the Voting Stock held by non-affiliates of the Registrant was $33,111,558,907 as of June 30, 2002.

There were 574,260,355 shares of the Registrant’s Common Stock, without par value, outstanding as of February 28, 2003.

DOCUMENTS INCORPORATED BY REFERENCE

2002 Annual Report to Shareholders:	Parts I, II and IV
Proxy Statement for 2003 Annual Meeting of Shareholders:	Parts III and IV

FIFTH THIRD BANCORP

2002 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

PART I

		Page
Item 1.	Business	3-13
Item 2.	Properties	14
Item 3.	Legal Proceedings	14
Item 4.	Submission of Matters to a Vote of Security Holders	14
	Executive Officers of the Registrant	15-16
PART II
Item 5.	Market For Registrant’s Common Equity and Related Stockholder Matters	17
Item 6.	Selected Financial Data	17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 8.	Financial Statements and Supplementary Data	17
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	17
PART III
Item 10.	Directors and Executive Officers of the Registrant	18
Item 11.	Executive Compensation	18
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	18
Item 13.	Certain Relationships and Related Transactions	19
Item 14.	Controls and Procedures	19
PART IV
Item 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	20-24
Signatures		25
Certifications		26-27

PART I

ITEM 1. BUSINESS

This report includes forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, that involve inherent risks and uncertainties. This report contains certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of Fifth Third Bancorp including statements preceded by, followed by or that include the words “believes,” “expects,” “anticipates” or similar expressions or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions. 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 Bancorp does business, are less favorable than expected; (5) legislative or regulatory changes or actions adversely affect the businesses in which Fifth Third Bancorp is engaged; (6) changes in the securities markets; (7) a delayed or incomplete resolution of regulatory issues (8) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity; and (9) the outcome of legal proceedings. Further information on other factors which could affect the financial results of Fifth Third Bancorp are included in Fifth Third Bancorp’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 Bancorp.

ORGANIZATION

Fifth Third Bancorp (the “Registrant”) is an Ohio corporation organized in 1975 and is a bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHCA”), and subject to regulation by the Board of Governors of the Federal Reserve System (“FRB”). The Registrant, with its principal office located in Cincinnati, is a multi-bank holding company as defined in the BHCA and is registered as such with the FRB. At December 31, 2002, the Registrant’s wholly-owned second tier holding company, Fifth Third Financial Corporation, had 11 wholly-owned direct subsidiaries: Fifth Third Bank; Fifth Third Bank, Florida; Fifth Third Bank, Northern Kentucky, Inc.; Fifth Third Bank, Kentucky, Inc.; Fifth Third Bank, Indiana; Fifth Third Bank (Michigan); Fifth Third Community Development Corporation; Fifth Third Investment Company; Heartland Capital Management, Inc; Old Kent Capital Trust I and Fifth Third Reinsurance Company, LTD.

At December 31, 2002, the Registrant, its affiliated banks and other subsidiaries had consolidated total assets of approximately $80.9 billion, consolidated total deposits of approximately $52.2 billion and consolidated total shareholders’ equity of approximately $8.5 billion.

The Registrant, through its subsidiaries, engages primarily in commercial, retail and trust banking, electronic payment processing services and investment advisory services. Significant direct subsidiaries of the Registrant’s affiliate banks consist of: The Fifth Third Company; Fifth Third Leasing Company; Fifth Third Processing Solutions, Inc.; Fifth Third International Company; Fifth Third Holdings, LLC; Fifth Third Securities, Inc.; Fifth Third Real Estate Capital Markets Company; Fifth Third Mortgage Company; Fifth Third Mortgage Insurance Reinsurance Company; Fifth Third Insurance Agency, Inc.; Old Kent Investment Corporation; Home Equity of America, Inc.; Old Kent Mortgage Services, Inc. and GNB Management, LLC. The Registrant’s subsidiaries provide a wide range of financial products and services to the retail, commercial, financial, governmental, educational and medical sectors, including a wide variety of checking, savings and money market accounts, and credit products such as credit cards, installment loans, mortgage loans and leasing. Each of the banking subsidiaries has deposit insurance provided by the Federal Deposit Insurance Corporation (“FDIC”) through the Bank Insurance Fund (“BIF”) and/or the Savings Association Insurance Fund (“SAIF”).

Fifth Third Processing Solutions, Inc., the Registrant’s electronic payment processing subsidiary, operates for itself and other financial institutions, a proprietary automated teller machine (“ATM”) and Point of Sale (“POS”) network, Jeanie^®. The Registrant’s banking subsidiaries participate in several regional shared ATM networks including “NYCE^®,” “Pulse^®,” and “Star^®.” These networks include approximately 595,000, 700,000 and 1,224,000 ATMs and POS devices, respectively. The Registrant’s banking subsidiaries also participate in “Cirrus^®,” and “Plus System^®,” which are international ATM networks including approximately 835,000 and 803,000 participating ATMs, respectively. Fifth Third Processing Solutions, Inc. also provides electronic fund transfers, ATM processing, electronic personal banking, merchant transaction processing, electronic bill payment and electronic benefit transfer services for thousands of regional banks, bank holding companies, service retailers and other financial institutions throughout the United States.

Additional information regarding the Registrant’s businesses is included in the Management Editorial (pages 4 through 15) in the Registrant’s 2002 Annual Report to Shareholders and is incorporated herein by reference and attached to this filing as Exhibit 13.

ACQUISITIONS

The Registrant has completed a number of mergers and acquisitions over the years involving financial institutions throughout Ohio, Indiana, Kentucky, Michigan, Wisconsin, and Florida. On July 23, 2002, the Registrant entered into an agreement to acquire Franklin Financial Corporation and its subsidiary, Franklin National Bank, headquartered in Franklin, Tennessee. The transaction is structured as a tax-free exchange of stock for a total transaction value of approximately $270 million.

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ITEM 1. BUSINESS (continued)

The transaction is subject to the approval of Franklin Financial Corporation shareholders. Pursuant to the recent amendment of the affiliation Agreement with Franklin Financial Corporation, the transaction must be consummated by June 30, 2004. The Affiliation Agreement and its Amendments are attached hereto as exhibits 99.4, 99.5, 99.6 and 99.7 and are incorporated herein by reference. The transaction is also subject to regulatory approvals. See “Business – Regulation and Supervision – The Registrant – The Gramm-Leach-Bliley Act” on pages 5 and 6 for a discussion of additional regulatory restrictions on acquisitions.

The Registrant’s strategy for growth includes strengthening its presence in core markets, expanding into contiguous markets and broadening its product offerings while taking into account the integration and other risks of growth. When permitted by the Federal Reserve Bank of Cleveland and the Division, the Registrant will evaluate strategic acquisition opportunities and conduct due diligence activities in connection with possible transactions. As a result, discussions, and in some cases, negotiations may take place and future acquisitions involving cash, debt or equity securities may occur. These typically involve the payment of a premium over book value and current market price, and therefore, some dilution of book value and net income per share may occur with any future transactions.

Additional information, with respect to acquisitions, is included in Note 21 and Note 22 (pages 36 and 37) of the Notes to Consolidated Financial Statements in the Registrant’s 2002 Annual Report to Shareholders, and is incorporated herein by reference and attached to this filing as Exhibit 13.

COMPETITION

There are hundreds of commercial banks, savings and loans and other financial service providers in Ohio, Kentucky, Michigan, Illinois, Indiana, Florida, West Virginia, Tennessee and nationally, which provide strong competition to the Registrant’s banking subsidiaries. The Registrant competes for deposits, loans and other banking services in its principal geographic markets as well as in selected national markets as opportunities arise. In addition to the challenge of attracting and retaining customers for traditional banking services, the Registrant’s competitors now include securities dealers, brokers, mortgage bankers, investment advisors and insurance companies. The Gramm-Leach-Bliley Act of 1999 (the “GLBA”), effective March 11, 2000, has changed the competitive environment in which the Registrant conducts business. See “Regulation and Supervision” below. The increasingly competitive environment is a result primarily of changes in regulation, changes in technology, product delivery systems and the accelerating pace of consolidation among financial service providers. These competitors with focused products targeted at highly profitable customer segments, compete across geographic boundaries and provide customers increasing access to meaningful alternatives to banking services in nearly all significant products. These competitive trends are likely to continue. The Registrant’s ability to maintain its history of strong financial performance and return on investment to shareholders will depend in part on the Registrant’s ability over time to expand its scope of available financial services as needed to meet the needs and demands of its customers. With respect to electronic payment processing services, the Registrant’s electronic payment processing subsidiary, Fifth Third Processing Solutions, Inc., competes with other national electronic fund transfer (“EFT”) and merchant processing service providers.

REGULATION AND SUPERVISION

In addition to the generally applicable state and federal laws governing businesses and employers, the Registrant and its subsidiary state banks (the “State Banks”) are subject to extensive regulation by federal and state laws and regulations applicable to financial institutions and their parent companies. Virtually all aspects of the business of the Registrant and the State Banks are subject to specific requirements or restrictions and general regulatory oversight. The principal objectives of state and federal banking laws are the maintenance of the safety and soundness of financial institutions and the federal deposit insurance system and the protection of consumers or classes of consumers, rather than the specific protection of shareholders of a bank or the parent company of a bank, such as the Registrant. In addition, the supervision, regulation and examination of the Registrant and its subsidiaries by the bank regulatory agencies is not intended for the protection of the Registrant’s security holders. To the extent the following material describes statutory or regulatory provisions, it is qualified in its entirety by reference to the particular statute or regulation.

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PART I

ITEM 1. BUSINESS (continued)

The Registrant

General. The Registrant is a bank holding company registered under the BHCA. The Registrant is subject to appropriate regulation and supervision by the FRB and the Division. The Registrant is required to file annually a report of operations with, and is subject to examination by, the FRB and the Division. The FRB has the authority to issue orders to bank holding companies to cease and desist from unsound banking practices and violations of conditions imposed by, or violations of agreements with, the FRB. The FRB is also empowered to assess civil money penalties against companies or individuals who violate the BHCA or orders or regulations thereunder, to order termination of non-banking activities of non-banking subsidiaries of bank holding companies, and to order termination of ownership and control of a non-banking subsidiary by a bank holding company.

The BHCA – Geographic Expansion. The BHCA prohibits a bank holding company, without prior approval of the FRB, from acquiring substantially all the assets of a bank or acquiring direct or indirect ownership or control of more than 5% of the voting shares of any bank, or increasing such ownership or control of any bank, or merging or consolidating with any bank holding company. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 generally authorizes bank holding companies to acquire banks located in any state, possibly subject to certain state-imposed age and deposit concentration limits, and also generally authorizes interstate mergers and to a lesser extent, interstate branching.

The Gramm-Leach-Bliley Act – Broader Range of Financial Activities for Financial Holding Companies. The GLBA, which was enacted on November 12, 1999, and portions of which became effective on March 11, 2000, permits a qualifying bank holding company to become a financial holding company (“FHC”) and thereby to affiliate with financial companies engaging in a broader range of activities than had previously been permitted for a bank holding company. Permitted affiliates include securities underwriters and dealers, insurance companies and companies engaged in other activities that are declared by the FRB, in cooperation with the Treasury Department, to be “financial in nature or incidental thereto” or are declared by the FRB unilaterally to be “complimentary” to financial activities. In addition, a FHC is allowed to conduct new financial activities or acquire non-bank financial companies with after-the-fact notice to the FRB. A bank holding company may elect to become a FHC if each of its subsidiary banks is “well capitalized” (as discussed on page 8 under “The State Banks”) is “well managed” and has at least a “satisfactory” rating under the Federal Community Reinvestment Act (“CRA”). In 2000, the Registrant elected and qualified for FHC status under the GLBA.

Subsidiary banks are also limited by law and regulations in the scope of permitted activities and investments. Subsidiary banks and their operating subsidiaries may engage in any activities that are determined by the appropriate State banking regulator to be part of or incidental to the business of banking. The GLBA, however, permits a State chartered member bank, such as the Registrant’s subsidiary banks, to engage in expanded activities through the formation of a “financial subsidiary.” Fifth Third Bank has filed a notice to control, or acquire an interest in, a financial subsidiary with the FRB and may thus engage through a financial subsidiary in any activity that is financial in nature or incidental to a financial activity, except for insurance underwriting, insurance investments, real estate investment or development, or merchant banking. So as to qualify to establish or acquire, and thereafter maintain, a financial subsidiary, Fifth Third Bank and each of its depository institution affiliates must be “well capitalized” and “well managed,” and may not have a less than “satisfactory” CRA rating. In addition, the total assets of all financial subsidiaries of a State chartered member bank may not exceed the lesser of $50 billion or 45% of the parent bank’s total assets. A State chartered member bank that is one of the largest 100 insured banks in the United States, such as Fifth Third Bank, must also have issued debt with a certain rating. In addition to calculating its risk-based capital information from its consolidated financial statements, a State chartered member bank with one or more financial subsidiaries must also be “well capitalized” after excluding from its assets and equity all equity investments, including retained earnings, in a financial subsidiary, and the assets of the financial subsidiary from the bank’s consolidated assets. Any published financial statement for a State chartered member bank with a financial subsidiary must provide risk-based capital information under both methods described above. The bank must also have policies and procedures to assess financial subsidiary risk and protect the bank from such risks and potential liabilities.

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PART I

ITEM 1. BUSINESS (continued)

As a result of the regulatory activities described on page 14 under Item 3 “Legal Proceedings,” the Registrant and Fifth Third Bank have been advised by the FRB that the Registrant and Fifth Third Bank no longer satisfy financial holding company and financial subsidiary requirements for purposes of the GLBA. The Registrant and Fifth Third Bank have entered into agreements with the FRB that require that certain corrective actions be taken within a 180 day period from receipt of the notices or such longer period as may be permitted by the applicable agency. During this period, the Registrant will no longer continue to enjoy the after-the-fact notice process for new non-banking activities and non-banking acquisitions, the Registrant cannot engage in additional activities, or make acquisitions of companies engaged in activities that are not permitted unless a bank holding company is a FHC and the FRB has the authority to limit the activities of the Registrant and its subsidiaries. Similar restrictions apply to a financial subsidiary of Fifth Third Bank. Failure to satisfy the criteria during this period could result in the FRB ordering the divestiture of any depository institution or financial subsidiary controlled by the Registrant or any of its subsidiaries. In the alternative, the Registrant may comply with a divestiture order by ceasing to engage in any financial or other activity that would not be permissible for a bank holding company that has not elected to be treated as a FHC.

The Registrant currently relies on its status as a FHC and on a financial subsidiary to engage in certain securities and insurance activities. Fifth Third Securities, Inc., a wholly-owned financial subsidiary of Fifth Third Bank, engages in bank ineligible securities underwriting and dealing activity. Although Fifth Third Securities, Inc. might be able to conduct some of these activities under pre-GLBA law if the Registrant fails to continue to qualify as a FHC, these activities would be subject to certain conditions and limitations. Fifth Third Reinsurance Company, Ltd., a wholly-owned subsidiary of the Registrant, engages in the reinsurance of collateral protection insurance for collateral subject to loans by the various banking subsidiaries of the Registrant. Unless permitted by the FRB, the Registrant might be required to divest Fifth Third Reinsurance Company, Ltd. if the Registrant fails to continue to qualify as a FHC. Management believes that the loss or restriction of these activities would not have a direct material effect upon the Registrant’s consolidated financial position or results of operations but there could be a more substantial reputational loss.

Capital Requirements. The FRB has adopted capital adequacy guidelines pursuant to which it assesses the adequacy of capital in examining and supervising a bank holding company and in analyzing applications to it under the BHCA. These capital adequacy guidelines generally require bank holding companies to maintain total capital equal to 8% of total risk-adjusted assets and off-balance sheet items (the “Total Risk-Based Capital Ratio”), with at least one-half of that amount consisting of Tier I or core capital and the remaining amount consisting of Tier II or supplementary capital. As a practical matter, however, the FRB requires larger bank holding companies, such as the Registrant, to maintain a Total Risk-Based Capital Ratio of at least 10%, and a Tier 1 capital ratio of at least 6%, which is the standard for a “well-capitalized” bank holding company. Tier I capital for bank holding companies generally consists of the sum of common shareholders’ equity and perpetual preferred stock (subject in the case of the latter to limitations on the kind and amount of such stocks which may be included as Tier I capital), less goodwill and other non-qualifying intangible assets. Tier II capital generally consists of hybrid capital instruments; perpetual preferred stock, which is not eligible to be included as Tier I capital; term subordinated debt and intermediate-term preferred stock; and, subject to limitations, general allowances for loan losses. Assets are adjusted under the risk-based guidelines to take into account different risk characteristics.

In addition to the risk-based capital requirements, the FRB requires bank holding companies to maintain a minimum leverage capital ratio of Tier I capital (defined by reference to the risk-based capital guidelines) to total average assets (the “Leverage Ratio”) of 3.0%. Total average assets for this purpose does not include goodwill and any other intangible assets and investments that the FRB determines should be deducted from Tier I capital. The FRB has

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PART I

ITEM 1. BUSINESS (continued)

announced that the 3.0% Leverage Ratio requirement is the minimum for the top-rated bank holding companies without any supervisory, financial or operational weaknesses or deficiencies or those that are not experiencing or anticipating significant growth. For all other bank holding companies, the minimum leverage ratio is 4%, and bank holding companies with supervisory, financial, managerial or operational weaknesses or organizations expecting significant growth are expected to maintain capital ratios well above minimum levels.

As a practical matter, the FRB requires larger bank holding companies, such as the Registrant, to maintain a Leverage Ratio of at least 5% in order to qualify as “well-capitalized.”

The Registrant is currently in compliance with the Total Risk-Based Capital Ratio, Tier I Capital and the Leverage Ratio requirements. As of December 31, 2002, the Registrant had a Tier I Risk-Based Capital Ratio and a Total Risk-Based Capital Ratio equal to 11.68% and 13.50%, respectively, and a Leverage Ratio equal to 9.72%. U.S. bank regulatory authorities and international bank supervisory organizations, principally the Basel Committee on Banking Supervision, currently are considering changes to the risk-based capital adequacy framework, including emphasis on credit, market and operational risk components, which ultimately could affect the appropriate capital guidelines.

Limitations on Acquisitions of Common Stock. The Federal Change in Bank Control Act prohibits a person or group of persons from acquiring “control” of a bank holding company unless the FRB has been given at least 60 days to review the proposal. Under a rebuttable presumption established by the FRB, the acquisition of 10% or more of a class of voting stock of a bank holding company, with a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) would, under the circumstances set forth in the presumption, constitute the acquisition of control. In addition, any company, as that term is broadly defined in the statute, would be required to obtain the approval of the FRB under BHCA before acquiring 25% (5% in the case of an acquirer that is a bank holding company) or more or such lesser percentage of common stock as the FRB deems to constitute control.

Ohio Law. Ohio law, the state law principally governing the Registrant and its largest bank subsidiary, does not require bank holding companies to register with the Division. As a general matter, the Division does not rule upon or regulate the activities in which bank holding companies or their non-bank subsidiaries engage. A bank holding company, however, may not acquire control of an Ohio bank through purchase, assignment, transfer, pledge, or other disposition of voting securities without the prior consent of the Division. In examining the Ohio banks of a bank holding company, the bank holding company itself is subject to review by the Division. The Division has the authority to issue orders to bank holding companies to cease and desist from unsound banking practices and violations of law and of conditions imposed by, or violations of agreements with, the Division in connection with the operation of Ohio banks. The Division is also empowered to assess civil money penalties against bank holding companies and banks engaging in unsafe or unsound practices.

The State Banks

General. The Registrant owns banks chartered under the laws of Ohio, Michigan, Florida, Indiana and Kentucky. The State Banks are subject to extensive state regulation and examination by the appropriate state banking agency in the particular state or states where each bank is chartered and maintains branch offices, by the FRB, and by the FDIC, which insures the deposits of each of the State Banks to the maximum extent permitted by law. The federal and state laws and regulations which are applicable to banks regulate among other matters, the scope of their business, their investments, their reserves against deposits, the timing of the availability of deposited funds and the nature, amount of and collateral for certain loans, and the amount of interest that may be charged on loans. Various state consumer laws and regulations also affect the operations of the State Banks.

FDIC Insurance Premiums. The State Banks pay deposit insurance premiums to the FDIC generally based on an assessment rate established by the FDIC for Bank Insurance Fund-member institutions. The FDIC has established a risk-based assessment system under which institutions are classified, and generally pay premiums according to their perceived risk to the federal deposit insurance funds. The Federal Deposit Insurance Act

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PART I

ITEM 1. BUSINESS (continued)

(“FDIA”) does not require the FDIC to charge all banks deposit insurance premiums when the ratio of deposit insurance reserves to insured deposits is maintained above specified levels. However, as a result of general economic conditions and recent bank failures, it is possible that the ratio of deposit insurance reserves to insured deposits could fall below the minimum ratio that FDIA requires, which would result in the FDIC setting deposit insurance assessment rates sufficient to increase deposit insurance reserves to the required ratio.

A resumption of assessments of deposit insurance premiums charged to well capitalized institutions could have an effect on net earnings. The State Banks cannot predict whether the FDIC will be required to increase deposit insurance assessments above their current levels. Banks with the lowest risk assessments generally pay no deposit insurance premiums. However, as a result of the regulatory activities described on page 14 under Item 3 “Legal Proceedings,” the risk-based assessment of the State Banks has been increased and will result in payment by the State Banks of FDIC insurance premiums currently estimated at an additional approximate $14 million on an annual basis.

Capital Requirements. The FRB has promulgated regulations and adopted a statement of policy regarding the capital adequacy of state-chartered banks, which, like the State Banks, are members of the FRB. These requirements are substantially similar to those adopted by the FRB regarding bank holding companies, as described above. In addition, the federal banking agencies have promulgated substantially similar regulations to implement the system of prompt corrective action established by Section 38 of the FDIA. Under the regulations, a bank generally shall be deemed to be (i) “well-capitalized” if it has a Total Risk-Based Capital Ratio of 10.0% or more, a Tier I Risk-Based Capital Ratio of 6.0% or more, a Leverage Ratio of 5.0% or more and is not subject to any written capital order or directive; or (ii) “adequately capitalized” if it has a Total Risk-Based Capital Ratio of 8.0% or more, a Tier I Risk-Based Capital Ratio of 4.0% or more, and a Leverage Ratio of 4.0% or more (3.0% under certain circumstances) and does not meet the definition of “well-capitalized;” or (iii) “undercapitalized” if it has a Total Risk-Based Capital Ratio that is less than 8.0%, a Tier I Risk-Based Capital Ratio that is less than 4.0% or a Leverage Ratio that is less than 4.0% (3.0% under certain circumstances); or (iv) “significantly undercapitalized” if it has a Total Risk-Based Capital Ratio that is less than 6.0%, a Tier I Risk-Based Capital Ratio that is less than 3.0% or a Leverage Ratio that is less than 3.0%, and (v) “critically undercapitalized” if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%. If an institution becomes undercapitalized, it would become subject to significant additional oversight and regulation, as mandated by the FDIA.

As of December 31, 2002, each of the State Banks was deemed to be a well-capitalized institution for the above purposes. As discussed above, the State Banks are required to remain well-capitalized institutions at all times because the Registrant elected to be treated as an FHC. Additional information, with respect to these capital and leverage ratios, is included in Note 18 (page 34) of the Notes to Consolidated Financial Statements in the Registrant’s 2002 Annual Report to Shareholders, and is incorporated herein by reference and attached to this filing as Exhibit 13.

Transactions with Affiliates. Federal law restricts the range of permissible transactions between a bank and an affiliated company. The State Banks are subject to certain restrictions on loans to affiliated companies, on investments in the stock or securities thereof, on the taking of such stock or securities as collateral for loans to any borrower, and on the issuance of a guarantee or letter of credit on their behalf. The State Banks are also subject to certain restrictions on most types of transactions with affiliates, requiring that the terms of such transactions be substantially equivalent to terms to similar transactions with non-affiliates. The FRB recently adopted a final rule, which will become effective April 1, 2003, to implement comprehensively Sections 23A and 23B of the Federal Reserve Act.

This new rule, among numerous other requirements, specifies that derivative transactions are subject to Section 23B (including use of daily marks and two way collateralization) but generally not to Section 23A, except that derivatives in which the bank provides credit protection to a nonaffiliate on behalf of an affiliate will be treated as a guarantee for purposes of Section 23A. The rule also requires banks to establish policies and procedures to monitor credit exposure to affiliates. The FRB has stated that it intends to propose future regulations to treat derivatives that are the functional equivalent of a loan to an affiliate as subject to Section 23A.

Activities and Investments of Insured State-Chartered Banks. Section 24 of the FDIA generally limits the activities as principal and equity investments of FDIC-insured, state-chartered banks to those that are permissible

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ITEM 1. BUSINESS (continued)

for national banks. However, the GLBA permits national banks and state banks, to the extent permitted under state law, to engage through a “financial subsidiary” in certain new activities that are permissible for subsidiaries of a FHC. In order to form a financial subsidiary, a state bank must be well-capitalized, and the bank would be subject to certain capital deductions, risk management and affiliate transaction rules. As previously mentioned, Fifth Third Bank has established a financial subsidiary that is subject to these requirements.

Community Reinvestment Act. The CRA requires the FRB to evaluate the performance of each of the State Banks in helping to meet the credit needs of their communities. As a part of the CRA program, the State Banks are subject to periodic examinations by the FRB, and must maintain comprehensive records of their CRA activities for this purpose. Each of the State Banks has a CRA rating of satisfactory or higher. Because the Registrant is an FHC, with limited exceptions, the Registrant may not commence any new financial activities or acquire control of any companies engaged in financial activities in reliance on the GLBA if any of the State Banks receives a CRA rating of less than satisfactory.

Customer Information Security. The FRB, the FDIC and other bank regulatory agencies have adopted final guidelines (the “Guidelines”) for safeguarding confidential customer information. The Guidelines require each financial institution, under the supervision and ongoing oversight of its Board of Directors, to create a comprehensive written information security program designed to ensure the security and confidentiality of customer information, protect against any anticipated threats or hazards to the security or integrity of such information; and protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer. The Registrant has adopted a customer information security program which has been approved by the Registrant’s Board of Directors (the “Board”).

Privacy. The GLBA requires financial institutions to implement policies and procedures regarding the disclosure of nonpublic personal information about consumers to nonaffiliated third parties. In general, the statute requires explanations to consumers on policies and procedures regarding the disclosure of such nonpublic personal information, and, except as otherwise required by law, prohibits disclosing such information except as provided in the State Banks policies and procedures. The State Banks have implemented a privacy policy effective since the GLBA became law, pursuant to which all of its existing and new customers are notified of the privacy policies.

USA PATRIOT Act. The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”), designed to deny terrorists and others the ability to obtain access to the United States financial system, has significant implications for depository institutions, brokers, dealers and other businesses involved in the transfer of money. The Patriot Act, as implemented by various federal regulatory agencies, requires financial institutions, including the Registrant and its subsidiaries, to implement new policies and procedures or amend existing policies and procedures with respect to, among other matters, anti-money laundering, compliance, suspicious activity and currency transaction reporting, and due diligence on customers. The Patriot Act also permits information sharing for counter-terrorist purposes between federal law enforcement agencies and financial institutions, as well as among financial institutions, subject to certain conditions, and requires the FRB to evaluate the effectiveness of an applicant in combating money laundering activities when considering applications filed under Section 3 of the BHCA or the Bank Merger Act. The Registrant’s Board has approved policies and procedures which are believed to be compliant with the USA Patriot Act.

Regulatory Enforcement Authority. The enforcement powers available to federal banking regulators include, among other things, the ability to assess civil money penalties, to issue cease-and-desist or removal orders, to require written agreements and to initiate injunctive actions against banking organizations and institution-affiliated parties, as defined. In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions or inactions may provide the basis for enforcement action, including misleading or untimely reports filed with regulatory authorities. Federal law requires, except under certain circumstances, public disclosure of final enforcement actions by the federal banking agencies. In addition, the FRB may take various other informal actions, such as the supervisory letter which the Registrant received on November 7, 2002.

Transfer Agency. In order to serve as a transfer agent to clients that execute transactions in publicly traded securities, banks must register with the U.S. Securities and Exchange Commission (the “SEC”) as a transfer agent

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PART I

ITEM 1. BUSINESS (continued)

under the Exchange Act. As a registered transfer agent, Fifth Third Bank is subject to certain reporting and record keeping requirements. Currently, management believes Fifth Third Bank is in compliance with these registration, reporting and record keeping requirements.

Regulation of Investment Companies. Certain mutual fund and unit investment trust clients are regulated as “investment companies” as that term is defined under the Investment Company Act of 1940, as amended (the “ICA”), and are subject to various examination and reporting requirements.

The provisions of the ICA and the regulations promulgated there under prescribe the type of institution which may act as a custodian of investment company assets, as well as the manner in which a custodian administers the assets in its custody. As a custodian for a number of investment company clients, these regulations require, among other things, that certain minimum aggregate capital, surplus, and undivided profit levels are maintained. Additionally, arrangements with clearing agencies or other securities depositories must meet ICA requirements for segregation of assets, identification of assets and client approval. Future legislative and regulatory changes in the existing laws and regulations governing custody of investment company assets, particularly with respect to custodian qualifications, may have a material and adverse impact on the Registrant. Currently, management believes the Registrant is in compliance with all minimum capital and securities depository requirements. Further, the Registrant is not aware of any proposed or pending regulatory developments, which, if approved, would adversely affect its ability to act as custodian to an investment company.

Investment companies are also subject to extensive record keeping and reporting requirements. These requirements dictate the type, volume and duration of the record keeping the Registrant undertakes, either in the role as custodian for an investment company or as a provider of administrative services to an investment company. Further, specific ICA guidelines must be followed when calculating the net asset value of a client mutual fund. Consequently, changes in the statutes or regulations governing record keeping and reporting or valuation calculations will affect the manner in which operations are conducted.

New legislation or regulatory requirements could have a significant impact on the information reporting requirements applicable to the Registrant and may in the short term adversely affect the Registrant’s ability to service clients at a reasonable cost. Any failure to provide such support could cause the loss of customers and have a material adverse effect on financial results. Additionally, legislation or regulations may be proposed or enacted to regulate the Registrant in a manner that may adversely affect financial results.

Other Securities Laws Issues. The GLBA amended the federal securities laws to eliminate the blanket exceptions that banks traditionally have had from the definition of “broker” and “dealer” for a “bank.” In February 2003, the SEC extended the temporary exemption from the definition of “dealer” for banks until September 30, 2003 and, in May 2002, it extended the temporary exemption from the definition of “broker” until May 12, 2003. In February 2003, the SEC also issued final rules that, among other matters, adopt amendments to its rule granting an exemption to banks from dealer registration for a de minimis number of riskless principal transactions, and to its rule that defines terms used in the bank exception to dealer registration for asset-backed transactions, and it adopted a new exemption for banks from the definition of broker and dealer under the Exchange Act for certain securities lending transactions. Banks not falling within the specific exemptions provided by the new law may have to register with the SEC as a broker or a dealer or both and become subject to SEC jurisdiction. The Registrant is currently evaluating alternatives to ensure that its subsidiary banks will not be required to register as a broker-dealer.

Additional Information

Additional information regarding regulatory matters is included in Item 3 “Legal Proceedings” on page 14 and in both Note 18 (page 34) of the Notes to Consolidated Financial Statements and the Regulatory Matters section (page 54) of the Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Registrant’s 2002 Annual Report to Shareholders, which are incorporated herein by reference and attached to this filing as Exhibit 13.

10

PART I

ITEM 1. BUSINESS (continued)

EMPLOYEES

As of December 31, 2002, there were no employees of the Registrant. Subsidiaries of the Registrant employed 20,569 employees – 4,037 were officers and 3,349 were part-time employees. There were 19,119 full-time equivalent employees as of December 31, 2002.

SEGMENT INFORMATION

Information about the Registrant’s business segments is included in Note 26 (pages 40 through 41) of the Notes to Consolidated Financial Statements in the Registrant’s 2002 Annual Report to Shareholders, and is incorporated herein by reference and attached to this filing as Exhibit 13.

AVERAGE BALANCE SHEETS

The average balance sheets for each of the last three fiscal years are incorporated herein by reference to Table 1 of Management’s Discussion and Analysis of Financial Condition and Results of Operations (page 43) of the Registrant’s 2002 Annual Report to Shareholders attached to this filing as Exhibit 13.

ANALYSIS OF NET INTEREST INCOME AND NET INTEREST INCOME CHANGES

The analysis of net interest income and the analysis of net interest income changes are incorporated herein by reference to Table 1 and Table 2 of Management’s Discussion and Analysis of Financial Condition and Results of Operations and the related discussion on pages 43 through 45 of the Registrant’s 2002 Annual Report to Shareholders attached to this filing as Exhibit 13.

INVESTMENT SECURITIES PORTFOLIO

The investment securities portfolio as of December 31 for each of the last five years and the weighted average maturity distribution and weighted average yield of investment securities as of December 31, 2002, are incorporated herein by reference to the Securities Portfolio and Weighted Average Maturity of Securities tables on page 48 of the Registrant’s 2002 Annual Report to Shareholders attached to this filing as Exhibit 13.

The weighted average yields for the investment securities portfolio are yields to maturity, weighted by the book values of the investment securities. The weighted average yields on investment securities exempt from income taxes are computed on a taxable-equivalent basis. The taxable-equivalent yields are net after-tax yields to maturity divided by the complement of the full corporate tax rate (35 percent). In order to express yields on a taxable-equivalent basis, yields on obligations of states and political subdivisions (municipal securities) have been increased as follows:

Under 1 year	2.35	%
1 – 5 years	2.38	%
6 – 10 years	2.31	%
Over 10 years	2.27	%
Total municipal securities	2.30	%

LOAN PORTFOLIO

The loan and lease portfolio as of December 31 for each of the last five years and maturities and sensitivities of loans and leases to changes in interest rates at December 31, 2002 are incorporated herein by reference to the Loans and Leases section of Management’s Discussion and Analysis of Financial Condition and Results of Operations (pages 50 through 51) of the Registrant’s 2002 Annual Report to Shareholders attached to this filing as Exhibit 13.

11

PART I

ITEM 1. BUSINESS (continued)

RISK ELEMENTS OF LOAN AND LEASE PORTFOLIO

Interest on loans is normally accrued at the rate agreed upon at the time each loan was negotiated. It is the Registrant’s policy to discontinue accrual of interest on commercial, construction and mortgage loans when there is a clear indication 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 the principal or interest is past due ninety days or more, unless the loan is well-secured and in the process of collection. Consumer loans and revolving lines of credit for equity lines that have principal and interest payments that have become past due one hundred and twenty days and credit cards that have principal and interest payments that have become past due one hundred and eighty days are charged off to the allowance for credit losses. A summary of nonperforming and underperforming assets as of December 31 for each of the last five years are incorporated herein by reference to the Nonperforming and Underperforming Assets section of Management’s Discussion and Analysis of Financial Condition and Results of Operations (pages 51 through 52) of the Registrant’s 2002 Annual Report to Shareholders attached to this filing as Exhibit 13. Additional data concerning loans and leases at risk is as follows:

As of December 31, 2002, there were $16,849,000 of loans and leases currently performing in accordance with contractual terms where there were serious doubts as to the ability of the borrower to comply with such terms.

For the years 2002, 2001, and 2000, interest income of $4,970,000, $6,937,000, and $2,302,000, respectively, was recorded on nonaccrual and renegotiated loans and leases. Additional interest income of $23,547,000, $23,937,000, and $9,709,000, respectively, would have been recorded if the nonaccrual and renegotiated loans and leases had been current in accordance with the original terms.

SUMMARY OF LOAN LOSS EXPERIENCE

A summary of the activity in the reserve for credit losses as well as the elements of the reserve for credit losses for each of the last five years ended December 31 are herein incorporated by reference to the Provision and Reserve for Credit Losses section of Management’s Discussion and Analysis of Financial Condition and Results of Operations (pages 52 through 53) of the Registrant’s 2002 Annual Report to Shareholders attached to this filing as Exhibit 13.

DEPOSITS

An analysis of the average balances and the average rate paid by deposit category for each of the last three years are incorporated herein by reference to Table 1 of Management’s Discussion and Analysis of Financial Condition and Results of Operations (page 43) of the Registrant’s 2002 Annual Report to Shareholders and attached to this filing as Exhibit 13.

Maturity distribution of domestic certificates of deposit of $100,000 and over at December 31, 2002 are as follows ($000’s):

Three months or less	$	630,876
Over three months through six months		208,895
Over six months through twelve months		167,655
Over twelve months		173,339
Total certificates—$100,000 and over	$	1,180,765

As of December 31, 2002 foreign office deposits totaling $3,774,581,000 are denominated in amounts greater than $100,000.

12

PART I

ITEM 1. BUSINESS (continued)

RETURN ON EQUITY AND ASSETS

The following table presents certain GAAP operating ratios:

	2002		2001(1)	2000(2)
Return on average assets (a)	2.18	%	1.55	1.71
Return on average equity (b)	19.9	%	15.1	19.1
Dividend payout ratio (c)	35.5	%	44.7	38.2
Average equity to average assets ratio (d)	10.93	%	10.28	8.98

(a) net income divided by average assets

(b) net income divided by average equity

(c) dividends declared per share divided by diluted earnings per share, as originally reported

(d) average equity divided by average assets

(1) Certain 2001 ratios and statistics include merger-related charges and a nonrecurring accounting principle change of $394.5 million pretax ($300.3 million after tax, or $.51 per diluted share). For comparability, excluding the impact of these charges, return on average assets, return on average equity and the dividend payout ratio for 2001 would have been 1.97%, 19.2% and 35.0%, respectively.

(2) Certain 2000 ratios and statistics include merger-related charges of $99.0 million pretax ($66.6 million after tax, or $.12 per diluted share). For comparability, excluding the impact of these charges, return on average assets, return on average equity and the dividend payout ratio for 2000 would have been 1.81%, 20.2% and 33.3%, respectively.

SHORT-TERM BORROWINGS

Short-term borrowings balances outstanding by category as of December 31 for each of the last three years and weighted average interest rates by category are incorporated herein by reference to Note 8 (page 29) of the Notes to Consolidated Financial Statements of the Registrant’s 2002 Annual Report to Shareholders and attached to this filing as Exhibit 13.

AVAILABILITY OF FINANCIAL INFORMATION

The Registrant files reports with the SEC. Those reports include the annual report on Form 10-K, quarterly reports on Form 10-Q, current event reports on Form 8-K and proxy statements, as well as any amendments to those reports. The public may read and copy any materials the Registrant files with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. The Registrant’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are accessible at no cost on the Registrant’s web site at www.53.com on a same day basis after they are electronically filed with or furnished to the SEC.

13

PART I

ITEM 2. PROPERTIES

The Registrant’s executive offices and the main office of Fifth Third Bank are located on Fountain Square Plaza in downtown Cincinnati, Ohio, in a 32-story office tower, a five-story office building with an attached parking garage and a separate ten-story office building known as the Fifth Third Center, the William S. Rowe Building and the 530 Building, respectively. The Registrant’s main operations center is located in Cincinnati, Ohio, in a three-story building with an attached parking garage known as the Madisonville Operations Center. A subsidiary of the Registrant owns 100 percent of these buildings.

At December 31, 2002, the Registrant, through its subsidiary banks, two in Kentucky and one located in each of Ohio, Indiana, Michigan, Illinois, and Florida, operated 930 banking centers, of which 618 were owned and 312 were leased. The Registrant’s significant owned properties are owned free from mortgages and major encumbrances.

Management’s Editorial (pages 4 through 15) and Note 5 (pages 27 and 28) of the Notes to Consolidated Financial Statements in the Registrant’s 2002 Annual Report to Shareholders is incorporated herein by reference and attached to this filing as Exhibit 13.

ITEM 3. LEGAL PROCEEDINGS

A putative class action complaint was filed on March 25, 2003 in the United States District Court for the Southern District of Ohio against the Registrant, its Chief Executive Officer and President, its Chief Financial Officer and Executive Vice President and its Controller alleging violations of federal securities laws related to disclosures made by the Registrant in press releases and filings with the Securities and Exchange Commission regarding its integration of Old Kent Financial Corporation and its effect on the Registrant’s infrastructure and prospects and related matters, and seeking unquantified damages on behalf of putative classes of persons who purchased the Corporation’s common stock, attorneys’ fees and other expenses. Management believes there are substantial defenses to the lawsuit and intends to defend them vigorously. The impact of the final disposition of this lawsuit cannot be assessed at this time.

The Registrant and its subsidiaries are not parties to any other material litigation other than those arising in the normal course of business. Based on a review of such other litigation with legal counsel, management believes any resulting liability from these other actions would not have a material effect upon the Registrant’s consolidated financial position or results of operations.

As described in Management’s Discussion and Analysis of Financial Condition and Results of Operations (pages 54 and 55) of the Registrant’s 2002 Annual Report to Shareholders attached to this filing as Exhibit 13, the Registrant has been the subject of certain regulatory actions.

On November 7, 2002, the Registrant received a supervisory letter from the Federal Reserve Bank of Cleveland and the State of Ohio Department of Commerce, Division of Financial Institutions relating to matters including procedures for access to the general ledger and other books and records; segregation of duties among functional areas; procedures for reconciling transactions; the engagement of third party consultants; and efforts to complete the review of the $82 million ($53 million after tax) charged-off treasury-related aged receivable and in-transit reconciliation items.

Subsequently, on March 27, 2003, the Registrant announced that it and Fifth Third Bank had entered into a Written Agreement with the Federal Reserve Bank of Cleveland and the State of Ohio Department of Commerce, Division of Financial Institutions, addressing these and a number of other areas. This regulatory agreement is filed herewith as Exhibit 99.3 and is incorporated herein by reference. The foregoing discussion of the regulatory agreement is qualified in its entirety by reference to the text of the regulatory agreement. The Registrant’s press release relating to the execution of the regulatory agreement is filed herewith as Exhibit 99.8. See Item 1 “Business- Regulation and Supervision” on pages 5, 6 and 8 for a discussion of certain possible effects of this regulatory action.

On November 12, 2002, the Registrant was informed by a letter from the Securities and Exchange Commission that the Commission was conducting an informal investigation regarding the after-tax charge of $54 million reported in the Registrant’s Form 8-K dated September 10, 2002 and the existence or effects of weaknesses in financial controls in the Registrant’s Treasury and/or Trust operations. The Registrant has responded to the Commission’s initial and subsequent requests and intends to continue to cooperate and assist the Commission in this review.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

14

PART I

EXECUTIVE OFFICERS OF THE REGISTRANT

The names, ages and positions of the Executive Officers of the Registrant as of February 1, 2003 are listed below along with their business experience during the past 5 years. Officers are appointed annually by the Board of Directors at the meeting of Directors immediately following the Annual Meeting of Shareholders.

Name and Age	Current Position and Business Experience During Past 5 Years
George A. Schaefer, Jr., 57	PRESIDENT AND CHIEF EXECUTIVE OFFICER. President and Chief Executive Officer of the Registrant and Fifth Third Bank since 1990.
Neal E. Arnold, 43	EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER. Executive Vice President of the Registrant and Fifth Third Bank since December 1998. Chief Financial Officer of the Registrant and Fifth Third Bank since June 1997. Mr. Arnold has been the Treasurer of the Registrant and Fifth Third Bank. Previously, Mr. Arnold was Treasurer and Senior Vice President of Fifth Third Bank.
Michael D. Baker, 52	EXECUTIVE VICE PRESIDENT. Executive Vice President of the Registrant and Fifth Third Bank since August 1995. Previously, Mr. Baker was Senior Vice President of the Registrant since March 1993 and of Fifth Third Bank.
David J. DeBrunner, 36	VICE PRESIDENT AND CONTROLLER. Vice President of the Registrant and Fifth Third Bank since January 2002. Previously, Mr. DeBrunner was Vice President of Fifth Third Bank since 1997.
Diane L. Dewbrey, 38	SENIOR VICE PRESIDENT. Senior Vice President of the Registrant and Fifth Third Bank since January 2002. Previously, Ms. Dewbrey was Senior Vice President of Fifth Third Bank since 1995 and Vice President of Fifth Third Bank since 1992.
James R. Gaunt, 57	EXECUTIVE VICE PRESIDENT. Executive Vice President of the Registrant since June 1997. Senior Vice President of the Registrant since March 1994, and President and CEO of Fifth Third Bank, Kentucky, Inc. since August 1994. Previously, Mr. Gaunt was Senior Vice President of the Registrant and Fifth Third Bank.
R. Mark Graf, 38	SENIOR VICE PRESIDENT AND TREASURER. Senior Vice President of the Registrant since January 2003. Treasurer of the Registrant since January 2002 and of Fifth Third Bank since July 2001. Mr. Graf joined the Registrant in July 2001. Previously, Mr. Graf served in various management capacities at AmSouth Bancorporation since 1998.
James J. Hudepohl, 50	EXECUTIVE VICE PRESIDENT. Executive Vice President of the Registrant and Fifth Third Bank since January 1997. Previously, Mr. Hudepohl was Senior Vice President of Fifth Third Bank.

15

PART I

EXECUTIVE OFFICERS OF THE REGISTRANT (continued)

Robert J. King, Jr., 47	EXECUTIVE VICE PRESIDENT. Executive Vice President of the Registrant since June 1997. President and CEO of Fifth Third Bank (Northeastern Ohio). Previously, Mr. King was President and CEO of Fifth Third Bank, Northwestern Ohio, N.A. and was Senior Vice President of the Registrant since March 1995.
Robert P. Niehaus, 56	EXECUTIVE VICE PRESIDENT. Executive Vice President of the Registrant and Fifth Third Bank since August 1995. Previously, Mr. Niehaus was Senior Vice President of the Registrant since March 1993, and Senior Vice President of Fifth Third Bank.
Daniel T. Poston, 44	SENIOR VICE PRESIDENT AND AUDITOR. Senior Vice President of the Registrant and Fifth Third Bank since January 2002. Auditor of the Registrant and Fifth Third Bank. Mr. Poston joined the Registrant in October 2001. Previously, Mr. Poston was a partner at Arthur Andersen since 1994.
Paul L. Reynolds, 41	EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY. General Counsel and Secretary of the Registrant since January 2002. Executive Vice President of the Registrant since September 1999. Previously, Senior Vice President of the Registrant and Fifth Third Bank since March 1997. Assistant Secretary of the Registrant since March 1995, General Counsel and Assistant Secretary of Fifth Third Bank since January 1995.
Stephen J. Schrantz, 53	EXECUTIVE VICE PRESIDENT. Executive Vice President of the Registrant and Fifth Third Bank since October 1989. Previously, Mr. Schrantz was Senior Vice President of Fifth Third Bank.
Robert A. Sullivan, 48	EXECUTIVE VICE PRESIDENT. Executive Vice President of the Registrant since December 2002. Previously, Mr. Sullivan was President and CEO of Fifth Third Bank (Northwestern Ohio), since March 9, 2001 and President and Chief Operating Officer of Capital Holding, Inc. prior to its acquisition by Fifth Third Bancorp effective March 9, 2001. Mr. Sullivan was Co-Founder, President and Chief Operating Officer of Capital Holding, Inc. since 1989.

16

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated herein by reference to Investor Information (page 63) and the discussion of dividend limitations that the subsidiaries can pay to the Registrant discussed in Note 18 (page 34) of the Notes to Consolidated Financial Statements in the Registrant’s 2002 Annual Report to Shareholders attached to this filing as Exhibit 13. Additionally, as of March 4, 2003, the Registrant had approximately 56,300 shareholders of record.

ITEM 6. SELECTED FINANCIAL DATA

The information required by this item is incorporated herein by reference to Management’s Discussion and Analysis of Financial Condition and Results of Operations (page 60) of the Registrant’s 2002 Annual Report to Shareholders attached to this filing as Exhibit 13.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required by this item is incorporated herein by reference to Management’s Discussion and Analysis of Financial Condition and Results of Operations (pages 43 through 60) of the Registrant’s 2002 Annual Report to Shareholders attached to this filing as Exhibit 13.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this item is incorporated herein by reference to Management’s Discussion and Analysis of Financial Condition and Results of Operations (pages 56 and 57) of the Registrant’s 2002 Annual Report to Shareholders attached to this filing as Exhibit 13.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is incorporated herein by reference to pages 17 through 42 and page 60 of the Registrant’s 2002 Annual Report to Shareholders attached to this filing as Exhibit 13.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

17

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item relating to the Executive Officers of the Registrant is included in PART I (page 13) under “Executive Officers of the Registrant.”

The information required by this item concerning Directors is incorporated herein by reference under the caption “ELECTION OF DIRECTORS” (pages 3 through 5) of the Registrant’s Proxy Statement for the 2003 Annual Meeting of Shareholders.

The information required by this item concerning Section 16 (a) Beneficial Ownership Reporting Compliance is incorporated herein by reference under the caption “SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE” (page 9) of the Registrant’s Proxy Statement for the 2003 Annual Meeting of Shareholders.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference under the caption “EXECUTIVE COMPENSATION” (pages 7 through 13) of the Registrant’s Proxy Statement for the 2003 Annual Meeting of Shareholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security ownership information of certain beneficial owners and management is incorporated herein by reference under the captions “CERTAIN BENEFICIAL OWNERS, ELECTION OF DIRECTORS AND EXECUTIVE COMPENSATION” (pages 2 through 5 and page 9) of the Registrant’s Proxy Statement for the 2003 Annual Meeting of Shareholders.

The following table provides the detail relating to the Registrant’s equity compensation plans at December 31, 2002:

Plan category	Number of shares to be issued upon exercise of outstanding options	Weighted-average exercise price of outstanding options	Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column 1)
	(1)	(2)	(3)
Equity compensation plans approved by security holders	35,776,114	$42.46	8,086,882    (A)
Equity compensation plans not approved by security holders	—            (B)	—          (B)	540,983    (C)
Total	35,776,114	$42.46	8,627,865

(A) Includes .6 million shares issuable relating to deferred stock compensation plans.

(B) Excludes 3.3 million outstanding options awarded under plans assumed by the Registrant in connection with certain mergers and acquisitions. The Registrant has not made any awards under these plans and will make no additional awards under these plans. The weighted-average exercise price of the outstanding options is $35.09 per share.

(C) Represents remaining shares of Fifth Third common stock currently registered and reserved for issuance under the Registrant’s 1993 Stock Purchase Plan, as amended and restated. The number of shares available for issuance pursuant to this Plan may be increased without shareholder approval.

18

PART III

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated herein by reference under the caption “CERTAIN TRANSACTIONS” (page 15) of the Registrant’s Proxy Statement for the 2003 Annual Meeting of Shareholders.

ITEM 14. CONTROLS AND PROCEDURES

The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Registrant’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Exchange Act Rules 13a-14 and 15d-14. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Within 90 days prior to the date of this report, the Registrant carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on the foregoing, the Registrant’s Chief Executive Officer and Chief Financial Officer concluded that the Registrant’s disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the reports the Registrant files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required.

There have been no significant changes in the Registrant’s internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Registrant completed its evaluation. Prior to this evaluation, the Registrant has undertaken a complete review of internal control processes, accounting policies and procedures and overall risk management throughout the organization. This review has included internal resources as well as certain third party expertise. As a result of this review, the Registrant has implemented or is in the process of implementing certain additional processes and controls. The Registrant expects that many of the additional processes and controls implemented will serve to enhance existing processes and controls. In addition, the Registrant is required under the Written Agreement discussed under “Legal Proceedings” to take certain controls-related actions.

19

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K

a) Documents Filed as Part of the Report

1. Index to Financial Statements

	Page
Consolidated Statements of Income for the Years Ended December 31, 2002, 2001 and 2000	*
Consolidated Balance Sheets as of December 31, 2002 and 2001	*
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2002, 2001 and 2000.	*
Consolidated Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and 2000	*
Notes to Consolidated Financial Statements	*
Report of Independent Auditors — Deloitte & Touche LLP	*
Report of Independent Public Accountants — Arthur Andersen LLP

THE FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN LLP WHICH HAS CEASED OPERATIONS, AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP NOR HAS ARTHUR ANDERSEN LLP PROVIDED A CONSENT TO THE INCLUSION OF THE REPORT IN THIS FORM 10-K. THE ABSENCE OF SUCH CONSENT MAY LIMIT RECOVERY FROM ARTHUR ANDERSEN LLP BY INVESTORS RELATED TO ANY CLAIMS THAT THEY MAY ASSERT AS A RESULT OF THE AUDIT PERFORMED BY ARTHUR ANDERSEN LLP.

To the Board of Directors of Old Kent Financial Corporation:

We have audited the consolidated balance sheet of Old Kent Financial Corporation (a Michigan corporation) and subsidiaries as of December 31, 2000, and the related consolidated statements of income, cash flows and shareholders’ equity for each of the two years in the period ended December 31, 2000. These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. 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 Old Kent Financial Corporation and subsidiaries as of December 31, 2000, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States.

/s/ Arthur Andersen LLP

Chicago, Illinois

January 17, 2001

20

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (continued)

Incorporated by reference to pages 17 through 42 of the Registrant’s 2002 Annual Report to Shareholders attached to this filing as Exhibit 13. *

2. Financial Statement Schedules

The schedules for the Registrant and its subsidiaries are omitted because of the absence of conditions under which they are required, or because the information is set forth in the consolidated financial statements or the notes thereto.

3. Exhibits

Exhibit No.
3.1	Second Amended Articles of Incorporation of Fifth Third Bancorp, as amended (a)
3.2	Code of Regulations of Fifth Third Bancorp, as amended (a)
4(a)	Junior Subordinated Indenture, dated as of March 20, 1997 between Fifth Third Bancorp and Wilmington Trust Company, as Debenture Trustee (b)
4(b)	Certificate Representing the 8.136% Junior Subordinated Deferrable Interest Debentures, Series A, of Fifth Third Bancorp (b)
4(c)	Amended and Restated Trust Agreement, dated as of March 20, 1997 of Fifth Third Capital Trust II, among Fifth Third Bancorp, as Depositor, Wilmington Trust Company, as Property Trustee, and the Administrative Trustees name therein (b)
4(d)	Certificate Representing the 8.136% Capital Securities, Series A, of Fifth Third Capital Trust I (b)
4(e)	Guarantee Agreement, dated as of March 20, 1997 between Fifth Third Bancorp, as Guarantor, and Wilmington Trust Company, as Guarantee Trustee (b)
4(f)	Agreement as to Expense and Liabilities, dated as of March 20, 1997 between Fifth Third Bancorp, as the holder of the Common Securities of Fifth Third Capital Trust I and Fifth Third Capital Trust II (b)
4(g)	Old Kent Capital Trust I Floating Rate Subordinated Capital Income Securities
4(h)	Form of Fifth Third Bancorp, as successor to Old Kent Financial Corporation, Floating Rate Junior Subordinated Debentures Due 2027 (c)
4(i)	Indenture, dated as of January 31, 1997 between Fifth Third Bancorp, as successor to Old Kent Financial Corporation, and Bankers Trust Company (d)

21

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (continued)

4(j)	Guarantee Agreement, dated as of January 31, 1997, between Fifth Third Bancorp, as successor to Old Kent Financial Corporation (e)
4(k)	Amended and Restated Declaration of Trust dated as of January 31, 1997, between Fifth Third Bancorp, as successor to Old Kent Financial Corporation, and Bankers Trust Company (d)
10(a)	Fifth Third Bancorp Unfunded Deferred Compensation Plan for Non-Employee Directors (f) *
10(b)	Fifth Third Bancorp 1990 Stock Option Plan (g) *
10(c)	Fifth Third Bancorp 1987 Stock Option Plan (h) *
10(d)	Indenture effective November 19, 1992 between Fifth Third Bancorp, Issuer and NBD Bank, N.A., Trustee (i)
10(e)	Fifth Third Bancorp Master Profit Sharing Plan (j) *
10(f)	Amended and Restated Fifth Third Bancorp 1993 Stock Purchase Plan (k) *
10(g)	Fifth Third Bancorp 1998 Long-Term Incentive Stock Plan (l) *
10(h)	Amendment to Fifth Third Bancorp 1998 Long-Term Incentive Stock Plan (m)*
10(i)	Fifth Third Bancorp Variable Compensation Plan (n)*
10(j)	Fifth Third Bancorp Non-qualified Deferred Compensation Plan, as Amended and Restated (m)*
10(k)	CNB Bancshares, Inc. 1999 Stock Incentive Plan, 1995 Stock Incentive Plan, 1992 Stock Incentive Plan and Associate Stock Option Plan; King City Federal Savings Bank 1986 Stock Option and Incentive Plan; Indiana Bancshares, Inc. 1990 Stock Option Plan; National Bancorp Stock Option Plan; Indiana Federal Corporation 1986 Stock Option and Incentive Plan; and UF Bancorp, Inc. 1991 Stock Option and Incentive Plan (o) *
10(l)	Fifth Third Direct (p) *
10(m)	Fifth Third Bancorp Stock Option Gain Deferral Plan (m) *
10(n)	Old Kent Executive Stock Option Plan of 1986, as amended (q) *
10(o)	Old Kent Stock Option Incentive Plan of 1992, as amended (r) *
10(p)	Old Kent Executive Stock Incentive Plan of 1997, as amended (s) *
10(q)	Old Kent Stock Incentive Plan of 1999 (t) *
11	Computation of Consolidated Earnings Per Share for the Years Ended December 31, 2002, 2001, 2000, 1999 and 1998.

22

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (continued)

13	Fifth Third Bancorp 2002 Annual Report to Shareholders.
21	Fifth Third Bancorp Subsidiaries, as of December 31, 2002.
23	Independent Auditors’ Consent—Deloitte & Touche LLP.
99.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer.
99.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer.
99.3	Written Agreement among Fifth Third Bancorp, Fifth Third Bank, Federal Reserve Bank of Cleveland and the State of Ohio Department of Commerce, Division of Financial Institutions dated as of March 26, 2003.
99.4	Affiliation Agreement dated as of July 23, 2002 by and among Fifth Third Bancorp, Fifth Third Financial Corporation and Franklin Financial Corporation (omitting schedules and exhibits).
99.5	Amendment No. 1, dated as of September 9, 2002 to the Affiliation Agreement, dated as of July 23, 2002 by and among Fifth Third Bancorp, Fifth Third Financial Corporation and Franklin Financial Corporation.
99.6	Amendment No. 2, dated as of December 10, 2002 to the Affiliation Agreement, dated as of July 23, 2002 by and among Fifth Third Bancorp, Fifth Third Financial Corporation and Franklin Financial Corporation.
99.7	Amendment No. 3, dated as of March 27, 2003 to the Affiliation Agreement, dated as of July 23, 2002 by and among Fifth Third Bancorp, Fifth Third Financial Corporation and Franklin Financial Corporation.
99.8	Press release dated as of March 27, 2003.

b) Reports on Form 8-K

During the quarter ended December 31, 2002, the Registrant filed the following reports on Form 8-K:

Dated December 10, 2002, the Registrant issued an update concerning the ongoing review of the $82 million pre-tax ($53 million after-tax) expense related to certain predominantly treasury related aged receivable and in-transit reconciliation items charged off in the third quarter of 2002. Also, the Registrant announced Amendment No. 2 to the Affiliation Agreement signed between the Registrant, Fifth Third Financial Corporation and Franklin Financial Corporation and issued “Management Discussion of Trends” which has a general trend overview discussion of the Registrant’s expectations for its results of operations for the fourth quarter.

* – Denotes management contract or compensatory plan or arrangement.

(a) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2001.

(b) Incorporated by reference to Registrant’s filing with the Securities and Exchange Commission on March 26, 1997, a Form 8-K Current Report.

(c) Incorporated by reference to the Exhibits to Old Kent Financial Corporation’s Form S-4 Registration Statement filed July 19, 1997.

(d) Incorporated by reference to the Exhibits to Old Kent Financial Corporation’s Form 8-K filed on March 5, 1997.

(e) Incorporated by reference to the Exhibits to Old Kent Financial Corporation’s Form 8-K filed on March 4, 1998.

(f) Incorporated by reference to Registrant’s Form 10-K Annual Report by reference to Form 10-K filed for fiscal year ended December 31, 1985.

(g) Incorporated by reference to Registrant’s filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 33-34075.

23

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (continued)

(h) Incorporated by reference to Registrant’s filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 33-13252.

(i) Incorporated by reference to Registrant’s filing with the Securities and Exchange Commission on November 18, 1992, a Form 8-K Current Report dated November 16, 1992 and as Exhibit 4.1 to a Registration Statement on Form S-3, Registration No. 33-54134.

(j) Incorporated by reference to Registrant’s filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 33-55553.

(k) Incorporated by reference to Registrant’s filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 333-58618.

(l) Incorporated by reference to Registrant’s filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 333-58249.

(m) Incorporated by reference to Registrant’s Proxy Statement dated February 9, 2001.

(n) Incorporated by reference to Registrant’s Proxy Statement dated February 9, 1998.

(o) Incorporated by reference to Registrant’s filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-4, Registration No.333-84955 and by reference to CNB Bancshares Form 10-K, as amended, for the fiscal year ended December 31, 1998.

(p) Incorporated by reference to Registrant’s filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-3, Registration No. 333-41164.

(q) Incorporated by reference to the following filings by Old Kent Financial Corporation with the Securities and Exchange Commission: Exhibit 10 to Form 10-Q for the quarter ended September 30, 1995; Exhibit 10.19 to Form 8-K filed on March 5, 1997; Exhibit 10.3 to Form 8-K filed on March 2, 2000.

(r) Incorporated by reference to the following filings by Old Kent Financial Corporation with the Securities and Exchange Commission: Exhibit 10(b) to Form 10-Q for the quarter ended June 30, 1995; Exhibit 10.20 to Form 8-K filed on March 5, 1997; Exhibit 10(d) to Form 10-Q for the quarter ended June 30, 1997; Exhibit 10.3 to Form 8-K filed on March 2, 2000.

(s) Incorporated by reference to Old Kent Financial Corporation’s Annual Meeting Proxy Statement dated March 1, 1997.

(t) Incorporated by reference to Old Kent Financial Corporation’s Annual Meeting Proxy Statement dated March 1, 1999.

24

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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/    GEORGE A. SCHAEFER, JR.	March 27, 2003
George A. Schaefer, Jr. President and CEO (Principal Executive Officer)

Pursuant to requirements of the Securities Exchange Act of 1934, this report has been signed on March 27, 2003 by the following persons on behalf of the Registrant and in the capacities indicated.

/s/    GEORGE A. SCHAEFER, JR.         George A. Schaefer, Jr. Director, President, and CEO (Principal Executive Officer)	/s/    NEAL E. ARNOLD      Neal E. Arnold Executive Vice President and CFO (Principal Financial Officer)	/s/    DAVID J. DEBRUNNER         David J. DeBrunner Vice President and Controller (Principal Accounting Officer)
/s/    DARRYL F. ALLEN         Darryl F. Allen Director	/s/    JOAN R. HERSCHEDE Joan R. Herschede Director	/s/    JAMES E. ROGERS         James E. Rogers Director
/s/    JOHN F. BARRETT         John F. Barrett Director	/s/    ALLEN M. HILL         Allen M. Hill Director	/s/    JOHN J. SCHIFF, JR.         John J. Schiff, Jr. Director
/s/    THOMAS B. DONNELL          Thomas B. Donnell Director	/s/    ROBERT L. KOCH II         Robert L. Koch II Director	/s/    DUDLEY S. TAFT         Dudley S. Taft Director
/s/    RICHARD T. FARMER         Richard T. Farmer Director	/s/    MITCHEL D. LIVINGSTON, PH.D.         Mitchel D. Livingston, Ph.D. Director	/s/    THOMAS W. TRAYLOR         Thomas W. Traylor Director
/s/    JAMES P. HACKETT         James P. Hackett Director	/s/    HENDRIK G. MEIJER         Hendrik G. Meijer Director
/s/    JOSEPH H. HEAD, JR.         Joseph H. Head, Jr. Director	/S/    ROBERT B. MORGAN         Robert B. Morgan Director

25

CERTIFICATION PURSUANT

TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, George A. Schaefer, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of Fifth Third Bancorp (the “Registrant”);

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report;

4. The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of Registrant’s Board of Directors:

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and

6. The Registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/s/    GEORGE A. SCHAEFER, JR.         

George A. Schaefer, Jr.

President and Chief Executive Officer

March 27, 2003

26

CERTIFICATION PURSUANT

TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Neal E. Arnold, certify that:

1. I have reviewed this annual report on Form 10-K of Fifth Third Bancorp (the “Registrant”);

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report;

4. The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of Registrant’s Board of Directors:

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and

6. The Registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/s/    NEAL E. ARNOLD         

Neal E. Arnold

Executive Vice President and

Chief Financial Officer

March 27, 2003

27

EX-11

                                   EXHIBIT 11

                               FIFTH THIRD BANCORP
                 COMPUTATION OF CONSOLIDATED EARNINGS PER SHARE
                         FOR THE YEARS ENDED DECEMBER 31
             ($ and share data in thousands, except per share data)



                                                         2002        2001        2000       1999      1998
                                                         ----        ----        ----       ----      ----
                                                                                      
Net Income                                            $1,633,973   1,093,031   1,140,493   946,607   806,910
                                                      ======================================================

Earnings per share:
  Weighted average number of shares outstanding (a)      580,327     575,254     565,686   562,041   558,534
                                                      ======================================================

  Per share (net income divided by the weighted
   average number of shares outstanding)              $     2.82        1.90        2.02      1.68      1.44
                                                      ======================================================

Earnings per diluted share:
  Net income                                          $1,633,973   1,093,031   1,140,493   946,607   806,910
  Add - Interest on 6% convertible subordinated
   notes due 2028 and preferred dividends,
   net of applicable income taxes                            580       5,500       7,308     7,308     3,944
                                                      ------------------------------------------------------

  Adjusted net income                                 $1,634,553   1,098,531   1,147,801   953,915   810,854
                                                      ======================================================

  Adjusted weighted average number of shares
   outstanding - after giving effect to the
   conversion of stock options, convertible
   subordinated notes and preferred dividends (a)        592,020     591,316     578,973   575,895   571,085
                                                      ======================================================

  Per share (adjusted net income divided by
   the adjusted weighted average number of
   shares outstanding)                                $     2.76        1.86        1.98      1.66      1.42
                                                      ======================================================


(a) Per share amounts and average shares outstanding have been adjusted for the
three-for-two stock splits effected in the form of stock dividends paid July 14,
2000 and April 15, 1998.

EX-13

                                                                      Exhibit 13
                              Fifth Third Bancorp
                     [LOGO]   -------------------
                               2002 ANNUAL REPORT




                                    [PHOTO]








                                                          Financial Strength and
                                                               Consistent Growth



                                ABOUT FIFTH THIRD

                               Corporate Profile

Fifth Third traces its origins to the Bank of the Ohio Valley, which opened in
1858 and was subsequently purchased in 1871 by the Third National Bank.
The union of the Third National and Fifth National banks in 1908 eventually
led to the creation of the diversified financial services company, Fifth Third
Bancorp. Today, Fifth Third operates 17 affiliates with 930 full-service
locations primarily in five Midwestern states. We serve 5.5 million customers
through our affiliate banking network and feature four primary businesses:
Commercial Banking, Retail Banking, Investment Advisors and Fifth Third
Processing Solutions, our electronic payment processing subsidiary. With $81
billion in assets, Fifth Third is the 13th largest bank holding company in the
nation, and its market capitalization of $34 billion makes it the eighth largest
banking institution in the United States at year-end. []

[GRAPHIC]

                                About The Cover

Financial Strength and Consistent Growth: Fifth Third's 29-year track record of
delivering consistent, quality growth to our shareholders is a source of a great
deal of pride to the 20,600 employees of Fifth Third Bancorp. As one of the keys
to consistent growth, Fifth Third maintains a steadfast commitment to a strong,
flexible balance sheet. The financial strength of our balance sheet was recently
recognized by Moody's Investors Service(r) with a senior debt rating of Aa2, a
rating equaled or surpassed by only three other U.S. bank holding companies. []

                      FIFTH THIRD BANCORP AND SUBSIDIARIES



                                   AT A GLANCE

                              Financial Highlights

                                                                         Percent
For the years ended December 31                     2002         2001     Change
- -------------------------------                     ----         ----     ------
$ in millions, except per share data

EARNINGS AND DIVIDENDS
Net Income Available to Common Shareholders      $ 1,634      $ 1,093      49.5
Cash Dividends Declared                              567          460      23.3

PER SHARE
Earnings                                         $  2.82      $  1.90      48.4
Diluted Earnings                                    2.76         1.86      48.4
Cash Dividends Declared                             0.98         0.83      18.1
Year-End Book Value                                14.76        13.11      12.6
Year-End Market Price                              58.55        61.33      (4.5)

AT YEAR-END
Assets                                           $80,894      $71,026      13.9
Loans and Leases                                  49,286       43,728      12.7
Deposits                                          52,208       45,854      13.9
Shareholders' Equity                               8,475        7,639      10.9
Market Capitalization                             33,628       35,735      (5.9)

KEY RATIOS (PERCENT)
Return on Average Assets (ROAA)                     2.18         1.55      40.6
Return on Average Equity (ROAE)                     19.9         15.1      31.8
Net Interest Margin                                 3.96         3.82       3.7
Efficiency Ratio                                    44.9         54.8     (18.1)
Average Shareholders' Equity to
   Average Assets                                  10.93        10.28       6.3

ACTUALS
Number of Shares                             574,355,247  582,674,580      (1.4)
Number of Banking Locations                          930          933      (0.3)
Number of Full-Time Equivalent Employees          19,119       18,373       4.1

Note: Certain ratios and statistics for 2001 include nonrecurring merger charges
and a nonrecurring accounting principle change of $394.5 million pretax ($300.3
million after tax, or $.51 per diluted share). These ratios and statistics on a
comparable basis with 2002 are as follows:

                                              Percent
                            2002     2001      Change
- -----------------------------------------------------
Net Income              $ 1,634     1,393        17.3
ROAA                       2.18%     1.97        10.7
ROAE                       19.9%     19.2         3.6
Efficiency Ratio           44.9%     46.6        (3.6)

                              Investment Qualities

      Fifth Third Bancorp shareholders have:

      o  Received an annualized total return of 25% since the Bancorp began
         trading in April of 1975 and have seen an initial investment of $10,000
         increase to more than $4.6 million in that same time frame;
      o  Received a 10-year compounded annual dividend growth rate of 19%;
      o  Seen their investment outperform the S&P 500 21-fold over a 20-year
         period;
      o  Seen a single share of stock purchased in 1980 grow to nearly 77
         shares.

                               2002 ANNUAL REPORT

                                       1



                             REPORT TO SHAREHOLDERS

[GRAPHIC]

Fifth Third Bancorp President and CEO George A. Schaefer, Jr.

Dear Shareholders and Friends,

2002 was another good year for Fifth Third. Financial results were driven by
outstanding customer and deposit growth in all of our markets, solid revenue
growth, and consistently strong credit quality. Net income increased by 17
percent on a comparable basis over 2001 and totaled $1.63 billion for the full
year. I would like to thank all of our employees for their hard work, both in
maintaining our high standard of customer service and in managing the challenges
that come with growth. Some of the highlights:

     o   Total revenue increased by 15 percent on double-digit growth in nearly
         all of our affiliate markets despite the challenges of a difficult year
         in financial services.

     o   Our capital ratio improved six percent to 10.93 percent, representing
         an additional $836 million in shareholder equity and one of the best
         capitalized balance sheets in the industry.

     o   Return on average assets was 2.18 percent and return on average equity
         was 19.9 percent on an expanded capital base, continuing our long
         history of high returns and once again ranking among the best in the
         industry.

     o   Our efficiency ratio improved to 44.9 percent in 2002 from 46.6 percent
         on a comparable basis in 2001.

     o   The 2002 dividend of $.98 per share was an 18 percent increase over
         last year's dividend and an increase of 40 percent over the 2000 annual
         dividend.

     o   In 2002, five affiliates contributed earnings in excess of $100
         million, with an additional six affiliates earning more than $50
         million for the full year.

The year was highlighted by deposit and customer growth stronger than at any
other time in our history and an across-the-board return to traditional Fifth
Third performance metrics less than a year after the largest acquisition Fifth
Third has ever undertaken. Our four primary businesses - Retail and Commercial
Banking, Investment Advisors and Electronic Payment Processing - continued to
provide strong results in 2002 with non-interest income up 18 percent for the
full year. Electronic Payment Processing once again led the growth with an
annual increase in revenues of 47 percent over last year, or 27 percent
excluding the incremental revenue addition from the 2001 purchase acquisition of
Universal Companies (USB), on the addition of several significant new merchant
and electronic funds transfer (EFT) customer relationships. Successful sales of
Retail and Commercial deposit accounts fueled an annual increase in deposit
service revenues of 17 percent over last year and provided an important base for
the sale of additional products and services within these business lines.
Investment Advisors revenues increased 10 percent on the year despite a
difficult equity market on the strength of double-digit growth in private
banking and retail brokerage. The credit quality of our loan portfolio remained
stable at levels among the best in the industry, an area where some competitors
experienced a great deal of difficulty this year. We continue to maintain our
commitment to a strong, flexible balance sheet as evidenced by the full year
2002 capital ratio of 10.93 percent compared to 10.28 percent in 2001. Overall,
we were extremely pleased with the quality growth and performance in each of our
markets in 2002.

Over the years, as we have grown from our base here in Cincinnati by expanding
into adjacent markets, we

                      FIFTH THIRD BANCORP AND SUBSIDIARIES

                                       2



have emphasized accountability at every level of our organization as the key to
our success. We strive to identify, recognize and reward top performers in every
area of the bank while working to upgrade those areas that are underachieving.
We continue to invest significantly in people and technologies to grow and
maintain a high-quality banking franchise in metropolitan markets. Our primary
challenge, as in every business, lies in continuing to find new ways to
capitalize on the talent and entrepreneurial spirit of our employees. I've long
believed that the competitive challenges in banking vary street corner by street
corner. To meet these challenges we continue to rely on experienced local
managers empowered with the authority to make the best decisions for our
customers, communities and shareholders. Banking is ultimately a relationship
business and we believe that our approach keeps motivated decision makers closer
to the customer. We remain committed to operating your company in this manner,
and I invite you to read more about this approach in the pages that follow.

As many of you may be aware, Fifth Third recognized an $82 million pretax charge
in the third quarter of 2002 related to settlement activity in the bank's
investment portfolio. We are continuing to work hard on the reconstruction and
review of activity surrounding the investment portfolio in the hopes of
realizing a recovery. We also continue to work closely with the Federal Reserve
Bank of Cleveland, our primary federal regulator, and the respective state
agencies that govern our six bank charters whose reviews have encompassed, among
other items, an evaluation of

[GRAPHIC]

Fifth Third's processes and internal controls. We have provided a more detailed
discussion of these events on page 49. We have learned a great deal from these
events and are committed to making the infrastructure, governance and oversight
improvements that will continue to ensure both the scalability and strength of
your company. While a focused operating model and hard work are important
ingredients to our past and future success, we realize that effective risk
management is equally important in sustaining our growth story. Ultimately, I
feel that maintaining Fifth Third's track record results from ensuring that the
financial flexibility, integrity and diligence for which Fifth Third is known is
effectively applied to this and any other challenges that may lie ahead.

I am pleased to announce that Fifth Third adopted a number of corporate
governance initiatives including the creation of a compliance committee, a
nominating and corporate governance committee and a management disclosure
committee. New corporate governance guidelines, new charters for existing
committees, and an employee code of ethics and conduct were also adopted during
the year. All of these initiatives will help to ensure that your Board of
Directors continues to be well informed and effective.

I would also like to take this opportunity to thank William G. Kagler, James D.
Kiggen, David E. Reese, and Dennis J. Sullivan, Jr., all of whom retired from
our Board in 2002. Their guidance and leadership were outstanding, and we will
miss their insight greatly.

I would like to thank our customers, employees, board members and the
communities in which we operate for their contributions to another successful
year and their continued confidence and support. The focus in all of our markets
in 2003 will be on continuing to add new customers, increasing market share, and
expanding relationships with existing customers. We will also continue to work
hard and apply that same level of focus on refining risk management processes,
building infrastructure and strengthening internal controls in order to ensure
that your company is even stronger tomorrow. It is with a great deal of pride
that we announce another year of record earnings and look forward to meeting the
opportunities and challenges that 2003 and continued growth will provide.

Sincerely,

/s/ George A. Schaefer, Jr.
- ---------------------------

George A. Schaefer, Jr.
President & Chief Executive Officer

January 2003

                               2002 ANNUAL REPORT

                                        3



                            THE FIFTH THIRD FRANCHISE

PERFORMANCE PROFILES

[GRAPHIC]

 Fifth Third (Northeastern Ohio) Investment Consultant Donna Panton Buchanan has
 partnered with leading Cleveland area businesses and banking center licensed
 personnel for investment management services. In 2002, she sold over $6.5
 million in annuities, mutual funds and other investments.

[GRAPHIC]

 Bruce Rosenblatt, a Regional Sales Manager for Fifth Third (Eastern Michigan),
 was part of the team responsible for over $750 million in residential mortgage
 originations last year. The Eastern Michigan affiliate more than doubled the
 number of accounts per customer in 2002 through hard work and the help of new
 sales tracking software applications.

[GRAPHIC]

Fifth Third (Chicago) Regional Sales Manager Jayne Diedrich's team helped the
Chicago affiliate attract more than $530 million in new checking account
balances during the "100-days of DDA's" sales campaign. The affiliate exceeded
the campaign goal by 315%.

Affiliate Banking Model

Fifth Third's affiliate management model is comprised of 17 separate bank
operating units based in metropolitan markets. No matter how large we become, we
absolutely believe that the key to sustaining growth is executing better than
anyone else in each of our local markets. Our focus every day is keeping the
company small and pushing earnings growth accountability and decision-making
further down into the organization. Each of our affiliate presidents is
accountable for delivering earnings growth and increasing market share in their
individual markets. Compensation is linked to performance at every level of the
organization as we strive to identify and reward top performers. We concentrate
on four businesses in each of our markets: Retail and Commercial Banking,
Investment Advisors and Electronic Payment Processing. All lines of business
report to the local presidents, not to the home office. This approach ensures
that sales efforts across our lines of business are aligned and focused on each
market's unique opportunities and competitive challenges.


Culture of Performance Measurement

Sales campaigns are regularly conducted at every level of the organization and
results are published and distributed throughout the company, with the winners
stack ranked and clearly identified. In addition, Fifth Third maintains,
processes and distributes over 2500 individual profit and loss statements every
month. These statements represent the actions of every affiliate, business line,
cost center, relationship officer, and banking center at Fifth Third. We believe
that intense competition generates new and better ideas with most of the best
ideas at Fifth Third flowing towards headquarters not from it. When combined
with a common goal of growing and improving the value of the company, those
ideas are shared and applied across neighborhoods, affiliates and regions.

Employee Ownership

We want each and every employee to think and act like an owner of the company
every single day - always having in mind the importance of every customer
relationship and striving to build a strong reputation for Fifth Third in the
communities where we operate. We believe that management and employee ownership
is the single best method of aligning interests with shareholders. In addition
to variable compensation tied to performance, Fifth Third utilizes a broad-based
incentive stock option plan that included over 4,000 entrepreneurs in 2002 -
officers entrusted with managing customer relationships everyday. In fact,
employees at Fifth Third are eligible to participate in the company's profit
sharing plan and each employee has the opportunity to purchase Fifth Third stock
at a discount. Fifth Third is extremely proud to maintain among the highest
management and employee ownership in our peer group.

Financial Strength and Conservative Underwriting

Fifth Third strives to maintain a

                      FIFTH THIRD BANCORP AND SUBSIDIARIES

                                       4




strong, flexible balance sheet as one of the keys to consistent growth in all
economic cycles. The flexibility to respond to changing economic conditions
afforded by strong capital levels and a belief in operating leverage has long
been a hallmark of Fifth Third. We also continue to emphasize growth in the
number and depth of relationships rather than the size of credits in the
commercial loan portfolio. Fifth Third's long history of low exposure limits,
avoidance of sub-prime lending businesses and centralized credit risk management
position us well to continue to ensure that Fifth Third delivers earnings growth
in any economic climate.

Metropolitan Markets with Upside Potential

2002 was a meaningful year to Fifth Third in terms of customer growth and
gaining competitive scale in all of our metropolitan markets. Despite a very
successful period in our history, Fifth Third has a great deal of work to do and
a huge opportunity for sustained growth in the future. In the eight markets in
our footprint boasting populations in excess of one million people, Fifth Third
currently has less than seven percent deposit market share on a combined basis.
Our largest metropolitan markets, Chicago, Detroit and Cleveland, represent over
45 percent of the total population in metropolitan statistical areas within
Fifth Third's footprint and terrific opportunities with less than four percent
share of the total deposits in these markets. [_]

     o   With 8.4 million residents and over $200 billion of deposits in the
         market, Chicago and its suburbs represent an important growth
         opportunity for Fifth Third.

                        FIFTH THIRD AFFILIATE LEADERSHIP

                                                          Years at
Location                 President                     Fifth Third

Cincinnati               George Schaefer, Jr.                 31
Western Michigan         Kevin Kabat                          2
Chicago                  Bradlee Stamper                      17
Southern Indiana         John Daniel                          3
Western Ohio             Daniel Sadlier                       13
Eastern Michigan         Patrick Fehring, Jr.                 22
Central Ohio             Timothy O'Dell                       22
Northwestern Ohio        Bruce Lee                            2
Central Indiana          Maurice Spagnoletti                  2
Northeastern Ohio        Robert King, Jr.                     27
Northern Michigan        John Pelizzari                       2
Louisville               James Gaunt                          34
Northern Kentucky        Timothy Rawe                         25
Lexington                Samuel Barnes                        8
Ohio Valley              Raymond Webb                         2
Florida                  Colleen Kvetko                       14
Tennessee                Todd Clossin                         2

[GRAPHIC]

[GRAPHIC]

     o   Our Eastern Michigan headquarters in Southfield serves as an excellent
         hub for downtown and suburban Detroit.

                               2002 ANNUAL REPORT

                                       5



              DRIVING PROFITABLE GROWTH THROUGH RETAIL DISTRIBUTION

Deposit Focused Sales Culture

     Fifth Third has long viewed the checking account as the core relationship
product and profit driver in banking. New checking account customers and the
corresponding growth in deposit balances provide a stable and increasing
core-funding base and represent a critical platform from which to cross-sell
additional products and services. We work extremely hard to retain relationships
and generate new ones by providing convenient and competitively priced products
and services to meet all of our customer's financial needs.

     2002 was a record year for Fifth Third in terms of deposit growth with
almost $8 billion in transaction deposits added throughout the year, an increase
of 25 percent over the prior year. Our affiliate banks continue to win market
share from our competitors on the strength of a culture of out-hustling the
competition. Total numbers of customers, account openings and balances increased
in all of our affiliate markets in 2002 and represent important opportunities as
we strive to deepen these new relationships in the coming years. Amazingly, 12
of our 16 established affiliates delivered average transaction deposit growth of
30 percent or more in 2002 with the four remaining affiliates all in excess of
18 percent growth over the prior year.

[GRAPHIC]

 o Fifth Third checking accounts offer competitive rates and convenient access
   . . . and for a limited time, a free soccer chair. Open any checking account
   -- from Totally Free with no monthly service charge to Platinum(SM) with
   premium tiered interest rates to the Capital Management Account, a
   consolidated way to manage checking and brokerage assets -- and the free gift
   is yours!

Banking Centers

     Fifth Third's 930 Banking Centers, including 132 Bank Mart(R) locations,
are the primary point of contact for the majority of our 5.5 million customers.
Through these outlets, Fifth Third strives to provide unparalleled convenience
and customer service to the individual and small business customers within our
geographic footprint.

     Fifth Third views Banking Centers as an integral part of our business, and
empowers those closest to the customer, local Banking Center managers, to become
a visible presence in the community and make the lending and account decisions
that affect not only the customer but also the bottom line of the Banking
Center. We strive to create a culture of ownership and reward each of our
managers for making the right decisions for the customer and the company.

     Our Banking Center employees produced excellent results in 2002. Interest
checking balances increased 33 percent over last year and aggressive selling
efforts produced a record number of new deposit accounts. The related deposit
service revenue from these efforts increased eight percent over last year and
continues to demonstrate solid, sustainable growth. Retail loan and checking
account campaigns help identify and reward the best performing managers and
produced remarkable overall results in all of our markets in 2002.

Consumer Loan Generation

     Fifth Third directed significant sales and marketing focus on the

                      FIFTH THIRD BANCORP AND SUBSIDIARIES

                                       6



generation of consumer loans in 2002 and our sales force responded to the call
with record results. Fourteen affiliates delivered double-digit growth in direct
installment loans during the year with the sum total of all of our markets
increasing by 20 percent over 2001. Monthly originations per Banking Center
reached a new high in 2002 of $542,000, an increase of 40 percent over last
year's $386,000. Full year direct loan originations totaled $6.7 billion
compared to $4.6 billion in 2001.

     Mortgage banking also produced a strong year in 2002 with $221.4 million in
revenue and $11.5 billion in originations on a managed basis, increases of 8
percent and 35 percent on a comparable basis over 2001, respectively. Fifth
Third views mortgage banking as an integral part of its business because of the
ability to both deepen and attract new customer relationships. Mortgage activity
in 2002 was characterized by 40-year record low interest rates and
correspondingly robust housing and refinance markets. The resulting volatility
in valuations on the mortgage servicing portfolio provided a significant risk
management challenge throughout the year. Fifth Third Mortgage is pleased to
have met these challenges while still managing to welcome over 77,000 checking
account customers in 2002, an 89 percent cross-selling success rate. Home equity
referrals from mortgage personnel during the year resulted in over 39,000 new
loans for the Banking Centers, a record 45 percent of mortgage originations.

[GRAPHIC]

     o   Debra Sands, a Banking Center Manager in Cleveland, OH, with customer
         Darrell Boff. He chose Fifth Third for its flexibility and convenience.
         Mr. Bock recently opened a Capital Management Account. His monthly
         statement now enables him to conveniently review his entire financial
         profile: savings, checking, investment accounts, loans and on-line bill
         payment transactions in one complete package.

                               2002 ANNUAL REPORT

                                       7



[GRAPHIC]

Meet Vernon Wyche. A local realtor for 11 years, Vernon prides himself on
helping first-time homebuyers find just what they need--and then figuring out
the financing so they can afford it. Vernon's motto? "Hard Work Never Goes Out
of Style." At Fifth Third, we believe in hard work, too.

From speedy pre-approvals to attention to details to seamless closings, Vernon
Wyche knows he can count on Fifth Third. You can too. You'll like the way we
help you close deals.

                                   [GRAPHIC]

                        Member FDIC Equal Housing Lender

     o   Record low interest rates, hard work and advertisements like this one
         all contributed to a great year for Fifth Third Mortgage in 2002. Fifth
         Third views mortgage banking as a great way to introduce new customers
         to all of our products and services.

A Powerful Commercial Partnership

     Fifth Third's Banking Center Managers, with the assistance of the Small
Business Development Group, also serve as relationship managers to over 166,000
small businesses with more than $3.3 billion in deposit balances within the
bank's footprint, an increase of 24 percent over 2001 levels.

     Fifth Third brings the best mix of services and management tools for small
businesses available anywhere. Whether a company needs help with working
capital, payroll or payment processing, automated clearing, lock-box services,
investments, or any level of foreign exchange, Fifth Third will individually
tailor an integrated solution that helps that customer focus more time and
energy toward servicing its customers and growing its business. Our managers and
small

                      FIFTH THIRD BANCORP AND SUBSIDIARIES

                                       8



business officers, partnered with cash management, investment and electronic
payment processing personnel, remain committed to helping customers operate more
efficiently. They demonstrate this commitment every day by getting out from
behind their desks and observing first hand the inner-workings of our customers'
businesses.

Investments - New Focus, Products and Capabilities

Banking Center revenues from investment advisory services increased by 42
percent in 2002. Over 1,800 Banking Center employees are licensed and
participating in the sale of mutual funds, annuity products and Capital
Management Accounts, Fifth Third's integrated banking and investment solution.
This number has increased from just 76 three years ago.

Fifth Third's Retail Brokerage and Private Banking operations now encompass over
175 full-time licensed securities representatives assigned and deployed
throughout the Banking Center network, an 18 percent increase over 2001 levels.
In 2002, a difficult year in the markets, our sales force concentrated on
working more closely with the Banking Centers in leveraging the Retail network.
As a result, 13 affiliates responded with double-digit growth in brokerage
revenues, new mutual fund sales increased by 13 percent and annuity sales
revenues increased by over $28 million from the prior year.

Additionally, over 14,000 Capital Management Accounts were sold in 2002,
representing $1.4 billion in investment balances and an important growth
opportunity for the future. []

[GRAPHIC]

     o   Tiffiney Meade, center, Banking Center Manager, greets Wen and Wendy Yu
         at a Fifth Third Bank Mart in a Kroger supermarket in Columbus, Ohio,
         where the Wu family owns and operates the Mandarin Inn restaurant. They
         chose Fifth Third because of its friendly service, seven day a week
         access and broad array of banking products, which gave them a single
         source for their business as well as their personal investment needs.

                               2002 ANNUAL REPORT

                                        9



               INDIVIDUALIZED AND COMPREHENSIVE BUSINESS SOLUTIONS

Fifth Third's 1,600 commercial relationship officers and support staff offer
companies within our geographic footprint a business partner of unparalleled
capital strength and stability, sound expertise and experience and comprehensive
financial solutions. But, above all else, Fifth Third brings an uncompromising
commitment to service.

Customized Delivery

     Fifth Third's Commercial Relationship Officers are respected for their
commitment to develop personal, one-on-one relationships with our customers. We
strive to offer creative and insightful perspectives that come from our almost
150 years of commercial banking experience. We offer a single source for all of
our customers' corporate banking needs - from traditional lending to real estate
and leasing opportunities, to treasury management and international finance,
investment management and corporate finance. Fifth Third offers individually
tailored solutions and innovative technologies for companies of all sizes, with
the goal of improving the day-to-day efficiencies of our customers' operations.

     Our operating structure ensures that all aspects of customer relationships
are maintained locally - local Presidents responsible for the bank's operation
and local officers with the authority and incentives to make the right decisions
for our customers and the Bank. Relationship management decisions are made by
the people that are the most familiar with our customers' business and the
communities in which they operate. Fifth Third's Commercial Team has the
experience to advise our customers, the

[GRAPHIC]

     o   Rebecca Smith, Fifth Third (Eastern Michigan), meets with David Murphy,
         Assistant Treasurer of Detroit Edison. Mr. Murphy's company chose Fifth
         Third because of its commitment to personalized service and flexibility
         to meet some of DTE's specialized needs, particularly its expanding
         international business.

                      FIFTH THIRD BANCORP AND SUBSIDIARIES

                                       10




     o   Sandy Watson, right, Commercial Relationship Manager for our Western
         Michigan affiliate bank, joins Lew Chamberlin at the Fifth Third
         Ballpark in Grand Rapids. Lew and his partners brought professional
         baseball back to the Western Michigan area in 1994. Since that time,
         the West Michigan Whitecaps have earned a reputation as one of the best
         run organizations in minor league baseball, and the Western Michigan
         community continues to enthusiastically support the team and Fifth
         Third Bank.

financial resources to support their growth, and the willingness, infrastructure
and ability to provide customized financial solutions.

Investment Management

     Fifth Third is a full-service money management firm with $29 billion in
assets under management and $187 billion in assets under care featuring a broad
array of equity products and four distinct investment styles: Quality Growth,
Disciplined Value, Broadly Diversified, and Fixed Income. Fifth Third's
Institutional Officers offer retirement plan services, investment management,
municipal and public finance solutions, institutional custody services, and
foundation and endowment management. Our investment professionals are committed
to helping institutional clients successfully manage investment funds by taking
the time to learn their needs and carefully creating an individualized plan
tailored to their risk, reward and liquidity objectives. Fifth Third delivers a
full spectrum of investment strategies for plans of varying scope and complexity
from individually managed equity and fixed-income portfolios to our nationally
recog-

[GRAPHIC]

nized Fifth Third mutual fund family for both long- and short-term investment
horizons.

     Despite a difficult year in the markets in 2002, our Investment Advisors
team as a whole added significantly to its customer and product base and
delivered a 10 percent increase in revenues while adding over 200 sales
professionals to our staff.

Fifth Third Processing Solutions

     Fifth Third Processing Solutions, our electronic payment processing
subsidiary, authorizes, initiates, captures and settles electronic payment
transactions as part of an integrated cash management solution for financial
institutions and merchants all over the world. As a leading electronic
processor, Fifth Third helps our commercial customers eliminate paper and reduce
cycle time and expense while providing instant on-line access to information
through a platform integrated with traditional banking services. In 2002, Fifth
Third processed more than 8.2 bil-

                               2002 ANNUAL REPORT


                                       11



[GRAPHIC]

     o   Fifth Third (Chicago) customer, W.S. Darley & Co. has been an
         industry-leading manufacturer of fire trucks and allied equipment for a
         worldwide customer base since 1908. Pictured left to right are Paul
         Darley, President and Chief Operating Officer; Robert Eversole, Fifth
         Third (Chicago); and William Darley, Chairman of the Board. Fifth Third
         recently provided credit to finance this customer's plant expansion and
         also worked with business partners to finance the manufacture and sale
         of 43 fire trucks overseas. The W.S. Darley company, members of the
         Darley family and several key employees utilize a broad array of Fifth
         Third products and services, including private banking, various credit
         facilities, treasury management services, investment management and
         electronic payment processing.

lion electronic transactions, an increase of 24 percent over 2001 and almost
four times the number processed just five years ago. Fifth Third Processing
Solutions operates two primary businesses - Merchant Services and Electronic
Funds Transfer (EFT) Services.

   Our Merchant Services group provides more than 180,000 retail locations
worldwide with debit, credit and stored-value payment processing. In 2002,
transaction volumes and revenues increased by 33 and 81 percent, respectively.
Excluding the impact of USB, 2002 merchant revenues increased 35 percent.

   Our EFT Services group provides automated teller machine processing, debit
card management, and debit network access for over 1,300 financial institutions
and in 24 countries worldwide. In 2002, EFT revenues increased by 22 percent
over 2001 and transaction volumes increased by 21 percent.

   Strong revenue growth was evident in improved distribution through the
affiliate markets in 2002. Affiliate electronic payment processing revenues
increased by 56 percent in 2002, as Fifth Third continues to win new customers
and expand merchant relationships as part of a complete cash management
solution.

2002 - A Year of Growth and Accelerating Momentum

   Growth in the absolute number of commercial accounts and sales successes in
treasury management fueled a 20 percent increase in Commercial demand deposits
and a 34 percent increase in related deposit

                      FIFTH THIRD BANCORP AND SUBSIDARIES


                                       12



service revenues in 2002. Successful cross-selling efforts resulted in a 13
percent increase in foreign exchange services and an overall 26 percent increase
in total international revenues. Institutional fixed income trading and sales
also demonstrated meaningful growth and advanced by 23 percent in 2002.
Commercial loan and lease fees increased by 55 percent in 2002 with the addition
of new customers driving a 10 percent increase in commercial loans and leases
despite a relatively soft year for capital expenditures. Ten affiliates
delivered double-digit increases in commercial loan and lease balances during
2002 and the outlook for 2003 remains bright as our officers continue to win new
customers and increase market share. Fifth Third maintains the commitment to a
diverse and granular commercial loan portfolio with industry concentrations and
exposure limits closely monitored. At year-end, 95 percent of commercial loan
and lease obligations and 67 percent of outstanding balances were less than $5
million. [_]

[GRAPHIC]

     o   Built in 1820 as the Baum-Longworth-Taft House, Cincinnati's Taft
         Museum of Art is undergoing a $19 million metamorphosis. A
         20,000-square foot addition, new lighting and better climate-control
         and parking for this historical treasure will help preserve paintings,
         artwork and days of old. The museum, which looks to Fifth Third for its
         endowment management, sought Fifth Third's expertise in financing the
         project.

[GRAPHIC]

     o   Kohl's Department Stores, Inc. chose Fifth Third Processing Solutions
         to handle its credit and debit card processing. Fifth Third's capacity
         can readily accommodate the increasing volumes from Kohls' 420-store
         network. Kohl's will also utilize Fifth Third Direct SM, our
         internet-based back office management system.

Opportunity for the Future

FIFTH THIRD has experienced a period of dramatic growth over the last several
years but we have never been more excited about the opportunities that lie
ahead. As Fifth Third continues to grow, we are absolutely committed to
maintaining a decentralized structure characterized by local management and
accountability to results. Five years ago, our largest banking affiliate had
$2.6 billion in assets. Today nine of our affiliates would exceed that level
with the largest just over $8 billion in assets. It's important to note that
Fifth Third has less than a seven percent deposit market share on a combined
basis in both the core five state Midwestern footprint and in metropolitan
markets with populations in excess of one million. We have a great opportunity
to increase market share in all of our markets by continuing to attract new
customers and expanding relationships by cross-selling additional products and
services and providing outstanding customer service. We expect that our
passionate and motivated sales people, innovative and competitively priced
products, and the ability to operate as 17 separate growth units will allow us
to continue to deliver the growth that our shareholders have come to expect from
us.

                               2002 ANNUAL REPORT


                                       13



[GRAPHIC]

     o   Fifth Third (Eastern Michigan) employee-volunteers help construct a
         "Habitat for Humanity" single-family dwelling in Detroit's
         Tri-Centennial Village. The new home is one of three funded by a
         $180,000 grant from the Fifth Third Foundation. The house is designed
         with a two-story plan to fit the narrow lots in Detroit's older
         neighborhoods. Upon completion, it and the two others will be sold at
         cost to qualified low-income families and financed by interest-free
         mortgages.

Building Strong Communities

If you build a stronger community, you build a stronger bank.

     Despite a challenging economic environment, Fifth Third fulfilled its
three-year, $9 billion community development commitment last year. Fifth Third's
"B.L.I.TZ.", or Building, Lending, Investments and Technology Zones, was
launched in 1999, and Fifth Third provided $12.1 billion in loans, investments
and free Internet service for low- and moderate-income residents.

Fifth Third Foundation

     Equally strong is the Bank's commitment to philanthropy. In 1948, Fifth
Third became one of the first institutions to establish a permanently endowed
foundation. Today, the Fifth Third Foundation Office helps direct the Bank's
charitable giving as well as that of the other foundations for which we are
privileged to serve as Trustee. Fifth Third works hard to be an involved,
participatory corporate citizen by funding arts and culture, community
development, education and social service initiatives. As a result, Fifth Third
helped build stronger neighborhoods in 2002 by making $20.5 million available in
grants.

Community Affairs

     Fifth Third's Community Affairs Office is committed to community
development. The group identifies opportunities for the Bank to participate in
residential mortgage, small business lending and real estate projects in
under-served com-

                      FIFTH THIRD BANCORP AND SUBSIDARIES

                                       14



munities within our markets. This group works hard to champion financial
literacy and youth mentoring.


Community
Development Corporation

     Affordable housing is key to maintaining a strong and vital region. The
Fifth Third Community Development Corporation invests in low income housing,
historic tax credit and economic development projects that support community
revitalization -- and ultimately, better, safer places to live and work. Since
its inception, the Fifth Third CDC has invested over $200 million in more than
150 projects including both direct equity and indirect equity participation.

Financial Literacy

     We conduct a variety of outreach programs in area community centers and
schools, like the one featured below in Cleveland, and worked with over 10,000
students to teach money management skills. Nearly 6,000 Midwest residents gained
the credit and ownership savvy they needed from our mortgage and community
affairs personnel through home-buying seminars, technical assistance conferences
and one-on-one counseling.

[GRAPHIC]

Diversity

     As our marketplace continues to grow, Fifth Third is committed to
communicating with all of its constituents. In 2002, we spent millions of
dollars on bi-lingual initiatives, including second language training for our
customer service representatives, bi-lingual options for our automated telephone
customer service, brochures, advertisements and TV campaigns. Nearly 2,000
employees attended diversity awareness training to better understand, celebrate
and leverage the uniqueness of peers, clients and managers. With 930
full-service locations in eight states and 24-hour access at 1,875 Jeanie(R)
ATMs, www.53.com and toll-free dialing at 1-800-972-3030, we remain committed to
providing banking and investment products and services wherever and whenever
needed. Because at Fifth Third, we are "working hard to be the only bank you'll
ever need.(R)" [_]

[GRAPHIC]

     o   Carmelo Delgado, Jr., Banking Center Manager, teaches children the
         fundamentals of personal finance at the Walton Elementary school in
         Cleveland. Fifth Third sponsors these in-school programs as a way to
         help children become responsible adults and thereby develop a more
         secure future.

                               2002 ANNUAL REPORT

                                       15



Financial Presentation

Consolidated Statements of Income                                 17
Consolidated Balance Sheets                                       18
Consolidated Statements of
Changes in Shareholders' Equity                                   19
Consolidated Statements of Cash Flows                             20
Notes to Consolidated Financial Statements                        21
Independent Auditors' Report                                      42
Management's Discussion and Analysis of
Financial Condition and Results of Operations                     43
Consolidated Ten Year Comparison                                  61
Directors and Officers                                            62
Corporate Information                                             63

                      FIFTH THIRD BANCORP AND SUBSIDARIES

                                       16


                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Consolidated Statements of Income

For the Years Ended December 31
 ($ in millions, except per share data)                     2002    2001   2000
- --------------------------------------------------------------------------------
Interest Income

Interest and Fees on Loans and Leases ...............    $ 2,810   3,420  3,590
Interest on Securities
   Taxable ..........................................      1,257   1,213  1,271
   Exempt from Income Taxes .........................         56      66     73
- --------------------------------------------------------------------------------
Total Interest on Securities ........................      1,313   1,279  1,344
Interest on Other Short-Term Investments ............          6      10     13
- --------------------------------------------------------------------------------
Total Interest Income ...............................      4,129   4,709  4,947

Interest Expense
Interest on Deposits
   Interest Checking ................................        296     311    316
   Savings ..........................................        158     174    194
   Money Market .....................................         27      38     37
   Other Time .......................................        357     745    760
   Certificates-$100,000 and Over ...................         55     187    260
   Foreign Office ...................................         35      97    251
- --------------------------------------------------------------------------------
Total Interest on Deposits ..........................        928   1,552  1,818
Interest on Federal Funds Borrowed ..................         53     153    300
Interest on Short-Term Bank Notes ...................         --      --     69
Interest on Other Short-Term Borrowings .............         67     204    202
Interest on Long-Term Debt ..........................        381     367    303
- --------------------------------------------------------------------------------
Total Interest Expense ..............................      1,429   2,276  2,692
- --------------------------------------------------------------------------------
Net Interest Income .................................      2,700   2,433  2,255
Provision for Credit Losses .........................        246     236    138
- --------------------------------------------------------------------------------
Net Interest Income After Provision for
Credit Losses .......................................      2,454   2,197  2,117

Other Operating Income
Electronic Payment Processing Income ................        512     347    252
Service Charges on Deposits .........................        431     367    298
Mortgage Banking Net Revenue ........................        188      63    256
Investment Advisory Income ..........................        336     307    281
Other Service Charges and Fees ......................        580     542    389
Securities Gains, Net ...............................        114      28      6
Securities Gains, Net - Non-Qualifying
Hedges on Mortgage Servicing ........................         33     143     --
- --------------------------------------------------------------------------------
Total Other Operating Income ........................      2,194   1,797  1,482

Operating Expenses
Salaries, Wages and Incentives ......................        905     845    783
Employee Benefits ...................................        202     148    145
Equipment Expenses ..................................         79      91    100
Net Occupancy Expenses ..............................        142     146    138
Other Operating Expenses ............................        888     762    666
Merger-Related Charges ..............................         --     349     87
- --------------------------------------------------------------------------------
Total Operating Expenses ............................      2,216   2,341  1,919
- --------------------------------------------------------------------------------
Income Before Income Taxes, Minority
Interest and Cumulative Effect ......................      2,432   1,653  1,680
Applicable Income Taxes .............................        759     550    539
- --------------------------------------------------------------------------------
Income Before Minority Interest and
Cumulative Effect ...................................      1,673   1,103  1,141
Minority Interest, Net of Tax .......................         38       2     --
- --------------------------------------------------------------------------------
Income Before Cumulative Effect .....................      1,635   1,101  1,141
Cumulative Effect of Change in Accounting
Principle, Net of Tax ...............................         --       7     --
- --------------------------------------------------------------------------------
Net Income ..........................................      1,635   1,094  1,141
Dividends on Preferred Stock ........................          1       1      1
- --------------------------------------------------------------------------------
Net Income Available to Common Shareholders .........    $ 1,634   1,093  1,140
- --------------------------------------------------------------------------------
Earnings Per Share ..................................     $ 2.82    1.90   2.02
Earnings Per Diluted Share ..........................     $ 2.76    1.86   1.98
- --------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.



                                       17



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Consolidated Balance Sheets

December 31 ($ in millions, except share data)                   2002      2001
- --------------------------------------------------------------------------------

Assets
Cash and Due from Banks .............................        $  1,891     2,031
Securities Available-for-Sale
(amortized cost 2002-$24,790 and 2001-$20,479) ......          25,464    20,507
Securities Held-to-Maturity
(fair value 2002-$52 and 2001-$16) ..................              52        16
Other Short-Term Investments ........................             312       225
Loans Held for Sale .................................           3,358     2,180
Loans and Leases
   Commercial Loans .................................          12,743    10,839
   Construction Loans ...............................           3,327     3,356
   Commercial Mortgage Loans ........................           5,885     6,085
   Commercial Lease Financing .......................           3,986     3,151
   Residential Mortgage Loans .......................           3,495     4,505
   Consumer Loans ...................................          15,116    12,565
   Consumer Lease Financing .........................           2,638     1,958
   Unearned Income ..................................          (1,262)     (911)
   Reserve for Credit Losses ........................            (683)     (624)
- --------------------------------------------------------------------------------
Total Loans and Leases ..............................          45,245    40,924
Bank Premises and Equipment .........................             891       833
Accrued Income Receivable ...........................             569       618
Goodwill ............................................             702       682
Intangible Assets ...................................             236       267
Mortgage Servicing Rights ...........................             263       426
Other Assets ........................................           1,911     2,317
- --------------------------------------------------------------------------------
Total Assets ........................................        $ 80,894    71,026
- --------------------------------------------------------------------------------

Liabilities
Deposits
   Demand ...........................................        $ 10,095     9,243
   Interest Checking ................................          17,878    13,474
   Savings ..........................................          10,056     7,065
   Money Market .....................................           1,044     1,352
   Other Time .......................................           8,180    11,301
   Certificates-$100,000 and Over....................           1,181     2,197
   Foreign Office                                               3,774     1,222
- --------------------------------------------------------------------------------
Total Deposits ......................................          52,208    45,854
Federal Funds Borrowed ..............................           4,748     2,544
Short-Term Bank Notes ...............................              --        34
Other Short-Term Borrowings .........................           4,075     4,875
Accrued Taxes, Interest and Expenses ................           2,308     1,963
Other Liabilities ...................................             440       666
Long-Term Debt ......................................           8,179     7,030
- --------------------------------------------------------------------------------
Total Liabilities ...................................          71,958    62,966
- --------------------------------------------------------------------------------
Minority Interest ...................................             461       421
- --------------------------------------------------------------------------------
Shareholders' Equity
Common Stock (a) ....................................           1,295     1,294
Preferred Stock (b) .................................               9         9
Capital Surplus .....................................           1,442     1,495
Retained Earnings ...................................           5,904     4,837
Accumulated Nonowner Changes in Equity ..............             369         8
Treasury Stock ......................................            (544)       (4)
- --------------------------------------------------------------------------------
Total Shareholders' Equity ..........................           8,475     7,639
- --------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity ..........        $ 80,894    71,026
- --------------------------------------------------------------------------------

(a) Stated value $2.22 per share; authorized 1,300,000,000; outstanding at 2002
- -- 574,355,247 (excludes 9,071,857 treasury shares) and 2001 -- 582,674,580
(excludes 80,000 treasury shares).

(b) 490,750 shares of no par value preferred stock are authorized of which none
had been issued; 7,250 shares of 8.0% cumulative Series D convertible (at
$23.5399 per share) perpetual preferred stock with a stated value of $1,000 were
authorized, issued and outstanding; 2,000 shares of 8.0% cumulative Series E
perpetual preferred stock with a stated value of $1,000 were authorized, issued
and outstanding.

See Notes to Consolidated Financial Statements.


                                       18



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Consolidated Statements of Changes in Shareholders' Equity



                                                                                       Accumulated
                                                                                        Nonowner
                                                  Common Preferred  Capital   Retained   Changes     Treasury
($ in millions, except per share data)             Stock   Stock    Surplus   Earnings  in Equity      Stock    Other    Total
- ------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Balance at December 31, 1999 ...................  $1,255       9        897      3,708       (302)        --       (4)   5,563
Net Income and Nonowner Changes
   in Equity, Net of Tax:
Net Income .....................................                                 1,141                                   1,141
Change in Unrealized Gains (Losses) on
   Securities Available-for-Sale, Net ..........                                              330                          330
- ------------------------------------------------------------------------------------------------------------------------------
Net Income and Nonowner Changes in Equity ......                                                                         1,471
Cash Dividends Declared
Fifth Third Bancorp:
   Common Stock at $.70 per share ..............                                  (325)                                   (325)
Pooled Companies Prior to Acquisition:
   Common Stock ................................                                  (118)                                   (118)
   Preferred Stock .............................                                    (1)                                     (1)
Shares Acquired for Treasury or Retired ........      (3)               (58)                            (181)             (242)
Stock Options Exercised,
   Including Treasury Shares Issued ............       8                106                                                114
Corporate Tax Benefit Related to Exercise
   of Non-Qualified Stock Options ..............                         15                                                 15
Stock Issued in Acquisitions and Other .........       3                180       (180)                  180        2      185
- ------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000 ...................   1,263       9      1,140      4,225         28         (1)      (2)   6,662
Net Income and Nonowner Changes
   in Equity, Net of Tax:
Net Income .....................................                                 1,094                                   1,094
Change in Unrealized Gains (Losses) on
   Securities Available-for-Sale, Net ..........                                              (10)                         (10)
Change in Unrealized Losses on Qualifying
   Cash Flow Hedges ............................                                              (10)                         (10)
- ------------------------------------------------------------------------------------------------------------------------------
Net Income and Nonowner Changes in Equity ......                                                                         1,074
Cash Dividends Declared
Fifth Third Bancorp:
   Common Stock at $.83 per share ..............                                  (460)                                   (460)
   Preferred Stock .............................                                    (1)                                     (1)
Pooled Companies Prior to Acquisition:
   Common Stock ................................                                   (51)                                    (51)
Conversion of Subordinated Debentures
   to Common Stock .............................      10                158                                                168
Shares Acquired for Treasury ...................                                                         (15)              (15)
Stock Options Exercised,
   Including Treasury Shares Issued ............       9                 99                               11               119
Corporate Tax Benefit Related to Exercise
   of Non-Qualified Stock Options ..............                         22                                                 22
Stock Issued in Acquisitions and Other .........      12                 76         30                     1        2      121
- ------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2001 ...................   1,294       9      1,495      4,837          8         (4)      --    7,639
Net Income and Nonowner Changes
   in Equity, Net of Tax:
Net Income .....................................                                 1,635                                   1,635
Change in Unrealized Gains on Securities
   Available-for-Sale, Net .....................                                              420                          420
Change in Unrealized Losses on Qualifying
   Cash Flow Hedges ............................                                               (7)                          (7)
Change in Minimum Pension Liability ............                                              (52)                         (52)
- -------------------------------------------------------------------------------------------------------------------------------
Net Income and Nonowner Changes in Equity ......                                                                         1,996
Cash Dividends Declared
   Common Stock at $.98 per share ..............                                  (567)                                   (567)
   Preferred Stock .............................                                    (1)                                     (1)
Shares Acquired for Treasury ...................                                                        (720)             (720)
Stock Options Exercised,
   Including Treasury Shares Issued ............       1                (77)                             180               104
Corporate Tax Benefit Related to Exercise
   of Non-Qualified Stock Options ..............                         26                                                 26
Other ..........................................                         (2)                                                (2)
- -------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2002 ...................  $1,295       9      1,442      5,904        369       (544)      --    8,475
- ------------------------------------------------------------------------------------------------------------------------------


See Notes to Consolidated Financial Statements.


                                       19



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash Flows
- --------------------------------------------------------------------------------


For the Years Ended December 31 ($ in millions)                                         2002        2001        2000
- --------------------------------------------------------------------------------------------------------------------
                                                                                                   
Operating Activities
Net Income .......................................................................   $ 1,635       1,094      1,141
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
   Provision for Credit Losses ...................................................       246         236        138
   Minority Interest in Net Income ...............................................        38           2         --
   Cumulative Effect of Change in Accounting Principle, Net of Tax ...............        --           7         --
   Depreciation, Amortization and Accretion ......................................       338         236        180
   Provision for Deferred Income Taxes ...........................................       279         254        308
   Realized Securities Gains .....................................................      (125)        (43)        (7)
   Realized Securities Gains - Non-Qualifying Hedges on Mortgage Servicing .......       (86)       (151)        --
   Realized Securities Losses ....................................................        11          15          1
   Realized Securities Losses - Non-Qualifying Hedges on Mortgage Servicing ......        53           8         --
   Proceeds from Sales of Residential Mortgage Loans Held for Sale ...............     9,924       8,957     12,411
   Net Gains on Sales of Loans ...................................................      (269)       (197)      (161)
   Net Gains on Divestitures .....................................................       (34)        (43)        --
   Increase in Residential Mortgage Loans Held for Sale ..........................    (9,892)     (9,281)   (12,850)
   Decrease (Increase) in Accrued Income Receivable ..............................        49         (43)       (91)
   Decrease (Increase) in Other Assets ...........................................       453        (398)      (519)
   (Decrease) Increase in Accrued Taxes, Interest and Expenses ...................      (107)         27        130
   (Decrease) Increase in Other Liabilities ......................................      (286)        223        106
- --------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities ........................................     2,227         903        787
- --------------------------------------------------------------------------------------------------------------------
Investing Activities
Proceeds from Sales of Securities Available-for-Sale .............................    20,605      10,177      7,042
Proceeds from Calls, Paydowns and Maturities of Securities Available-for-Sale ....     7,481      14,295      2,299
Purchases of Securities Available-for-Sale .......................................   (32,278)    (23,771)   (10,786)
Proceeds from Calls, Paydowns and Maturities of Securities Held-to-Maturity ......         5          17        112
Purchases of Securities Held-to-Maturity .........................................       (35)         --        (12)
(Increase) Decrease in Other Short-Term Investments ..............................       (87)          7        160
Increase in Loans and Leases .....................................................    (5,608)        (84)    (3,767)
Purchases of Bank Premises and Equipment .........................................      (174)       (139)      (132)
Proceeds from Disposal of Bank Premises and Equipment ............................        14          15         22
Net Cash Received (Paid) in Acquisitions/Divestitures ............................        55        (125)       155
- --------------------------------------------------------------------------------------------------------------------
Net Cash (Used in) Provided by Investing Activities ..............................   (10,022)        392     (4,907)
- --------------------------------------------------------------------------------------------------------------------
Financing Activities
Increase in Core Deposits ........................................................     4,916       3,855        504
Increase (Decrease) in CDs -- $100,000 and Over, including Foreign Office ........     1,536      (6,815)     4,948
Increase (Decrease) in Federal Funds Borrowed ....................................     2,204         314       (925)
(Decrease) Increase in Short-Term Bank Notes .....................................       (34)         34     (2,729)
(Decrease) Increase in Other Short-Term Borrowings ...............................      (304)        661     (1,219)
Proceeds from Issuance of Long-Term Debt .........................................     1,143       6,466      5,951
Proceeds from Issuance of Preferred Stock of Subsidiary ..........................        --         425         --
Repayment of Long-Term Debt ......................................................      (635)     (5,555)    (2,015)
Payment of Cash Dividends ........................................................      (553)       (461)      (436)
Exercise of Stock Options ........................................................       104         141        129
Proceeds from Sale of Common Stock ...............................................        --          --         16
Purchases of Treasury Stock ......................................................      (720)        (15)      (242)
Other ............................................................................        (2)        (21)       (47)
- --------------------------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities ..............................     7,655        (971)     3,935
- --------------------------------------------------------------------------------------------------------------------
(Decrease) Increase in Cash and Due from Banks ...................................      (140)        324       (185)
Cash and Due from Banks at Beginning of Year .....................................     2,031       1,707      1,892
- --------------------------------------------------------------------------------------------------------------------
Cash and Due from Banks at End of Year ...........................................   $ 1,891       2,031      1,707
- --------------------------------------------------------------------------------------------------------------------


Note: The Bancorp paid Federal income taxes of $456 million, $139 million and
     $160 million in 2002, 2001 and 2000, respectively.
     The Bancorp paid interest of $1,497 million, $2,334 million and $2,642
     million in 2002, 2001 and 2000, respectively.
     The Bancorp had noncash investing activities consisting of the
     securitization and transfer to securities of $1.4 billion and $1.6 billion
     of residential mortgage loans in 2001 and 2000, respectively.
     The Bancorp had noncash financing activities consisting of the conversion
     of trust preferred securities to common stock of $172 million in 2001.

         See Notes to Consolidated Financial Statements.


                                       20



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

I. SUMMARY OF SIGNIFICANT ACCOUNTING AND
REPORTING POLICIES

Nature of Operations

Fifth Third Bancorp (Bancorp), an Ohio corporation, conducts its principal
activities through its banking and non-banking subsidiaries from 930 offices
located throughout Ohio, Indiana, Kentucky, Michigan, Illinois, Florida, West
Virginia and Tennessee. Principal activities include commercial and retail
banking, investment advisory services and electronic payment processing.

Basis of Presentation

The Consolidated Financial Statements include the accounts of the Bancorp and
its majority-owned subsidiaries. Unconsolidated investments in which there is
greater than 20% ownership are accounted for by the equity method; those in
which there is less than 20% ownership are generally carried at cost. All
material intercompany transactions and balances have been eliminated. Certain
prior period data has been reclassified to conform to current period
presentation.

     Financial data for all periods prior to 2001 have been restated to reflect
the 2001 merger with Old Kent Financial Corporation (Old Kent). This merger was
tax-free and was accounted for as a pooling of interests. Certain
reclassifications were made to Old Kent's financial statements to conform
presentation.

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.

Securities

Securities are classified as held-to-maturity, available-for-sale or trading on
the date of purchase. Only those securities classified as held-to-maturity, and
which management has the intent and ability to hold to maturity, are reported at
amortized cost. Available-for-sale and trading securities are reported at fair
value with unrealized gains and losses, net of related deferred income taxes,
included in accumulated nonowner changes in equity and income, respectively. The
fair value of a security is determined based on quoted market prices. If quoted
market prices are not available, fair value is determined based on quoted prices
of similar instruments. Realized securities gains or losses are reported within
Other Operating Income in the Consolidated Statements of Income. The cost of
securities sold is based on the specific identification method.
Available-for-sale and held-to-maturity securities are reviewed quarterly for
possible other-than-temporary impairment. The review includes an analysis of the
facts and circumstances of each individual investment such as the length of time
the fair value has been below cost, the expectation for that security's
performance, the credit worthiness of the issuer and the Bancorp's ability to
hold the security to maturity. A decline in value that is considered to be
other-than-temporary is recorded as a loss within Other Operating Income in the
Consolidated Statements of Income.

Loans and Leases

Interest income on loans is based on the principal balance outstanding, with the
exception of interest on discount basis loans, computed using a method which
approximates the effective interest rate. The accrual of interest income for
commercial, construction and mortgage loans is discontinued when there is a
clear indication 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 the
principal or interest is past due ninety days or more, unless the loan is well
secured and in the process of collection. Consumer loans and revolving lines of
credit for equity lines that have principal and interest payments that have
become past due one hundred and twenty days and credit cards that have principal
and interest payments that have become past due one hundred and eighty days are
charged off to the allowance for credit losses. When a loan is placed on
nonaccrual status, all previously accrued and unpaid interest receivable is
charged against income and the loan is accounted for on the cash method
thereafter, until qualifying for return to accrual status. Generally, a loan is
returned to accrual status when all delinquent interest and principal payments
become current in accordance with the terms of the loan agreement or when the
loan is both well secured and in the process of collection and collectibility is
no longer doubtful.

   Loan and lease 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.

   Interest income on direct financing leases is recognized to achieve a
constant periodic rate of return on the outstanding investment. Interest income
on leveraged leases is recognized to achieve a constant rate of return on the
outstanding investment in the lease, net of the related deferred income tax
liability, in the years in which the net investment is positive.

   Residential mortgage loans held for sale are valued at the lower of aggregate
cost or fair value. Loans held for sale that qualify for fair value hedge
accounting are carried at fair value. Fair value is based on the contract price
at which the mortgage loans will be sold. The Bancorp generally has commitments
to sell residential mortgage loans held for sale in the secondary market. Gains
or losses on sales are recognized in Mortgage Banking Net Revenue upon delivery.

   Impaired loans are 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. The Bancorp evaluates the collectibility of both
principal and interest when assessing the need for a loss accrual.

Reserve for Credit Losses

The Bancorp maintains a reserve to absorb probable loan and lease losses
inherent in the portfolio. The reserve for credit losses is maintained at a
level the Bancorp considers to be adequate to absorb probable loan and lease
losses inherent in the portfolio, based on evaluations of the collectibility and
historical loss experience of loans and leases. Credit losses are charged and
recoveries are credited to the reserve. Provisions for credit losses are based
on the Bancorp's review of the historical credit loss experience and such
factors which, in management's judgment, deserve consideration under existing
economic conditions in estimating probable credit losses.

   The reserve is based on ongoing quarterly assessments of the probable
estimated losses inherent in the loan and lease portfolio. In determining the
appropriate level of reserves, the Bancorp estimates losses using a range
derived from "base" and "conservative" estimates. The Bancorp's methodology for
assessing the appropriate reserve level consists of several key elements, as
discussed below. The Bancorp's strategy for credit risk management includes
stringent, centralized credit policies, and uniform underwriting criteria for
all loans as well as an overall $25 million credit limit for each customer, with
limited


                                       21



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

exceptions. The strategy also emphasizes diversification on a geographic,
industry and customer level, regular credit examinations and quarterly
management reviews of large credit exposures and loans experiencing
deterioration of credit quality.

   Larger commercial loans that exhibit probable or observed credit weaknesses
are subject to individual review. Where appropriate, reserves are allocated to
individual loans based on management's estimate of the borrower's ability to
repay the loan given the availability of collateral, other sources of cash flow
and legal options available to the Bancorp.

   Included in the review of individual loans are those that are impaired as
provided in Statement of Financial Accounting Standards (SFAS) No. 114,
"Accounting by Creditors for Impairment of a Loan." Any reserves for impaired
loans are measured based on the present value of expected future cash flows
discounted at the loans' effective interest rate or fair value of the underlying
collateral. The Bancorp evaluates the collectibility of both principal and
interest when assessing the need for loss accrual.

   Historical loss rates are applied to other commercial loans not subject to
specific reserve allocations. The loss rates are derived from a migration
analysis, which computes the net charge-off experience sustained on loans
according to their internal risk grade. These grades encompass ten categories
that define a borrower's ability to repay their loan obligations. The risk
rating system is intended to identify and measure the credit quality of all
commercial lending relationships.

   Homogenous loans, such as consumer installment, residential mortgage loans
and automobile leases are not individually risk graded. Rather, standard credit
scoring systems are used to assess credit risk. Reserves are established for
each pool of loans based on the expected net charge-offs for one year. Loss
rates are based on the average net charge-off history by loan category.

   Historical loss rates for commercial and consumer loans may be adjusted for
significant factors that, in management's judgment, reflect the impact of any
current conditions on loss recognition. Factors which management considers in
the analysis include the effects of the national and local economies, trends in
the nature and volume of loans (delinquencies, charge-offs and nonaccrual
loans), changes in mix, credit score migration comparisons, asset quality
trends, risk management and loan administration, changes in the internal lending
policies and credit standards, collection practices and examination results from
bank regulatory agencies and the Bancorp's internal credit examiners.

   An unallocated reserve is maintained to recognize the imprecision in
estimating and measuring loss when evaluating reserves for individual loans or
pools of loans. Reserves on individual loans and historical loss rates are
reviewed quarterly and adjusted as necessary based on changing borrower and/or
collateral conditions and actual collection and charge-off experience.

   The Bancorp's primary market areas for lending are Ohio, Kentucky, Indiana,
Florida, Michigan, Illinois, West Virginia and Tennessee. When evaluating the
adequacy of reserves, consideration is given to this regional geographic
concentration and the closely associated effect changing economic conditions has
on the Bancorp's customers.

   The Bancorp has not substantively changed any aspect of its overall approach
in the determination of the allowance for loan losses. There have been no
material changes in assumptions or estimation techniques as compared to prior
years that impacted the determination of the current year allowance.

Loan Sales and Securitizations

When the Bancorp sells loans through either securitizations or individual loan
sales in accordance with its investment policies, it may retain one or more
subordinated tranches, servicing rights, interest-only strips, credit recourse
and, in some cases, a cash reserve account, all of which are considered retained
interests in the securitized or sold loans. Gain or loss on sale or
securitization of the loans depends in part on the previous carrying amount of
the financial assets sold or securitized, allocated between the assets sold and
the retained interests based on their relative fair value at the date of sale or
securitization. To obtain fair values, quoted market prices are used if
available. If quotes are not available for retained interests, the Bancorp
calculates fair value based on the present value of future expected cash flows
using both management's best estimates and third party data sources for the key
assumptions -- credit losses, prepayment speeds, forward yield curves and
discount rates commensurate with the risks involved.

   Servicing rights resulting from loan sales are amortized in proportion to,
and over the period of, estimated net servicing revenues and are reported as a
component of Mortgage Banking Net Revenue in the Consolidated Statements of
Income. Servicing rights are assessed for impairment periodically, based on fair
value, with temporary impairment recognized through a valuation allowance and
permanent impairment recognized through a write-off of the servicing asset and
related valuation reserve. Key economic assumptions used in measuring any
potential impairment of the servicing rights include the prepayment speed of the
underlying mortgage loans, the weighted-average life of the loan and the
discount rate. The primary risk of material changes to the value of the mortgage
servicing rights resides in the potential volatility in the economic assumptions
used, particularly the prepayment speed. The Bancorp monitors this risk and
adjusts its valuation allowance as necessary to adequately reserve for any
probable impairment in the portfolio. For purposes of measuring impairment, the
rights are stratified based on interest rate and original maturity. Fees
received for servicing mortgage loans owned by investors are based on a
percentage of the outstanding monthly principal balance of such loans and are
included in operating income as loan payments are received. Costs of servicing
loans are charged to expense as incurred.

Bank Premises and Equipment

Bank premises and equipment, including leasehold improvements, are stated at
cost less accumulated depreciation and amortization. Depreciation is calculated
using the straight-line method based on estimated useful lives of the assets for
book purposes, while accelerated depreciation is used for income tax purposes.
Amortization of leasehold improvements is computed using 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.

Derivative Financial Instruments

The Bancorp accounts for its derivatives under SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended. The standard
requires recognition of all derivatives as either assets or liabilities in the
balance sheet and requires measurement of those instruments at fair value
through adjustments to either accumulated nonowner changes in equity or current
earnings or both, as appropriate. On the date the Bancorp enters into a
derivative contract,


                                       22



                      FIFTH THIRD BANCORP AND SUBSIDIARIES


Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

the Bancorp designates the derivative instrument as either a fair value hedge,
cash flow hedge or as a free-standing derivative instrument. For a fair value
hedge, changes in the fair value of the derivative instrument and changes in the
fair value of the hedged asset or liability or of an unrecognized firm
commitment attributable to the hedged risk are recorded in current period net
income. For a cash flow hedge, changes in the fair value of the derivative
instrument, to the extent that it is effective, are recorded in accumulated
nonowner changes in equity within shareholders' equity and subsequently
reclassified to net income in the same period(s) that the hedged transaction
impacts net income. For free-standing derivative instruments, changes in the
fair values are reported in current period net income.

   Prior to entering a hedge transaction, the Bancorp formally documents the
relationship between hedging instruments and hedged items, as well as the risk
management objective and strategy for undertaking various hedge transactions.
This process includes linking all derivative instruments that are designated as
fair value or cash flow hedges to specific assets and liabilities on the balance
sheet or to specific forecasted transactions along with a formal assessment at
both inception of the hedge and on an ongoing basis as to the effectiveness of
the derivative instrument in offsetting changes in fair values or cash flows of
the hedged item. If it is determined that the derivative instrument is not
highly effective as a hedge, hedge accounting is discontinued and the adjustment
to fair value of the derivative instrument is recorded in net income.

   The Bancorp maintains an overall interest rate risk management strategy that
incorporates the use of derivative instruments to minimize significant unplanned
fluctuations in earnings and cash flows caused by interest rate volatility. The
Bancorp's interest rate risk management strategy involves modifying the
repricing characteristics of certain assets and liabilities so that changes in
interest rates do not adversely affect the net interest margin and cash flows.
Derivative instruments that the Bancorp may use as part of its interest rate
risk management strategy include interest rate and principal only ("PO") swaps,
interest rate floors, forward contracts and both futures contracts and options
on futures contracts. Interest rate swap contracts are exchanges of interest
payments, such as fixed-rate payments for floating-rate payments, based on a
common notional amount and maturity date. Forward contracts are contracts in
which the buyer agrees to purchase, and the seller agrees to make delivery of, a
specific financial instrument at a predetermined price or yield. PO swaps are
total return swaps based on changes in value of an underlying PO trust. Futures
contracts represent the obligation to buy or sell a predetermined amount of debt
subject to the contract's specific delivery requirements at a predetermined date
and a predetermined price. Options on futures contracts represent the right but
not the obligation to buy or sell. The Bancorp also enters into foreign exchange
contracts, interest rate swaps, floors and caps for the benefit of customers.
Generally, the Bancorp hedges the exposure of these free-standing derivatives,
entered into for the benefit of customers, by entering into offsetting
third-party forward contracts with approved reputable counterparties with
matching terms and currencies that are generally settled daily. Credit risks
arise from the possible inability of counterparties to meet the terms of their
contracts and from any resultant exposure to movement in foreign currency
exchange rates, limiting the Bancorp's exposure to the replacement value of the
contracts rather than the notional principal of contract amounts. The Bancorp
minimizes the credit risk through credit approvals, limits and monitoring
procedures. Free-standing derivatives also include derivative transactions
entered into for risk management purposes that do not otherwise qualify for
hedge accounting. The Bancorp will hedge its interest rate exposure on customer
transactions by executing offsetting swap agreements with primary dealers.

   Upon adoption of SFAS No. 133 on January 1, 2001, the Bancorp recorded a
cumulative effect of change in accounting principle of approximately $7 million,
net of tax.

Fair Value Hedges

The Bancorp enters into interest rate swaps to convert its non-prepayable,
fixed-rate long-term debt to floating-rate debt. The Bancorp's practice is to
convert fixed-rate debt to floating-rate debt. Decisions to convert fixed-rate
debt to floating are made primarily by consideration of the asset/liability mix
of the Bancorp, the desired asset/liability sensitivity and by interest rate
levels. For the year ended December 31, 2002, certain interest rate swaps met
the criteria required to qualify for shortcut method accounting. Based on this
shortcut method accounting treatment, no ineffectiveness is assumed and fair
value changes in the interest rate swaps are recorded as changes in the value of
both the swap and the long-term debt. If any of the interest rate swaps do not
qualify for the shortcut method of accounting, the ineffectiveness due to
differences in the changes in the fair value of the interest rate swap and the
long-term debt are reported within interest expense in the Consolidated
Statements of Income. For the year ended December 31, 2002, changes in the fair
value of any interest rate swaps attributed to hedge ineffectiveness were
insignificant to the Bancorp's Consolidated Statement of Income. During 2002,
the Bancorp terminated an interest rate swap designated as a fair value hedge
and in accordance with SFAS No. 133, the fair value of the swap at the date of
termination was recognized as a premium on the previously hedged long-term debt
and will be amortized over the remaining life of the long-term debt as an
adjustment to yield. The Bancorp had approximately $146.2 million and $13.6
million of fair value hedges included in Other Assets in the December 31, 2002
and 2001 Consolidated Balance Sheets, respectively.

   The Bancorp also enters into forward contracts to hedge the forecasted sale
of its mortgage loans. For the year ended December 31, 2002, the Bancorp met
certain criteria to qualify for matched terms accounting on the hedged loans for
sale. Based on this treatment, fair value changes in the forward contracts are
recorded as changes in the value of both the forward contract and Loans Held for
Sale in the Consolidated Balance Sheets. The Bancorp had approximately $25.2
million and $9.8 million of fair value hedges included in Loans Held for Sale in
the December 31, 2002 and 2001 Consolidated Balance Sheets, respectively.

   As of December 31, 2002, there were no instances of designated hedges no
longer qualifying as fair value hedges.

Cash Flow Hedges

The Bancorp enters into interest rate swaps to convert floating-rate liabilities
to fixed rates and to hedge certain forecasted transactions. The liabilities are
typically grouped and share the same risk exposure for which they are being
hedged. As of December 31, 2002 and 2001, $16.9 million and $10.1 million,
respectively, in deferred losses, net of tax, related to existing hedges were
recorded in accumulated nonowner changes in equity. Gains and losses on
derivative contracts that are reclassified from accumulated nonowner changes in
equity to current period earnings are included in the line item in which the
hedged item's effect in earnings is recorded. As of December 31, 2002, the $16.9
million in deferred losses on derivative


                                       23



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

instruments included in accumulated nonowner changes in equity are expected to
be reclassified into earnings during the next twelve months. All components of
each derivative instrument's gain or loss are included in the assessment of
hedge effectiveness.

   The maximum term over which the Bancorp is hedging its exposure to the
variability of future cash flows for all forecasted transactions, excluding
those forecasted transactions related to the payments of variable interest in
existing financial instruments, is three years for hedges converting
floating-rate loans to fixed. The Bancorp has approximately $26.0 million and
$15.6 million in deferred losses related to existing cash flow hedges on
floating-rate liabilities included in Other Short-Term Borrowings in the
December 31, 2002 and 2001 Consolidated Balance Sheets, respectively.

   For the year ended December 31, 2002, there were no cash flow hedges that
were discontinued related to forecasted transactions deemed not probable of
occurring.

Free-Standing Derivative Instruments

The Bancorp enters into various derivative contracts that primarily focus on
providing derivative products to commercial customers. These derivative
contracts are not linked to specific assets and liabilities on the balance sheet
or to forecasted transactions and, therefore, do not qualify for hedge
accounting. Generally, the Bancorp enters into offsetting third-party contracts
with an approved reputable counterparty with matching terms. Interest rate lock
commitments issued on residential mortgage loans intended to be held for resale
are considered free-standing derivative instruments. The interest rate exposure
on these commitments is economically hedged primarily with forward contracts.
The Bancorp also enters into a combination of free-standing derivative
instruments (PO swaps, swaptions, floors, forward contracts and interest rate
swaps) to hedge changes in fair value of its fixed rate mortgage servicing
rights portfolio. In addition, the Bancorp enters into foreign exchange
derivative contracts for the benefit of customers involved in international
trade to hedge their exposure to foreign currency fluctuations. Generally, the
Bancorp enters into offsetting third-party forward contracts with approved
reputable counterparties with matching terms and currencies that are generally
settled daily. The commitments and free-standing derivative instruments related
to mortgage servicing rights and interest rate locks are marked to market and
recorded as a component of Mortgage Banking Net Revenue and the foreign exchange
derivative contracts are marked to market and recorded as a component of foreign
exchange income included within Other Service Charges and Fees in the
Consolidated Statements of Income. For the years ended December 31, 2002 and
2001, the Bancorp recorded net gains of $25.0 million and $23.1 million,
respectively, on foreign exchange derivative contracts for customers, a net loss
of $1.9 million and a net gain of $2.4 million, respectively, on forward
contracts and purchased options related to interest rate lock commitments and
net gains of $100.1 million and $17.2 million, respectively, related to
free-standing derivative instruments related to the mortgage servicing rights
portfolio. The Bancorp has $56.0 million of free-standing derivatives related to
commercial customer contracts included in Other Assets and Other Liabilities,
respectively, in the December 31, 2002 Consolidated Balance Sheets. The Bancorp
has approximately $9.6 million and $3.7 million, respectively, of free-standing
foreign exchange derivatives related to customer transactions included in
Accrued Income Receivable, a net $.2 million and $2.1 million, respectively, of
forward contracts and purchased options related to interest rate lock
commitments included in Other Assets and $36.5 million and $18.3
million, respectively, of free-standing derivative instruments related to the
mortgage servicing rights portfolio included in Other Assets in the December 31,
2002 and 2001 Consolidated Balance Sheets.

Earnings Per Share

In accordance with SFAS No. 128, "Earnings Per Share," basic earnings per share
are computed by dividing net income available to common shareholders by the
weighted average number of shares of common stock outstanding during the period.
Earnings per diluted share are computed by dividing adjusted net income
available to common shareholders by the weighted average number of shares of
common stock and common stock equivalents outstanding during the period.
Dilutive common stock equivalents represent the assumed conversion of
convertible subordinated debentures, convertible preferred stock and the
exercise of stock options.

Other

Securities and other property held by Fifth Third Investment Advisors, a
division of the Bancorp's banking subsidiaries, in a fiduciary or agency
capacity are not included in the Consolidated Balance Sheets because such items
are not assets of the subsidiaries. Investment advisory income in the
Consolidated Statements of Income is recognized on the accrual basis. Investment
advisory service revenues are recognized monthly based on a fee charged per
transaction processed and a fee charged on the market value of ending account
balances associated with individual contracts.

   The Bancorp recognizes revenue from its electronic payment processing
services as such services are performed, recording revenues net of certain costs
(primarily interchange fees charged by credit card associations) not controlled
by the Bancorp.

   Treasury stock is carried at cost.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
142, "Goodwill and Other Intangible Assets." This statement discontinued the
practice of amortizing goodwill and indefinite lived intangible assets and
initiated an annual review for impairment. Impairment is to be examined more
frequently if certain indicators are encountered. The Bancorp has completed the
initial and the annual goodwill impairment test required by this standard and
has determined that no impairment exists. Intangible assets with a determinable
useful life will continue to be amortized over that period. The Bancorp adopted
the amortization provisions of SFAS No. 142 effective January 1, 2002. The
effect of the elimination of goodwill amortization increased net income by
approximately $34 million in 2002. See Note 6 for certain pro forma financial
disclosures related to SFAS No.142.

   In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." This statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This statement amends SFAS No. 19, "Financial
Accounting and Reporting by Oil and Gas Producing Companies," and is effective
for financial statements issued for fiscal years beginning after June 15, 2002.
Adoption of this standard is not expected to have a material effect on the
Bancorp's Consolidated Financial Statements.

   In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets." This statement eliminates the allocation of
goodwill to long-lived assets to be tested


                                       24



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

for impairment and details both a probability-weighted and "primary-asset"
approach to estimate cash flows in testing for impairment of a long-lived asset.
This statement supersedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and the
accounting and reporting provisions of the Accounting Principles Board (APB)
Opinion No. 30, "Reporting the Results of Operations--Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions." This statement also amends Accounting
Research Bulletin (ARB) No. 51, "Consolidated Financial Statements." SFAS No.
144 is effective for financial statements issued for fiscal years beginning
after December 15, 2001. Adoption of this standard did not have a material
effect on the Bancorp's Consolidated Financial Statements.

   In April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS Statements
No. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections." This
statement rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment
of Debt," and amends SFAS No. 64, "Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements." This statement also rescinds SFAS No. 44,
"Accounting for Intangible Assets of Motor Carriers." This statement amends SFAS
No. 13, "Accounting for Leases," to eliminate an inconsistency between the
required accounting for sale-leaseback transactions and the required accounting
for certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. This statement also amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings, or describe their applicability under changed conditions. SFAS No. 145
was effective for transactions occurring after May 15, 2002. Adoption of SFAS
No. 145 did not have a material effect on the Bancorp.

   In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." This statement addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." This statement
requires recognition of a liability for a cost associated with an exit or
disposal activity when the liability is incurred, as opposed to being recognized
at the date an entity commits to an exit plan under EITF Issue No. 94-3. This
statement also establishes that fair value is the objective for initial
measurement of the liability. This statement is effective for exit or disposal
activities that are initiated after December 31, 2002. Adoption of this standard
is not expected to have a material effect on the Bancorp's Consolidated
Financial Statements.

   In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." This statement addresses the financial accounting and
reporting for the acquisition of all or part of a financial institution, except
for a transaction between two or more mutual enterprises. This statement removes
acquisitions of financial institutions from the scope of SFAS No. 72,
"Accounting for Certain Acquisitions of Banking or Thrift Institutions" and FASB
Interpretation No. 9, "Applying APB Opinions No. 16 and 17 when a Savings and
Loan Association or a Similar Institution Is Acquired in a Business Combination
Accounted for by the Purchase Method," and requires that those transactions be
accounted for in accordance with SFAS No. 141 and SFAS No. 142. In addition,
this statement amends SFAS No. 144 to include in its scope long-term customer
relationship intangible assets of financial institutions such as depositor and
borrower-relationship intangible assets and credit cardholder intangible assets.
Consequently, those intangible assets are subject to the same undiscounted cash
flow recoverability test and impairment loss recognition and measurement
provisions that SFAS No. 144 requires for other long-lived assets that are held
and used. This statement was effective October 1, 2002. Adoption of SFAS No. 147
did not have a material effect on the Bancorp's Consolidated Financial
Statements.

   In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure--an Amendment of FASB Statement No. 123."
This statement amends SFAS No. 123, "Accounting for Stock-Based Compensation,"
to provide alternative methods of transition for a voluntary change to the fair
value method of accounting for stock-based employee compensation. In addition,
this statement amends the disclosure requirements of SFAS No. 123 to require
more prominent disclosures about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results in
both annual and interim financial statements. This statement is effective for
financial statements for fiscal years ending after December 15, 2002. As
permitted by SFAS No. 148, the Bancorp will continue to apply the provisions of
APB Opinion No. 25, "Accounting for Stock-Based Compensation," for all employee
stock option grants and has elected to disclose pro forma net income and
earnings per share amounts as if the fair-value based method had been applied in
measuring compensation costs. In addition, the Bancorp is awaiting further
guidance and clarity that may result from current FASB and International
Accounting Standards Board (IASB) stock compensation projects and will continue
to evaluate any developments concerning mandated, as opposed to optional,
fair-value based expense recognition.

   The Bancorp's as reported and pro forma information for the years ended
December 31:

($ in millions, except per share data)         2002         2001      2000
- --------------------------------------------------------------------------------
As reported net income available to
   common shareholders ....................  $ 1,634.0   1,093.0   1,140.4
Less: stock-based compensation
   expense determined under fair
   value method, net of tax ...............      113.5      98.8      86.1
- --------------------------------------------------------------------------------
Pro forma net income ......................  $ 1,520.5     994.2   1,054.3
- --------------------------------------------------------------------------------
As reported earnings per share ............     $ 2.82      1.90      2.02
Pro forma earnings per share ..............     $ 2.62      1.73      1.86
As reported earnings per diluted share ....     $ 2.76      1.86      1.98
Pro forma earnings per diluted share ......     $ 2.57      1.68      1.82
- --------------------------------------------------------------------------------

   Compensation expense in the pro forma disclosures is not indicative of future
amounts, as options vest over several years and additional grants are generally
made each year.

   The weighted average fair value of options granted was $26.14, $18.79 and
$14.81 in 2002, 2001 and 2000, respectively. The fair value of each option grant
is estimated on the date of grant using the Black-Scholes option-pricing model
with the following assumptions used for grants in 2002, 2001 and 2000: expected
option lives of nine years for all three years; expected dividend yield of 1.4%
for 2002, 1.8% for 2001 and 1.0% for 2000; expected volatility of 28%, 28% and
27% and risk-free interest rates of 5.0%, 5.1% and 5.2%, respectively.

     In November 2002, the FASB issued Interpretation No. 45, (FIN 45)
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others,"

                                       25




                      FIFTH THIRD BANCORP AND SUBSIDIARIES


Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

which elaborates on the disclosures to be made by a guarantor about its
obligations under certain guarantees issued. It also clarifies that a guarantor
is required to recognize, at the inception of a guarantee, a liability for the
fair value of the obligation undertaken in issuing the guarantee. The
Interpretation expands on the accounting guidance of SFAS No. 5, "Accounting for
Contingencies," SFAS No. 57, "Related Party Disclosures," and SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments." It also incorporates
without change the provisions of FASB Interpretation No. 34, "Disclosure of
Indirect Guarantees of Indebtedness of Others," which is superseded. The initial
recognition and measurement provisions of this Interpretation apply on a
prospective basis to guarantees issued or modified after December 31, 2002. The
disclosure requirements in this Interpretation are effective for periods ending
after December 15, 2002. Significant guarantees that have been entered into by
the Bancorp are disclosed in Note 15. Adoption of the requirements of FIN 45 is
not expected to have a material effect on the Bancorp's Consolidated Financial
Statements.

     In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities." This Interpretation clarifies the
application of ARB No. 51, "Consolidated Financial Statements," for certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated support from
other parties. This Interpretation requires variable interest entities to be
consolidated by the primary beneficiary which represents the enterprise that
will absorb the majority of the variable interest entities' expected losses if
they occur, receive a majority of the variable interest entities' residual
returns if they occur, or both. Qualifying Special Purpose Entities (QSPE) are
exempt from the consolidation requirements of FIN 46. This Interpretation is
effective immediately for variable interest entities created after January 31,
2003 and for variable interest entities in which an enterprise obtains an
interest after that date. This Interpretation is effective in the first fiscal
year or interim period beginning after June 15, 2003 for variable interest
entities in which an enterprise holds a variable interest that was acquired
before February 1, 2003, with earlier adoption permitted. The Bancorp will adopt
the provisions of FIN 46 no later than July 1, 2003.

     Upon adoption of the provisions of FIN 46 in 2003, the Bancorp will be
required to consolidate a certain special purpose entity (SPE) to which it will
be deemed to be the primary beneficiary. Through December 31, 2002, the Bancorp
has provided full credit recourse to an unrelated and unconsolidated
asset-backed SPE in conjunction with the sale and subsequent leaseback of leased
autos. The unrelated and unconsolidated asset-backed SPE was formed for the sole
purpose of participating in the sale and subsequent lease-back transactions with
the Bancorp. Based on this credit recourse, the Bancorp will be deemed to
maintain the majority of the variable interests in this entity and will
therefore be required to consolidate. As of December 31, 2002, the total
outstanding balance of leased autos sold was $1.4 billion, net of unearned
income. Additionally, upon the adoption of FIN 46, a series of interest rate
swaps entered into to hedge certain forecasted transactions with the SPE will no
longer qualify as cash flow hedges under SFAS No. 133. As of December 31, 2002,
the cumulative effect of a change in accounting principle would have been a loss
of approximately $16.9 million, net of tax.

2.   SECURITIES

Securities available-for-sale as of December 31:

- --------------------------------------------------------------------------------
                                                       2002
                                    --------------------------------------------
                                    Amortized   Unrealized   Unrealized    Fair
($ in millions)                         Cost       Gains      Losses      Value
- --------------------------------------------------------------------------------
U.S. Government and
  agencies obligations ............. $ 2,611.4      82.3         (.4)   2,693.3
Obligations of states and
  political subdivisions ...........   1,032.5      57.4         (.2)   1,089.7
Agency mortgage-backed
  securities .......................  19,328.2     520.8       (15.6)  19,833.4
Other bonds, notes and
  debentures .......................   1,084.2      20.9        (3.6)   1,101.5
Other securities. ..................     734.0      26.2       (14.0)     746.2
- --------------------------------------------------------------------------------
Total securities ................... $24,790.3     707.6       (33.8)  25,464.1
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
                                                       2001
                                   ---------------------------------------------
                                    Amortized  Unrealized   Unrealized    Fair
($ in millions)                       Cost       Gains       Losses      Value
- --------------------------------------------------------------------------------
U.S. Government and agencies
  obligations ...................... $ 1,330.6      16.9       (49.9)    1,297.6
Obligations of states and
  political subdivisions ...........   1,197.8      29.0        (8.4)    1,218.4
Agency mortgage-backed
  securities .......................  15,286.7     153.3      (132.3)   15,307.7
Other bonds, notes and
  debentures .......................   1,872.1      29.7        (5.6)    1,896.2
Other securities ...................     791.8       1.1        (6.2)      786.7
- --------------------------------------------------------------------------------
Total securities ................... $20,479.0     230.0      (202.4)   20,506.6
- --------------------------------------------------------------------------------

Securities held-to-maturity as of December 31:

- --------------------------------------------------------------------------------
                                                      2002
                                   ---------------------------------------------
                                    Amortized   Unrealized   Unrealized    Fair
($ in millions)                        Cost        Gains       Losses     Value
- --------------------------------------------------------------------------------
Obligations of states and
  political subdivisions ...........    $ 51.8        --         --        51.8
- --------------------------------------------------------------------------------
Total securities ...................    $ 51.8        --         --        51.8
- --------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
                                                        2001
                                   ---------------------------------------------
                                    Amortized   Unrealized  Unrealized    Fair
($ in millions)                       Cost       Gains      Losses        Value
- --------------------------------------------------------------------------------
Obligations of states and
political subdivisions .............    $ 16.4        --         --        16.4
- --------------------------------------------------------------------------------
Total securities ...................    $ 16.4        --         --        16.4
- --------------------------------------------------------------------------------

     The amortized cost and approximate fair value of securities at December 31,
2002, 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.

                                       26


                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
                                      Available-for-Sale       Held-to-Maturity
                                      ------------------       ----------------
                                    Amortized       Fair    Amortized      Fair
($ in millions)                        Cost        Value      Cost        Value
- --------------------------------------------------------------------------------
Debt securities:
  Under 1 year .....................   $  82.3      83.5         $7.2       7.2
  1-5 years ........................   1,963.5   2,033.8          1.5       1.5
  6-10 years .......................   1,610.8   1,682.8         23.0      23.0
  Over 10 years ....................  20,399.7  20,917.8         20.1      20.1
Other securities ...................     734.0     746.2          --         --
- --------------------------------------------------------------------------------
 Total securities .................. $24,790.3  25,464.1        $51.8      51.8
- --------------------------------------------------------------------------------

     At December 31, 2002 and 2001, securities with a fair value of $13.8
billion and $11.0 billion, respectively, were pledged to secure short-term
borrowings, public deposits, trust funds and for other purposes as required or
permitted by law. Of the amount pledged by the Bancorp at December 31, 2002,
$2.1 billion represents encumbered securities for which the secured party has
the right to repledge.

3.   RESERVE FOR CREDIT LOSSES

Transactions in the reserve for credit losses for the years ended December 31:

- -------------------------------------------------------------------------------
($ in millions)                                     2002      2001        2000
- -------------------------------------------------------------------------------
Balance at January 1 ........................    $ 624.1     609.3        572.9
Losses charged off ..........................     (272.5)   (308.6)      (175.8)
Recoveries of losses
 previously charged off .....................       85.7      81.5         67.1
- -------------------------------------------------------------------------------
Net charge-offs .............................     (186.8)   (227.1)      (108.7)
Provision charged to
 operations .................................      246.6     200.6        125.7
Merger-related provision
charged to operations .......................        --       35.4         12.0
Reserve of acquired institutions
and other ...................................        (.7)      5.9          7.4
- -------------------------------------------------------------------------------
Balance at December 31 ......................    $ 683.2     624.1        609.3
- -------------------------------------------------------------------------------

Impaired loan information, under SFAS No. 114, at December 31:

- -------------------------------------------------------------------------------
($ in millions)                                                  2002      2001
- -------------------------------------------------------------------------------
Impaired loans with a valuation
 reserve ..................................................   $ 180.3     128.3
Impaired loans with no valuation
 reserve ..................................................      40.0      30.6
- -------------------------------------------------------------------------------
Total impaired loans ......................................   $ 220.3     158.9
- -------------------------------------------------------------------------------
Valuation reserve on impaired loans .......................   $  56.1      27.2
- -------------------------------------------------------------------------------

     Average impaired loans, net of valuation reserves, were $163.0 million in
2002, $141.6 million in 2001 and $140.0 million in 2000. Cash basis interest
income recognized on those loans during each of the years was immaterial.

4.   LEASE FINANCING

A summary of the gross investment in lease financing at December 31:

- -------------------------------------------------------------------------------
($ in millions)                                                2002     2001
- -------------------------------------------------------------------------------
Direct financing leases ...................................$  5,005.2   4,000.2
Leveraged leases ..........................................   1,618.6   1,109.1
- -------------------------------------------------------------------------------
Total lease financing .....................................$  6,623.8   5,109.3
- -------------------------------------------------------------------------------

The components of the investment in lease financing at December 31:

- -------------------------------------------------------------------------------
($ in millions)                                             2002         2001
- -------------------------------------------------------------------------------
Rentals receivable, net of principal and
 interest on nonrecourse debt ..........................$  4,520.3     3,332.9
Estimated residual value of leased
 assets ................................................   2,103.5     1,776.4
- -------------------------------------------------------------------------------
Gross investment in lease financing. ...................   6,623.8     5,109.3
Unearned income ........................................  (1,261.8)     (879.9)
- -------------------------------------------------------------------------------
Total net investment in lease financing ................$  5,362.0     4,229.4
- -------------------------------------------------------------------------------

     At December 31, 2002, the minimum future lease payments receivable for each
of the years 2003 through 2007 were $1,218.6 million, $1,066.3 million, $1,008.1
million, $864.2 million and $585.3 million, respectively.

5.   BANK PREMISES AND EQUIPMENT

A summary of bank premises and equipment at December 31:

- -------------------------------------------------------------------------------
                                         Estimated
($ in millions)                          Useful Life         2002         2001
- -------------------------------------------------------------------------------
Land and improvements .................                    $ 216.3      214.7
Buildings ............................. 18 to 50 yrs.        784.1      705.8
Equipment .............................  3 to 20 yrs.        642.4      608.0
Leasehold improvements ................  6 to 25 yrs.        113.5      113.3
Accumulated depreciation
 and amortization .....................                     (865.4)    (809.1)
- -------------------------------------------------------------------------------
Total bank premises and equipment .....                    $ 890.9      832.7
- -------------------------------------------------------------------------------

     Depreciation and amortization expense related to bank premises and
equipment was $96.8 million in 2002, $99.4 million in 2001 and $103.2 million in
2000.

     Occupancy expense has been reduced by rental income from leased premises of
$14.3 million in 2002, $16.0 million in 2001 and $14.6 million in 2000.

     The Bancorp's 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 noncancelable lease agreements for land
and buildings at December 31, 2002, exclusive of income taxes and other charges
payable by the lessee:

- -------------------------------------------------------------------------------
                                                                     Land and
($ in millions)                                                      Buildings
- -------------------------------------------------------------------------------
2003 .............................................................$  40.2
2004 .............................................................   31.9
2005 .............................................................   25.8
2006 .............................................................   21.6
2007 .............................................................   19.2
2008 and subsequent years ........................................   88.6
- -------------------------------------------------------------------------------
Total ............................................................$ 227.3
- -------------------------------------------------------------------------------

     Rental expense for cancelable and noncancelable leases was $48.3 million
for 2002, $56.5 million for 2001 and $55.6 million for 2000.

     Through December 31, 2001, the Bancorp has sold, subject to credit recourse
and with servicing retained, a total of approximately $2.4 billion in leased
autos to an unrelated asset-backed special purpose entity that have subsequently
been leased back to the Bancorp. There were no such sales during 2002. As of
December 31, 2002, the outstanding balance of these leases was $1.4 billion, net
of unearned income, and pursuant to this sale-leaseback, the Bancorp has future
operating lease payments (and corresponding scheduled

                                       27


                      FIFTH THIRD BANCORP AND SUBSIDIARIES



Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

annual lease receipts from the underlying lessee) as follows: $569.2 million in
2003, $529.2 million in 2004, $300.2 million in 2005, $118.7 million in 2006 and
$4.4 million in 2007. No significant gain or loss was recognized on these sales.

6.   INTANGIBLE ASSETS AND GOODWILL

Intangible assets consist of core deposits, acquired merchant processing and
credit card portfolios and mortgage servicing rights. Intangibles, excluding
mortgage servicing right assets, are amortized on a straight-line basis over
their estimated useful lives, generally over a period of up to 25 years. The
Bancorp reviews intangible assets for possible impairment whenever events or
changes in circumstances indicate that carrying amounts may not be recoverable.

     Upon adoption of the amortization provisions of SFAS No. 142 on January 1,
2002, the Bancorp discontinued the practice of amortizing goodwill which
decreased operating expenses and increased Net Income Available to Common
Shareholders as compared to 2001 and 2000.

     The following tables illustrate financial results on a pro forma basis as
if SFAS No. 142 was effective beginning January 1, 2000.

     Results of Operations for the year ended December 31:

- -------------------------------------------------------------------------------
($ in millions, except per share)                   2002       2001       2000
- -------------------------------------------------------------------------------
Income Before Minority Interest
 and Cumulative Effect ......................... $ 1,672.4   1,137.0   1,165.7
Net Income Available to
 Common Shareholders ........................... $ 1,634.0   1,127.0   1,165.0
Earnings Per Diluted Share ..................... $    2.76      1.92      2.02
- -------------------------------------------------------------------------------

   The following table presents a reconciliation between originally reported Net
Income Available to Common Shareholders for the year ended December 31, 2001 and
2000 and Net Income Available to Common Shareholders restated for the effects of
SFAS No. 142:

- -------------------------------------------------------------------------------
($ in millions)                                            2001         2000
- -------------------------------------------------------------------------------
Net Income Available to Common
 Shareholders (as originally reported) .................. $ 1,093.0     1,140.4
Effect of Goodwill Amortization
 Expense, Net ...........................................      34.0        24.6
- -------------------------------------------------------------------------------
Net Income Available to Common
 Shareholders ...........................................$  1,127.0     1,165.0
- -------------------------------------------------------------------------------

Detail of amortizable Intangible Assets as of December 31, 2002:

- -------------------------------------------------------------------------------
                              Gross Carrying   Accumulated      Net Carrying
($ in millions)                  Amount       Amortization(a)     Amount
- -------------------------------------------------------------------------------
Mortgage Servicing Rights .... $   800.0         536.5            263.5
 Core Deposits ...............     341.1         156.5            184.6
Merchant Processing and
 Credit Card Portfolios .......     66.0          14.5             51.5
- -------------------------------------------------------------------------------
Total ........................ $ 1,207.1         707.5            499.6
- -------------------------------------------------------------------------------

(a) Accumulated amortization for Mortgage Servicing Rights includes a $277.8
million valuation allowance at December 31, 2002.

     As of December 31, 2002, all of the Bancorp's intangible assets were being
amortized. Amortization expense of $190.8 million, $131.4 million and $82.9
million respectively, was recognized on intangible assets (including mortgage
servicing rights) for the years ended December 31, 2002, 2001 and 2000,
respectively.

     Estimated amortization expense, including mortgage servicing rights, for
fiscal years 2003 through 2007 is as follows:

- -------------------------------------------------------------------------------
For the Years Ended December 31 ($ in millions)
- -------------------------------------------------------------------------------
2003 ............................................................... $ 147.0
2004 ...............................................................   113.0
2005 ...............................................................    78.0
2006 ...............................................................    52.7
2007 ...............................................................    30.0
- -------------------------------------------------------------------------------

7.   MORTGAGE SERVICING RIGHTS

Changes in capitalized mortgage servicing rights for the years ended December
31:

- -------------------------------------------------------------------------------
($ in millions)                                                2002     2001
- -------------------------------------------------------------------------------
Balance at January 1 ....................................... $ 426.3    428.9
Amount capitalized .........................................   139.7    309.6
Amortization ...............................................  (156.6)  (111.8)
Sales ......................................................    (5.7)    (1.2)
Change in valuation reserve ................................  (140.2)  (199.2)
- -------------------------------------------------------------------------------
Balance at December 31 ..................................... $ 263.5    426.3
- -------------------------------------------------------------------------------

   Changes in the mortgage servicing rights valuation reserve for the years
ended December 31:

($ in millions)                                     2002       2001      2000
- -------------------------------------------------------------------------------
Balance at January 1 ........................... $ (208.6)     (9.4)       --
Servicing valuation provision ..................   (140.2)   (199.2)     (9.4)
Permanent impairment write-off .................     71.0        --        --
- -------------------------------------------------------------------------------
Balance at December 31 ......................... $ (277.8)   (208.6)     (9.4)
- -------------------------------------------------------------------------------

     During 2001, the Bancorp began a non-qualifying hedging strategy to manage
a portion of the risk associated with impairment losses on the mortgage
servicing rights portfolio. This strategy includes the purchase of various
securities (primarily FHLMC and FNMA agency bonds, U.S. treasury bonds and PO
strips) which combined with the purchase of free-standing derivatives (PO swaps,
swaptions and interest rate swaps) are expected to economically hedge a portion
of the change in value of the mortgage servicing rights portfolio caused by
fluctuating discount rates, earnings rates and prepayment speeds. As temporary
impairment was recognized on the mortgage servicing rights portfolio in 2002 and
2001 due to falling interest rates and earnings rates and corresponding
increases in prepayment speeds, the Bancorp sold certain of these securities
resulting in net realized gains of $33.5 million and $142.9 million in 2002 and
2001, respectively, that were captured as a component of Other Operating Income
in the Consolidated Statements of Income. In addition, the Bancorp recognized
$100.1 million and $17.2 million in 2002 and 2001, respectively, related to
changes in fair value and settlement of free-standing derivatives purchased to
economically hedge the mortgage servicing rights portfolio. As of December 31,
2002 and 2001, the Bancorp's available-for-sale security portfolio included
$147.2 million and $1.0 billion, respectively, of securities related to the
non-qualifying hedging strategy and Other Assets included free-standing
derivative instruments with a fair value of $36.5 million and $18.3 million,
respectively, on outstanding notional amounts totaling $1.8 billion and $1.7
billion, respectively.

     The continued decline in primary and secondary mortgage rates during 2002
led to historically high refinance rates and corresponding increases in
prepayment speeds. This increase in

                                       28


                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

prepayment speeds led to the recognition of $140.2 million in temporary
impairment throughout 2002. In addition, in the fourth quarter of 2002 the
Bancorp determined a portion of the mortgage servicing rights portfolio was
permanently impaired, resulting in a write-off of $71.0 million in mortgage
servicing rights against the related valuation reserve. Significant decreases in
primary and secondary mortgage rates in 2001 also led to the recognition of
$199.2 million in temporary impairment. Impairment charges are captured as a
component of Mortgage Banking Net Revenue in the Consolidated Statements of
Income.

     The fair value of capitalized mortgage servicing rights was $264.0 million
and $435.6 million at December 31, 2002 and 2001, respectively. The Bancorp
serviced $26.5 billion and $31.6 billion of residential mortgage loans for other
investors at December 31, 2002 and 2001, respectively.

8.   SHORT-TERM BORROWINGS

A summary of short-term borrowings and rates at December 31:


- -------------------------------------------------------------------------------
($ in millions)                                 2002       2001        2000
- -------------------------------------------------------------------------------
Federal funds borrowed:
 Balance .....................................$ 4,748.5   2,543.8     2,177.7
 Rate ........................................     1.21%     1.75%       6.16%
- -------------------------------------------------------------------------------
Short-term bank notes:
 Balance .....................................$      --      33.9          --
 Rate ........................................       --      3.57%         --
- -------------------------------------------------------------------------------
Securities sold under
 agreements to repurchase:
 Balance .....................................$ 3,923.5   4,854.4     3,939.7
 Rate ........................................     1.28%     1.76%       5.70%
- -------------------------------------------------------------------------------
Other:
 Balance .....................................$   151.1      20.6       226.6
 Rate ........................................     1.11%     3.65%       6.70%
- -------------------------------------------------------------------------------
Total short-term borrowings:
 Balance .....................................$ 8,823.1   7,452.7      6,344.0
 Rate ........................................     1.24%     1.60%       5.89%
- -------------------------------------------------------------------------------
Average outstanding ..........................$ 7,190.3   8,799.1      9,724.7
Weighted average interest rate ...............     1.67%     4.06%       5.87%
Maximum month-end balance ....................$10,133.9  10,113.0     11,002.0
- -------------------------------------------------------------------------------

     Short-term senior notes with maturities ranging from 30 days to one year
can be issued by five subsidiary banks, none of which were outstanding as of
December 31, 2002.

     At December 31, 2002, the Bancorp had issued $93.2 million in commercial
paper, with unused lines of credit of $6.8 million available to support
commercial paper transactions and other corporate requirements.

9.   LONG-TERM BORROWINGS

A summary of long-term borrowings at December 31:
- -------------------------------------------------------------------------------
($ in millions)                                             2002        2001
- -------------------------------------------------------------------------------
Capital Securities, 8.136%, due 2027 ................... $  240.9       214.9
 Capital Securities, three month LIBOR
 plus .80%, due 2027 ...................................    100.0       100.0
Subordinated notes,
 6.625%, due 2005 ......................................    106.2       100.0
Subordinated notes, 6.75%, due 2005 ....................    263.4       248.7
Subordinated notes, three month LIBOR
 plus .75%, due 2005 ...................................       --       100.0
Subordinated notes, years 1-5: 7.75%;
 years 6-10: one month LIBOR plus
 1.16%, due 2010 .......................................    162.5       150.0
Federal Home Loan Bank advances ........................  5,685.8     5,779.9
Securities sold under agreements
 to repurchase .........................................  1,597.2       325.0
Other ..................................................     22.7        11.4
- -------------------------------------------------------------------------------
Total long-term borrowings ............................. $8,178.7     7,029.9
- -------------------------------------------------------------------------------

     In March 1997, Fifth Third Capital Trust 1 (FTCT1), a wholly-owned finance
subsidiary of the Bancorp, issued 8.136% Capital Securities due in 2027. The
Bancorp has fully and unconditionally guaranteed all of FTCT1's obligations
under the Capital Securities. The Capital Securities qualify as total capital
for regulatory capital purposes.

     In connection with the merger of Old Kent in 2001, the Bancorp assumed
three-month LIBOR plus .80% Capital Securities due in 2027 through Old Kent
Capital Trust 1 (OKCT1), an indirect wholly owned finance subsidiary of the
Bancorp. The Bancorp has fully and unconditionally guaranteed all of OKCT1's
obligations under the Capital Securities. The Capital Securities qualify as Tier
1 capital for regulatory capital purposes.

     The 6.625% Subordinated Notes due in 2005 are unsecured obligations of a
subsidiary bank. Interest is payable semi-annually and the notes qualify as
total capital for regulatory capital purposes.

     The 6.75% Subordinated Notes due in 2005 are unsecured obligations of a
subsidiary bank. Interest is payable semi-annually and the notes qualify as
total capital for regulatory capital purposes.

     The LIBOR + .75% Subordinated Notes were unsecured obligations of a
subsidiary bank. The notes qualified as total capital for regulatory capital
purposes at December 31, 2001 and were redeemed during 2002.

     The 7.75% (years 1-5); 1 month LIBOR + 1.16% (years 6-10) Subordinated
Notes due 2010 are unsecured obligations of a subsidiary bank. Interest is
payable semi-annually and the notes may also be redeemed on the semi-annual
interest payment date. The notes qualify as total capital for regulatory capital
purposes.

     At December 31, 2002, Federal Home Loan Bank advances have rates ranging
from 1.0% to 8.34%, with interest payable monthly. The advances were secured by
certain mortgage loans and securities totaling $9.9 billion. The advances mature
as follows: $368.2 million in 2003, $244.3 million in 2004, $1,673.0 million in
2005, $239.5 million in 2006, $1,852.0 million in 2007 and $1,308.8 million in
2008 and thereafter.

     At December 31, 2002, securities sold under agreements to
repurchase have rates ranging from 4.81% to 7.26%, with interest payable
monthly. The repurchase agreements mature as follows: $500.0 million in 2003,
$25.0 million in 2004 and $1,072.2 million in 2008 and thereafter.

     Medium-term senior notes and subordinated bank notes with

                                       29


                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

maturities ranging from one year to 30 years can be issued by five subsidiary
banks, none of which were outstanding as of December 31, 2002 or 2001.

10. MINORITY INTEREST

During 2001, a subsidiary of the Bancorp issued $425.0 million of preferred
stock through a private placement. The preferred stock qualifies as Tier 1
capital for regulatory capital purposes. The preferred stock will be exchanged
for trust preferred securities in 2031. The Bancorp has the ability to exchange
the preferred stock for trust preferred securities or cash prior to 2031,
subject to regulatory approval, beginning five years from the date of issuance,
upon a change in the Bancorp's long-term debt credit rating to BBB or below,
upon the investor changing tax elections or upon a change in applicable tax law.
Annual dividend returns to the preferred stock holder are reflected as minority
interest expense in the Consolidated Statements of Income.

11. 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 at December 31:

- ----------------------------------------------------------------------------
($ in millions)                                   2002      2001      2000
- ----------------------------------------------------------------------------
Current U.S. income taxes .................... $  462.8     264.8     214.3
State and local income taxes .................     23.1      31.5      16.5
- ----------------------------------------------------------------------------
Total current tax ............................    485.9     296.3     230.8
Deferred U.S. income taxes
resulting from temporary
differences ..................................    273.4     253.7     308.3
- ----------------------------------------------------------------------------
Applicable income taxes ...................... $  759.3     550.0     539.1
- ----------------------------------------------------------------------------

     Deferred income taxes are included as a component of Accrued Taxes,
Interest and Expenses in the Consolidated Balance Sheets and are comprised of
the following temporary differences at December 31:

- --------------------------------------------------------------------
($ in millions)                                    2002       2001
- --------------------------------------------------------------------
Lease financing ............................. $ 1,595.8    1,290.4
Reserve for credit losses ...................    (240.7)    (247.2)
Bank premises and equipment .................      38.9       25.1
Net unrealized gains on securities
available-for-sale and hedging instruments ..     226.5        3.9
Mortgage servicing and other ................      42.1      122.5
- --------------------------------------------------------------------
Total net deferred tax liability ............ $ 1,662.6    1,194.7
- --------------------------------------------------------------------

     A reconciliation between the statutory U.S. income tax rate and the
Bancorp's effective tax rate for the years ended December 31:

- --------------------------------------------------------------------
                                             2002     2001    2000
- --------------------------------------------------------------------
Statutory tax rate ......................... 35.0%    35.0%   35.0%
Increase (Decrease) resulting from:
   Tax-exempt income ....................... (2.1)    (3.0)   (2.6)
   Other--net .............................. (1.7)     1.3     (.3)
- --------------------------------------------------------------------
Effective tax rate ......................... 31.2%    33.3%   32.1%
- --------------------------------------------------------------------

     Retained earnings at December 31, 2002 includes $157.3 million in
allocations of earnings for bad debt deductions of former thrift subsidiaries
for which no income tax has been provided. Under current tax law, if certain of
the Bancorp's subsidiaries use these bad debt reserves for purposes other than
to absorb bad debt losses, they will be subject to Federal income tax at the
current corporate tax rate.

12. RELATED PARTY TRANSACTIONS

At December 31, 2002 and 2001, certain directors, executive officers, principal
holders of Bancorp common stock and associates of such persons were indebted,
including undrawn commitments to lend, to the Bancorp's banking subsidiaries in
the aggregate amount, net of participations, of $485.8 million and $469.9
million, respectively. As of December 31, 2002 and 2001, the outstanding balance
on loans to related parties, net of participations and undrawn commitments, was
$160.2 million and $168.2 million, respectively.

     Commitments to lend to related parties as of December 31, 2002, net of
participations, were comprised of $321.9 million in loans and guarantees for
various business and personal interests made to the Bancorp and subsidiary
directors and $3.7 million to certain executive officers. This 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.

     None of the Bancorp's affiliates, officers, directors or employees have an
interest in or receive any remuneration from any special purpose entities or
qualified special purpose entities with which the Bancorp transacts business.

13. STOCK OPTIONS AND EMPLOYEE STOCK GRANTS

The Bancorp has historically emphasized employee stock ownership. Accordingly,
the Bancorp encourages further ownership through granting stock options to
approximately 24% of its employees, including approximately 4,000 officers.
Share grants represented approximately 1.1%, 1.2% and 1.4% of average
outstanding shares in 2002, 2001 and 2000, respectively. Based on total stock
options outstanding and shares remaining for future option grants under the 1998
Stock Option Plan, the Bancorp's total overhang is approximately eight percent.

     Options are eligible for issuance under the Bancorp's 1998 Stock Option
Plan to key employees and directors of the Bancorp and its subsidiaries for up
to 37.7 million shares of the Bancorp's common stock. Option grants are
generally at fair market value at the date of grant, have up to ten year terms
and vest and become fully exercisable at the end of three years of continued
employment. The Bancorp applies the provisions of APB Opinion No. 25 in
accounting for stock based compensation plans. Under APB Opinion No. 25, because
the exercise price of the Bancorp's stock option grants equals the market price
of the underlying stock on the date of the grant, no compensation cost is
recognized. A summary of option transactions during the years ended December 31:




- --------------------------------------------------------------------------------------------
                                         2002               2001               2000
                                     -----------        -----------         -----------
                                            Average             Average              Average
                                  Shares    Option    Shares    Option    Shares     Option
                                  (000's)   Price     (000's)   Price     (000's)    Price
- ---------------------------------------------------------------------------------------------
                                                                   
Outstanding beginning of year... 36,735    $ 36.27    33,034    $ 32.90    29,287    $ 30.40
Exercised ...................... (3,736)     30.73    (4,010)     31.39    (3,616)     24.48
Expired ........................   (533)     53.97      (565)     45.43      (871)     43.83
Granted ........................  6,564      67.68     8,276      51.94     8,234      39.81
- ---------------------------------------------------------------------------------------------
Outstanding end of year ........ 39,030    $ 41.85    36,735    $ 36.27    33,034    $ 32.90
- ---------------------------------------------------------------------------------------------
Exercisable end of year ........ 29,935    $ 36.96    27,568    $ 32.59    25,101    $ 29.73
- ---------------------------------------------------------------------------------------------



                                       30


                      FIFTH THIRD BANCORP AND SUBSIDIARIES


Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

   At December 31, 2002, there were 15.4 million incentive options and 23.6
million nonqualified options outstanding, and 7.5 million shares were available
for granting additional options. Options outstanding represent 6.8% of the
Bancorp's issued shares at December 31, 2002.



- ------------------------------------------------------------------------------------------------
                                             Outstanding Stock Options       Exercisable Options
                                             ---------------------------------------------------
                                                    Weighted    Average                 Weighted
                                     Number of      Average    Remaining                 Average
Exercise Price  Lowest  Highest      Options at     Exercise  Contractual   Number of   Exercise
per Share       Price    Price        Year End        Price     Life (yrs)   Options      Price
================================================================================================
                                                                    
Under $11       $ 6.21   $10.88        1,621,591       $10.36     1.2       1,621,362     $10.36
$11-$25          11.06    24.90        7,678,375        18.39     3.8       7,447,560      18.39
$25-$40          25.22    39.96        6,099,533        36.15     5.7       6,077,247      36.15
$40-$55          40.17    54.92       16,506,899        47.17     7.3      12,822,682      46.98
Over $55         55.50    68.76        7,123,880        66.85     9.3       1,965,839      66.24
- ------------------------------------------------------------------------------------------------
All Options     $ 6.21   $68.76       39,030,278       $41.85     6.3      29,934,690     $36.96
================================================================================================



14. COMMITMENTS AND CONTINGENT LIABILITIES

The Bancorp, in the normal course of business, uses derivatives to manage its
interest rate risk, to help manage the risk of the mortgage servicing rights
portfolio and to meet the financing needs of its customers. These financial
instruments primarily include commitments to extend credit, standby and
commercial letters of credit, foreign exchange contracts, interest rate swap
agreements, interest rate floors and caps, principal only swaps, purchased
options and commitments to sell residential mortgage loans. These instruments
involve, to varying degrees, elements of credit risk, counterparty risk and
market risk in excess of the amounts recognized in the Consolidated Balance
Sheets. As of December 31, 2002, 100% of the Bancorp's derivatives exposures
were to investment grade companies. The contract or notional 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
accordance with the Bancorp's 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 and guarantors.

   A summary of significant commitments and other financial instruments at
December 31:

- -------------------------------------------------------------------------------
                                                             Contract or
                                                           Notional Amount
                                                           ---------------
($ in millions)                                             2002       2001
===============================================================================
Commitments to extend credit .......................    $ 21,666.6  18,168.6
Letters of credit (including standby letters
 of credit) ........................................       4,015.4   2,597.6
Foreign exchange contracts:
   Commitments to purchase .........................       1,387.0     662.2
   Commitments to sell .............................       1,377.9     681.0
Interest rate swap agreements ......................       4,824.1   3,787.0
Interest rate floors ...............................          45.7      48.1
Interest rate caps .................................         201.3     123.4
Principal only swaps ...............................         385.9      18.5
Put options sold ...................................            --     333.2
Purchased options ..................................       1,491.0   1,150.4
Commitments to sell residential mortgage
 loans .............................................       2,543.0   2,158.9
===============================================================================

   Commitments to extend credit are agreements to lend, generally having fixed
expiration dates or other termination clauses that may require payment of a fee.
Since many of the commitments to extend credit may expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash flow
requirements. The Bancorp's exposure to credit risk in the event of
nonperformance by the other party is the contract amount. Fixed-rate commitments
are subject to market risk resulting from fluctuations in interest rates and the
Bancorp's exposure is limited to the replacement value of those commitments.

   Standby and commercial letters of credit are conditional commitments issued
to guarantee the performance of a customer to a third party. At December 31,
2002, approximately $491.9 million of standby letters of credit expire within
one year, $990.1 million expire between one to five years and $2,516.8 million
expire thereafter. At December 31, 2002, letters of credit of approximately
$16.6 million were issued to commercial customers for a duration of one year or
less to facilitate trade payments in domestic and foreign currency transactions.
The amount of credit risk involved in issuing letters of credit in the event of
nonperformance by the other party is the contract amount.

   Foreign exchange forward contracts are for future delivery or purchase of
foreign currency at a specified price. Risks arise from the possible inability
of counterparties to meet the terms of their contracts and from any resultant
exposure to movement in foreign currency exchange rates, limiting the Bancorp's
exposure to the replacement value of the contracts rather than the notional
principal or contract amounts. The Bancorp generally reduces its market risk for
foreign exchange contracts by entering into offsetting third-party forward
contracts. The foreign exchange contracts outstanding at December 31, 2002
primarily mature in one year or less.

   The Bancorp enters into forward contracts for future delivery of residential
mortgage loans at a specified yield to reduce the interest rate risk associated
with fixed-rate residential mortgages held for sale and commitments to fund
residential mortgage loans. In addition, at December 31, 2002 the Bancorp
entered into a purchased option contract with a notional amount of approximately
$100 million related to interest rate lock commitments. Credit risk arises from
the possible inability of the other parties to comply with the contract terms.
The majority of the Bancorp's forward contracts are with U.S.
government-sponsored agencies (FNMA, FHLMC).

   The Bancorp manages a portion of the risk of the mortgage servicing rights
portfolio with a combination of derivatives. Throughout 2002 the Bancorp entered
into total rate of return swaps, interest rate swaps and purchased and sold
various options on interest rate swaps. As of December 31, 2002 the Bancorp was
receiving the total return on various underlying PO securities and paying a
variable rate based on one-month LIBOR on interest rate swaps with notional
amount of $385.9 million. The Bancorp was also receiving a fixed rate between
4.37% and 5.97% and paying a variable rate based on three-month LIBOR on
interest rate swaps with notional amount of $54.0 million. In addition, the
Bancorp owns various options on interest rate swaps where it may receive a fixed
rate ranging from 3.40% to 4.50% and may pay three-month LIBOR on notional
amounts of $1.16 billion and may pay a fixed rate of 5.0% and receive 3 month
LIBOR on options with notional amounts of $225.0 million.

   In 1997, the Bancorp entered into an interest rate swap agreement with a
notional amount of $200.0 million in connection with the issuance of $200.0
million of long term, fixed rate capital qualifying

                                       31


                      FIFTH THIRD BANCORP AND SUBSIDIARIES


Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

securities. The Bancorp receives a fixed rate of 8.136% and pays a variable rate
based on three-month LIBOR plus 50 basis points. In 2002, the Bancorp entered
into $1.3 billion of interest rate swaps to swap existing fixed rate debt to a
floating rate. The Bancorp receives a rate equal to the rate on the designated
debt issue and pays a variable rate based on one- or three-month LIBOR plus a
spread.

     In 2001 the Bancorp entered into various amortizing interest rate swap
agreements with an original notional amount of $2.0 billion to hedge certain
forecasted transactions. The notional balance as of December 31, 2002 was $1.1
billion. The Bancorp pays a fixed rate of 4.21% and receives a variable rate
based on the 30 day Financial Commercial Paper rate.

     As of December 31, 2002, the Bancorp had entered into various interest rate
related derivative instruments (interest rate swaps, interest rate floors and
interest rate caps) with commercial clients with an aggregate notional principal
notional amount of $1.2 billion. The agreements generally call for the Bancorp
to receive a fixed rate and pay a variable rate of interest that resets
periodically. The Bancorp has hedged its interest rate exposure with commercial
clients by executing offsetting swap agreements with other derivatives dealers.
These transactions involve the exchange of fixed and floating interest rate
payments without the exchange of the underlying principal amounts. Therefore
while notional principal amounts are typically used to express the volume of
these transactions it does not represent the much smaller amounts that are
potentially subject to credit risk. Entering into interest rate swap agreements
involves the risk of dealing with counter-parties and their ability to meet the
terms of the contract. The Bancorp controls the credit risk of these
transactions through adherence to a derivatives products policy, credit approval
policies and monitoring procedures.

     In 2000, the Bancorp sold a one time put option to bondholders for the
purpose of enhancing the liquidity and marketability of a jumbo residential
mortgage loan securitization. The option expired on August 20, 2002, resulting
in one bond holder exercising the original face put to the Bancorp in an amount
of $25.0 million.

     There are claims pending against the Bancorp and its subsidiaries which
have arisen in the normal course of business. Based on a review of such
litigation with legal counsel, management believes any resulting liability would
not have a material effect upon the Bancorp's consolidated financial position or
results of operations.

15.  GUARANTEES

The Bancorp has performance obligations upon the occurrence of certain events
under financial guarantees provided in certain contractual arrangements. These
various arrangements are summarized below.

     At December 31, 2002, the Bancorp had issued approximately $4.0 billion of
financial standby letters of credit to guarantee the performance of various
customers to third parties. The maximum amount of credit risk in the event of
nonperformance by these parties is equivalent to the contract amount and totals
$4.0 billion. At December 31, 2002, the Bancorp maintained a credit loss reserve
of approximately $16 million relating to these financial standby letters of
credit. Approximately 90% of the total standby letters of credit are secured and
in the event of nonperformance by the customers, the Bancorp has rights to the
underlying collateral provided including commercial real estate, physical plant
and property, inventory, receivables, cash and marketable securities.

     Through December 31, 2002, the Bancorp had transferred, subject to credit
recourse, certain commercial loans to an unconsolidated QSPE that is wholly
owned by an independent third party. The outstanding balance of such loans at
December 31, 2002 was approximately $1.8 billion. These loans may be transferred
back to the Bancorp upon the occurrence of an event specified in the legal
documents that established the QSPE. These events include borrower default on
the loans transferred, bankruptcy preferences initiated against underlying
borrowers and ineligible loans transferred by the Bancorp to the QSPE. The
maximum amount of credit risk in the event of nonperformance by the underlying
borrowers is approximately equivalent to the total outstanding balance. The
maximum amount of credit risk at December 31, 2002 was $1.7 billion. The
outstanding balances are generally secured by the underlying collateral that
include commercial real estate, physical plant and property, inventory,
receivables, cash and marketable securities. Given the investment grade nature
of the loans transferred as well as the underlying collateral security provided,
the Bancorp has not maintained any loss reserve related to these loans
transferred.

     At December 31, 2002, the Bancorp had provided credit recourse on
approximately $380 million of residential mortgage loans sold to unrelated third
parties. In the event of any customer default, pursuant to the credit recourse
provided, the Bancorp is required to reimburse the third party. The maximum
amount of credit risk in the event of nonperformance by the underlying borrowers
is equivalent to the total outstanding balance of $380 million. In the event of
nonperformance, the Bancorp has rights to the underlying collateral value
attached to the loan. Consistent with its overall approach in estimating credit
losses for residential mortgage loans held in its loan portfolio, the Bancorp
maintains an estimated credit loss reserve of approximately $1 million relating
to these residential mortgage loans sold.

     At December 31, 2002, the Bancorp had provided credit recourse on $1.4
billion of leased autos sold to and subsequently leased back from an unrelated
asset-backed SPE. In the event of default by the underlying lessees and pursuant
to the credit recourse provided, the Bancorp is required to reimburse the
unrelated asset-backed SPE for all principal related credit losses and a portion
of all residual credit losses. The maximum amount of credit risk in the event of
nonperformance by the underlying lessees is approximately equivalent to the
total outstanding balance. The maximum amount of credit risk at December 31,
2002 was $1.2 billion. In the event of nonperformance, the Bancorp has rights to
the underlying collateral value of the autos. Consistent with its overall
approach in estimating credit losses for auto loans and leases held in its loan
and lease portfolio, the Bancorp maintains an estimated credit loss reserve of
approximately $7.0 million relating to these sold auto leases.

     The Bancorp has also fully and unconditionally guaranteed certain long-term
borrowing obligations issued by certain of the Bancorp's wholly-owned finance
subsidiaries totaling $340.9 million at December 31, 2002.

                                       32


                      FIFTH THIRD BANCORP AND SUBSIDIARIES


Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

16. OTHER SERVICE CHARGES AND FEES AND OTHER
    OPERATING EXPENSES

The major components of Other Service Charges and Fees and Other Operating
Expenses for the years ended December 31:

- --------------------------------------------------------------------------------
($ in millions)                                   2002        2001        2000
- --------------------------------------------------------------------------------
Other Service Charges and
Fees:
Cardholder fees ...........................  $    51.3        49.7        41.8
Consumer loan and lease fees ..............       69.5        58.9        48.9
Commercial banking ........................      157.2       125.1        86.0
Bank owned life insurance
income ....................................       62.1        52.2        43.2
Insurance income ..........................       54.9        49.1        47.8
Gain on sale of branches ..................        7.1        42.7          --
Gain on sale of property and
casualty insurance
product lines .............................       26.4          --          --
Other .....................................      151.2       164.5       121.3
- --------------------------------------------------------------------------------
Total Other Service Charges
and Fees ..................................  $   579.7       542.2       389.0
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
($ in millions)                                   2002        2001        2000
- --------------------------------------------------------------------------------
Other Operating Expenses:
Marketing and
communications ............................  $    96.4       101.7        97.3
Postal and courier ........................       48.2        49.7        45.0
Bankcard ..................................      141.6       103.2        72.1
Intangible and goodwill
amortization ..............................       37.0        71.2        60.3
Franchise taxes ...........................       24.2        17.9        27.7
Loan and lease ............................       91.3        62.4        38.9
Printing and supplies .....................       36.5        40.4        40.9
Travel ....................................       38.1        33.5        33.7
Data processing and .......................       82.4        70.1        86.4
operations
Corporate insurance .......................       16.8        27.0        16.9
Other .....................................      275.3       184.7       146.9
- --------------------------------------------------------------------------------
Total Other Operating Expenses ............  $   887.8       761.8       666.1
- --------------------------------------------------------------------------------


17. RETIREMENT AND BENEFIT PLANS

A combined summary of the defined benefit retirement plans as of and for the
years ended December 31:

- --------------------------------------------------------------------------------
($ in millions)                                              2002        2001
- --------------------------------------------------------------------------------
Change in benefit obligation:
Projected benefit obligation at beginning
of year .............................................     $  262.8       242.5
Service cost ........................................           .9        11.8
Interest cost .......................................         16.2        18.3
Curtailment .........................................        (25.5)       (8.7)
Settlement ..........................................        (34.6)       (6.0)
Actuarial loss ......................................         31.7        42.0
Benefits paid .......................................         (8.8)      (37.1)

- --------------------------------------------------------------------------------
Projected benefit obligation at end of
year ................................................     $  242.7       262.8
- --------------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets at beginning of
year ................................................     $  264.3       312.1
Actual return on assets .............................        (37.5)      (12.8)
Contributions .......................................          3.2         9.3
Settlement ..........................................        (44.5)       (7.2)
Benefits paid .......................................         (8.8)      (37.1)
- --------------------------------------------------------------------------------
Fair value of plan assets at end of year ............     $  176.7       264.3
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
($ in millions)                                              2002        2001
- --------------------------------------------------------------------------------
Funded status ........................................    $  (66.0)        1.5
Unrecognized transition amount .......................        (3.5)       (6.5)
Unrecognized prior service cost ......................         4.6         8.1
Unrecognized actuarial loss ..........................        98.1        40.0
- --------------------------------------------------------------------------------
Net amount recognized ................................    $   33.2        43.1
- --------------------------------------------------------------------------------
Amounts recognized in the Consolidated
Balance Sheets consist of:
Prepaid benefit cost .................................    $    4.9        89.6
Accrued benefit liability ............................       (56.7)      (46.7)
Intangible Asset .....................................         4.7          --
Accumulated nonowner changes in equity ...............        80.3          .2
- --------------------------------------------------------------------------------
Net amount recognized ................................    $   33.2        43.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
($ in millions)                                2002          2001        2000
- --------------------------------------------------------------------------------
Components of net periodic pension
cost (benefit):
Service cost ...............................  $    .9         11.8        10.4
Interest cost ..............................     16.2         18.3        17.0
Curtailment ................................      1.6          1.8       (12.7)
Expected return on assets ..................    (22.7)       (29.1)      (28.5)
Amortization and deferral of
transition amount ..........................     (2.2)        (2.3)       (2.4)
Amortization of actuarial
loss (gain) ................................       .1         (1.4)       (5.4)
Amortization of unrecognized prior
service cost ...............................       .4          1.3         1.3
Settlement .................................     18.7          1.9        (1.4)
Termination benefit ........................       --           --         1.8
- --------------------------------------------------------------------------------
Net periodic pension cost
(benefit) ..................................  $  13.0          2.3       (19.9)
- --------------------------------------------------------------------------------

   Net periodic pension cost for 2002 included a settlement charge of $18.7
million related to an increased level of lump-sum distributions during 2002 as a
result of the headcount reductions that occurred in connection with the
integration of Old Kent.

   In connection with the merger of CNB Bancshares, Inc. (CNB), the CNB defined
benefit pension plan was curtailed and the resulting curtailment gain was
recorded against the merger charge in 2000.

   Plan assets consist primarily of common trust and mutual funds managed by
Fifth Third Bank, an affiliate of the Bancorp, and Fifth Third Bancorp common
stock securities.

- -------------------------------------------------------------
                                    2002    2001    2000
- -------------------------------------------------------------
Weighted-average assumptions:
For disclosure:
Discount rate ....................  6.75%   7.25%   7.80%
Rate of compensation increase ...   5.10    4.86    4.77
For measuring net periodic pension
cost (benefit):
Discount rate ....................  7.25    7.80    7.66
Rate of compensation increase ....  4.86    4.77    4.81
Expected return on plan assets ...  8.99    9.52    9.36
- -------------------------------------------------------------

   For the Bancorp's defined benefit plans, with an accumulated benefit
obligation exceeding assets, the total projected benefit obligation, accumulated
benefit obligation and fair value of plan assets were $236.2 million, $227.6
million and $169.1, respectively, as of December 31, 2002 and $33.3 million,
$25.4 million and $0, respectively, as of December 31, 2001. At December 31,
2002 an additional minimum pension liability was recorded as a reduction to
shareholders' equity in an amount of $52.2 million, net of $28.1 million of tax
benefit.

   The Bancorp's profit sharing plan contribution was $58.0 million for 2002,
$33.5 million for 2001 and $37.9 million for 2000.

                                       33


                      FIFTH THIRD BANCORP AND SUBSIDIARIES



Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

18. REGULATORY REQUIREMENTS AND CAPITAL RATIOS

The principal source of income and funds for the Bancorp (parent company) are
dividends from its subsidiaries. During 2003, the amount of dividends the
subsidiaries can pay to the Bancorp without prior approval of regulatory
agencies is limited to their 2003 eligible net profits, as defined, and the
adjusted retained 2002 and 2001 net income of the subsidiaries.

   The Bancorp's subsidiary banks must maintain cash reserve balances when total
reservable deposit liabilities are greater than the regulatory exemption. These
reserve requirements may be satisfied with vault cash and noninterest-bearing
cash balances on reserve with the Federal Reserve Bank (FRB). In 2002 and 2001,
the banks were required to maintain average cash reserve balances of $303.0
million and $554.6 million, respectively.

   The FRB adopted quantitative measures which assign risk weightings to assets
and off-balance-sheet items and also define and set minimum regulatory capital
requirements (risk-based capital ratios). All banks are required to have core
capital (Tier 1) of at least 4% of risk-weighted assets, total capital of at
least 8% of risk-weighted assets and a minimum Tier 1 leverage ratio of 3% of
adjusted quarterly average assets. Tier 1 capital consists principally of
shareholders' equity including capital-qualifying subordinated debt but
excluding unrealized gains and losses on securities available-for-sale, less
goodwill and certain other intangibles. Total capital consists of Tier 1 capital
plus certain debt instruments and the reserve for credit losses, subject to
limitation. Failure to meet certain capital requirements can initiate certain
actions by regulators that, if undertaken, could have a direct material effect
on the Consolidated Financial Statements of the Bancorp. The regulations also
define well-capitalized levels of Tier 1, total capital and Tier 1 leverage as
6%, 10% and 5%, respectively. The Bancorp and each of its subsidiary banks had
Tier 1, total capital and leverage ratios above the well-capitalized levels at
December 31, 2002 and 2001. As of December 31, 2002, the most recent
notification from the FRB categorized the Bancorp and each of its subsidiary
banks as well-capitalized under the regulatory framework for prompt corrective
action.

   Capital and risk-based capital and leverage ratios for the Bancorp and its
significant subsidiary banks at December 31:

                                                2002
                                         -------------------

($ in millions)                             Amount    Ratio
- ------------------------------------------------------------
Total Capital (to Risk-Weighted
Assets):
- ------------------------------------------------------------
Fifth Third Bancorp (Consolidated) ......$ 8,835.0    13.50%
Fifth Third Bank (Ohio) .................  4,443.7    11.68
Fifth Third Bank (Michigan) .............  2,280.5    10.66
Fifth Third Bank, Indiana ...............  1,054.0    18.19
Fifth Third Bank, Kentucky, Inc. ........    256.0    10.09
Fifth Third Bank, Northern Kentucky,
Inc. ....................................    131.9    10.74
Tier 1 Capital (to Risk-Weighted Assets):
Fifth Third Bancorp (Consolidated) ......  7,647.0    11.68
Fifth Third Bank (Ohio) .................  3,592.1     9.44
Fifth Third Bank (Michigan) .............  1,891.4     8.84
Fifth Third Bank, Indiana ...............    996.3    17.19
Fifth Third Bank, Kentucky, Inc. ........    236.2     9.31
Fifth Third Bank, Northern Kentucky,
Inc. ....................................    101.8     8.29

Tier 1 Leverage Capital (to Average
Assets):
Fifth Third Bancorp (Consolidated) ......  7,647.0     9.72
Fifth Third Bank (Ohio) .................  3,592.1     7.93
Fifth Third Bank (Michigan) .............  1,891.4     7.60
Fifth Third Bank, Indiana ...............    996.3    11.93
Fifth Third Bank, Kentucky, Inc. ........    236.2     9.05
Fifth Third Bank, Northern Kentucky,
Inc. ....................................    101.8     7.08
- ------------------------------------------------------------

- ------------------------------------------------------------
                                                2001
                                         -------------------
($ in millions)                           Amount     Ratio
- ------------------------------------------------------------
Total Capital (to Risk-Weighted
Assets):
Fifth Third Bancorp (Consolidated) ..... $ 8,575.8    14.41%
Fifth Third Bank (Ohio) ................   3,916.5    12.25
Fifth Third Bank (Michigan) ............   2,205.3    11.06
Fifth Third Bank, Indiana ..............   1,087.9    20.63
Fifth Third Bank, Kentucky, Inc. .......     218.6    11.30
Fifth Third Bank, Northern Kentucky,
Inc. ...................................     118.2    11.04
Tier 1 Capital (to Risk-Weighted Assets):
Fifth Third Bancorp (Consolidated) .....   7,351.7    12.35
Fifth Third Bank (Ohio) ................   3,117.5     9.75
Fifth Third Bank (Michigan) ............   1,762.5     8.84
Fifth Third Bank, Indiana ..............   1,034.8    19.62
Fifth Third Bank, Kentucky, Inc. .......     200.9    10.39
Fifth Third Bank, Northern Kentucky,
Inc. ...................................      88.4     8.26
Tier 1 Leverage Capital (to Average
Assets):
Fifth Third Bancorp (Consolidated) .....   7,351.7    10.52
Fifth Third Bank (Ohio) ................   3,117.5     8.11
Fifth Third Bank (Michigan) ............   1,762.5     7.43
Fifth Third Bank, Indiana ..............   1,034.8    11.97
Fifth Third Bank, Kentucky, Inc. .......     200.9     8.36
Fifth Third Bank, Northern Kentucky,
Inc. ...................................      88.4     6.98
- ------------------------------------------------------------


19. NONOWNER CHANGES IN EQUITY

The Bancorp has elected to present the disclosures required by SFAS No. 130,
"Reporting Comprehensive Income," in the Consolidated Statements of Changes in
Shareholders' Equity on page 19. The caption "Net Income and Nonowner Changes in
Equity" represents total comprehensive income as defined in the statement.
Reclassification adjustments, related tax effects allocated to nonowner changes
in equity and accumulated nonowner changes in equity as of and for the years
ended December 31:

- -------------------------------------------------------------------
($ in millions)                             2002      2001     2000
- -------------------------------------------------------------------
Reclassification adjustment,
pretax:

Change in unrealized net gains
arising during year ....................  $ 793.3    156.2    496.5

Reclassification adjustment for
net gains included in net income .......   (147.1)  (171.1)    (6.2)
- -------------------------------------------------------------------
Change in unrealized gains (losses)
on securities available-for-sale .......  $ 646.2    (14.9)   490.3
- -------------------------------------------------------------------
Related tax effects:

Change in unrealized net gains
arising during year ....................  $ 277.3     60.6    162.5

Reclassification adjustment for
net gains included in net income .......    (51.3)   (65.4)    (2.0)
- -------------------------------------------------------------------
Change in unrealized gains (losses)
on securities available-for-sale .......  $ 226.0     (4.8)   160.5
- -------------------------------------------------------------------
Reclassification adjustment, net
of tax:

Change in unrealized net gains
arising during year ....................  $ 516.0     95.6    334.0

Reclassification adjustment for
net gains included in net income .......    (95.8)  (105.7)    (4.2)
- -------------------------------------------------------------------
Change in unrealized gains (losses)
on securities available-for-sale .......  $ 420.2    (10.1)   329.8
- -------------------------------------------------------------------

                                       34



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
($ in millions)                                   2002         2001        2000
- --------------------------------------------------------------------------------
Accumulated nonowner changes in equity:
  Beginning balance --
    Unrealized gains (losses) on
    securities available-for-sale ...........  $  17.9         28.0      (301.8)
  Current period change .....................    420.2        (10.1)      329.8
- --------------------------------------------------------------------------------
  Ending balance --
    Unrealized net gains on
    securities available-for-sale ...........  $ 438.1         17.9        28.0
- --------------------------------------------------------------------------------
  Beginning balance --
    Unrealized net losses on
    qualifying cash flow hedges .............  $ (10.1)          --          --
  Current period change, net of
    tax of $3.6 million and $5.5
    million, in 2002 and 2001,
    respectively  ...........................     (6.8)       (10.1)         --
- --------------------------------------------------------------------------------
  Ending balance --
    Unrealized net losses on
    qualifying cash flow hedges, net
    of tax of $9.1 million and
    $5.5 million, in 2002 and
    2001, respectively ......................  $ (16.9)       (10.1)         --
- --------------------------------------------------------------------------------
  Beginning balance --
    Minimum pension liability ...............  $    --           --          --
  Current period change,
    net of tax of $28.1 million
    in 2002 .................................    (52.2)          --          --
- --------------------------------------------------------------------------------
  Ending balance -- Minimum
    pension liability, net of tax
    of $28.1 million in 2002 ................  $ (52.2)          --          --
- --------------------------------------------------------------------------------
  Ending balance -- Unrealized
    net gains on securities
    available-for-sale ......................  $ 438.1         17.9        28.0
  Unrealized net losses on
    qualifying cash flow hedges .............    (16.9)       (10.1)         --
  Minimum pension liability .................    (52.2)          --          --
- --------------------------------------------------------------------------------
  Accumulated nonowner
    changes in equity .......................  $ 369.0          7.8        28.0
- --------------------------------------------------------------------------------

20. SALES AND TRANSFERS OF LOANS

During 2002 and 2001, the Bancorp sold fixed rate and adjustable residential
mortgage loans in securitization transactions. In all those sales, the Bancorp
retained servicing responsibilities. In addition, during 2002 the Bancorp
retained an interest-only strip (IO strip) and a subordinated interest in a
securitization transaction. The Bancorp receives annual servicing fees at a
percentage of the outstanding balance and rights to future cash flows arising
after the investors in the securitization trust have received the return for
which they contracted. The investors and the securitization trust have no
recourse to the Bancorp's other assets for failure of debtors to pay when due.
The Bancorp's retained interests are subordinate to investor's interests. Their
value is subject to credit, prepayment and interest rate risks on the sold
financial assets. In 2002 and 2001, the Bancorp recognized pretax gains of
$268.7 million and $197.1 million, respectively, on the sales of residential
mortgage loans. Total proceeds from residential mortgage loan sales in 2002 and
2001 were $9.9 billion and $9.0 billion, respectively.

     Initial carrying values of retained interests recognized during 2002 and
2001 were as follows:

- --------------------------------------------------------------------------------
($ in millions)                                   2002         2001
- --------------------------------------------------------------------------------
Mortgage Servicing Assets ....................  $139.7        309.6
IO Strips ....................................  $  3.2           --
Subordinated Interests .......................  $ 22.0           --
- --------------------------------------------------------------------------------

     Key economic assumptions used in measuring the retained interests at the
date of securitization resulting from securitizations completed during 2002 and
2001 were as follows:



- -------------------------------------------------------------------------------------
                                                  2002
- -------------------------------------------------------------------------------------
                              Mortgage Servicing Asset     Interest-Only Subordinated
                              ------------------------
                              Fixed-Rate    Adjustable        Strips      Interest
- -------------------------------------------------------------------------------------
                                                                 
Prepayment speed ...........     22.7%        30.1%             65%          35%
Weighted-average life
  (in years) ...............      4.6          3.1             .89         2.83
Residual servicing cash
  flows discounted at ......      9.1%        11.0%             --           --
- -------------------------------------------------------------------------------------


- --------------------------------------------------------------------------------
                                                         2001
- --------------------------------------------------------------------------------
                                               Mortgage Servicing Asset
                                               ------------------------
                                               Fixed-Rate    Adjustable
- --------------------------------------------------------------------------------
Prepayment speed ............................     13.9%       23.1%
Weighted-average life
  (in years) ................................      7.2         4.0
Residual servicing cash
  flows discounted at .......................     10.5%       15.2%
- --------------------------------------------------------------------------------

     Based on historical credit experience, expected credit losses and the
effect of an unfavorable change in credit losses have been deemed to not be
material.

     At December 31, 2002, key economic assumptions and the sensitivity of the
current fair value of residual cash flows to immediate 10 percent and 20 percent
adverse changes in those assumptions are as follows:



- -------------------------------------------------------------------------------------
                               Mortgage Servicing Asset    Interest-Only Subordinated
                               ------------------------
($ in millions)                Fixed-Rate    Adjustable       Strips      Interests
- -------------------------------------------------------------------------------------
                                                                 
Fair value of retained
  interests ....................   $230.7        $ 32.8         $3.2       $62.9
Weighted-average life
  (in years) ...................      3.4           3.2          .89         3.4
Prepayment speed
  assumption
  (annual rate) ................     26.6%         26.4%          65%         43%
Impact on fair value of 10%
  adverse change ...............   $ 15.6        $  1.9         $ .5          --
Impact on fair value of 20%
  adverse change ...............   $ 29.3        $  3.6         $1.0          --
Residual servicing cash
  flows discount rate
  (annual) .....................      9.5%         11.3%          --          --
Impact on fair value of 10%
  adverse change ...............   $  4.5        $   .8           --          --
Impact on fair value of 20%
  adverse change ...............   $  8.9        $  1.5           --          --
- -------------------------------------------------------------------------------------


     Changes in prepayment speeds relative to the valuation of the subordinated
interests will only result in favorable changes in fair value.

     These sensitivities are hypothetical and should be used with caution. As
the figures indicate, changes in fair value based on a 10% variation in
assumptions generally cannot be extrapolated because the relationship of the
change in assumption to the change in fair value may not be linear. Also, in the
above table, the effect of a variation in a particular assumption on the fair
value of the

                                       35



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

retained interest is calculated without changing any other assumption; in
reality, changes in one factor may result in changes in another (for example,
increases in market interest rates may result in lower prepayments and increased
credit losses), which might magnify or counteract the sensitivities.

     During 2002 and 2001, the Bancorp transferred, subject to credit recourse,
certain commercial loans to an unconsolidated QSPE that is wholly owned by an
independent third party. At December 31, 2002 and 2001, the outstanding balance
of loans transferred was $1.8 billion and $2.0 billion, respectively. The
commercial loans transferred to the QSPE are primarily fixed-rate and short-term
investment grade in nature. Generally, the loans transferred, due to their
investment grade nature, provide a lower yield and therefore transferring these
loans to the QSPE allows the Bancorp to reduce its exposure to these lower
yielding loan assets and at the same time maintain these customer relationships.
These commercial loans are transferred at par with no gain or loss recognized.
The Bancorp receives rights to future cash flows arising after the investors in
the securitization trust have received the return for which they contracted. Due
to the relatively short-term nature of the loans transferred, no value has been
assigned to this retained future stream of fees to be received. As of December
31, 2002, the $1.8 billion balance of outstanding loans had a weighted average
remaining maturity of 64 days.

     The Bancorp had the following cash flows with the unconsolidated QSPE
during 2002 and 2001:

- --------------------------------------------------------------------------------
($ in millions)                             2002           2001
- --------------------------------------------------------------------------------
Proceeds from transfers ................  $257.6          203.0
Transfers received from QSPE ...........  $269.8          178.5
Fees received ..........................  $ 26.3           22.6
- --------------------------------------------------------------------------------

21. ACQUISITIONS
- --------------------------------------------------------------------------------


                                                       Consideration
                                                       -------------
                                                                   Common
                                       Date           Cash          Shares      Method of
                                    Completed     (in millions)     Issued     Accounting
- -----------------------------------------------------------------------------------------
                                                                     
Universal Companies (USB),           10/31/01         $220.0              --     Purchase
  Milwaukee, Wisconsin
Old Kent Financial                     4/2/01             --     103,716,638      Pooling
  Corporation,
  Grand Rapids, Michigan
Capital Holdings, Inc. (Capital),      3/9/01             --       4,505,385      Pooling
  Sylvania, Ohio
Resource Management, Inc.,             1/2/01           18.1         470,162     Purchase
  Cleveland, Ohio
Ottawa Financial                      12/8/00             .1       3,658,125     Purchase
  Corporation (Ottawa),
  Grand Rapids, Michigan
Grand Premier Financial, Inc.          4/1/00             --       6,990,743      Pooling
  (Grand Premier),
  Wauconda, Illinois
Merchants Bancorp, Inc.               2/11/00             --       3,235,680      Pooling
  (Merchants),
  Aurora, Illinois
- -----------------------------------------------------------------------------------------


     The assets, liabilities and shareholders' equity of the pooled entities
were recorded on the books of the Bancorp at their values as reported on the
books of the pooled entities immediately prior to the consummation of the merger
with the Bancorp. This presentation required the restatements for material
acquisitions of prior periods as if the companies had been combined for all
years presented.

     On April 2, 2001, the Bancorp acquired Old Kent, a publicly-traded
financial holding company headquartered in Grand Rapids, Michigan. The
contribution of Old Kent to consolidated net interest income, other operating
income and net income available to common shareholders for the periods prior to
the merger were as follows:

- --------------------------------------------------------------------------------
                                                      Year Ended
                                Three Months Ended    December 31,
($ in millions)                    March 31, 2001        2000
- --------------------------------------------------------------------------------
Net Interest Income:
Bancorp ..........................     $392.9           1,470.3
Old Kent .........................      195.5             784.2
- --------------------------------------------------------------------------------
Combined .........................     $588.4           2,254.5
- --------------------------------------------------------------------------------
Other Operating Income:
Bancorp ..........................     $292.5           1,012.7
Old Kent .........................      120.7             469.7
- --------------------------------------------------------------------------------
Combined .........................     $413.2           1,482.4
- --------------------------------------------------------------------------------
Net Income Available to
  Common Shareholders:
Bancorp ..........................     $244.3             862.9
Old Kent .........................       55.1             277.5
- --------------------------------------------------------------------------------
Combined .........................     $299.4           1,140.4
- --------------------------------------------------------------------------------

     During 2000, as a direct result of the Grand Premier and Merchants
acquisitions as well as the pooling acquisition consummated with CNB on October
29, 1999 and the related formally developed integration plans, the Bancorp
recorded merger-related charges of $99.0 million ($66.6 million after tax) of
which $87.0 million was recorded as operating expense and $12.0 million was
recorded as additional provision for credit losses. The charge to operating
expenses consisted of employee severance and benefit obligations including
recognition of a $10.0 million curtailment gain on CNB's defined benefit plan,
costs to eliminate duplicate facilities and equipment, contract terminations,
conversion expenses, professional fees and securities losses realized in
realigning the balance sheet.

     In the second and third quarters of 2001, as a result of the Old Kent
acquisition and a formally developed integration plan, the Bancorp recorded
merger-related charges of $384.0 million ($293.6 million after tax) of which
$348.6 million was recorded as operating expense and $35.4 million was recorded
as additional provision for credit losses.

     The merger-related charges consist of:

- --------------------------------------------------------------------------------
($ in millions)                                         2001       2000
- --------------------------------------------------------------------------------
Employee severance and benefit obligations .........   $77.4       17.4
Duplicate facilities and equipment .................    95.1        4.1
Conversion expenses ................................    50.9       14.8
Professional fees ..................................    45.8        5.9
Contract termination costs .........................    19.9       19.8
Loss on portfolio sales ............................    28.7       21.6
Net loss on sales of subsidiaries and out-
  of-market line of business operations ............    15.2        2.6
Other ..............................................    15.6         .8
- --------------------------------------------------------------------------------
Merger-related charges .............................  $348.6       87.0
- --------------------------------------------------------------------------------

     In 2001, employee severance included the packages negotiated with
approximately 1,400 people (including all levels of the previous Old Kent
organization from the executive management level to back office support staff)
and the change-in-control payments made pursuant to pre-existing employment
agreements. Employee-related payments made through 2002 totaled $77.4 million,
including payments to the approximate 1,400 people that have been terminated as
of December 31, 2002. All terminations have been completed related to this

                                       36



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

transaction. Credit quality charges relate to conforming Old Kent commercial and
consumer loans to the Bancorp's credit policies. Specifically, these loans were
conformed to the Bancorp's credit rating and review systems, as documented in
the Bancorp's credit policies.

     Duplicate facilities and equipment charges of $95.1 million largely include
write-downs of duplicative equipment and software, negotiated terminations of
several office leases and other facility exit costs. The Bancorp has
approximately $4.0 million of remaining negotiated termination and lease
payments of exited facilities as of December 31, 2002.

     Summary of merger-related accrual activity at December 31:

- --------------------------------------------------------------------------------
($ in millions)                                         2002            2001
- --------------------------------------------------------------------------------
Balance, January 1 ................................    $54.5            13.0
Merger-related charges ............................       --           348.6
Cash payments .....................................    (50.5)         (229.4)
Noncash writedowns ................................       --           (77.7)
- --------------------------------------------------------------------------------
Balance, December 31 ..............................    $ 4.0            54.5
- --------------------------------------------------------------------------------

     In 2001, non-cash writedowns consisted of $51.3 million of duplicate
equipment and duplicate data processing software writedowns, $18.4 million of
goodwill and fixed asset writedowns necessary as a result of the sale of the
out-of-market mortgage operations and $8.0 million to conform Bancorp and Old
Kent accounting policies for cost deferral and revenue recognition.

     The pro forma effect and the financial results of Ottawa and Capital,
respectively, included in the results of operations subsequent to the date of
the acquisitions were not material to the Bancorp's financial condition and
operating results for the periods presented.

22. PENDING ACQUISITION

On July 23, 2002, the Bancorp entered into an agreement to acquire Franklin
Financial Corporation and its subsidiary, Franklin National Bank, headquartered
in Franklin, Tennessee. At December 31, 2002, Franklin Financial Corporation had
approximately $890 million in total assets and $758 million in total deposits.
The transaction is structured as a tax-free exchange of stock for a total
transaction value of approximately $240 million. The transaction is subject to
regulatory approvals. There is currently a moratorium on future acquisitions,
including Franklin Financial Corporation, imposed by the Federal Reserve Bank of
Cleveland and the Ohio Department of Commerce, Division of Financial
Institutions under a November 7, 2002 supervisory letter until such letter is
withdrawn. In addition, the transaction is subject to the approval of Franklin
Financial Corporation shareholders. Pursuant to the current terms of the
Affiliation Agreement with Franklin Financial Corporation, the transaction must
be consummated by April 1, 2003.

23. EARNINGS PER SHARE

Reconciliation of Earnings Per Share to Earnings Per Diluted Share for the years
ended December 31:

- --------------------------------------------------------------------------------
                                                             2002
                                                  ------------------------------
                                                             Average  Per Share
($ in millions, except per share amounts)         Income      Shares    Amount
- --------------------------------------------------------------------------------
EPS
Net income available to
  common shareholders .........................  $1,634.0     580,327     $2.82
Effect of Dilutive Securities --
Stock options .................................                11,385
Dividends on convertible
  preferred stock .............................        .6         308
- --------------------------------------------------------------------------------
Diluted EPS
Net income available to
  common shareholders
  plus assumed conversions ....................  $1,634.6     592,020     $2.76
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
                                                             2001
                                                  ------------------------------
                                                             Average  Per Share
($ in millions, except per share amounts)         Income      Shares    Amount
- --------------------------------------------------------------------------------
EPS
Net income available to
common shareholders ...........................  $1,093.0     575,254     $1.90
Effect of Dilutive Securities --
Stock options .................................                11,350
Interest on 6% convertible
  subordinated debentures
  due 2028, net of applicable
  income taxes ................................       4.9       4,404
Dividends on convertible
  preferred stock .............................        .6         308
- --------------------------------------------------------------------------------
Diluted EPS
Net income available to
  common shareholders
  plus assumed conversions ....................  $1,098.5     591,316    $ 1.86
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
                                                             2000
                                                  ------------------------------
                                                             Average  Per Share
($ in millions, except per share amounts)         Income      Shares    Amount
- --------------------------------------------------------------------------------
EPS
Net income available to
  common shareholders .........................  $1,140.4     565,686     $2.02
Effect of Dilutive Securities --
Stock options .................................                 8,563
Interest on 6% convertible
  subordinated debentures
  due 2028, net of applicable
  income taxes ................................       6.7       4,416
Dividends on convertible
  preferred stock .............................        .6         308
- --------------------------------------------------------------------------------
Diluted EPS
Net income available to
  common shareholders
  plus assumed conversions ....................  $1,147.7     578,973     $1.98
- --------------------------------------------------------------------------------

   In connection with the merger of CNB in 1999, the Bancorp assumed $172.5
million of trust preferred securities through CNB Capital Trust I, a Delaware
statutory business trust. Effective December 31, 2001, the Bancorp announced
that it would redeem all of the outstanding 6.0% convertible subordinated
debentures due 2028, thereby causing a redemption of all the issued and
outstanding

                                       37



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

6.0% trust preferred securities. The holders elected to convert all but 2,800
shares of the trust preferred securities into Bancorp common stock in December,
2001.

     The diluted per share impact of the change in accounting principle in 2001
related to the adoption of SFAS No. 133 was $.01. Options to purchase 6.2
million and .6 million shares outstanding at December 31, 2002 and 2001,
respectively, were not included in the computation of net income per diluted
share because the exercise price of these options was greater than the average
market price of the common shares, and therefore, the effect would be
antidilutive.

24. FAIR VALUE OF FINANCIAL INSTRUMENTS

Carrying amounts and estimated fair values for financial instruments at December
31:

- --------------------------------------------------------------------------------
                                                            2002
                                                 -------------------------------
                                                   Carrying           Fair
($ in millions)                                      Amount          Value
- --------------------------------------------------------------------------------
Financial Assets --
  Cash and due from banks ...................      $ 1,890.8       $ 1,890.8
  Securities available-for-sale .............       25,464.1        25,464.1
  Securities held-to-maturity ...............           51.8            51.8
  Other short-term investments ..............          311.9           311.9
  Loans held for sale .......................        3,357.5         3,395.2
  Loans and leases ..........................       45,928.1        46,593.7
  Accrued income receivable .................          569.4           569.4
Financial Liabilities --
  Deposits ..................................       52,208.4        52,432.9
  Federal funds borrowed ....................        4,748.5         4,748.5
  Other short-term borrowings ...............        4,074.6         4,063.3
  Accrued interest payable ..................          127.0           127.0
  Long-term debt ............................        8,178.7         9,115.0
Financial Instruments --
  Commitments to extend credit ..............             --            25.1
  Letters of credit .........................             --            35.2
  Interest rate swap agreements .............          120.2           120.2
  Principal only swaps ......................            9.6             9.6
  Purchased options .........................           37.0            37.0
  Forward contracts:
    Commitments to sell loans ...............          (35.1)          (35.1)
    Foreign exchange contracts:
      Commitments to purchase ...............           46.8            46.8
      Commitments to sell ...................          (37.2)          (37.2)
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
                                                            2001
                                                 -------------------------------
                                                   Carrying           Fair
($ in millions)                                      Amount          Value
- --------------------------------------------------------------------------------
Financial Assets --
  Cash and due from banks ...................      $ 2,031.0       $ 2,031.0
  Securities available-for-sale .............       20,506.6        20,506.6
  Securities held-to-maturity ...............           16.4            16.4
  Other short-term investments ..............          224.7           224.7
  Loans held for sale .......................        2,180.1         2,184.0
  Loans and leases ..........................       41,547.9        42,812.1
  Accrued income receivable .................          617.9           617.9
Financial Liabilities --
  Deposits ..................................       45,854.1        45,905.6
  Federal funds borrowed ....................        2,543.8         2,543.8
  Short-term bank notes .....................           33.9            33.9
  Other short-term borrowings ...............        4,875.0         4,959.6
  Accrued interest payable ..................          194.6           194.6
  Long-term debt ............................        7,029.9         7,444.8
Financial Instruments --
  Commitments to extend credit ..............             --            20.4
  Letters of credit .........................             --            31.0
  Interest rate swap agreements .............          (15.1)          (15.1)
  Interest rate floors ......................             --             (.9)
  Interest rate caps ........................             --              .2
  Purchased options .........................           31.4            31.4
  Interest rate lock commitments ............            3.9             3.9
  Forward contracts:
    Commitments to sell loans ...............           13.6            13.6
    Foreign exchange contracts:
      Commitments to purchase ...............           (1.4)           (1.4)
      Commitments to sell ...................            5.1             5.1
- --------------------------------------------------------------------------------

     Fair values for financial instruments, which were based on various
assumptions and estimates as of a specific point in time, represent liquidation
values and may vary significantly from amounts that will be realized in actual
transactions. In addition, certain non-financial instruments were excluded from
the fair value disclosure requirements. Therefore, the fair values presented in
the table 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
a 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, accrued income
receivable, certain deposits (demand, interest checking, savings and money
market), Federal funds borrowed, short-term bank notes, other short-term
borrowings and accrued interest payable.

     Securities, available-for-sale and held-to-maturity--fair values were based
on prices obtained from an independent nationally recognized pricing service.

     Loans--fair values 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.

     Loans held for sale--the fair value of loans held for sale was estimated
based on outstanding commitments from investors or current investor yield
requirements.

     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.

                                       38


                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

     Long-term debt--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.

     Commitments and letters of credit--fair values of loan commitments, letters
of credit and commitments to sell loans, representing assets to the Bancorp,
were based on fees currently charged to enter into similar agreements with
similar maturities.

     Interest rate swap agreements--fair value was based on the estimated amount
the Bancorp would receive or pay to terminate the swap agreements, taking into
account the current interest rates and the creditworthiness of the swap
counterparties. The fair values represent an asset at December 31, 2002.

     Purchased options and interest rate floors and caps--fair values were based
on the estimated amounts the Bancorp would receive from terminating the
contracts at the reporting date.

     Foreign exchange contracts--fair values were based on quoted market prices
of comparable instruments and represent a net asset to the Bancorp.

25.PARENT COMPANY FINANCIAL STATEMENTS

The condensed financial statements of the Bancorp ($ in millions):

- --------------------------------------------------------------------------------
Condensed Statements of Income (Parent Company Only)
For the Years Ended December 31                 2002       2001       2000
- --------------------------------------------------------------------------------
Income
Dividends from Subsidiaries ...........     $1,257.7      214.4      636.4
Interest on Loans to
  Subsidiaries ........................         32.5       38.9       40.8
Other .................................           .1       24.4         .9
- --------------------------------------------------------------------------------
Total Income ..........................      1,290.3      277.7      678.1
Expenses
Interest ..............................          5.0       25.1       19.7
Other .................................          3.4       36.5        8.5
- --------------------------------------------------------------------------------
Total Expenses ........................          8.4       61.6       28.2
- --------------------------------------------------------------------------------
Income Before Taxes and
  Change in Undistributed
  Earnings of Subsidiaries ............      1,281.9      216.1      649.9
Applicable Income Taxes (Benefit) .....          8.5   (    5.6)       2.7
- --------------------------------------------------------------------------------
Income Before Change in
  Undistributed Earnings of
  Subsidiaries ........................      1,273.4      221.7      647.2
Increase in Undistributed
  Earnings of Subsidiaries ............        361.3      872.0      493.9
- --------------------------------------------------------------------------------
Net Income ............................     $1,634.7    1,093.7    1,141.1
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Condensed Balance Sheets (Parent Company Only)
December 31                                                2002       2001
- --------------------------------------------------------------------------------
Assets
Cash ...............................................   $     .1         .1
Securities  Available-for-Sale .....................         --        1.1
Loans to  Subsidiaries .............................    1,144.3      985.5
Investment in Subsidiaries .........................    7,869.4    6,897.8
Goodwill ...........................................      137.0      138.0
Other  Assets ......................................       54.9       26.3
- --------------------------------------------------------------------------------
Total  Assets ......................................   $9,205.7    8,048.8
- --------------------------------------------------------------------------------
Liabilities
Commercial  Paper ..................................   $   93.2       20.6
Accrued Expenses and Other Liabilities .............      396.6      188.9
Long-Term  Debt ....................................      240.9      200.0
- --------------------------------------------------------------------------------
Total Liabilities ..................................      730.7      409.5
- --------------------------------------------------------------------------------
Shareholders' Equity ...............................    8,475.0    7,639.3
- --------------------------------------------------------------------------------
Total Liabilities and
  Shareholders' Equity .............................   $9,205.7    8,048.8
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Condensed Statements of Cash Flows (Parent Company Only)
December 31                                     2002       2001       2000
- --------------------------------------------------------------------------------
Operating Activities
Net Income ..............................   $1,634.7    1,093.7    1,141.1
Adjustments to Reconcile Net
  Income to Net Cash Provided
  by Operating Activities:
    Amortization/Depreciation ...........         .1        6.4        5.9
    (Benefit) Provision for
      Deferred Income Taxes .............   (    3.2)   (   8.0)       2.3
    (Increase) Decrease in
      Other Assets ......................   (   28.6)   (   3.4)      29.1
    Increase in Accrued Expenses
      and Other Liabilities .............        1.8       65.2        7.0
    Increase in Undistributed
      Earnings of Subsidiaries ..........   (  361.3)   ( 872.0)   ( 493.9)
- --------------------------------------------------------------------------------
Net Cash Provided by
  Operating Activities ..................    1,243.5      281.9      691.5
- --------------------------------------------------------------------------------
Investing Activities
Proceeds from Sales of
  Securities Available-for-Sale .........        1.1         --       --
Decrease in Interest-
  Bearing Deposits ......................         --       11.5       --
(Increase) Decrease in Loans
  to Subsidiaries .......................   (  158.8)     251.1    ( 124.6)
Capital Contributions to Subsidiaries...... (     .4)   ( 254.8)   (  86.1)
- --------------------------------------------------------------------------------
Net Cash (Used in) Provided by
  Investing Activities ..................   (  158.1)       7.8    ( 210.7)
- --------------------------------------------------------------------------------
Financing Activities
Increase in Other
  Short-Term Borrowings .................       72.6       10.3        8.0
Payment of Cash Dividends ...............   (  553.1)   ( 460.1)   ( 317.5)
Purchases of Treasury Stock .............   (  719.5)   (  14.7)   ( 180.9)
Exercise of Stock Options ...............      104.3       97.7       39.0
Other ...................................       10.3       70.5    (  23.5)
- --------------------------------------------------------------------------------
Net Cash Used in
  Financing Activities ..................   (1,085.4)   ( 296.3)   ( 474.9)
- --------------------------------------------------------------------------------
(Decrease) Increase in Cash .............         --    (   6.6)       5.9
Cash at Beginning of Year ...............         .1        6.7         .8
- --------------------------------------------------------------------------------
Cash at End of Year .....................   $     .1         .1        6.7
- --------------------------------------------------------------------------------

                                       39


                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------

26. SEGMENTS

The Bancorp's principal activities include Retail Banking, Commercial Banking,
Investment Advisory Services and Electronic Payment Processing. Retail Banking
provides a full range of deposit products and consumer loans and leases.
Commercial Banking offers banking, cash management and financial services to
business, government and professional customers. Investment Advisory Services
provides a full range of investment alternatives for individuals, companies and
not-for-profit organizations. Fifth Third Processing Solutions, the Electronic
Payment Processing subsidiary, provides electronic funds transfer (EFT)
services, merchant transaction processing, operates the Jeanie ATM network and
provides other data processing services to affiliated and unaffiliated
customers. General Corporate and Other includes the investment portfolio,
certain non-deposit funding, unassigned equity, the net effect of funds transfer
pricing and other items not allocated to operating segments.

     The financial information for each operating segment is reported on the
basis used internally by the Bancorp's management to evaluate performance and
allocate resources. The allocation has been consistently applied for all periods
presented. Revenues from affiliated transactions, principally EFT services from
Fifth Third Processing Solutions to the banking segments, are generally charged
at rates available to and transacted with unaffiliated customers.

     The performance measurement of the operating segments is based on the
management structure of the Bancorp and is not necessarily comparable with
similar information for any other financial institution. The information
presented is also not necessarily indicative of the segments' financial
condition and results of operations if they were independent entities.

     Results of operations and selected financial information by operating
segment for each of the three years ended December 31 is as follows:

                                       40



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------



- -----------------------------------------------------------------------------------------------------------------------------------
                                                                          Investment   Electronic     General
                                                  Commercial    Retail     Advisory      Payment      Corporate  Elimina-
($ in millions)                                     Banking    Banking     Services   Processing (a)  and Other   tions (a)   Total
- -----------------------------------------------------------------------------------------------------------------------------------
2002
Results of Operations
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                                       
Net Interest Income (Expense) ..................   $ 1,002.5    1,568.3       128.4        (3.6)          4.7          --   2,700.3
Provision for Credit Losses ....................        99.5      144.6         2.5          --            --          --     246.6
- -----------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Expense) After Provision
  for Credit Losses ............................       903.0    1,423.7       125.9        (3.6)          4.7          --   2,453.7
Other Operating Income .........................       371.5      665.6       336.2       543.2         308.7       (31.1)  2,194.1
Operating Expenses .............................       452.2    1,022.3       290.9       302.1         179.7       (31.1)  2,216.1
- -----------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes, Minority
  Interest and Cumulative Effect ...............       822.3    1,067.0       171.2       237.5         133.7          --   2,431.7
Applicable Income Taxes ........................       256.6      333.2        53.3        74.4          41.8          --     759.3
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income Available to
  Common Shareholders ..........................   $   565.7      696.1       117.9       163.1          91.2          --   1,634.0
- -----------------------------------------------------------------------------------------------------------------------------------
Selected Financial Information
Goodwill as of Jan. 1, 2002 ....................   $   183.4      235.8        98.4       164.7            --          --     682.3
Goodwill Recognized (b) ........................          --         --          --        28.6            --          --      28.6
Divestiture ....................................          --       (8.8)         --          --            --          --      (8.8)
- -----------------------------------------------------------------------------------------------------------------------------------
Goodwill as of Dec. 31, 2002 ...................   $   183.4      227.0        98.4       193.3            --          --     702.1
- -----------------------------------------------------------------------------------------------------------------------------------
Identifiable Assets ............................   $21,690.3   28,465.0     1,720.0       491.0      28,528.1          --  80,894.4
Depreciation and Amortization ..................   $     1.0       13.4         1.4         2.0          79.0          --      96.8
- -----------------------------------------------------------------------------------------------------------------------------------
2001
Results of Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Expense) ..................   $   929.2    1,386.4        95.6        (4.8)         26.6          --   2,433.0
Provision for Credit Losses ....................        90.9      104.1         5.6          --          35.4          --     236.0
- -----------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Expense) After Provision
  for Credit Losses ............................       838.3    1,282.3        90.0        (4.8)         (8.8)         --   2,197.0
Other Operating Income .........................       228.5      584.9       306.5       372.2         330.1       (24.8)  1,797.4
Merger-Related Charges .........................          --         --          --          --         348.6          --     348.6
Operating Expenses .............................       389.6      981.7       235.2       200.1         211.0       (24.8)  1,992.8
- -----------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes, Minority
  Interest and Cumulative Effect ...............       677.2      885.5       161.3       167.3        (238.3)         --   1,653.0
Applicable Income Taxes ........................       225.3      294.6        53.7        55.7         (79.3)         --     550.0
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income Available to
  Common Shareholders ..........................   $   451.9      590.9       107.6       111.6        (169.0)         --   1,093.0
- -----------------------------------------------------------------------------------------------------------------------------------
Selected Financial Information
Identifiable Assets ............................   $19,506.0   25,087.7     1,305.9       494.1      24,632.6          --  71,026.3
Depreciation and Amortization ..................   $     1.5       19.7         1.4         2.0          74.8          --      99.4
- -----------------------------------------------------------------------------------------------------------------------------------
2000
Results of Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Expense) ..................   $   820.1    1,223.1        81.0        (2.9)        133.2          --   2,254.5
Provision for Credit Losses ....................        55.3       67.1         3.3          --          12.0          --     137.7
- -----------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Expense) After Provision
  for Credit Losses ............................       764.8    1,156.0        77.7        (2.9)        121.2          --   2,116.8
Other Operating Income .........................       176.5      452.9       281.0       271.9         320.2       (20.2)  1,482.3
Merger-Related Charges .........................          --         --          --          --          87.0          --      87.0
Operating Expenses .............................       383.7      826.6       211.4       142.5         287.9       (20.2)  1,831.9
- -----------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes, Minority
  Interest and Cumulative Effect ...............       557.6      782.3       147.3       126.5          66.5          --   1,680.2
Applicable Income Taxes ........................       178.9      251.0        47.2        40.6          21.4          --     539.1
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income Available to
  Common Shareholders ..........................   $   378.7      531.3       100.1        85.9          44.4          --   1,140.4
- -----------------------------------------------------------------------------------------------------------------------------------
Selected Financial Information
Identifiable Assets.............................   $19,097.2   24,927.5     1,103.5       146.0      24,384.1          --  69,658.3
Depreciation and Amortization ..................   $     1.6       28.7         1.5         1.3          70.1          --     103.2
- -----------------------------------------------------------------------------------------------------------------------------------


(a)  Electronic payment processing service revenues provided to the banking
     segments are eliminated in the Consolidated Statements of Income.
(b)  The net increase in goodwill resulted from finalizing purchase accounting,
     including the deferred tax accounts, related to the USB purchase
     acquisition.

                                       41



                      FIFTH THIRD BANCORP AND SUBSIDIARIES


Independent Auditors' Report
- --------------------------------------------------------------------------------

Independent Auditors' Report
To the Shareholders and Board of Directors of Fifth Third Bancorp:
     We have audited the consolidated balance sheets of Fifth Third Bancorp and
subsidiaries ("Bancorp") as of December 31, 2002 and 2001, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 2002. These
financial statements are the responsibility of the Bancorp's management. Our
responsibility is to express an opinion on the financial statements based on our
audits. The consolidated financial statements give retroactive effect to the
merger of the Bancorp and Old Kent Financial Corporation ("Old Kent"), which has
been accounted for as a pooling of interests as described in Note 21 to the
consolidated financial statements. We did not audit the statements of income,
changes in shareholders' equity, or cash flows of Old Kent for the year ended
December 31, 2000, which statements reflect total interest income and other
income of $2,129,369,000 for the year ended December 31, 2000. Those statements
were audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for Old Kent for 2000, is
based solely on the report of such other auditors.
     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 and the report of
the other auditors provide a reasonable basis for our opinion.
     In our opinion, based on our audits and the report of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Fifth Third Bancorp and
subsidiaries at December 31, 2002 and 2001, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2002 in conformity with accounting principles generally accepted in the
United States of America.
     As discussed in Note 1, the Bancorp adopted the provisions of Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets,"
effective January 1, 2002.

/s/ DELOITTE & TOUCHE LLP


Cincinnati, Ohio
February 12, 2003
================================================================================
Fifth Third Funds(R) Performance Disclosure
     *Investments in the Fifth Third Funds are: NOT INSURED BY THE FDIC or any
other government agency, are not deposits or obligations of, or guaranteed by,
any bank, the distributor or any of their affiliates, and involve investment
risks, including the possible loss of the principal amount invested. For more
information on the Fifth Third Funds, including charges and expenses, call
1-888-889-1025 for a prospectus. Read it carefully before you invest or send
money. Fifth Third Funds Distributor, Inc. is the distributor for the funds.
There are risks associated with investing in small cap companies, which tend to
be more volatile and less liquid than stocks of large companies, including
increased risk of price fluctuations. International investing involves increased
risk and volatility. A portion of income may be subject to some state and/or
local taxes and for certain investors, a portion may be subject to the federal
alternative minimum tax. Past performance is no guarantee of future results.

                                       42



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------
     This report includes forward-looking statements within the meaning of
Sections 27A of the Securities Act of 1933, as amended, and 21E of the
Securities Exchange Act of 1934, as amended, that involve inherent risks and
uncertainties. A number of important factors could cause actual results to
differ materially from those in the forward-looking statements. Those factors
include the economic environment, competition, products and pricing in
geographic and business areas in which the Bancorp operates, prevailing interest
rates, changes in government regulations and policies affecting financial
services companies, credit quality and credit risk management, changes in the
banking industry including the effects of consolidation resulting from possible
mergers of financial institutions, acquisitions and integration of acquired
businesses. Fifth Third Bancorp undertakes no obligation to release revisions to
these forward-looking statements or reflect events or circumstances after the
date of this report.

     The data presented in the following pages should be read in conjunction
with the audited Consolidated Financial Statements on pages 17 to 41 of this
report.

TABLE 1-CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF NET INTEREST INCOME
For the Years Ended December 31 (Taxable Equivalent Basis)


- ----------------------------------------------------------------------------------------------------------------------------------
                                            2002                              2001                             2000
                            ---------------------------------   --------------------------------  --------------------------------
                              Average                 Average     Average                Average    Average                Average
($ in                          Out-      Revenue/      Yield/      Out-     Revenue/      Yield/     Out-      Revenue/     Yield/
millions)                    standing      Cost        Rate      standing     Cost        Rate     standing      Cost        Rate
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Assets
Interest-Earning
 Assets
  Loans and Leases .......  $45,538.6    $2,823.7      6.20%    $44,888.2   $3,434.5      7.65%   $42,690.5    $3,605.2     8.44%
  Securities
    Taxable ..............   22,145.0     1,257.6      5.68      18,481.4    1,213.2      6.56     17,245.9     1,270.8     7.37
    Exempt from
      Income Taxes .......    1,101.3        81.5      7.40       1,254.8       96.8      7.71      1,383.8       105.5     7.63
  Other Short-Term
    Investments ..........      338.6         5.8      1.72         201.2        9.8      4.88        200.3        13.2     6.59
- ----------------------------------------------------------------------------------------------------------------------------------
Total Interest-Earning
  Assets .................   69,123.5     4,168.6      6.03      64,825.6    4,754.3      7.33     61,520.5     4,994.7     8.12
Cash and Due from Banks ..    1,551.0                             1,482.4                           1,455.7
Other Assets .............    4,969.0                             4,980.4                           4,227.8
Reserve for Credit
  Losses .................     (644.9)                             (624.9)                           (594.1)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Assets .............  $74,998.6                           $70,663.5                         $66,609.9
- ----------------------------------------------------------------------------------------------------------------------------------
Liabilities
Interest-Bearing
 Liabilities
  Interest Checking ......  $16,239.1      $296.4      1.83%    $11,489.0     $311.1      2.71%    $9,531.2      $316.4     3.32%
  Savings ................    9,464.8       158.2      1.67       4,928.4      174.3      3.54      5,798.8       194.0     3.35
  Money Market ...........    1,162.4        27.4      2.36       2,551.5       37.5      1.47        939.1        36.8     3.92
  Other Time Deposits ....    9,402.8       356.8      3.80      13,473.0      745.3      5.53     13,716.3       760.1     5.54
  Certificates-$100,000
    and Over .............    1,689.6        54.7      3.24       3,821.0      187.0      4.89      4,283.0       260.5     6.08
  Foreign Office
    Deposits .............    2,017.7        34.6      1.71       1,992.2       96.4      4.84      3,895.5       251.1     6.45
  Federal Funds
    Borrowed .............    3,261.9        52.8      1.62       3,681.7      152.6      4.14      4,800.6       299.8     6.24
  Short-Term Bank
    Notes ................        1.6          .1      3.40           9.8         .2      2.13      1,102.5        68.6     6.22
  Other Short-Term
    Borrowings ...........    3,926.8        67.0      1.71       5,107.6      204.1      4.00      3,821.6       202.3     5.29
  Long-Term Debt .........    7,640.3       381.1      4.99       6,301.1      367.3      5.83      4,706.5       303.3     6.44
- ----------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing
  Liabilities ............   54,807.0     1,429.1      2.61      53,355.3    2,275.8      4.27     52,595.1     2,692.9     5.12
Demand Deposits ..........    8,952.8                             7,394.5                           6,257.3
Other Liabilities ........    2,601.9                             2,623.0                           1,776.3
- ----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities ........   66,361.7                            63,372.8                          60,628.7
Minority Interest ........      440.1                                30.0                                --
Shareholders' Equity .....    8,196.8                             7,260.7                           5,981.2
- ----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and
  Shareholders' Equity ...  $74,998.6                           $70,663.5                         $66,609.9
- ----------------------------------------------------------------------------------------------------------------------------------
Net Interest Income
  Margin on a Taxable
  Equivalent Basis .......               $2,739.5      3.96%                $2,478.5      3.82%                 $2,301.8    3.74%
- ----------------------------------------------------------------------------------------------------------------------------------
Net Interest Rate Spread .                             3.42%                              3.06%                             3.00%
- ----------------------------------------------------------------------------------------------------------------------------------
Interest-Bearing
 Liabilities to
 Interest-Earning Assets .                            79.29%                             82.30%                            85.49%
- ----------------------------------------------------------------------------------------------------------------------------------


                                       43



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Management's Discussion and Analysis of
Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
     The following table shows changes in tax-equivalent interest income,
interest expense, and net interest income due to volume and rate variances for
major categories of earning assets and interest bearing liabilities. The change
in interest, not solely due to changes in volume or rates, has been consistently
allocated in proportion to the absolute dollar amount of the change in each.

TABLE 2-ANALYSIS OF NET INTEREST INCOME CHANGES (TAXABLE EQUIVALENT BASIS)
- --------------------------------------------------------------------------------


                                                              2002 Compared to 2001                    2001 Compared to 2000
                                                     -------------------------------------   ---------------------------------------
($ in millions)                                      Volume  Yield/Rate    Mix      Total    Volume   Yield/Rate     Mix      Total
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     
Increase (Decrease) in Interest Income
 Loans and Leases ...............................    $ 49.8  $ (651.2)   $ (9.4)  $ (610.8)   185.5     (338.8)     (17.4)   (170.7)
 Securities
  Taxable .......................................     240.5    (163.7)    (32.4)      44.4     91.1     (138.7)     (10.0)    (57.6)
  Tax Exempt ....................................     (11.8)     (4.0)       .5      (15.3)    (9.8)       1.2        (.1)     (8.7)
 Other Short-Term Investments ...................       6.7      (6.4)     (4.3)      (4.0)      .1       (3.5)        --      (3.4)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest Income Change ....................     285.2    (825.3)    (45.6)    (585.7)   266.9     (479.8)     (27.5)   (240.4)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Interest Expense
 Interest Checking ..............................     128.6    (101.4)    (41.9)     (14.7)    65.0      (58.4)     (11.9)     (5.3)
 Savings ........................................     160.4     (91.9)    (84.6)     (16.1)   (29.2)      11.2       (1.7)    (19.7)
 Money Market ...................................     (20.4)     22.6     (12.3)     (10.1)    63.2      (23.0)     (39.5)       .7
 Other Time Deposits ............................    (225.2)   (234.0)     70.7     (388.5)   (13.5)      (1.3)        --     (14.8)
 Certificates -- $100,000 and over ..............    (104.3)    (63.3)     35.3     (132.3)   (28.1)     (50.9)       5.5     (73.5)
 Foreign Deposits ...............................       1.2     (62.3)      (.7)     (61.8)  (122.8)     (62.5)      30.6    (154.7)
 Federal Funds Borrowed .........................     (17.4)    (93.0)     10.6      (99.8)   (69.8)    (100.9)      23.5    (147.2)
 Short-Term Bank Notes ..........................       (.2)       .1        --        (.1)   (68.0)     (45.1)      44.7     (68.4)
 Other Short-Term Borrowings ....................     (47.2)   (117.0)     27.1     (137.1)    68.0      (49.6)     (16.6)      1.8
 Long-Term Debt .................................      78.1     (53.0)    (11.3)      13.8    102.7      (29.0)      (9.7)     64.0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest Expense Change ...................     (46.4)   (793.2)     (7.1)    (846.7)   (32.5)    (409.5)      24.9    (417.1)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Interest Income
 on a Taxable Equivalent Basis ..................   $ 331.6   $ (32.1)  $ (38.5)   $ 261.0    299.4      (70.3)     (52.4)    176.7
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in Taxable Equivalent Adjustment .......                                      6.3                                      1.8
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income Change ......................                                  $ 267.3                                    178.5
- ------------------------------------------------------------------------------------------------------------------------------------


RESULTS OF OPERATIONS

Summary

The Bancorp's net income was $1.6 billion in 2002, up 49% compared to $1.1
billion in 2001. Earnings per diluted share were $2.76 for the year, up 48% from
$1.86 in 2001. Earnings for 2001 include $293.6 million of after-tax
nonrecurring merger charges, or $0.50 per diluted share, associated with the
merger and integration of Old Kent, and an after-tax nonrecurring charge for an
accounting principle change related to the adoption of SFAS No. 133, of $6.8
million or $0.01 per diluted share.
   The Bancorp's net income, earnings per share, earnings per diluted share,
dividends per share, efficiency ratio, net income to average assets, referred to
as return on average assets (ROA), and return on average shareholders' equity
(ROE) for the most recent five years are as follows:


- -------------------------------------------------------------------------------------
                                       2002       2001       2000      1999      1998
- -------------------------------------------------------------------------------------
                                                                 
Net income ($ in millions) ......  $1,634.0    1,093.0    1,140.4     946.6     806.9
Earnings per share (a) ..........      2.82       1.90       2.02      1.68      1.44
Earnings per diluted share (a) ..      2.76       1.86       1.98      1.66      1.42
Cash dividends per common
 share (b) ......................       .98        .83        .70       .59       .47
ROA(c) ..........................      2.18%      1.55       1.71      1.57      1.43
ROE(c) ..........................      19.9%      15.1       19.1      17.3      15.7
Efficiency ratio (c) ............      44.9%      54.8       50.7      53.2      55.1
- -------------------------------------------------------------------------------------


(a)  Per share amounts have been adjusted for the three-for-two stock splits
     effected in the form of stock dividends paid July 14, 2000 and April 15,
     1998.
(b)  Cash dividends per common share are those the Bancorp declared prior to the
     merger with Old Kent.
(c)  Net income includes merger charges and a nonrecurring accounting principle
     change of $394.5 million pretax ($300.3 million after tax, or $.51 per
     diluted share) for 2001, merger-related items of $99.0 million pretax
     ($66.6 million after tax, or $.12 per diluted share) for 2000,
     merger-related items of $134.4 million pretax ($101.4 million after tax, or
     $.18 per diluted share) for 1999 and merger-related items of $166.5 million
     pretax ($118.4 million after tax, or $.21 per diluted share) for 1998.
     Excluding the impact of the above charges for the respective years, ROA was
     1.97%, 1.81%, 1.74% and 1.64%, ROE was 19.2%, 20.2%, 19.2% and 18.1% and
     the efficiency ratio was 46.6%, 48.4%, 50.2% and 50.5% for 2001, 2000, 1999
     and 1998, respectively.

Net Interest Income

Net interest income is the difference between interest income on earning assets
such as loans, leases and securities, and interest expense paid on liabilities
such as deposits and borrowings, and continues to be the Bancorp's largest
revenue source. Net interest income is affected by the general level of interest
rates, changes in interest rates and by changes in the amount and composition of
interest-earning assets and interest-bearing liabilities. The relative
performance of the lending and deposit-raising functions is frequently measured
by two statistics -- net interest margin and net interest rate spread. The net
interest margin is determined by dividing fully-taxable equivalent net interest
income by average interest-earning assets. The net interest rate spread is the
difference between the average fully-taxable equivalent yield earned on
interest-earning assets and the average rate paid on interest-bearing
liabilities. The net interest margin is generally greater than the net interest
rate spread due to the additional income earned on those assets funded by
non-interest-bearing liabilities, or free funding, such as demand deposits and
shareholders' equity.

                                       44



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------


Other Operating Income
- ---------------------------------------------------------------------------------------------------------------------------
($ in millions)                                              2002           2001          2000          1999           1998
- ---------------------------------------------------------------------------------------------------------------------------
                                                                                                     
Electronic payment processing income .................   $  512.1          347.5         251.8         188.7          146.5
Service charges on deposits ..........................      431.1          367.4         298.4         252.4          230.2
Mortgage banking net revenue .........................      187.9           62.7         256.0         289.5          248.3
Investment advisory income ...........................      336.2          306.5         281.0         261.5          221.4
Other service charges and fees .......................      579.7          542.2         389.0         338.4          269.3
- ---------------------------------------------------------------------------------------------------------------------------
Subtotal .............................................    2,047.0        1,626.3       1,476.2       1,330.5        1,115.7
Securities gains, net ................................      113.6           28.2           6.2           8.5           49.5
Securities gains, net -- non-qualifying hedges on
mortgage servicing ...................................       33.5          142.9            --            --             --
- ---------------------------------------------------------------------------------------------------------------------------
Total ................................................   $2,194.1        1,797.4       1,482.4       1,339.0        1,165.2
- ---------------------------------------------------------------------------------------------------------------------------
After-tax securities gains, net ......................   $   73.7           21.4           4.2           5.4           32.2
After-tax securities gains, net: non-qualifying
hedges on mortgage servicing .........................   $   22.1           94.4            --            --             --
- ---------------------------------------------------------------------------------------------------------------------------


     Table 1 on page 43, Consolidated Average Balance Sheets and Analysis of Net
Interest Income, presents the net interest income, net interest margin, and net
interest rate spread for the three years 2000 through 2002, comparing interest
income, average interest-bearing liabilities and average free funding
outstanding. Each of these measures is reported on a fully-taxable equivalent
basis. Nonaccrual loans and leases and loans held for sale have been included in
the average loans and lease balances. Average outstanding securities balances
are based upon fair value including any unrealized gains or losses on securities
available-for-sale.
     Net interest income on a fully taxable equivalent basis rose 11% to $2.7
billion in 2002 from $2.5 billion in 2001. The improvement in 2002's net
interest income was attributable to 7% growth in average interest-earning assets
as compared to 3% growth in interest-bearing liabilities and the overall
increase between years in the net interest rate spread from 3.06% in 2001 to
3.42% in 2002. The net interest margin increased 14 basis points (bps) from
3.82% in 2001 to 3.96% in 2002 compared to an 8 bps increase from 2000 to 2001.
The yield on interest-earning assets declined 130 bps from 2001 due to new loan
growth at lower interest rates and continued asset repricing in a lower rate
environment. The average yield on loans and leases was down 145 bps and the
yield on taxable securities was down 88 bps. The negative effects of lower asset
yields was offset by a 166 bps decrease in the cost of interest-bearing
liabilities in 2002 resulting from faster repricing of borrowed funds and lower
year-over-year deposit rates on existing accounts as well as the continued
improvement in the overall mix of interest bearing liabilities. The Bancorp
realized an overall increase in total average deposits between years of
approximately $3.3 billion highlighted by a 36% year-over-year increase in
average transaction account balances reflecting both the Bancorp's emphasis on
deposits as an important source of funding and a shift in deposit mix to
transaction accounts. The cost of borrowed funds, including foreign office
deposits, federal funds borrowed, short-term bank notes, other short-term
borrowings and long-term debt, decreased by 162 bps in 2002, to 3.18%, from
4.80% in 2001. The contribution of free funding to the net interest margin was
reduced to 54 bps in 2002, from 76 bps in 2001, despite the benefits of a $1.6
billion increase in average demand deposits due to the lower interest rate
environment. The Bancorp expects margin and net interest income trends in coming
periods will be dependent upon the magnitude of loan demand, the overall level
of business activity in the Bancorp's Midwestern footprint and the path of
interest rates in the economy.
     Average interest-earning assets increased by 7% to $69.1 billion in 2002,
an increase of $4.3 billion from 2001. During 2001, interest-earning assets grew
by 5% over the prior year. In 2002, sales (including branch divestitures) of
loans and leases totaled approximately $9.7 billion compared to $11.6 billion in
2001. Additionally, the Bancorp securitized $1.4 billion of residential mortgage
loans in 2001 and retained the resulting securities. The Bancorp continues to
use loan sales and securitizations to manage the composition of the balance
sheet and to improve balance sheet liquidity. Sales and securitizations permit
the Bancorp to grow the origination and servicing functions and to increase
revenues without increasing capital leverage.
     Average interest-bearing liabilities grew to $54.8 billion during 2002, an
increase of 3% over the $53.4 billion average in 2001. Average core deposits
(which excludes time deposits, certificates of deposit with balances greater
than $100,000 and foreign office deposits) increased $9.5 billion, or 36%, over
2001 and remain the Bancorp's most important and lowest cost source of funding.

Other Operating Income

The table at the top of the page shows the components of other operating income
for the five years ended December 31, 2002. Total other operating income
increased 22% in 2002 and 21% in 2001. Excluding non-mortgage related security
gains, total other

Operating Expense


- ---------------------------------------------------------------------------------------------
($ in millions)                              2002       2001       2000       1999       1998
- ---------------------------------------------------------------------------------------------
                                                                       
Salaries, wages and incentives ....      $  904.9      845.2      783.2      763.0      693.3
Employee benefits .................         201.6      148.5      144.7      142.3      131.6
Equipment expenses ................          79.3       91.1      100.2       98.3       91.2
Net occupancy expenses ............         142.5      146.2      137.6      131.2      120.4
Other operating expenses...........         887.8      761.8      666.1      649.6      585.1
- ---------------------------------------------------------------------------------------------
Total operating expenses ..........       2,216.1    1,992.8    1,831.8    1,784.4    1,621.6
Merger-related charges ............            --      348.6       87.0      108.1      146.3
- ---------------------------------------------------------------------------------------------
Total .............................      $2,216.1    2,341.4    1,918.8    1,892.5    1,767.9
- ---------------------------------------------------------------------------------------------


                                       45



                      FIFTH THIRD BANCORP AND SUBSIDIARIES


Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------
operating income increased 18% in 2002 and 20% in 2001, as a result
of strong growth across both traditional and non-banking business lines.
     Electronic payment processing income increased 47% in 2002 and 38% in 2001.
The increase in income in 2002 results from continued double-digit growth trends
in electronic funds transfer (EFT) and merchant processing generated from a
broadly diversified and largely non-cyclical customer base, incremental revenue
additions from the fourth quarter 2001 purchase acquisition of Universal
Companies (USB) and new customer relationships added during 2002. Excluding the
incremental revenue from USB, electronic payment processing revenue increased
27% in 2002 compared to 2001 and 32% in 2001 compared to 2000. Merchant
processing revenues increased 81% this year and 44% in 2001 due to the addition
of new customers and resulting increases in merchant transaction volumes, as
well as the incremental contributions from the fourth quarter 2001 USB
acquisition. Excluding the incremental revenue contribution from USB, merchant
processing revenues increased 35% in 2002 compared to 2001. Electronic funds
transfer revenues grew by 22% this year and 32% in 2001 fueled by higher debit
and ATM card usage. The Bancorp handled over 8.2 billion ATM, point-of-sale and
e-commerce transactions in 2002, a 24% increase compared to 6.6 billion in 2001,
and Fifth Third Processing Solutions' world-class capabilities as a transaction
processor position the Bancorp well to continue to take advantage of the
opportunities of e-commerce.
     Service charges on deposits were $431.1 million in 2002, an increase of 17%
over 2001's $367.4 million. Service charges on deposits increased 23% in 2001
compared to 2000. The growth in 2002 was fueled by the expansion of the
Bancorp's retail and commercial network, continued sales success in treasury
management services, successful sales campaigns promoting retail and commercial
deposit accounts, the introduction of new cash management products for
commercial customers and the benefit of a lower interest rate environment.
Commercial deposit based revenues increased 34% over last year on the strength
of new product introductions, growth in treasury management services, successful
cross-selling efforts and the benefit of a lower interest rate environment.
Retail based deposit revenue increased 8% in 2002 compared to 2001, driven by
the success of sales campaigns and direct marketing programs in generating new
account relationships in all of the Bancorp's markets.
     Investment advisory service income was $336.2 million in 2002, an increase
of 10% over 2001's $306.5 million despite a difficult year in the equity
markets. Investment advisory service income increased 9% in 2001. Declines in
market sensitive service income in 2002 were mitigated by double-digit increases
in private banking and in retail brokerage as sales through the retail network
increased throughout 2002. The Bancorp continues to focus its sales efforts on
integrating services across business lines and working closely with retail and
commercial team members to take advantage of a diverse and expanding customer
base. The Bancorp continues to be one of the largest money managers in the
Midwest and as of December 31, 2002, had $187 billion in assets under care, over
$29 billion in assets under management and $12 billion in its proprietary Fifth
Third Funds.
     Mortgage banking net revenue increased 200% to $187.9 million in 2002 from
$62.7 million in 2001. In 2002 and 2001, mortgage banking net revenue was
comprised of $345.0 million and $353.1 million, respectively, of total mortgage
banking fees, $41.5 million and $1.0 million, respectively, resulting from
servicing assets and corresponding gains recognized in various mortgage loan
securitizations and sales, $98.2 million and $19.6 million, respectively, in
gains and mark-to-market adjustments on both settled and outstanding
free-standing derivative instruments and a reduction of $296.8 million and
$311.0 million, respectively, in net valuation adjustments and amortization on
mortgage servicing rights.
     The Bancorp maintains a comprehensive management strategy relative to its
mortgage banking activity, including consultation with an outside independent
third party specialist, in order to manage a portion of the risk associated with
impairment losses incurred on its mortgage servicing rights portfolio as a
result of the falling interest rate environment. This strategy includes the
utilization of available-for-sale securities and free-standing derivatives as
well as engaging in occasional loan securitization and sale transactions. During
2001, the Bancorp began a non-qualifying hedging strategy that includes the
purchase of various securities (primarily FHLMC and FNMA agency bonds, US
treasury bonds, and PO strips) which combined with the purchase of free-standing
derivatives (PO swaps, swaptions and interest rate swaps) are expected to
economically hedge a portion of the change in value of the mortgage servicing
rights portfolio caused by fluctuating discount rates, earnings rates and
prepayment speeds. The decline in primary and secondary mortgage rates during
2002 and 2001 led to historically high refinance rates and corresponding
increases in prepayments which led to the recognition of $140.2 million and
$199.2 million in 2002 and 2001, respectively, in temporary impairment.
Servicing rights are typically deemed impaired when a borrower's loan rate is
distinctly higher than prevailing market rates. As a result of the temporary
impairment incurred in 2002 and 2001, the Bancorp sold certain securities,
originally purchased and designated under the non-qualifying hedging strategy,
resulting in net realized gains of $33.5 million and $142.9 million,
respectively. Additionally, the Bancorp realized a gain of $61.5 million in 2002
from settled free-standing derivatives and recognized favorable changes in fair
value on outstanding free-standing derivatives of $36.7 million, providing a
total gain of $98.2 million. The combined results of these available-for-sale
security and free-standing derivative transactions, along with the results from
securitization activities is $173.2 million in 2002, a net increase of $9.7
million from $163.5 million in 2001. On an overall basis and inclusive of the
net security gain component of the Bancorp's mortgage banking risk management
strategy, mortgage banking net revenue increased 8% to $221.4 million in 2002
from $205.6 million in 2001.
     The Bancorp primarily uses PO strips/swaps to hedge the economic risk of
mortgage servicing rights as they are deemed to be the best available instrument
for several reasons. POs hedge the mortgage-LIBOR spread because they appreciate
in value as a result of tightening spreads. They also provide prepayment
protection as they increase in value as prepayment speeds increase (as opposed
to mortgage servicing rights that lose value in a faster prepayment
environment). Additionally, POs allow the servicer to address geographic factors
by purchasing POs in markets in which they service loans. The $78.6 million
increase in gains and mark-to-market adjustments on both settled and outstanding
free-standing derivative instruments was primarily due to the Bancorp's shift in
2002 towards the use of free-standing derivatives rather than the use of
available-for-sale securities as part of its overall hedging strategy and was
accompanied by a $109.4 million year-over-year decrease in gains from sales of
such securities. This shift was primarily attributable to the increased use of
PO swaps during 2002 and the corresponding decrease in coverage provided by
non-qualifying available-for-sale securities. As of December 31, 2002, the
Bancorp held $147.2

                                       46


                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------
million of U.S. treasury bonds as part of the non-qualifying hedging strategy
and a combination of free-standing derivatives including PO swaps, swaptions and
interest rate swaps with a fair value of $36.5 million on an outstanding
notional amount of $1.8 billion.
     In-footprint and total originations were $11.5 billion in 2002 as compared
to $8.5 billion and $17.8 billion, respectively, in 2001. In-footprint
originations increased in 2002 due to continued declines in primary and
secondary mortgage rates while total originations declined due to the Bancorp's
divestiture of out-of-footprint origination capacity in 2001. The Bancorp
expects the core contribution of mortgage banking to total revenues to decline
in 2003 as originations and refinancings begin to slow from recent levels.
     The Bancorp's total residential mortgage loan servicing portfolio at the
end of 2002 and 2001 was $30.0 billion and $36.1 billion, respectively, with
$26.5 billion and $31.6 billion, respectively, of loans serviced for others.
     Total other service charges and fees were $579.7 million in 2002, an
increase of 7% over 2001. Commercial banking income, cardholder fees, indirect
consumer loan and lease fees and bank owned life insurance (BOLI) represent the
majority of other service charges and fees.
     The commercial banking revenue component of other service charges and fees
grew 26% to $157.2 million in 2002, led by international department revenue
which includes foreign currency exchange, letters of credit and trade financing.
Commercial banking revenues continued to increase as a result of successful
sales of commercial deposit relationships and the introduction of new products.
Indirect consumer loan and lease fees contributed $69.5 million, up 18% due to
an increase in loan and lease originations; cardholder fees from the credit card
portfolio provided $51.3 million, an increase of 3% over 2001 due to an overall
increase in credit card accounts; and income from BOLI provided $62.1 million,
an increase of 19% over 2001. Other service charges and fees were $151.2 million
in 2002, compared to $164.5 million in 2001, a decrease of 8%. Other service
charges and fees included a pretax gain of $26.4 million from the fourth quarter
2002 sale of the property and casualty insurance product lines and a $7.1
million pretax gain on the third quarter 2002 sale of six branches in Southern
Illinois. Comparisons to 2001 are impacted by the $42.7 million pretax gain on
the third quarter 2001 sale of 11 branches in Arizona.
     The commercial banking revenue component of other service charges and fees
of $125.1 million in 2001 represented an increase of 46% over 2000 and resulted
primarily from growth in international department revenue. Indirect consumer
loan and lease fees increased 21% to $58.9 million in 2001, and cardholder fees
provided $49.7 million, up 19%. Other service charges and fees were $164.5
million in 2001, compared to $121.3 million in 2000, an increase of 36%.

Operating Expenses

The Bancorp's proven expense discipline continues to drive its efficiency ratio
to levels well below its peer group and the banking industry through the
consistent generation of revenue at a rate faster than expenses. The Bancorp's
success in controlling operating expenses comes from efficient staffing, a
constant focus on process improvement and centralization of various internal
functions such as data processing, loan servicing and corporate overhead
functions.
     Operating expense levels are often measured using an efficiency ratio
(operating expenses divided by the sum of taxable equivalent net interest income
and other operating income). The efficiency ratio for 2002 was 44.9% compared to
54.8% in 2001. Operating expenses for 2001 include pretax nonrecurring
merger-related charges of $348.6 million associated with the merger and
integration of Old Kent. Excluding the impact of the 2001 merger charges, the
efficiency ratio was 46.6%. Aside from the impact of merger-related charges in
2001, the improvement in the 2002 efficiency ratio was the result of 15% revenue
growth outpacing 11% expense growth.
     Total operating expenses decreased 5% in 2002 and increased 22% in 2001,
including merger-related charges incurred of $348.6 million and $87.0 million in
2001 and 2000, respectively. Excluding the effect of merger-related charges,
total operating expenses increased 11% in 2002 and 9% in 2001. The
year-over-year increase in operating expenses reflects the growth in all of our
markets and increases in spending related to the expansion and improvement of
our sales force, growth in the retail banking platform and continuing investment
in back-office personnel, technology and infrastructure supporting risk
management processes as well as recent and future growth.
     Salaries, wages and incentives comprised 41% and 42% of total operating
expenses in 2002 and 2001, respectively, excluding merger-related charges
incurred in 2001. Compensation expense increased 7% in 2002 and 8% in 2001. The
increase in compensation expense for both years primarily relates to the
addition of sales officers and back-office personnel to support recent and
future growth in the business. Employee benefits expense increased 36% in 2002
resulting primarily from an increase in profit sharing expense due to the
inclusion of the former Old Kent employees in the Fifth Third Master Profit
Sharing Plan beginning in January 2002. In addition, the 2002 employee

Distribution of Loan and Lease Portfolio


- ------------------------------------------------------------------------------------------------------------------------------------
                                     2002                 2001                 2000                 1999               1998
                                --------------       ---------------      ---------------      ---------------    ----------------
($ in millions)                 Amount        %      Amount        %      Amount        %      Amount        %      Amount       %
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                               
Commercial,
 financial and
  agricultural loans ......  $12,742.7     27.7%  $10,807.3    26.0%   $10,669.6     25.1%  $ 9,879.4     25.4%   $8,833.8    25.9%
Real estate --
 construction loans .......    3,327.0      7.2     3,356.2      8.1     3,222.6      7.6     2,272.2      5.9     1,662.0     4.9
Real estate -- mortgage
 loans ....................    9,380.1     20.5    10,590.1     25.5    11,862.1     27.8    12,335.5     31.8    12,516.4    36.7
Consumer loans ............   15,116.3     32.9    12,564.9     30.2    11,551.1     27.2     9,053.5     23.3     7,209.8    21.1
Lease financing ...........    5,362.0     11.7     4,229.4     10.2     5,225.0     12.3     5,296.0     13.6     3,893.4    11.4
- ------------------------------------------------------------------------------------------------------------------------------------
Loans and leases,
 net of unearned income ...   45,928.1   100.0%    41,547.9    100.0%   42,530.4    100.0%   38,836.6    100.0%   34,115.4    100.0%
Reserve for credit losses .     (683.2)              (624.1)              (609.3)              (572.9)              (532.2)
- ------------------------------------------------------------------------------------------------------------------------------------
Loans and leases,
 net of reserve ...........  $45,244.9            $40,923.8            $41,921.1            $38,263.7            $33,583.2
- ------------------------------------------------------------------------------------------------------------------------------------
Loans held for sale .......  $ 3,357.5            $ 2,180.1             $1,655.0            $ 1,198.4             $2,861.3
- ------------------------------------------------------------------------------------------------------------------------------------


                                       47



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------

benefits expense includes $13.0 million of net pension expense as compared to
$2.3 million in 2001. In addition to downward changes to discount rate and rate
of return plan assumptions, the increase in net pension expense largely relates
to an $18.7 million settlement charge realized from increased levels of lump-sum
distributions during 2002 as a result of the headcount reductions that occurred
in connection with the integration of Old Kent.
     The Bancorp's net pension expense for 2002 and 2001 was $13.0 million and
$2.3 million, respectively, and is based upon specific actuarial assumptions,
including an expected long-term rate of return of 8.99%. In arriving at an
expected long-term rate of return assumption, the Bancorp evaluated actuarial
and economic input, including, long-term inflation rate assumptions and broad
equity and bond indices long-term return projections. The Bancorp believes the
8.99% long-term rate of return assumption appropriately reflects both projected
broad equity and bond indices long-term return projections as well as actual
long-term historical Plan returns realized. The Bancorp will continue to
evaluate the actuarial assumptions, including the expected rate of return,
annually, and will adjust the assumptions as necessary.
     The Bancorp based the determination of pension expense on a market-related
valuation of assets. This market-related valuation recognizes investment gains
or losses over a three-year period from the year in which they occur. Investment
gains or losses for this purpose are the difference between the expected return
calculated using the market-related value of assets and the actual return based
on the market-related value of assets. Since the market-related value of assets
recognizes gains or losses over a three-year period, the future value of assets
will be impacted as previously deferred gains or losses are recorded.
     As of December 31, 2002 the Bancorp had cumulative losses of approximately
$98.1 million which remain to be recognized in the calculation of the
market-related value of assets. These unrecognized net actuarial losses result
in an increase in the Bancorp's future pension expense depending on several
factors, including whether such losses at each measurement date exceed the
corridor in accordance with SFAS No. 87, "Employers' Accounting for Pensions."
     The discount rate that the Bancorp utilizes for determining future pension
obligations is based on a review of long-term bonds that receive the highest
ratings given by a recognized rating agency. The discount rate determined on
this basis has decreased from 7.25% at December 31, 2001 to 6.75% at December
31, 2002.
     Lowering the expected long-term rate of return on Plan assets by .25% (from
8.99% to 8.74%) would have increased the pension expense for 2002 by
approximately $.6 million. Lowering the discount rate by .25% (from 7.25% to
7.00%) would have increased the pension expense for 2002 by approximately $.3
million.
     The value of the Plan assets has decreased from $264.3 million at

SECURITIES PORTFOLIO AT DECEMBER 31


- ------------------------------------------------------------------------------------------------------------
($ in millions)                                      2002        2001        2000        1999        1998
- ------------------------------------------------------------------------------------------------------------
                                                                                  
Securities Available-for-Sale:
 U.S. Treasury ..............................   $   303.8        96.2       197.9       368.0       918.2
 U.S. Government agencies and corporations ..     2,389.5     1,201.4     1,240.0     1,020.4       815.9
 States and political subdivisions ..........     1,089.7     1,218.4       903.5       934.2       967.3
 Agency mortgage-backed securities ..........    19,833.4    15,307.7    13,940.0    11,409.8    11,033.0
 Other bonds, notes and debentures ..........     1,101.5     1,896.2     1,956.6     1,866.7     1,308.8
 Other securities ...........................       746.2       786.7       790.8       326.2       541.0
- ------------------------------------------------------------------------------------------------------------
Securities Held-to-Maturity:
 U.S. Treasury ..............................   $      --          --          --         3.0        26.3
 U.S. Government agencies and corporations ..          --          --          --        27.5       156.0
 States and political subdivisions ..........        51.8        16.4       475.4       599.4       526.1
 Agency mortgage-backed securities ..........          --          --          --        87.1       154.2
 Other bonds, notes and debentures ..........          --          --        44.7        10.9        28.9
 Other securities ...........................          --          --        32.5        10.5        34.2
- ------------------------------------------------------------------------------------------------------------


WEIGHTED AVERAGE MATURITY OF SECURITIES AT DECEMBER 31, 2002


- ---------------------------------------------------------------------------------------------------------------------------
                                   Maturity            1-5 Year           6-10 Year        Over 10
                                Under 1 Year          Maturity            Maturity      Year Maturity           Total
                              ---------------      ---------------    ---------------   --------------    ----------------
($ in millions)               Amount    Yield      Amount    Yield    Amount    Yield   Amount   Yield    Amount     Yield
- ---------------------------------------------------------------------------------------------------------------------------
                                                                                       
Securities Available-for-Sale:
 U.S. Treasury .............  $ 26.6     3.89%  $   126.2     4.29%   $150.8    3.81%   $   .2    8.36%  $  303.8     4.01%
 U.S. Government agencies
  and corporations .........     5.5     6.72     1,448.2     4.18     562.0    5.99     373.8    4.26    2,389.5     4.61
 States and political
  subdivisions (a) .........    48.1     7.54       179.8     7.59     341.3    7.34     520.5    7.24    1,089.7     7.34
 Agency mortgage-
  backed securities (b) ....   980.7     5.13    18,072.3     5.24     763.3    6.17      17.1    6.29    19,833.4    5.27
 Other bonds, notes and
  debentures (c) ...........   318.7     6.45       643.9     6.30     115.1    7.39      23.8    6.10    1,101.5     6.45
- ---------------------------------------------------------------------------------------------------------------------------

Maturities of mortgage-backed securities were estimated based on historical and
predicted prepayment trends. Yields are computed based on historical cost
balances.
(a)  Taxable-equivalent yield using the statutory rate in effect.
(b)  Included in agency mortgage-backed securities available-for-sale are
     floating-rate securities totaling $356.9 million.
(c)  Included in other bonds, notes and debentures available-for-sale are
     floating-rate securities totaling $241.7 million.

                                       48



                      FIFTH THIRD BANCORP AND SUBSIDIARIES



Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------
December 31, 2001 to $176.7 million at December 31, 2002. The investment
performance returns and declining discount rates have reduced the Bancorp's
funded Plan status, net of benefit obligations, from $1.5 million at December
31, 2001 to an unfunded status of $66.0 million at December 31, 2002. Despite
the recent reductions in the funded status of the Plan, the Bancorp believes
that, based on the actuarial assumptions, the Bancorp will not be required to
make a cash contribution to the Plan in 2003; however, a contribution in 2004 is
likely.
     Full-time-equivalent (FTE) employees were 19,119 at December 31, 2002, up
from 18,373 at December 31, 2001 and down from 20,468 at December 31, 2000. The
decrease in FTE employees in 2001 as compared to 2000 largely relates to the
divestiture of out-of-market mortgage operations in the third quarter of 2001.
     Equipment expense decreased 13% in 2002 and 9% in 2001 primarily due to
dispositions related to the Old Kent acquisition. Net occupancy expenses
decreased 3% in 2002 largely related to the elimination of duplicate facilities
in connection with the integration of Old Kent and increased 6% in 2001.
Contributing to net occupancy expense growth in 2001 was the utilization of
additional office rental space to support growth and repairs and maintenance
expense to the existing branch network.
     Other operating expenses increased to $887.8 million in 2002, up $126.0
million or 17% over 2001 and increased $95.7 million or 14% in 2001 over 2000.
Volume-related expenses and higher loan and lease processing costs from strong
origination volumes in our processing and fee businesses contributed to the
increases in 2002 and 2001 other operating expenses. Other operating expenses in
2002 also include approximately $82 million pretax ($53 million after-tax) for
certain charged-off treasury related aged receivable and in-transit
reconciliation items.
     During the third quarter of 2002, in connection with overall data
validation procedures completed in preparation for a conversion and
implementation of a new treasury investment portfolio accounting system, and a
review of related account reconciliations, the Bancorp became aware of a
misapplication of proceeds from a mortgage loan securitization against unrelated
treasury items in a treasury clearing account. Upon this discovery and after
rectifying the mortgage loan securitization receivable, a treasury clearing
account used to process entries into and out of the Bancorp's securities
portfolio went from a small credit balance to a debit balance of approximately
$82 million consisting of numerous posting and settlement items, all relating to
the Bancorp's investment portfolio. Upon concluding that the $82 million balance
did not result from a single item but rather numerous settlement and
reconciliation items, many of which had aged or for which no sufficient detail
was readily available for presentment for claim from counterparties, the Bancorp
recorded a charge-off for these items because it became apparent that any
collection would be uncertain, and, if achieved, time consuming and would
require a significant amount of focused research. The Bancorp is and has been
reviewing and reconciling all entries posted to this treasury clearing and other
related settlement accounts from March 2000 through September 2002. This period
was determined to be most relevant as it reflected the period since the
Bancorp's last treasury portfolio accounting system conversion. This review has
consisted of reviewing 31 months of data for over 7,500 security CUSIP numbers
(many of them associated with multiple monthly entries related to monthly
processing and/or paydowns).
     The Bancorp is still in the process of investigating the transactions
related to the $82 million pretax treasury related charge-off. This
investigation has included internal resources, supplemented with external
resources with expertise in treasury operations. Since the internal
investigation began, the research and reconstruction of the items has continued
with no additional loss exposure having been identified to date. Based on the
reviews completed to date by the Bancorp and independent third party experts,
the Bancorp has concluded that there is no significant further financial
exposure in excess of the amount charged-off in the third quarter. Nor has any
specific triggering event been isolated to a period other than the third quarter
of 2002, at which time the ultimate collectibility of the full amount of the
reconciling items was placed into question. Our investigation has identified no
point prior to the third quarter of 2002 for which we can definitively conclude
that the items would have been more appropriately charged-off. As a consequence
of the discovery of the $82 million deficit in the treasury clearing account and
the subsequent review of the clearing account, the Bancorp has initiated, with
the assistance of external resources, a more general review of its processes and
controls relating to similar clearing and settlement accounts. Although this
review is ongoing and will continue, to date the Bancorp has not found any
discrepancy or error that would have a significant financial impact. The Bancorp
is, however, in the process of improving its procedures and controls for these
accounts. See also the "Regulatory Matters" section on page 54 of Management's
Discussion and Analysis of Financial Condition and Results of Operations for
additional information. The investigation phase has moved to seeking recovery as
the Bancorp continues to believe it is likely that a portion of the amount can
be recovered, with a definitive conclusion as to the dollar amount dependent
upon the successful completion of its investigation. The Bancorp maintains the
goal of concluding the recovery phase of its review during the second quarter of
2003.
     Loan and lease and bankcard expense increased $67.3 million or 41% in 2002
and $54.7 million or 49% in 2001 due to strong origination and processing
volumes. Data processing and operations expense increased $12.3 million or 18%
in 2002 primarily due to higher electronic transfer volume from debit and ATM
card usage, expansion of business-to-business e-commerce and new sales.
     Total operating expenses for 2001 include pretax merger-related charges of
$348.6 million related to the acquisition of Old Kent. These charges consist of
employee severance and benefit obligations, professional fees, costs to
eliminate duplicate facilities and equipment, conversion expenses, contract
termination costs and divestiture and shutdown charges. See Note 21 of the Notes
to Consolidated Financial Statements for additional discussion.

Securities

The table on page 48 provides a breakout of the weighted average expected
maturity of the securities portfolio by security type at December 31. The
investment portfolio consists largely of fixed and floating-rate
mortgage-related securities, predominantly underwritten to the standards of and
guaranteed by the government-sponsored agencies of FHLMC, FNMA and GNMA. These
securities differ from traditional debt securities primarily in that they have
uncertain maturity dates and are priced based on estimated prepayment rates on
the underlying mortgages. The Other Bonds, Notes and Debentures portion of the
portfolio at December 31, 2002 consisted of certain non-agency mortgage backed
securities totaling approximately $845 million, certain other asset backed
securities (primarily home equity and auto loan backed securities) totaling
approximately $167 million and corporate bond securities totaling approximately
$90 million. The Other Securities portion of the portfolio at December 31, 2002

                                       49



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------

consisted of Federal Home Loan Bank, Federal Reserve and FNMA stock holdings
totaling approximately $618 million and certain mutual fund holdings and equity
security holdings totaling approximately $128 million. At December 31, 2002,
total available-for-sale and held-to-maturity investment securities were $25.5
billion, compared to $20.5 billion at December 31, 2001, an increase of 24%. The
estimated average life of the available-for-sale portfolio is 3.1 years based on
current prepayment expectations.

     The Bancorp securitized and retained $1.4 billion in 2001 of fixed and
adjustable-rate residential mortgages. These securitizations improve liquidity,
reduce interest rate risk and the reserve for credit losses and preserve
capital. Further securitizations in 2003 are expected.

Loans and Leases

The following tables provide the distribution of commercial and consumer loans
and leases, including Loans Held for Sale, by major category at December 31.
Additional loan component detail is provided in the table on page 47.

- --------------------------------------------------------------------------------
Distribution of
Loans and Leases                   2002      2001      2000      1999     1998
- --------------------------------------------------------------------------------
Commercial:
   Commercial .................... 25.9%     24.9      24.3      25.0     24.7
   Mortgage ...................... 11.9      13.9      14.1      14.1     12.0
   Construction ..................  6.1       7.1       6.4       5.0      4.5
   Leases ........................  6.1       5.7       5.8       5.3      4.4
- --------------------------------------------------------------------------------
Subtotal ......................... 50.0      51.6      50.6      49.4     45.6

Consumer:
   Installment ................... 29.6      27.8      25.5      21.9     18.8
   Mortgage ...................... 14.5      15.6      17.1      19.9     28.6
   Credit Card ...................  1.1       1.0        .8        .8       .9
   Leases ........................  4.8       4.0       6.0       8.0      6.1
- --------------------------------------------------------------------------------
Subtotal ......................... 50.0      48.4      49.4      50.6     54.4
- --------------------------------------------------------------------------------
Total ............................100.0%    100.0     100.0     100.0    100.0
================================================================================

- --------------------------------------------------------------------------------
($ in millions)                    2002      2001      2000      1999     1998
- --------------------------------------------------------------------------------
Commercial:
   Commercial .............. $ 12,786.0  10,908.5  10,734.3  10,001.8  9,151.4
   Mortgage ................    5,885.5   6,085.1   6,226.8   5,640.0  4,424.5
   Construction ............    3,009.1   3,103.5   2,818.9   2,019.1  1,662.0
   Leases ..................    3,019.2   2,487.1   2,571.3   2,105.7  1,629.8
- --------------------------------------------------------------------------------
Subtotal ...................   24,699.8  22,584.2  22,351.3  19,766.6 16,867.7
- --------------------------------------------------------------------------------
Consumer:
   Installment .............   14,583.7  12,138.1  11,249.5   8,757.1  6,931.1
   Mortgage ................    7,121.8   6,815.2   7,570.3   8,003.0 10,569.6
   Credit Card .............      537.5     448.2     360.6     318.0    344.7
   Leases ..................    2,342.8   1,742.3   2,653.7   3,190.3  2,263.6
- --------------------------------------------------------------------------------
Subtotal ...................   24,585.8  21,143.8  21,834.1  20,268.4 20,109.0
- --------------------------------------------------------------------------------
Total ...................... $ 49,285.6  43,728.0  44,185.4  40,035.0 36,976.7
================================================================================

     Balance sheet loans and leases, including Loans Held for Sale, increased
13% and decreased 1%, respectively, in 2002 and 2001. The increase in
outstandings in 2002 resulted from continued strong consumer loan demand as well
as an improved level of commercial and industrial loan demand.

     Consumer installment loan balances increased 20% over the prior year on
originations of $6.7 billion, an increase of 46% over 2001 originations of $4.6
billion, reflecting strong new customer growth as well as a significant increase
in home equity line outstandings from successful 2002 sales campaigns.
Residential mortgage loan balances increased 4% over 2001, including Loans Held
for Sale, primarily due to strong origination activity late in 2002 and the
effects of timing on held for sale flows. Residential mortgage originations
totaled $11.5 billion in 2002 down from $17.8 billion in 2001 due to the
contribution of $9.3 billion in originations from divested operations in the
prior period. Consumer leases increased 34% in 2002 with comparisons to 2001
primarily impacted by the effect of selling, with servicing retained, $1.4
billion of leases in the prior year. Balance sheet loans and leases are affected
considerably by the sales and securitizations (including branch divestitures) of
approximately $9.7 billion in 2002 and $13.0 billion in 2001.

     Commercial loan and lease outstandings, including Loans Held for Sale,
increased 9%, compared to an increase of 1% in 2001, on the strength of new
customer additions and modest improvement in the level of economic activity in
the Bancorp's Midwestern footprint. The following tables provide a breakout of
the commercial loan and lease portfolio by major industry classification and
size of credit illustrating the diversity and granularity of the Bancorp's
portfolio. The commercial loan portfolio is further characterized by 96 percent
of outstanding balances and 94 percent of exposures concentrated within the
Bancorp's primary market areas of Ohio, Kentucky, Indiana, Florida, Michigan,
Illinois, West Virginia and Tennessee. The commercial portfolio overall,
inclusive of a national large-ticket leasing business, is characterized by 88
percent of outstanding balances and 89 percent of exposures concentrated within
these eight states. As part of its overall credit risk management strategy, the
Bancorp emphasizes small participations in individual credits, strict monitoring
of industry concentrations within the portfolio and a relationship-based lending
approach that determines the level of participation in individual credits based
on multiple factors, including the existence of and potential to provide
additional products and services.

- --------------------------------------------------------------------------------
                                                               Committed
($ in millions)                            Outstanding (a)     Exposure (a)
- --------------------------------------------------------------------------------
Manufacturing .............................  $ 3,090            $ 6,814
Real Estate ...............................    5,230              6,084
Construction ..............................    3,019              4,742
Retail Trade ..............................    2,106              3,804
Business Services .........................    1,896              2,978
Wholesale Trade ...........................    1,190              2,293
Financial Services & Insurance. ...........      505              1,885
Health Care ...............................    1,015              1,523
Transportation & Warehousing ..............    1,013              1,228
Other Services ............................      790              1,208
Accommodation & Food ......................      897              1,074
Other .....................................      991                991
Individuals ...............................      645                907
Public Administration .....................      750                845
Communication & Information. ..............      445                620
Agribusiness ..............................      424                533
Entertainment & Recreation ................      365                470
Utilities .................................      113                418
Mining ....................................      216                347
- --------------------------------------------------------------------------------
Total ..................................... $ 24,700            $38,764
================================================================================

- --------------------------------------------------------------------------------
                                                               Committed
($ in millions)                            Outstanding (a)     Exposure (a)
- --------------------------------------------------------------------------------
Less than $5 million ......................       67%               55%
$5 million to $15 million .................       24                27
$15 million to $25 million ................        8                11
Greater than $25 million ..................        1                 7
- --------------------------------------------------------------------------------
Total .....................................      100%              100%
================================================================================
(a) Net of unearned income

                                       50



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------

     To maintain balance sheet flexibility and enhance liquidity during 2002 and
2001, the Bancorp transferred, with servicing retained, certain fixed-rate,
short-term investment grade commercial loans to an unconsolidated QSPE. The
outstanding balances of these loans were $1.8 billion and $2.0 billion at
December 31, 2002 and 2001, respectively.

     In addition to the loan and lease portfolio, the Bancorp serviced loans and
leases for others totaling approximately $31.7 billion and $38.0 billion at
December 31, 2002 and 2001, respectively.

     Based on repayment schedules at December 31, 2002, the remaining maturities
of loans and leases held for investment follows:




- ----------------------------------------------------------------------------------------------------------
                    Commercial,     Real Estate   Real
                    Financial and   Estate        Estate
                    Agricultural    Construction  Commercial  Residential  Consumer  Lease
($ in millions)      Loans           Loans         Loans      Mortgage     Loans     Financing    Total
- ----------------------------------------------------------------------------------------------------------
                                                                             
Due in one year
  or less ........  $ 7,218.0        1,314.7      1,252.0      1,572.7      4,828.4    1,320.3    17,506.1
Due between
 one and
 five years ......    4,935.8        1,559.1      3,855.5      1,505.5      7,797.4    3,904.6    23,557.9
Due after
 five years ......      589.0          453.2        831.4        363.1      2,490.5    1,398.9     6,126.1
- ------------------------------------------------------------------------------------------------------------
      Total ......  $12,742.8        3,327.0      5,938.9      3,441.3     15,116.3    6,623.8    47,190.1
- ------------------------------------------------------------------------------------------------------------


     A summary of the remaining maturities of the loan and lease portfolio as of
December 31, 2002 based on the sensitivity of the loans and leases to interest
rate changes for loans due after one year follows:



- -----------------------------------------------------------------------------------------------------------
                    Commercial,      Real          Real
                    Financial and    Estate        Estate
                    Agricultural     Construction  Commercial  Residential  Consumer  Lease
($ in millions)     Loans            Loans         Loans       Mortgage     Loans     Financing   Total
- -----------------------------------------------------------------------------------------------------------
                                                                             
Predetermined
interest rate .... $  2,026.4          562.2      2,848.8        857.5      5,221.5    5,303.5    16,819.9
Floating or
adjustable
interest rate .... $  3,498.4        1,450.1      1,838.1      1,011.1      5,066.4        --     12,864.1
- ----------------------------------------------------------------------------------------------------------


Nonperforming and Underperforming Assets

Nonperforming assets include (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 and (3) other real estate owned. Underperforming assets include
nonperforming assets and loans and leases past due 90 days or more as to
principal or interest. For a detailed discussion on the Bancorp's policy on
accrual of interest on loans see Note 1 to the Consolidated Financial
Statements.

   At December 31, 2002, nonperforming assets totaled $272.6 million, compared
with $235.1 million at December 31, 2001, an increase of $37.5 million.
Nonperforming assets as a percent of total loans, leases and other real estate
owned were .59% and .57% for 2002 and 2001, respectively. The $37.5 million
increase in nonperforming assets as compared to December 31, 2001 reflects a net
increase of $8.3 million in all nonperforming commercial loans and leases,
comprised of an increase of $36.3 million in commercial loans and leases, a
decrease of $16.6 million in commercial mortgage and a decrease of $11.4 million
in construction loans. Additional components of the overall increase in
nonperforming assets include a $7.8 million increase in nonperforming
residential mortgage loans, a $14.9 million increase in nonperforming consumer
loans and a $6.5 million increase in other real estate owned. The increase in
nonperforming commercial loans was primarily due to weakness in the
manufacturing and commercial real estate sectors in the Chicago, Grand Rapids
and Indianapolis markets. Increases in nonperforming residential mortgages were
driven by rising trends in unemployment and personal bankruptcies. The level of
other real estate owned and nonperforming installment loans reflects the
estimated salvage value of underlying collateral associated with previously
charged-off assets. The reserve for credit losses as a percent of total
nonperforming assets has remained relatively constant between years at 250.6%
compared to 265.5% in the prior year.

   A summary of nonperforming and underperforming assets at December 31 follows:

- --------------------------------------------------------------------------------
($ in millions)                    2002      2001     2000     1999     1998
- --------------------------------------------------------------------------------
Nonaccrual loans
and leases ................   $   247.0     216.0    174.2    133.2    150.5
Renegotiated loans
and leases ................          --        --      1.6      2.2      5.2
Other real estate owned ...        25.6      19.1     24.7     19.1     21.4
- --------------------------------------------------------------------------------
Total nonperforming
assets ....................       272.6     235.1    200.5    154.4    177.1
Ninety days past due
loans and leases ..........       162.2     163.7    128.5     83.1    104.0
- --------------------------------------------------------------------------------
Total underperforming
assets ....................   $   434.8     398.8    329.0    237.6    281.1
- --------------------------------------------------------------------------------
Nonperforming assets as a
percent of total loans,
leases and other
real estate owned .........        .59%       .57      .47      .40      .52
Underperforming assets as a
percent of total loans,
leases and other
real estate owned .........        .95%       .96      .77      .61      .82
- --------------------------------------------------------------------------------

   The portfolio composition of nonaccrual loans and leases and ninety days past
due loans and leases as of December 31 follows:

- ---------------------------------------------------------------------
($ in millions)                 2002    2001    2000    1999    1998
- ---------------------------------------------------------------------
Commercial loans
and leases ................ $  158.5   122.2    73.6    52.9    66.4
Commercial mortgages ......     40.7    57.3    42.0    24.9    40.8
Construction and land
development ...............     14.4    25.8    10.9     4.0     4.8
Residential mortgages .....     18.4    10.6    41.9    48.3    32.7
Installment loans .........     15.0      .1     5.8     3.1     5.8
- ----------------------------------------------------------------------
Total nonaccrual
loans and leases .......... $  247.0   216.0   174.2   133.2   150.5
- ----------------------------------------------------------------------
Commercial loans
and leases ................ $   29.5    25.0    30.7    21.1    19.4
Commercial mortgages ......     18.1    24.1     6.0     5.0     6.0
Credit card receivables ...      9.1     7.3     5.5     4.9     6.9
Residential mortgages .....     59.5    56.1    49.4    36.6    38.1
Installment loans and
consumer leases ...........     46.0    51.2    36.9    15.5    33.6
- ----------------------------------------------------------------------
Total ninety days past due
loans and leases .......... $  162.2   163.7   128.5    83.1   104.0
- ----------------------------------------------------------------------

     Of the total underperforming assets at December 31, 2002, $206.2 million
are to borrowers or projects in the Ohio market area, $71.3 million in the
Illinois market area, $81.5 million in the Michigan market area, $52.0 million
in the Indiana market area,

                                       51



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------

$20.0 million in the Kentucky market area, $1.3 million in the Tennessee market
area, and $2.5 million in the Florida market area.

     The Bancorp's long history of low exposure limits, avoidance of national or
subprime lending businesses, centralized risk management and diversified
portfolio provide an effective position to weather an economic downturn and
reduce the likelihood of significant future unexpected credit losses.

Provision and Reserve for Credit Losses

The Bancorp provides as an expense an amount for probable credit losses which is
based on a review of historical loss experience and such factors which, in
management's judgment, deserve consideration under existing economic conditions.
The expected credit loss expense is included in the Consolidated Statements of
Income as provision for credit losses. Actual losses on loans and leases are
charged against the reserve for credit losses on the Consolidated Balance
Sheets. The amount of loans and leases actually removed as assets from the
Consolidated Balance Sheets is referred to as charge-offs and net charge-offs
include current charge-offs less recoveries in the current period on previously
charged-off assets. The Bancorp's credit risk management includes stringent,
centralized credit policies, and uniform underwriting criteria for all loans as
well as an overall $25 million credit limit for each customer, with limited
exceptions. In addition, the Bancorp emphasizes diversification on a geographic,
industry and customer level and performs regular credit examinations and
quarterly management reviews of large credit exposures and loans experiencing
deterioration of credit quality. The Bancorp has not substantively changed any
aspect to its overall approach in the determination of the allowance for loan
and lease losses, and there have been no material changes in assumptions or
estimation techniques, as compared to prior periods that impacted the
determination of the current period allowance. For a detailed discussion
regarding factors considered in the determination of the reserve for credit
losses see Note 1 to the Consolidated Financial Statements.

     Net charge-offs decreased $40.3 million to $186.8 million in 2002, compared
to $227.1 million in 2001. Comparisons to 2001 are impacted by the
merger-related charge-off of $35.4 million associated with the April 2001
acquisition of Old Kent to conform Old Kent to the Bancorp's reserve and
charge-off policies. Net charge-offs as a percentage of loans and leases
outstanding decreased 11 bps to .43% in

SUMMARY OF CREDIT LOSS EXPERIENCE


- --------------------------------------------------------------------------------------------------------------------
($ in millions)                                                  2002       2001        2000       1999        1998
- --------------------------------------------------------------------------------------------------------------------
                                                                                               
Reserve for credit losses, January 1 ...................... $   624.1      609.3       572.9      532.2       509.2
- --------------------------------------------------------------------------------------------------------------------
Losses charged off:
Commercial, financial and agricultural loans ..............    (80.5)    (106.2)      (37.4)     (53.6)      (56.8)
Real estate - commercial mortgage loans ...................    (17.9)     (11.5)      (21.6)     (17.4)      (14.0)
Real estate - construction loans ..........................     (6.3)      (2.2)       (1.1)      (1.1)       (1.1)
Real estate - residential mortgage loans ..................     (9.8)      (7.2)       (2.6)      (4.7)      (10.2)
Consumer loans ............................................   (115.3)    (116.3)      (73.5)     (92.2)      (90.7)
Lease financing ...........................................    (42.7)     (65.2)      (39.6)     (40.3)      (31.8)
- --------------------------------------------------------------------------------------------------------------------
Total losses ..............................................   (272.5)    (308.6)     (175.8)    (209.3)     (204.6)
- --------------------------------------------------------------------------------------------------------------------
Recoveries of losses previously charged off:
Commercial, financial and agricultural loans ..............      19.6       21.6        16.3       14.6         7.7
Real estate - commercial mortgage loans ...................       4.5        9.2         9.4        5.0         2.1
Real estate - construction loans ..........................       2.5         .4          .3         --          .1
Real estate - residential mortgage loans ..................        .3         .2          .2         .7         3.2
Consumer loans ............................................      46.6       38.2        31.7       33.8        34.6
Lease financing ...........................................      12.2       11.9         9.2       13.6         7.2
- --------------------------------------------------------------------------------------------------------------------
Total recoveries ..........................................      85.7       81.5        67.1       67.7        54.9
- --------------------------------------------------------------------------------------------------------------------
Net losses charged off:
Commercial, financial and agricultural loans ..............    (60.9)     (84.6)      (21.1)     (39.0)      (49.1)
Real estate - commercial mortgage loans ...................    (13.4)      (2.3)      (12.2)     (12.4)      (11.9)
Real estate - construction loans ..........................     (3.8)      (1.8)        (.8)      (1.1)       (1.0)
Real estate - residential mortgage loans ..................     (9.5)      (7.0)       (2.4)      (4.0)       (7.0)
Consumer loans ............................................    (68.7)     (78.1)      (41.8)     (58.4)      (56.1)
Lease financing ...........................................    (30.5)     (53.3)      (30.4)     (26.7)      (24.6)
- --------------------------------------------------------------------------------------------------------------------
Total net losses charged off ..............................   (186.8)    (227.1)     (108.7)    (141.6)     (149.7)
- --------------------------------------------------------------------------------------------------------------------
Reserve of acquired institutions and other ................      (.7)        5.9         7.4       12.9       (3.7)
Provision charged to operations ...........................     246.6      200.6       125.7      143.2       156.2
Merger-related provision ..................................        --       35.4        12.0       26.2        20.2
- --------------------------------------------------------------------------------------------------------------------
Reserve for credit losses, December 31 .................... $   683.2      624.1       609.3      572.9       532.2
- --------------------------------------------------------------------------------------------------------------------
Loans and leases outstanding at December 31 (a) ........... $45,928.1  $41,547.9   $42,530.4  $38,836.6   $34,115.4
Average loans and leases (a) .............................. $43,529.0  $42,339.1   $41,303.0  $36,542.7   $33,930.0
Reserve as a percent of loans and leases outstanding ......     1.49%      1.50%       1.43%      1.48%       1.56%
Net charge-offs as a percent of average loans and leases ..      .43%       .54%        .26%       .39%        .44%
Net charge-offs, excluding merger charges as a percent
of average loans and leases ...............................      .43%       .45%        .23%       .32%        .38%
Reserve as a percent of total nonperforming assets ........   250.62%    265.45%     303.85%    370.86%     300.58%
Reserve as a percent of total underperforming assets ......   157.12%    156.49%     185.21%    241.16%     189.33%
- --------------------------------------------------------------------------------------------------------------------


(a) Average loans and leases exclude loans held for sale.

                                       52



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------
ELEMENTS OF THE RESERVE FOR CREDIT LOSSES
- --------------------------------------------------------------------------------



                                                                                                       Reserve as a Percent of
($ in millions)                                                Reserve Amount                             Loans and Leases
December 31                                        2002     2001     2000     1999     1998     2002     2001    2000    1999   1998
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
Commercial, financial and agricultural loans ..  $158.5    117.9    106.8    121.0     85.0     1.24%    1.09    1.00    1.22   0.96
Real estate -- commercial mortgage loans ......   116.7    102.6    102.8    122.8    101.4     1.98     1.69    1.65    2.18   2.14
Real estate -- construction loans .............    41.4     32.5     27.9     20.2     16.4     1.24     0.97    0.87    0.89   0.99
Real estate -- residential mortgage loans .....    43.4     31.1     17.7     24.5     11.1     1.24     0.69    0.31    0.37   0.14
Consumer loans ................................   141.3    131.6    134.2    126.8    161.7      .93     1.05    1.16    1.40   2.24
Lease financing ...............................   131.8    100.7    113.3     82.1     83.1     2.46     2.38    2.17    1.55   2.13
Unallocated reserve ...........................    50.1    107.7    106.6     75.5     73.5     0.11     0.26    0.25    0.19   0.22
- ------------------------------------------------------------------------------------------------------------------------------------
Total reserve for credit losses ...............  $683.2    624.1    609.3    572.9    532.2    1.49%     1.50    1.43    1.48   1.56
- ------------------------------------------------------------------------------------------------------------------------------------


2002 from .54% in 2001. The effect of the $35.4 million merger-related
charge-off to 2001 net charge-offs as a percentage of loans and leases
outstanding was 9 bps. The decrease was due to lower net charge-offs on both
commercial and consumer loans and leases. Total commercial net charge-offs were
$60.9 million, compared with $84.6 million in 2001. The ratio of commercial loan
net charge-offs to average loans outstanding in 2002 was .52%, down from .79% in
2001. Aside from the merger-related charge-off, the decrease in commercial loan
net charge-offs in 2002 reflected several factors, including improved credit
performance in the Bancorp's Toledo, Evansville and Detroit markets and an
increase in the size of the commercial portfolio. Total commercial mortgage net
charge-offs in 2002 were $13.4 million, compared with $2.3 million in 2001,
largely related to weakness in the Chicago commercial real estate sector. Total
consumer loan net charge-offs in 2002 were $68.7 million, compared with $78.1
million in 2001. The ratio of consumer loan net charge-offs to average loans in
2002 was .49%, down from .65% in 2001. The decrease in the consumer loan net
charge-off ratio was primarily attributable to growth in the overall loan
portfolio from increased loan demand. The following table illustrates net
charge-offs as a percentage of average loans and leases outstanding by loan
category:

Net Charge-offs as a Percentage of
Average Loans and Leases Outstanding


- --------------------------------------------------------------------------------
December 31                          2002      2001     2000      1999      1998
- --------------------------------------------------------------------------------
                                                             
Commercial, financial
 and agricultural loans ..........   .52%       .79      .20       .41       .55
Real estate -- commercial
 mortgage loans ..................   .23%       .04      .21       .25       .27
Real estate --
 construction loans ..............   .12%       .06      .03       .05       .06
Real estate -- residential
 mortgage loans ..................   .23%       .14      .04       .05       .08
Consumer loans ...................   .49%       .65      .41       .72       .79
Lease financing ..................   .65%      1.13      .58       .58       .70
- --------------------------------------------------------------------------------
Weighted Average Ratio ...........   .43%       .54      .26       .39       .44
- --------------------------------------------------------------------------------


     The reserve for credit losses totaled $683.2 million at December 31, 2002
and $624.1 million at December 31, 2001. The reserve for credit losses at
December 31, 2002 was 1.49% of the total loan and lease portfolio compared to
1.50% at December 31, 2001. An analysis of the changes in the reserve for credit
losses, including charge-offs, recoveries and provision is presented on page 52.
The increase in the reserve for credit losses in the current year compared to
2001 is primarily due to the overall increase in the total loan and lease
portfolio as well as the increase in nonperforming and underperforming assets at
December 31, 2002 as compared to December 31, 2001. The total reserve for credit
losses as a percent of nonperforming assets decreased 6% to 250.6% at December
31, 2002, compared with 265.5% at December 31, 2001. The total reserve for
credit losses as a percent of underperforming assets increased 1% to 157.1% at
December 31, 2002, compared with 156.5% at December 31, 2001. The table on the
top of this page provides the amount of the reserve for credit losses by loan
and lease category. The reserve established for commercial loans increased $40.6
million to $158.5 million in 2002. The increase is largely reflective of growth
in the portfolio, particularly in the Cincinnati, Chicago, Grand Rapids, and
Detroit markets with the overall increase as a percent of loans and leases also
indicative of the increase in the level of nonperforming assets. The reserve
established for consumer loans increased $9.7 million to $141.3 million in 2002.
The increase in the reserve is largely a result of the overall increase in the
total loan balance resulting from the sales success of the Bancorp's direct
installment loan campaigns, featuring the Equity Flexline product, with the
decrease as a percent of loans and leases indicative of improving credit
performance as seen in the decline in charge-offs as compared to 2001. The
reserve for lease financing increased $31.1 million to $131.8 million in 2002.
The increase is largely in line with the growth of $1.1 billion in the leasing
portfolio in 2002. The reserve established for residential mortgage loans
increased $12.3 million to $43.4 million in 2002. The increase in the reserve is
largely reflective of increased charge-off experience realized in 2002 as well
as an increase in the level of nonperforming assets. The reserve established for
commercial mortgage increased $14.1 million to $116.7 million in 2002. The
increase in the reserve is largely reflective of increased charge-off experience
realized in 2002. An unallocated reserve is maintained to recognize the
imprecision in estimating and measuring loss when evaluating reserves for
individual loans or pools of loans. The unallocated reserve was $50.1 million at
December 31, 2002.

Deposits

Interest-earning assets are funded primarily by core deposits. The tables on
page 54 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 are comprised of consumer certificates of deposit. Foreign office
deposits are denominated in amounts greater than $100,000.
     Strong transaction deposit growth trends continued in 2002 as the Bancorp
maintained its focus on sales and promotional campaigns that increased Retail
and Commercial deposits. Average interest checking, savings and demand deposit
balances rose 41%, 92% and 21% respectively, from 2001 average levels. Overall,
the Bancorp experienced deposit growth across all of its regional markets due to
the popularity of existing products, such as Totally Free Checking, Platinum
One, MaxSaver, Business 53, and the new e53

                                       53



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------
Checking and Capital Management Account products. The Bancorp's competitive
deposit products and continuing focus on expanding its customer base and
increasing market share is evident in the 36% increase in average transaction
account balances over 2001 levels. These balances represent an important source
of funding and revenue growth opportunity as the Bancorp focuses on selling
additional products and services into an expanding customer base. The Bancorp
also realized a decrease in time deposit balances, largely resulting from the
declining interest rate environment.

Distribution of Average Deposits


- -------------------------------------------------------------------------------------
                            2002          2001         2000         1999         1998
- -------------------------------------------------------------------------------------
                                                                 
Demand ..................   18.3%         16.2         14.1         14.8         14.2
Interest checking .......   33.2          25.2         21.5         20.8         17.7
Savings .................   19.3          10.8         13.1         15.1         15.9
Money market ............    2.4           5.5          2.1          3.2          3.7
Other time ..............   19.2          29.5         30.9         33.7         38.1
Certificates-$100,000
 and over ...............    3.5           8.4          9.5         10.1          9.7
Foreign office ..........    4.1           4.4          8.8          2.3           .7
- -------------------------------------------------------------------------------------
Total ...................  100.0%        100.0        100.0        100.0        100.0
- -------------------------------------------------------------------------------------


Change in Average Deposit Sources


- -------------------------------------------------------------------------------------------
($ in millions)             2002          2001          2000          1999             1998
- -------------------------------------------------------------------------------------------
                                                                    
Demand ................ $1,558.3       1,137.2         178.5         452.0            694.9
Interest checking .....  4,750.1       1,957.8         978.1       1,522.5            821.7
Savings ...............  4,536.4        (870.4)       (407.9)       (125.0)         1,783.7
Money market .......... (1,389.1)      1,612.4        (388.5)       (143.4)        (1,037.2)
Other time ............ (4,070.2)       (243.3)       (141.7)     (1,258.9)          (770.3)
Certificates-$100,000
 and over ............. (2,131.4)       (462.0)         86.2         340.5           (316.9)
Foreign office ........     25.5      (1,903.3)      2,943.2         682.5           (170.8)
- -------------------------------------------------------------------------------------------
Total change .......... $3,279.6       1,228.4       3,247.9       1,470.2          1,005.1
- -------------------------------------------------------------------------------------------


Short-Term Borrowings

Short-term borrowings consist primarily of short-term excess funds from
correspondent banks, securities sold under agreements to repurchase and
commercial paper issuances. Short-term borrowings primarily fund short-term,
rate-sensitive earning-asset growth. Average short-term borrowings as a
percentage of average interest-earning assets decreased from 14% in 2001 to 10%
in 2002, reflecting the Bancorp's continued success in attracting deposit
accounts and utilizing them to fund a relatively higher proportion of
interest-earning assets. As the following table of average short-term borrowings
and average Federal funds loaned indicates, the Bancorp was a net borrower of
$7.0 billion in 2002, down from $8.7 billion in 2001.

Average Short-Term Borrowings


- ----------------------------------------------------------------------------------------
($ in millions)                     2002        2001        2000        1999        1998
- ----------------------------------------------------------------------------------------
                                                                  
Federal funds borrowed .......  $3,261.9     3,681.7     4,800.6     4,442.6     3,401.3
Short-term bank notes ........       1.6         9.8     1,102.5     1,053.2     1,184.6
Other short-term borrowings ..   3,926.8     5,107.6     3,821.6     3,077.0     2,509.5
- ----------------------------------------------------------------------------------------
Total short-term borrowings ..   7,190.3     8,799.1     9,724.7     8,572.8     7,095.4
Federal funds loaned .........    (154.6)      (68.8)     (117.5)     (223.4)     (241.0)
- ----------------------------------------------------------------------------------------
Net funds borrowed ...........  $7,035.7     8,730.3     9,607.2     8,349.4     6,854.4
- ----------------------------------------------------------------------------------------


Capital Resources

The Bancorp maintains a relatively high level of capital as a margin of safety
for its depositors and shareholders. At December 31, 2002, shareholders' equity
was $8.5 billion compared to $7.6 billion at December 31, 2001, an increase of
$836 million, or 11%.
     The Bancorp and each of its subsidiaries had Tier 1, total capital and
leverage ratios above the well-capitalized levels at December 31, 2002 and 2001.
The Bancorp expects to maintain these ratios above the well capitalized levels
in 2003.
     The following table provides capital and liquidity ratios for the last
three years:



- --------------------------------------------------------------------------------
                                                           2002    2001     2000
- --------------------------------------------------------------------------------
                                                                  
Average shareholders' equity to
Average assets ........................................  10.93%   10.28     8.98
Average deposits ......................................  16.75%   15.91    13.47
Average loans and leases ..............................  18.00%   16.18    14.01
- --------------------------------------------------------------------------------


     In December 2001, and as amended in May 2002, the Board of Directors
authorized the repurchase in the open market, or in any private transaction, of
up to three percent of common shares outstanding. In 2002, the Bancorp purchased
approximately 11.7 million shares of common stock for an aggregate amount of
approximately $719.5 million. At December 31, 2002, the total remaining common
stock repurchase authority was approximately 5.6 million shares.

Foreign Currency Exposure

At December 31, 2002 and 2001, the Bancorp maintained foreign office deposits of
$3.8 billion and $1.2 billion, respectively. These foreign deposits represent
U.S. dollar denominated deposits in the Bancorp's foreign branch located in the
Cayman Islands. Balances increased from the prior year as the Bancorp utilized
these deposits to aid in the funding of earning asset growth. In addition, the
Bancorp enters into foreign exchange derivative contracts for the benefit of
customers involved in international trade to hedge their exposure to foreign
currency fluctuations. Generally, the Bancorp enters into offsetting third-party
forward contracts with approved reputable counter-parties with comparable terms
and currencies that are generally settled daily.

Regulatory Matters

On November 7, 2002, the Bancorp received a supervisory letter from the Federal
Reserve Bank of Cleveland and the Ohio Department of Commerce, Division of
Financial Institutions relating to matters including procedures for access to
the general ledger and other books and records; segregation of duties among
functional areas; procedures for reconciling transactions; the engagement of
third party consultants; and efforts to complete the review of the $82 million
($53 million after tax) charged-off treasury-related aged receivable and
in-transit reconciliation items. In addition, the supervisory letter imposes a
moratorium on future acquisitions, including Franklin Financial Corporation,
until the supervisory letter has been withdrawn by both the Federal Reserve Bank
of Cleveland and the Ohio Department of Commerce, Division of Financial
Institutions. These two agencies continue to examine these and other areas of
the Bancorp, and the Bancorp will continue to cooperate fully with these
agencies. Based on preliminary discussions with the regulators, the Bancorp
believes some form of formal regulatory action will be taken, but is unable to
predict what that action may be. Based on these

                                       54


                      FIFTH THIRD BANCORP AND SUBSIDIARIES


Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------
preliminary discussions with the Federal Reserve and the State of
Ohio, the Bancorp believes that the resulting agreement with the supervisory
agencies will be formal and contain commitments to third-party reviews of
certain functions.
     The Bancorp is continuing to take aggressive steps to enhance its risk
management, internal audit and internal controls. The Bancorp expects these
activities, many of which have been implemented or are in the process of being
implemented, will serve to mitigate the risk of any potential future losses as
well as addressing any regulatory concerns. Additionally, the first two phases
of third party reviews of certain account reconciliations have been completed
with the third and final phase of third party reviews commencing in the first
quarter of 2003 and encompassing all remaining account reconciliations. The
Bancorp does remain optimistic that the steps taken in conjunction with the
ongoing examination will make the organization stronger through the development
of new and expanded risk management, audit and infrastructure processes.
     On November 12, 2002, the Bancorp was informed by a letter from the
Securities and Exchange Commission that the Commission was conducting an
informal investigation regarding the after-tax charge of $54 million reported in
the Bancorp's Form 8-K dated September 10, 2002 and the existence or effects of
weaknesses in financial controls in the Bancorp's Treasury and/or Trust
operations. The Bancorp has responded to the Commission's initial requests and
intends to continue to fully comply and assist the Commission in this review.

Critical Accounting Policies

Reserve for Credit Losses: The Bancorp maintains a reserve to absorb probable
loan and lease losses inherent in the portfolio. The reserve for credit losses
is maintained at a level the Bancorp considers to be adequate to absorb probable
loan and lease losses inherent in the portfolio and is based on ongoing
quarterly assessments and evaluations of the collectibility and historical loss
experience of loans and leases. Credit losses are charged and recoveries are
credited to the reserve. Provisions for credit losses are based on the Bancorp's
review of the historical credit loss experience and such factors which, in
management's judgment, deserve consideration under existing economic conditions
in estimating probable credit losses. In determining the appropriate level of
reserves, the Bancorp estimates losses using a range derived from "base" and
"conservative" estimates. The Bancorp's methodology for assessing the
appropriate reserve level consists of several key elements, as discussed below.
The Bancorp's strategy for credit risk management includes stringent,
centralized credit policies, and uniform underwriting criteria for all loans as
well as an overall $25 million credit limit for each customer, with limited
exceptions. The strategy also emphasizes diversification on a geographic,
industry and customer level, regular credit examinations and quarterly
management reviews of large credit exposures and loans experiencing
deterioration of credit quality.
     Larger commercial loans that exhibit probable or observed credit weaknesses
are subject to individual review. Where appropriate, reserves are allocated to
individual loans based on management's estimate of the borrower's ability to
repay the loan given the availability of collateral, other sources of cash flow
and legal options available to the Bancorp. Included in the review of individual
loans are those that are impaired as provided in SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan." Any reserves for impaired loans are
measured based on the present value of expected future cash flows discounted at
the loan's effective interest rate or fair value of the underlying collateral.
The Bancorp evaluates the collectibility of both principal and interest when
assessing the need for a loss accrual. Historical loss rates are applied to
other commercial loans not subject to specific reserve allocations. The loss
rates are derived from a migration analysis, which computes the net charge-off
experience sustained on loans according to their internal risk grade. These
grades encompass ten categories that define a borrower's ability to repay their
loan obligations. The risk rating system is intended to identify and measure the
credit quality of all commercial lending relationships.
     Homogenous loans, such as consumer installment, residential mortgage loans,
and automobile leases are not individually risk graded. Rather, standard credit
scoring systems are used to assess credit risks. Reserves are established for
each pool of loans based on the expected net charge-offs for one year. Loss
rates are based on the average net charge-off history by loan category.
Historical loss rates for commercial and consumer loans may be adjusted for
significant factors that, in management's judgment, reflect the impact of any
current conditions on loss recognition. Factors which management considers in
the analysis include the effects of the national and local economies, trends in
the nature and volume of loans (delinquencies, charge-offs and nonaccrual
loans), changes in mix, credit score migration comparisons, asset quality
trends, risk management and loan administration, changes in the internal lending
policies and credit standards, collection practices and examination results from
bank regulatory agencies and the Bancorp's internal credit examiners.
     An unallocated reserve is maintained to recognize the imprecision in
estimating and measuring loss when evaluating reserves for individual loans or
pools of loans. Reserves on individual loans and historical loss rates are
reviewed quarterly and adjusted as necessary based on changing borrower and/or
collateral conditions and actual collection and charge-off experience.
     The Bancorp's primary market areas for lending are Ohio, Kentucky, Indiana,
Florida, Michigan, Illinois, West Virginia and Tennessee. When evaluating the
adequacy of reserves, consideration is given to this regional geographic
concentration and the closely associated effect changing economic conditions has
on the Bancorp's customers.
     The Bancorp has not substantively changed any aspect to its overall
approach in the determination of the allowance for loan losses. There have been
no material changes in assumptions or estimation techniques as compared to prior
periods that impacted the determination of the current period allowance.
     Based on the procedures discussed above, management is of the opinion that
the reserve of $683.2 million was adequate, but not excessive, to absorb
estimated credit losses associated with the loan and lease portfolio at December
31, 2002.
     Valuation of Derivatives: The Bancorp maintains an overall interest rate
risk management strategy that incorporates the use of derivative instruments to
minimize significant unplanned fluctuations in earnings and cash flows caused by
interest rate volatility. Derivative instruments that the Bancorp may use as
part of its interest rate risk management strategy include interest rate and
principal only swaps, interest rate floors, forward contracts and both futures
contracts and options on futures contracts. The primary risk of material changes
to the value of the derivative instruments is fluctuation in interest rates;
however, as the Bancorp principally utilizes these derivative instruments as
part of a designated hedging program, the change in the derivative value is
generally offset by a corresponding change in the value of the hedged item or a
forecasted transaction. The fair values of derivative financial

                                       55


                      FIFTH THIRD BANCORP AND SUBSIDIARIES


     Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------
instruments are based on current market quotes.
     Valuation of Securities: The Bancorp's available-for-sale security
portfolio is reported at fair value. The fair value of a security is determined
based on quoted market prices. If quoted market prices are not available, fair
value is determined based on quoted prices of similar instruments.
Available-for-sale and held-to-maturity securities are reviewed quarterly for
possible other-than-temporary impairment. The review includes an analysis of the
facts and circumstances of each individual investment such as the length of time
the fair value has been below cost, the expectation for that security's
performance, the credit worthiness of the issuer and the Bancorp's ability to
hold the security to maturity. A decline in value that is considered to be
other-than-temporary is recorded as a loss within Other Operating Income in the
Consolidated Statements of Income.
     Valuation of Mortgage Servicing Rights: When the Bancorp sells loans
through either securitizations or individual loan sales in accordance with its
investment policies, it may retain one or more subordinated tranches, servicing
rights, interest-only strips, credit recourse and, in some cases, a cash reserve
account, all of which are considered retained interests in the securitized or
sold loans. Gain or loss on sale or securitization of the loans depends in part
on the previous carrying amount of the financial assets sold or securitized,
allocated between the assets sold and the retained interests based on their
relative fair value at the date of sale or securitization. To obtain fair
values, quoted market prices are used if available. If quotes are not available
for retained interests, the Bancorp calculates fair value based on the present
value of future expected cash flows using both management's best estimates and
third party data sources for the key assumptions -- credit losses, prepayment
speeds, forward yield curves and discount rates commensurate with the risks
involved.
     Servicing rights resulting from loan sales are amortized in proportion to,
and over the period of estimated net servicing revenues. Servicing rights are
assessed for impairment periodically, based on fair value, with temporary
impairment recognized through a valuation allowance and permanent impairment
recognized through a write-off of the servicing asset and related valuation
reserve. For purposes of measuring impairment, the rights are stratified based
on interest rate and original maturity. Fees received for servicing mortgage
loans owned by investors are based on a percentage of the outstanding monthly
principal balance of such loans and are included in operating income as loan
payments are received. Costs of servicing loans are charged to expense as
incurred.
     Key economic assumptions used in measuring any potential impairment of the
servicing rights include the prepayment speed of the underlying mortgage loans,
the weighted-average life of the loan and the discount rate. The primary risk of
material changes to the value of the mortgage servicing rights resides in the
potential volatility in the economic assumptions used, particularly the
prepayment speed. The Bancorp monitors this risk and adjusts its valuation
allowance as necessary to adequately reserve for any probable impairment in the
portfolio.

Related Party Transactions

At December 31, 2002 and 2001, certain directors, executive officers, principal
holders of Bancorp common stock and associates of such persons were indebted,
including undrawn commitments to lend, to the Bancorp's banking subsidiaries in
the aggregate amount, net of participations, of $485.8 million and $469.9
million, respectively. As of December 31, 2002 and 2001, the outstanding balance
on loans to related parties, net of participations and undrawn commitments, was
$160.2 million and $168.2 million, respectively.
     Commitments to lend to related parties as of December 31, 2002, net of
participations, were comprised of $321.9 million in loans and guarantees for
various business and personal interests made to the Bancorp and subsidiary
directors and $3.7 million to certain executive officers. This 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.
     None of the Bancorp's affiliates, officers, directors or employees have an
interest in or receive any remuneration from any special purpose entities or
qualified special purpose entities with which the Bancorp transacts business.

Liquidity and Market Risk

Managing risk is an essential component of successfully operating a financial
services company. Among the most prominent risk exposures are interest rate,
market and liquidity risk. The objective of the Bancorp's asset/liability
management function is to maintain consistent growth in net interest income
within the Bancorp's policy limits. This objective is accomplished through
management of the Bancorp's balance sheet composition, liquidity, and interest
rate risk exposures arising from changing economic conditions, interest rates
and customer preferences.
     The goal of liquidity management is to provide adequate funds to meet
changes in loan and lease demand or unexpected deposit withdrawals. This is
accomplished by maintaining liquid assets in the form of investment securities,
maintaining sufficient unused borrowing capacity in the national money markets
and delivering consistent growth in core deposits. In addition to the sale of
available-for-sale portfolio securities, asset-driven liquidity is also provided
by the Bancorp's ability to sell or securitize loan and lease assets. The
Bancorp also has in place a shelf registration with the Securities and Exchange
Commission permitting ready access to the public debt markets. As of December
31, 2002, $2.0 billion of debt or other securities were available for issuance
under this shelf registration. These sources, in addition to the Bancorp's
10.93% average equity capital base, provide a stable funding base.
     In June 2002, Moody's raised its senior debt rating for the Bancorp to Aa2
from Aa3, a rating equaled or surpassed by only three other U.S. bank holding
companies. This upgrade by Moody's reflects the capital strength and financial
stability of the Bancorp and further demonstrates the continued confidence of
the rating agencies.
     The following table exhibits the Bancorp's and its subsidiary banks' debt
ratings as of December 31, 2002:

- --------------------------------------------------------------------------------
                                                        Standard &
                                       Moody's            Poor's          Fitch
- --------------------------------------------------------------------------------
Fifth Third Bancorp
 Commercial Paper .................    Prime-1             A-1+            F1+
 Senior Debt ......................        Aa2              AA-            AA-
Fifth Third Bank and
 Fifth Third Banks of
 Michigan, Indiana,
 Kentucky, Inc. and
 Northern Kentucky
 Short-Term Deposit ...............    Prime-1             A-1+           F1+
 Long-Term Deposit ................        Aa1              AA-            AA
- --------------------------------------------------------------------------------

     These debt ratings, along with capital ratios significantly above
regulatory guidelines, provide the Bancorp with additional liquidity. In
addition to core deposit funding, the Bancorp accesses a variety of other
short-term and long-term funding sources which include

                                       56



                      FIFTH THIRD BANCORP AND SUBSIDIARIES



Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------
the use of the Federal Home Loan Bank (FHLB) as a funding source and
issuing notes payable through its FHLB member subsidiaries. Management does not
rely on any one source of liquidity and manages availability in response to
changing balance sheet needs. Given the continued strength of the balance sheet,
stable credit quality, risk management policies and revenue growth trends,
management does not expect any downgrade in the credit ratings based on
financial performance in the upcoming year.
     Management considers interest rate risk the Bancorp's most significant
market risk. Interest rate risk is the exposure to adverse changes in net
interest income due to changes in interest rates. Consistency of the Bancorp's
net interest income is largely dependent upon the effective management of
interest rate risk.
     The Bancorp employs a variety of measurement techniques to identify and
manage its interest rate risk including the use of an earnings simulation model
to analyze net interest income sensitivity to changing interest rates. The model
is based on actual cash flows and repricing characteristics for all of the
Bancorp's financial instruments and incorporates market-based assumptions
regarding the effect of changing interest rates on the prepayment rates of
certain assets and liabilities. The model also includes senior management
projections for activity levels in each of the product lines offered by the
Bancorp. Assumptions based on the historical behavior of deposit rates and
balances in relation to changes in interest rates are also incorporated into the
model. These assumptions are inherently uncertain, and as a result, the model
cannot precisely measure net interest income or precisely predict the impact of
fluctuations in interest rates on net interest income. Actual results will
differ from simulated results due to timing, magnitude, and frequency of
interest rate changes as well as changes in market conditions and management
strategies.
     The Bancorp's Asset/Liability Management Committee (ALCO), which includes
senior management representatives and reports to the Board of Directors,
monitors and manages interest rate risk within Board-approved policy limits. The
Bancorp's current interest rate risk policy limits are determined by measuring
the anticipated change in net interest income over a 24 month horizon assuming a
200 basis point linear increase or decrease in all interest rates. Current
policy limits this exposure to plus or minus 7% of net interest income for the
first and second year.
     The following table shows the Bancorp's estimated earnings sensitivity
profile as of December 31, 2002:

- --------------------------------------------------------------------------------
    Change in                                    Percentage Change in
  Interest Rates                                 Net Interest Income
  (basis points)                                Year 1       Year 2
- --------------------------------------------------------------------------------
      +200                                       1.8%         6.2%
      -125                                      (2.0)%       (6.9)%
- --------------------------------------------------------------------------------

     Given a linear 200 bp increase in the yield curve used in the simulation
model, it is estimated that net interest income for the Bancorp would increase
by 1.8% in the first year and 6.2% in the second year. A 125 bp linear decrease
in interest rates would decrease net interest income by 2.0% in the first year
and an estimated 6.9% in the second year. The ALCO limits are established for a
200 basis point linear increase or decrease in all interest rates. The Bancorp
is in compliance with the interest rate risk policy for the increase in rates by
200 basis points. The Bancorp's ALCO, along with senior management, have deemed
the risk of a 200 bp decrease in rates to be low as a 200 bp decrease would
result in a negative short term interest rate and therefore has measured the
risk of decrease in the interest rate at 125 basis points. The Bancorp's
interest rate risk profile has been impacted by the origination of floating rate
home equity lines and increases in core deposits, which do not always move in
step with market rates. The Bancorp's ALCO, along with senior management, views
the origination of home equity products and gathering of core deposits as
beneficial to the strength and stability of the Bancorp's balance sheet and
earnings. Management does not expect any significant adverse effect to net
interest income in 2003 based on the composition of the portfolio and
anticipated trends in rates.
     In order to reduce the exposure to interest rate fluctuations and to manage
liquidity, the Bancorp has developed securitization and sale procedures for
several types of interest-sensitive assets. The majority of long-term,
fixed-rate single family residential mortgage loans underwritten according to
Federal Home Loan Mortgage Corporation or Federal National Mortgage Association
guidelines are sold for cash upon origination. Periodically, additional assets
such as adjustable-rate residential mortgages, certain consumer leases and
certain short-term commercial loans are also securitized, sold or transferred
off balance sheet. In 2002 and 2001, a total of $9.9 billion and $12.0 billion,
respectively, were sold, securitized, or transferred off balance sheet
(excluding $1.2 billion of divestiture related sales in 2001).
     Management focuses its efforts on consistent net interest revenue and net
interest margin growth through each of the retail and wholesale business lines.

New Accounting Pronouncements

In June 2001, SFAS No. 142, "Goodwill and Other Intangible Assets" was issued.
This statement discontinued the practice of amortizing goodwill and indefinite
lived intangible assets and initiated an annual review for impairment.
Impairment is to be examined more frequently if certain indicators are
encountered. The Bancorp has completed the initial and the annual goodwill
impairment test required by this standard and has determined that no impairment
exists. Intangible assets with a determinable useful life will continue to be
amortized over that period. The Bancorp adopted the amortization provisions of
SFAS No. 142 effective January 1, 2002. The effect of the elimination of
goodwill amortization increased net income by approximately $34 million in 2002.
     The pro forma after-tax effect of the elimination of goodwill amortization
as if SFAS No. 142 had been effective in 2001 and 2000 was approximately $34
million and $25 million, respectively. The following table provides an
illustration of the impact to diluted earnings per share, ROA, ROE and
efficiency ratios as if the new accounting standard was effective beginning
January 1, 2000.

- --------------------------------------------------------------------------------
                                                           2001       2000
                                    Year Ended          Pro forma  Pro forma
                            2002      2001      2000    Restated   Restated
- --------------------------------------------------------------------------------
Earnings Per
 Diluted Share ..........  $2.76     $1.86     $1.98     $1.92      $2.02
ROA .....................   2.18%     1.55%     1.71%     1.59%      1.75%
ROE .....................   19.9%     15.1%     19.1%     15.5%      19.4%
Efficiency Ratio ........   44.9%     54.8%     50.7%     53.8%      49.9%
- --------------------------------------------------------------------------------

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. This statement is effective
for financial statements

                                       57



                      FIFTH THIRD BANCORP AND SUBSIDIARIES



Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------
issued for fiscal years beginning after June 15, 2002. Adoption of this standard
is not expected to have a material effect on the Bancorp's Consolidated
Financial Statements.
     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This statement eliminates the
allocation of goodwill to long-lived assets to be tested for impairment and
details both a probability-weighted and "primary-asset" approach to estimate
cash flows in testing for impairment of a long-lived asset. SFAS No. 144 is
effective for financial statements issued for fiscal years beginning after
December 15, 2001. Adoption of this standard did not have a material effect on
the Bancorp's Consolidated Financial Statements.
     In April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS Statements
No. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections." This
statement amends SFAS No. 13, "Accounting for Leases," to eliminate an
inconsistency between the required accounting for sale-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. This statement also
amends other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. SFAS No. 145 was effective for transactions occurring after May 15,
2002. Adoption of SFAS No. 145 did not have a material effect on the Bancorp.
     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." This statement
requires recognition of a liability for a cost associated with an exit or
disposal activity when the liability is incurred, as opposed to being recognized
at the date an entity commits to an exit plan. This statement also establishes
that fair value is the objective for initial measurement of the liability. This
statement is effective for exit or disposal activities that are initiated after
December 31, 2002. Adoption of this standard is not expected to have a material
effect on the Bancorp's Consolidated Financial Statements.
     In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." This statement addresses the financial accounting and
reporting for the acquisition of all or part of a financial institution, except
for a transaction between two or more mutual enterprises. This statement
requires transactions to be accounted for in accordance with SFAS No. 141 and
SFAS No. 142. In addition this statement amends SFAS No. 144 to include in its
scope long-term customer relationship intangible assets of financial
institutions such as depositor and borrower-relationship intangible assets and
credit cardholder intangible assets. Consequently, those intangible assets are
subject to the same undiscounted cash flow recoverability test and impairment
loss recognition and measurement provisions that SFAS No. 144 requires for other
long-lived assets that are held and used. This statement was effective October
1, 2002. Adoption of SFAS No. 147 did not have a material effect on the
Bancorp's Consolidated Financial Statements.
     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure--an Amendment of FASB Statement No. 123."
This statement provides alternative methods of transition for a voluntary change
to the fair value method of accounting for stock-based employee compensation.
This statement is effective for financial statements for fiscal years ending
after December 15, 2002. As permitted by SFAS No. 148, the Bancorp will continue
to apply the provisions of APB Opinion No. 25, "Accounting for Stock-Based
Compensation," for all employee stock option grants and provide all disclosures
required. In addition, the Bancorp is awaiting further guidance and clarity that
may result from current FASB and IASB stock compensation projects and will
continue to evaluate any developments concerning mandated, as opposed to
optional, fair-value based expense recognition.
     In November, 2002, the FASB issued Interpretation No. 45, (FIN 45),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others," which elaborates on the
disclosures to be made by a guarantor about its obligations under certain
guarantees issued. It also clarifies that a guarantor is required to recognize,
at the inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. The initial recognition and
measurement provisions of this Interpretation apply on a prospective basis to
guarantees issued or modified after December 31, 2002. The disclosure
requirements in this Interpretation are effective for periods ending after
December 15, 2002. Significant guarantees that have been entered into by the
Bancorp are disclosed in Note 15 of the Notes to Consolidated Financial
Statements. Adoption of the requirements of FIN 45 is not expected to have a
material effect on the Bancorp's Consolidated Financial Statements.
     In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities." This Interpretation clarifies the
application of ARB No. 51, "Consolidated Financial Statements," for certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated support from
other parties. This Interpretation requires variable interest entities to be
consolidated by the primary beneficiary which represents the enterprise that
will absorb the majority of the variable interest entities' expected losses if
they occur, receive a majority of the variable interest entities' residual
returns if they occur, or both. QSPE's are exempt from the consolidation
requirements of FIN 46. This Interpretation is effective immediately for
variable interest entities created after January 31, 2003 and for variable
interest entities in which an enterprise obtains an interest after that date.
This Interpretation is effective in the first fiscal year or interim period
beginning after June 15, 2003 for variable interest entities in which an
enterprise holds a variable interest that was acquired before February 1, 2003,
with earlier adoption permitted. The Bancorp will adopt the provisions of FIN 46
no later than July 1, 2003.
     Upon adoption of the provisions of FIN 46 in 2003, the Bancorp will be
required to consolidate a certain special purpose entity (SPE) to which it will
be deemed to be the primary beneficiary. Through December 31, 2002, the Bancorp
has provided full credit recourse to an unrelated and unconsolidated
asset-backed SPE in conjunction with the sale and subsequent leaseback of leased
autos. The unrelated and unconsolidated asset-backed SPE was formed for the sole
purpose of participating in the sale and subsequent lease-back transactions with
the Bancorp. Based on this credit recourse, the Bancorp will be deemed to
maintain the majority of the variable interests in this entity and will
therefore be required to consolidate. As of December 31, 2002, the total
outstanding balance of leased autos sold was $1.4 billion, net of

                                       58



                      FIFTH THIRD BANCORP AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------
unearned income. Additionally, upon the adoption of FIN 46, a series of interest
rate swaps entered into to hedge certain forecasted transactions with the SPE
will no longer qualify as cash flow hedges under SFAS No. 133. As of December
31, 2002, the cumulative effect of a change in accounting principle would have
been a loss of approximately $16.9 million, net of tax.

Off-Balance Sheet and Certain Trading Activities

The Bancorp consolidates all of its majority-owned subsidiaries. Unconsolidated
investments in which there is greater than 20% ownership are accounted for by
the equity method; those in which there is less than 20% ownership are generally
carried at cost.
     The Bancorp does not participate in any trading activities involving
commodity contracts that are accounted for at fair value. In addition, the
Bancorp has no fair value contracts for which a lack of marketplace quotations
necessitates the use of fair value estimation techniques. The Bancorp's
derivative product policy and investment policies provide a framework within
which the Bancorp and its affiliates may use certain authorized financial
derivatives as an asset/liability management tool in meeting the Bancorp's ALCO
capital planning directives, to hedge changes in fair value of its fixed rate
mortgage servicing rights portfolio or to provide qualifying customers access to
the derivative products market. These policies are reviewed and approved
annually by the Audit Committee and the Board of Directors.
     As part of the Bancorp's ALCO management, the Bancorp may transfer, subject
to credit recourse, certain types of individual financial assets to a
non-consolidated QSPE that is wholly owned by an independent third party. In
2002 and 2001, certain primarily fixed-rate short-term investment grade
commercial loans were transferred to the QSPE. Generally, the loans transferred,
due to their investment grade nature, provide a lower yield and therefore
transferring these loans to the QSPE allows the Bancorp to reduce its exposure
to these lower yielding loan assets and at the same time maintain these customer
relationships. At December 31, 2002, the outstanding balance of loans
transferred was $1.8 billion. During 2002, the Bancorp subject to the recourse
provision, received from the QSPE $269.8 million in loans. Given the investment
grade nature of the loans transferred, as well as the underlying collateral
security provided that includes commercial real estate, physical plant and
property, inventory, receivables, cash and marketable securities, the Bancorp
does not expect this recourse feature to result in a significant use of funds in
future periods or losses and therefore, the Bancorp has not maintained any loss
reserve related to these loans transferred.
     At December 31, 2002, the Bancorp had provided credit recourse on $1.4
billion of leased autos sold to and subsequently leased back from an unrelated
asset-backed SPE in transactions that occurred prior to January 1, 2002.
Pursuant to this sale-leaseback, the Bancorp has future operating lease payments
and corresponding scheduled annual lease receipts from the underlying lessee
totaling $1.4 billion, net of unearned income. In the event of default by the
underlying lessees and pursuant to the credit recourse provided, the Bancorp is
required to reimburse the unrelated asset-backed SPE for all principal related
credit losses and a portion of all residual credit losses. The maximum amount of
credit risk at December 31, 2002 was $1.2 billion. In the event of
nonperformance, the Bancorp has rights to the underlying collateral value of the
autos. Consistent with its overall approach in estimating credit losses for auto
loans and leases held in its portfolio, the Bancorp maintains an estimated
credit loss reserve of approximately $7.0 million and evaluates the adequacy of
such reserve on a quarterly basis.
     At December 31, 2002, the Bancorp had provided credit recourse on
approximately $380 million of residential mortgage loans sold to unrelated third
parties. In the event of any customer default, pursuant to the credit recourse
provided, the Bancorp is required to reimburse the third party. The maximum
amount of credit risk in the event of nonperformance by the underlying borrowers
is equivalent to the total outstanding balance of $380 million. In the event of
nonperformance, the Bancorp has rights to the underlying collateral value
attached to the loan. Consistent with its overall approach in estimating credit
losses for residential mortgage loans held in its loan portfolio, the Bancorp
maintains an estimated credit loss reserve of approximately $1 million relating
to these residential mortgage loans sold.
     Finally, the Bancorp utilizes securitization trusts formed by independent
third parties to facilitate the securitization process of residential mortgage
loans. The cash flows to and from the securitization trusts are principally
limited to the initial proceeds from the securitization trust at the time of
sale. The Bancorp's securitization policy permits the retention of subordinated
tranches, servicing rights, interest-only strips, credit recourse and in some
cases a cash reserve account. At December 31, 2002, the Bancorp had retained
mortgage servicing assets totaling $263.5 million, an interest-only strip
totaling $3.2 million and subordinated tranche security interests totaling $62.9
million.
     In January 2002, the FASB issued FASB Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities". Refer to the New Accounting
Pronouncements section of Management's Discussion and Analysis of Financial
Condition and Results of Operations for discussion of the impact of this
Interpretation to the Bancorp's Consolidated Financial Statements.

Contractual Obligations and Commercial Commitments

As disclosed in the footnotes to the Consolidated Financial Statements, the
Bancorp has certain obligations and commitments to make future payments under
contracts. At December 31, 2002, the aggregate contractual obligations and
commercial commitments are:

- --------------------------------------------------------------------------------
                                                 Payments Due by Period
Contractual Obligations                        Less than        1-5      After 5
($ in millions)                       Total      1 Year        Years       Years
- --------------------------------------------------------------------------------
Long-Term Debt                     $8,178.7       874.8      4,417.8     2,886.1
Annual Rental Commitments
 Under Noncancelable Leases           227.3        40.2         98.5        88.6
Consumer Auto Leases                1,521.7       569.2        952.5          --
- --------------------------------------------------------------------------------
Total                              $9,927.7     1,484.2      5,468.8     2,974.7
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
                                   Amount of Commitment - Expiration by Period

Other Commercial
Commitments                                   Less than       1-5       After 5
($ in millions)                   Total         1 Year       Years        Years
- --------------------------------------------------------------------------------
Letters of Credit               $4,015.4         508.5        990.1      2,516.8
Commitments to
 Extend Credit                  21,666.6      14,341.6      7,325.0       --
- --------------------------------------------------------------------------------
Total                          $25,682.0      14,850.1      8,315.1      2,516.8
- --------------------------------------------------------------------------------

                                       59


                      FIFTH THIRD BANCORP AND SUBSIDIARIES


Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------------
CONSOLIDATED SIX YEAR SUMMARY OF OPERATIONS


- ------------------------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31 ($ in millions,
except per share data)                                          2002        2001        2000        1999          1998         1997
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         
Interest Income ..........................................  $4,129.4     4,708.8     4,947.4     4,199.4       4,052.2      3,933.4
Interest Expense .........................................   1,429.1     2,275.8     2,692.9     2,021.7       2,042.0      2,026.1
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income ......................................   2,700.3     2,433.0     2,254.5     2,177.7       2,010.2      1,907.3
Provision for Credit Losses ..............................     246.6       200.6       125.7       143.2         156.2        176.6
Merger-Related Loan Loss Provision .......................        --        35.4        12.0        26.2          20.2           --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for Credit Losses ....   2,453.7     2,197.0     2,116.8     2,008.3       1,833.8      1,730.7
Other Operating Income ...................................   2,194.1     1,797.4     1,482.4     1,339.0       1,165.2        904.8
Operating Expenses .......................................   2,216.1     1,992.8     1,831.8     1,784.4       1,621.6      1,463.7
Merger-Related Charges ...................................        --       348.6        87.0       108.1         146.3           --
- ------------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes, Minority Interest
 and Cumulative Effect ...................................   2,431.7     1,653.0     1,680.2     1,454.8       1,231.1      1,171.8
Applicable Income Taxes ..................................     759.3       550.0       539.1       507.5         423.5        394.6
- ------------------------------------------------------------------------------------------------------------------------------------
Income Before Minority Interest and Cumulative Effect ....   1,672.4     1,103.0     1,141.1       947.3         807.6        777.2
Minority Interest, Net of Tax ............................      37.7         2.5          --          --            --           --
- ------------------------------------------------------------------------------------------------------------------------------------
Income Before Cumulative Effect ..........................   1,634.7     1,100.5     1,141.1       947.3         807.6        777.2
Cumulative Effect of Change in Accounting Principle,
Net of Tax ...............................................        --         6.8          --          --            --           --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income ...............................................   1,634.7     1,093.7     1,141.1       947.3         807.6        777.2
Dividends on Preferred Stock .............................        .7          .7          .7          .7            .7           .7
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income Available to Common Shareholders ..............  $1,634.0     1,093.0     1,140.4       946.6         806.9        776.5
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share (a) ...................................  $   2.82        1.90        2.02        1.68          1.44         1.39
Earnings Per Diluted Share (a) ...........................  $   2.76        1.86        1.98        1.66          1.42         1.37
Cash Dividends Declared Per Share (a) ....................  $    .98         .83         .70     .58 2/3       .47 1/3     .37 9/10
- ------------------------------------------------------------------------------------------------------------------------------------

CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
As of December 31 ($ in millions)                               2002        2001        2000        1999          1998         1997
- ------------------------------------------------------------------------------------------------------------------------------------
Securities ............................................... $25,515.9    20,523.0    19,581.4    16,663.7      16,509.9     15,620.9
Loans and Leases .........................................  45,928.1    41,547.9    42,530.4    38,836.6      34,115.4     33,906.1
Loans Held for Sale ......................................   3,357.5     2,180.1     1,655.0     1,198.4       2,861.3      1,590.3
Assets ...................................................  80,894.4    71,026.3    69,658.3    62,156.7      58,201.9     55,260.1
Deposits .................................................  52,208.4    45,854.1    48,359.5    41,855.8      41,014.0     39,609.0
Short-Term Borrowings ....................................   8,823.1     7,452.7     6,344.0    10,095.4       6,214.0      6,541.5
Long-Term Debt and Convertible Subordinated
 Debentures ..............................................   8,178.7     7,029.9     6,238.1     3,278.7       4,285.2      2,952.8
Shareholders' Equity .....................................   8,475.0     7,639.3     6,662.4     5,562.8       5,371.4      5,004.6
- ------------------------------------------------------------------------------------------------------------------------------------


SUMMARIZED QUARTERLY FINANCIAL INFORMATION


- ------------------------------------------------------------------------------------------------------------------------------------
                                                             2002                                           2001
                                       ---------------------------------------------------------------------------------------------
($ in millions, except per                 Fourth      Third      Second       First      Fourth       Third     Second       First
share data)                               Quarter    Quarter     Quarter     Quarter     Quarter     Quarter    Quarter     Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    
Interest Income ......................   $1,027.9    1,036.5     1,047.3     1,017.7     1,065.7     1,155.5    1,228.4     1,259.2
Net Interest Income ..................      698.5      677.7       678.0       646.2       629.0       608.0      607.7       588.4
Provision for Credit Losses ..........       72.1       55.5        64.0        55.0        61.6        47.5       25.6        65.9
Merger-Related Loan Loss
 Provision ...........................         --         --          --          --          --          --       35.4          --
Merger-Related Charges ...............         --         --          --          --          --       129.4      219.2          --
Income Before Income Taxes,
 Minority Interest and
 Cumulative Effect ...................      640.4      610.6       601.0       579.6       557.0       406.6      239.2       450.3
Net Income Available to
 Common Shareholders .................      423.4      416.6       404.1       390.0       385.5       279.4      128.7       299.4
Earnings Per Share ...................        .73        .72         .69         .67         .67         .48        .22         .52
Earnings Per Diluted Share ...........        .72        .70         .68         .66         .65         .47        .22         .51
- ------------------------------------------------------------------------------------------------------------------------------------


(a)  Per share amounts have been adjusted for the three-for-two stock splits
     effected in the form of stock dividends paid July 14, 2000 and April 15,
     1998 and July 15, 1997.

                                       60


                      FIFTH THIRD BANCORP AND SUBSIDIARIES


Consolidated Ten Year Comparison
- --------------------------------------------------------------------------------
AVERAGE ASSETS ($ IN MILLIONS)


- ------------------------------------------------------------------------------------------------------------------------------------
                                         Interest-Earning Assets
              -----------------------------------------------------------------------
                               Federal    Interest-Bearing                                 Cash and                         Total
                Loans and       Funds        Deposits                                      Due from         Other          Average
Year             Leases       Loaned (a)    in Banks (a)   Securities        Total          Banks           Assets          Assets
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
2002           $45,538.6        $154.6        $184.0       $23,246.3       $69,123.5       $1,551.0        $4,969.0       $74,998.6
2001            44,888.2          68.8         132.4        19,736.2        64,825.6        1,482.4         4,980.4        70,663.5
2000            42,690.5         117.5          82.8        18,629.7        61,520.5        1,455.7         4,227.8        66,609.9
1999            38,652.1         223.4         103.8        16,900.9        55,880.2        1,628.1         3,343.8        60,292.3
1998            36,013.8         241.0         134.8        16,090.7        52,480.3        1,565.8         2,781.7        56,305.6
1997            33,850.4         326.9         185.8        15,425.0        49,788.1        1,366.6         2,495.0        53,161.5
1996            30,742.2         324.9         211.6        14,958.5        46,237.2        1,401.5         2,212.1        49,366.6
1995            27,598.3         493.6         182.0        12,714.7        40,988.6        1,364.8         1,715.1        43,607.8
1994            22,848.9         340.2         133.6        11,595.5        34,918.2        1,256.3         1,491.2        37,426.9
1993            20,476.5         292.8         263.4        10,529.4        31,562.1        1,213.3         1,318.4        33,943.6
- ------------------------------------------------------------------------------------------------------------------------------------


AVERAGE DEPOSITS AND SHORT-TERM BORROWINGS ($ IN MILLIONS)


- ------------------------------------------------------------------------------------------------------------------------------------
                                                     Deposits
           -----------------------------------------------------------------------------------------------
                                                                      Certificates--                            Short-
                       Interest                  Money        Other     $100,000     Foreign                    Term
Year        Demand     Checking     Savings     Market        Time       and Over    Office        Total      Borrowings     Total
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                             
2002       $8,952.8   $16,239.1    $9,464.8    $1,162.4     $9,402.8    $1,689.6    $2,017.7     $48,929.2     $7,190.3    $56,119.5
2001        7,394.5    11,489.0     4,928.4     2,551.5     13,473.0     3,821.0     1,992.2      45,649.6      8,799.1     54,448.7
2000        6,257.3     9,531.2     5,798.8       939.1     13,716.3     4,283.0     3,895.5      44,421.2      9,724.7     54,145.9
1999        6,078.8     8,553.1     6,206.6     1,327.6     13,858.0     4,196.8       952.3      41,173.2      8,572.8     49,746.0
1998        5,626.7     7,030.6     6,331.7     1,471.0     15,116.9     3,856.3       269.8      39,703.0      7,095.5     46,798.5
1997        4,931.9     6,208.9     4,548.0     2,508.1     15,887.2     4,173.3       440.5      38,697.9      6,113.0     44,810.9
1996        4,492.5     5,558.6     4,236.8     2,908.8     15,170.6     4,186.4       569.1      37,122.8      4,836.6     41,959.4
1995        4,049.7     5,017.5     3,373.8     2,949.5     12,597.1     3,943.6     1,006.5      32,937.7      4,582.4     37,520.1
1994        3,584.6     3,520.8     4,062.3     4,092.7     10,283.7     2,371.1       814.4      28,729.6      3,543.0     32,272.6
1993        3,172.6     3,241.2     4,213.7     3,914.8      9,699.3     2,004.7       485.5      26,731.8      2,361.0     29,092.8
- ------------------------------------------------------------------------------------------------------------------------------------


INCOME ($ IN MILLIONS, EXCEPT PER SHARE DATA)


- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Per Share (b)
                                                                       --------------------------------------------------
                                                                                                             Originally Reported
                                                                                                        ----------------------------
                                     Other                                                                                  Dividend
          Interest    Interest     Operating   Operating      Net                 Diluted    Dividends            Diluted    Payout
Year       Income      Expense      Income      Expense     Income     Earnings   Earnings   Declared   Earnings  Earnings    Ratio
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                           
2002      $4,129.4    $1,429.1     $2,194.1    $2,216.1    $1,634.0      $2.82     $2.76      $.98        $2.82     $2.76     35.5%
2001       4,708.8     2,275.8      1,797.4     2,341.4     1,093.0       1.90      1.86       .83         1.90      1.86     44.7
2000       4,947.4     2,692.9      1,482.4     1,918.8     1,140.4       2.02      1.98       .70         1.86      1.83     38.2
1999       4,199.4     2,021.7      1,339.0     1,892.5       946.6       1.68      1.66       .58 2/3     1.46      1.43     40.9
1998       4,052.2     2,042.0      1,165.2     1,767.9       806.9       1.44      1.42       .47 1/3     1.20      1.17     40.3
1997       3,933.4     2,026.1        904.8     1,463.7       776.5       1.39      1.37       .37 9/10    1.15      1.13     33.6
1996       3,621.0     1,852.2        748.8     1,418.8       653.7       1.16      1.14       .32 4/7      .95       .93     34.9
1995       3,238.8     1,673.2        616.9     1,222.4       592.5       1.09      1.07       .28 4/9      .86       .84     33.8
1994       2,519.9     1,120.9        520.2     1,096.4       497.8        .96       .94       .23 7/10     .75       .73     32.3
1993       2,314.3     1,002.2        497.0     1,024.0       475.0        .92       .91       .20 1/7      .65       .63     31.8
- ------------------------------------------------------------------------------------------------------------------------------------


MISCELLANEOUS AT DECEMBER 31 ($ IN MILLIONS, EXCEPT PER SHARE DATA)


- ------------------------------------------------------------------------------------------------------------------------------------
                                                                Shareholders' Equity
                            --------------------------------------------------------------------------------------------
                                                                           Accumulated
              Number of                                                      Nonowner                                       Reserve
           Shares of Stock   Common    Preferred   Capital      Retained    Changes in   Treasury                 Per     for Credit
Year       Outstanding (b)    Stock      Stock     Surplus      Earnings      Equity       Stock      Total     Share (b)   Losses
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                            
2002        574,355,247     $1,295.2     $9.3     $1,441.4      $5,904.1      $ 369.0    $(544.0)    $8,475.0    $14.76     $683.2
2001        582,674,580      1,293.5      9.3      1,495.4       4,837.4          7.8       (4.1)     7,639.3     13.11      624.1
2000(c)     569,056,843      1,263.3      9.3      1,139.7       4,225.0         27.9       (1.1)     6,662.4     11.71      609.3
1999(c)     565,425,468      1,255.2      9.3        896.3       3,708.1       (301.8)        --      5,562.8      9.84      572.9
1998        557,438,774      1,237.5      9.3        786.5       3,261.3        135.8      (58.0)     5,371.4      9.64      532.2
1997        556,356,059      1,235.1      9.3        771.8       3,033.2        139.9     (184.6)     5,004.6      9.00      509.2
1996        564,561,419      1,253.3      9.3        739.5       2,676.2         16.8        (.2)     4,694.9      8.32      483.6
1995        548,266,213      1,217.2     14.3        522.3       2,400.4         46.0         --      4,200.2      7.66      474.0
1994        520,876,043      1,156.3     14.3        255.5       2,086.6        (66.9)       (.2)     3,445.6      6.62      427.4
1993        518,275,600      1,150.6     14.3        183.4       1,818.4         24.1        (.2)     3,190.5      6.16      382.2
- ------------------------------------------------------------------------------------------------------------------------------------


(a)  Federal funds loaned and interest-bearing deposits in banks are combined in
     other short-term investments in the Consolidated Financial Statements.
(b)  Number of shares outstanding and per share data have been adjusted for
     stock splits in 2000, 1998, 1997 and 1996.
(c)  Excludes the unamortized portion of the 1999 non-officer employee stock
     grant totaling $2.7 million in 2000 and $4.3 million in 1999.

                                       61



                             DIRECTORS AND OFFICERS

FIFTH THIRD BANCORP                         James J. Hudepohl
DIRECTORS                                   Executive Vice President
George A. Schaefer, Jr.
President & CEO                             Robert J. King, Jr.
Fifth Third Bancorp and                     Executive Vice President
Fifth Third Bank
                                            Robert P. Niehaus
Darryl F. Allen                             Executive Vice President
Retired Chairman
President & CEO                             Daniel T. Poston
Aeroquip-Vickers, Inc.                      Senior Vice President & Auditor

John F. Barrett                             Paul L. Reynolds
Chairman, President & CEO                   Executive Vice President,
The Western & Southern Life                 Secretary & General Counsel
Insurance Company
                                            Stephen J. Schrantz
Thomas B. Donnell                           Executive Vice President
Chairman Emeritus
Fifth Third Bank                            Robert A. Sullivan
(Northwestern Ohio)                         Executive Vice President

Richard T. Farmer                           AFFILIATE PRESIDENTS & CEOs
Chairman
Cintas Corporation                          Samuel G. Barnes
                                            Lexington, Kentucky
James P. Hackett
President, CEO & Director                   Todd F. Clossin
Steelcase, Inc.                             Tennessee

Joseph H. Head, Jr.                         John N. Daniel
Chairman                                    Southern Indiana
Atkins & Pearce, Inc.
                                            Patrick J. Fehring, Jr.
Joan R. Herschede                           Eastern Michigan
President & CEO
The Frank Herschede Company                 James R. Gaunt
                                            Louisville, Kentucky
Allen M. Hill
Retired President & CEO                     Kevin T. Kabat
DPL, Inc.                                   Western Michigan

Robert L. Koch II                           Robert J. King, Jr.
President & CEO,                            Northeastern Ohio
Koch Enterprises, Inc.
                                            Colleen M. Kvetko
Mitchel D. Livingston, Ph.D.                Florida
Vice President for
Student Affairs                             Bruce K. Lee
University of Cincinnati                    Northwestern Ohio

Hendrik G. Meijer                           Timothy T. O'Dell
Co-Chairman                                 Central Ohio
Meijer, Inc.
                                            John E. Pelizzari
Robert B. Morgan                            Northern Michigan
Executive Counselor
Cincinnati Financial                        Timothy P. Rawe
Corporation                                 Northern Kentucky

James E. Rogers
Chairman, President & CEO                   R. Daniel Sadlier
Cinergy Corporation                         Western Ohio

John J. Schiff, Jr.                         Maurice J. Spagnoletti
Chairman, President & CEO                   Central Indiana
Cincinnati Financial Corporation
                                            Bradlee F. Stamper
Donald B. Shackelford                       Chicago
Chairman
Fifth Third Bank                            Raymond J. Webb
(Central Ohio)                              Ohio Valley

Dudley S. Taft                              AFFILIATE CHAIRMEN
President
Taft Broadcasting Company                   H. Lee Cooper
                                            Southern Indiana
Thomas W. Traylor
Chairman & CEO                              Jerry L. Kirby
Traylor Bros., Inc.                         Western Ohio

David J. Wagner                             Donald B. Shackelford
Former Chairman                             Central Ohio
Fifth Third Bank (Michigan)
                                            William A. Stinnett III
DIRECTORS EMERITI                           Ohio Valley

Neil A. Armstrong                           James B. Sturges
Philip G. Barach                            Central Indiana
Vincent H. Beckman
J. Kenneth Blackwell                        John S. Szuch
Milton C. Boesel, Jr.                       Northwestern Ohio
Douglas G. Cowan
Thomas L. Dahl                              FIFTH THIRD BANCORP
Ronald A. Dauwe                             BOARD COMMITTEES
Gerald V. Dirvin
Nicholas M. Evans                           Executive Committee
Louis R. Fiore
John D. Geary                               George A. Schaefer, Jr.,
Ivan W. Gorr                                Chairman
William A. Hopple III
William J. Keating                          Thomas B. Donnell
Jerry L. Kirby                              Joseph H. Head, Jr.
Michael H. Norris                           Allen M. Hill
Brian H. Rowe                               John J. Schiff, Jr.
C. Wesley Rowles                            Dudley S. Taft
David B. Sharrock
Stephen Stranahan                           Stock Option and
N. Beverley Tucker, Jr.                     Compensation Committee
Alton C. Wendzel
                                            Joseph J. Head, Jr., Chairman
FIFTH THIRD BANCORP                         Allen M. Hill
OFFICERS                                    James E. Rogers

George A. Schaefer, Jr.                     Audit Committee
President & CEO
                                            Robert B. Morgan, Chairman
Neal E. Arnold                              John F. Barrett
Executive Vice President &                  Joan R. Herschede
Chief Financial Officer
                                            Nominating and Corporate
Michael D. Baker                            Governance Committee
Executive Vice President
                                            Dudley S. Taft, Chairman
David J. DeBrunner                          Darryl E. Allen
Vice President & Controller                 Robert L. Koch II
                                            James E. Rogers
Diane L. Dewbrey
Senior Vice President                       Compliance Committee

James R. Gaunt                              Joseph H. Head, Jr.
Executive Vice President                    Allen M. Hill
                                            John J. Schiff, Jr.
R. Mark Graf                                Dudley S. Taft
Senior Vice President and Treasurer


                                       62



                              INVESTOR INFORMATION

CORPORATE OFFICE                    TRANSFER AGENT/
                                    SHAREHOLDER RELATIONS
Fifth Third Center
Cincinnati, Ohio 45263              Fifth Third Bank
(513) 579-5300                      Corporate Trust Services
                                    Mail Drop 10AT66-3212
WEBSITE                             Fifth Third Center
                                    Cincinnati, Ohio 45263
www.53.com                          (800) 837-2755
                                    (513) 579-5320 (outside continental U.S.)
INVESTOR RELATIONS                  8:00 am to 5:00 pm EST
                                    www.Investordirect.53.com
Neal E. Arnold
Executive Vice President &          STOCK TRADING
Chief Financial Officer
(513) 579-4356                      The common stock of Fifth Third Bancorp
(513) 534-0629 (fax)                is traded in the over-the-counter market
                                    and is listed under the symbol "FITB"
Bradley S. Adams                    on the Nasdaq National Market.
Investor Relations Officer
(513) 534-0983                      PRESS RELEASES
(513) 534-0629 (fax)
                                    For copies of current press releases,
INDEPENDENT AUDITOR                 please  visit our website at www.53.com.

Deloitte & Touche LLP               [GRAPHIC]
250 East Fifth Street
Cincinnati, OH 45202                Featured on our cover are,
                                    from left to right, Fifth Third
                                    Bancorp Board Members
                                    Mitchel D. Livingston, Ph.D.
                                    and Joan R. Herschede and
                                    Fifth Third Affiliate Presidents
                                    Bradlee F. Stamper, James R.
                                    Gaunt and Robert J. King, Jr.

STOCK DATA



                            2002                                     2001
                   ---------------------------------------------------------------------
                                     Dividends                                Dividends
                                     Paid Per                                 Paid Per
                   High     Low      Share                  High     Low      Share
- ----------------------------------------------------------------------------------------
                                                            
Fourth Quarter     $66.47   $55.40   $ .26                  $63.07   $53.30   $ .23
Third Quarter      $68.54   $55.26   $ .26                  $64.77   $50.69   $ .20
Second Quarter     $69.70   $62.45   $ .23                  $63.00   $48.88   $ .20
First Quarter      $69.69   $60.10   $ .23                  $61.31   $45.69   $ .20



DEBT RATINGS

                                                   Moody's           Standard & Poor's      Fitch
- ----------------------------------------------------------------------------------------------------
FIFTH THIRD BANCORP

                                                                                   
   Commercial Paper                                Prime-1           A-1+                   F1+
   Senior Debt                                     Aa2               AA-                    AA-
FIFTH THIRD BANK AND FIFTH THIRD BANKS
OF MICHIGAN; INDIANA; KENTUCKY, INC. AND
NORTHERN KENTUCKY

   Short-Term Deposit                              Prime-1           A-1+                   F1+
   Long-Term Deposit                               Aa1               AA-                    AA


(C)Fifth Third Bank 2003
Member F.D.I.C. - Federal Reserve System
(R)Reg. U.S. Pat. & T.M. Office

                               2002 ANNUAL REPORT

                                       63



                            [LOGO] Fifth Third Bank

                            [GRAPHIC]

EX-21

                                   EXHIBIT 21

                        FIFTH THIRD BANCORP SUBSIDIARIES

                             As of December 31, 2002



                                                                                      Jurisdiction
                                                                                           of
      Name                                                                            Incorporation
      ----                                                                            -------------
                                                                                   
Fifth Third Capital Trust I                                                              Delaware

Fifth Third Financial Corporation                                                        Ohio

      Fifth Third Bank                                                                   Ohio

               The Fifth Third Company                                                   Ohio

               The Fifth Third Leasing Company                                           Ohio

                   The Fifth Third Auto Leasing Trust                                    Delaware

                   Fifth Third Foreign Lease Management, LLC                             Delaware

               Fifth Third Processing Solutions, Inc.                                    Ohio

               Fifth Third International Company                                         Kentucky

                   Fifth Third Trade Services Limited                                    Hong Kong

               Fifth Third Real Estate Capital Markets Company                           Ohio

               Fifth Third Holdings, LLC                                                 Delaware

               Fifth Third Mortgage Insurance Reinsurance Company                        Vermont

               Fifth Third Mortgage Company                                              Ohio

                   Fifth Third Real Estate Investment Trust, Inc.                        Maryland

               Fifth Third Securities, Inc.                                              Ohio

               Fifth Third Asset Management, Inc.                                        Ohio

               Fifth Third Insurance Agency, Inc.                                        Ohio

      Fifth Third Bank, Kentucky, Inc.                                                   Kentucky

      Fifth Third Bank, Northern Kentucky, Inc.                                          Kentucky

      Fifth Third Bank, Indiana                                                          Indiana

               Community Financial Services, Inc.                                        Indiana

                   Pedcor Investments 1994 XXLP                                          Indiana

      Fifth Third Bank, Florida                                                          Florida




                                   EXHIBIT 21

                        FIFTH THIRD BANCORP SUBSIDIARIES

                             As of December 31, 2002

                                                                         
Fifth Third Reinsurance Company, LTD                                        Turks and Caicos Islands

Fifth Third Community Development Corporation                                        Indiana

Fifth Third Investment Company                                                       Ohio

Fountain Square Life Reinsurance Company, Ltd.                              Turks and Caicos Islands

Heartland Capital Management, Inc.                                                   Indiana

Old Kent Capital Trust I                                                             Delaware

Old Kent Financial Life Insurance Company                                            Arizona

Fifth Third Bank (Michigan)                                                          Michigan

         Old Kent Investment Corporation                                             Nevada

         Home Equity of America, Inc.                                                Ohio

         GNB Management, LLC                                                         Delaware

            GNB Realty, LLC                                                          Delaware

         Old Kent Hong Kong, LLC                                                     Michigan

            Old Kent Trade Services, Ltd.                                            Hong Kong

         Old Kent Mortgage Services, Inc.                                            Michigan

            Fifth Third Mortgage - MI, LLC                                           Delaware

EX-23

                                   EXHIBIT 23

                          INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in the following Registration
Statements of Fifth Third Bancorp of our report dated February 12, 2003, (which
report expresses an unqualified opinion and includes an explanatory paragraph
related to the adoption of Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets") incorporated by reference in this Annual
Report on Form 10-K of Fifth Third Bancorp for the year ended December 31, 2002:

                  Form S-8                     Form S-3
                  --------                     --------

                  No. 33-34075                 No. 33-54134
                  No. 33-13252                 No. 333-42379
                  No. 33-60474                 No. 333-80919
                  No. 33-55223                 No. 333-56450
                  No. 33-55553                 No. 33-34798
                  No. 333-58249                No. 333-53826
                  No. 333-48049                No. 333-41164
                  No. 33-61149                 No. 333-86360
                  No. 333-77293
                  No. 333-84955
                  No. 333-47428
                  No. 333-53434
                  No. 333-52188
                  No. 333-84911
                  No. 333-52182
                  No. 333-58618
                  No. 333-63518
                  No. 333-72910





/s/ Deloitte & Touche LLP
Cincinnati, Ohio
March 27, 2003

EX-99.1

                                  EXHIBIT 99.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Fifth Third Bancorp (the "Registrant")
on Form 10-K for the year ended December 31, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, George A.
Schaefer, Jr., President and Chief Executive Officer of the Registrant, certify,
pursuant to 18 U.S.C. (S) 1350, as adopted pursuant to (S) 906 of the
Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Registrant.



/s/ George A. Schaefer, Jr.
- ---------------------------------
George A. Schaefer, Jr.
President and Chief Executive Officer
March 27, 2003



A signed original of this written statement required by Section 906 has been
provided to the Registrant and will be retained by the Registrant and furnished
to the Securities and Exchange Commission or its staff upon request.

EX-99.2

                                  EXHIBIT 99.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Anual Report of Fifth Third Bancorp (the "Registrant") on
Form 10-K for the year ended December 31, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Neal E. Arnold,
Executive Vice President and Chief Financial Officer of the Registrant, certify,
pursuant to 18 U.S.C. (S) 1350, as adopted pursuant to (S) 906 of the
Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Registrant.



/s/ Neal E. Arnold
- -------------------------------
Neal E. Arnold
Executive Vice President and Chief Financial Officer
March 27, 2003



A signed original of this written statement required by Section 906 has been
provided to the Registrant and will be retained by the Registrant and furnished
to the Securities and Exchange Commission or its staff upon request.

EX-99.3

                                  EXHIBIT 99.3

                            UNITED STATES OF AMERICA
                                   BEFORE THE
                BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

- ------------------------------------------
Written Agreement by and among            :
                                          :
FIFTH THIRD BANCORP                       :
Cincinnati, Ohio                          :
                                          :
FIFTH THIRD BANK                          :
Cincinnati, Ohio                          :
                                          :
FEDERAL RESERVE BANK                      :
  OF CLEVELAND                            :
Cleveland, Ohio                           :
                                          :
and                                       :
                                          :
STATE OF OHIO DEPARTMENT OF               :
  COMMERCE, DIVISION OF                   :
  FINANCIAL INSTITUTIONS                  :
Columbus, Ohio                            :
- ------------------------------------------

         WHEREAS, Fifth Third Bancorp, Cincinnati, Ohio ("Fifth Third"), a
registered bank holding company, owns and controls its lead subsidiary bank,
Fifth Third Bank, Cincinnati, Ohio (the "Bank"), a state chartered bank that is
a member of the Federal Reserve System, and five other subsidiary banks, Fifth
Third Bank, Grand Rapids, Michigan; Fifth Third Bank, Indiana, Indianapolis,
Indiana; Fifth Third Bank, Kentucky, Inc., Louisville, Kentucky; Fifth Third
Bank, Northern Kentucky, Inc., Covington, Kentucky; and Fifth Third Bank,
Florida, Naples, Florida (the "Subsidiary Banks"), which are state chartered
banks that are members of the Federal Reserve System;

         WHEREAS, on its own behalf and on behalf of the Bank and the Subsidiary
Banks, Fifth Third is addressing deficiencies noted by the Federal Reserve Bank
of Cleveland (the "Reserve Bank") and the Ohio Division of Financial
Institutions (the "Division") and is taking steps to enhance and improve its
risk management, internal controls, financial accounting, audit, and information
technology functions, as well as its management and corporate governance
policies and procedures;

         WHEREAS, in recognition of Fifth Third's efforts to work in cooperation
with the Reserve Bank and the Division, its progress in implementing corrective
actions, and its commitment to assuring the availability of resources necessary
to address deficiencies, Fifth



Third, the Bank, the Reserve Bank, and the Division have mutually agreed to
enter into this Written Agreement (the "Agreement"); and

         WHEREAS, on March 25, 2003, the boards of directors of Fifth Third and
the Bank, at duly constituted meetings, adopted resolutions authorizing and
directing George A. Schaefer, Jr., President and Chief Executive Officer of
Fifth Third and the Bank, to enter into this Agreement on behalf of Fifth Third
and the Bank, respectively, and consenting to compliance by Fifth Third and the
Bank and their institution-affiliated parties, as defined in sections 3(u) and
8(b)(3) of the Federal Deposit Insurance Act (the "FDI Act") (12 U.S.C. 1813(u)
and 1818(b)(3)), and the Bank's regulated persons, as defined in Ohio Revised
Code section 1121.01(A), with each and every applicable provision of this
Agreement.

         NOW, THEREFORE, Fifth Third, the Bank, the Reserve Bank, and the
Division agree as follows:

Management Review

         1.  (a)  Fifth Third shall complete its engagement of an independent
management consultant (the "Corporate Consultant") to conduct a review of the
structure, functions, composition, and performance of Fifth Third's and the
Bank's management and boards of directors (the "Corporate Review"), and to
prepare a written report (the "Corporate Consultant's Report") that includes
findings, conclusions, and written descriptions of any management or operational
changes recommended as a result of the Corporate Review. The primary goals of
the Corporate Review shall be, first, to assist Fifth Third's board of directors
in the development of adequate board and management structures that are staffed
by qualified and trained personnel suitable to the needs of the Fifth Third
consolidated organization and, second, to improve corporate governance practices
at the board of directors, committee and management levels. The Corporate Review
shall, at a minimum, address, consider, and include:

                  (i)   An evaluation of the effectiveness of the boards of
directors of Fifth Third and the Bank, as well as their committees, in carrying
out their oversight responsibilities, including but not limited to, an
evaluation of the adequacy of information provided to the boards of directors
and committees, and the frequency of board of directors and committee meetings;

                  (ii)  an assessment of the adequacy throughout the
consolidated organization of the identification and reporting of deficiencies
and weaknesses to senior management and the boards of directors;

                  (iii) an evaluation of the management structures of Fifth
Third and the Bank, including recommendations regarding the type and number of
senior officer and officer positions needed to manage and properly supervise the
affairs of Fifth Third, the Bank, and the Subsidiary Banks; and

                  (iv)  an evaluation of each senior officer of Fifth Third and
the Bank to determine whether the individual possesses the ability, experience,
and other qualifications

                                        2



required to competently perform present and anticipated duties, to adhere to
established policies and procedures, and to comply with the requirements of this
Agreement.

             (b)  Within 10 days of this Agreement, but prior to the
commencement of the Corporate Review, to the extent not already provided, Fifth
Third and the Bank shall submit to the Reserve Bank and the Division for
approval an engagement letter that delineates: (i) the scope of the Corporate
Review; (ii) the date of submission of the Corporate Consultant's Report, not to
exceed 90 days after the date of approval of the engagement letter by the
Reserve Bank and the Division; and (iii) the proposed Corporate Consultant
resources to be dedicated to the Corporate Review.

             (c)  Fifth Third and the Bank shall fully cooperate with the
Corporate Consultant and agree that the Corporate Consultant will have complete
access to all employees, books, records, documents, and communications necessary
to conduct the Corporate Review. A copy of the Corporate Consultant's Report
shall be provided to the Reserve Bank and the Division at the same time that it
is provided to Fifth Third and the Bank.

             (d)  Within 60 days after Fifth Third's and the Bank's receipt of
the Corporate Consultant's Report, Fifth Third and the Bank shall submit an
acceptable joint written management plan to the Reserve Bank and the Division
describing specific actions that the boards of directors propose to take to
fully address the findings and recommendations of the Corporate Consultant's
Report.

         2.  Within 180 days of receipt of the Corporate Consultant's Report,
and thereafter not less frequently than semi-annually, Fifth Third's and the
Bank's boards of directors shall review management's adherence to written
policies and procedures in the areas of risk management, internal controls,
financial accounting, audit, information technology, corporate governance,
financial and regulatory reporting, and compliance and shall prepare written
findings and conclusions of this review along with written descriptions of any
management or operational changes that are made as a result of the review. The
occurrence of the semi-annual review shall be noted in the minutes of the boards
of directors meetings, and the written findings and information reviewed by the
boards of directors to conduct this review shall be maintained for subsequent
regulatory review.

Risk Management

         3.  Within 90 days of this Agreement, Fifth Third and the Bank shall
submit to the Reserve Bank and the Division an acceptable joint written plan
designed to strengthen and improve the risk management processes for the
consolidated organization that covers its operations, products, and financial
activities, including but not limited to, information technology, wire transfer,
account reconciliation, and treasury and trust operations. The plan shall, at a
minimum, address, consider, and include:

             (a)  An enterprise-wide, independent structure, overseen by an
experienced senior executive level risk management officer, designed to ensure
the evaluation of all functional risk management processes, identification and
monitoring of aggregate risk exposures,

                                        3



and reporting of enterprise-wide risk exposures in all areas to senior
management and Fifth Third's board of directors;

             (b)  improvements to the oversight of risk management processes by
the boards of directors, including but not limited to, timely response to
identified deficiencies and risks;

             (c)  policies and procedures to establish controls, define
responsibilities, and set risk tolerance levels for the consolidated
organization;

             (d)  policies and procedures to identify and assess all risks
associated with new operations, products, and financial activities and to ensure
that internal controls to manage those risks are in place;

             (e)  improvements to management information systems and reporting
procedures to ensure the accuracy of data provided to management and the board
of directors, including but not limited to, the performance of independent
validations of market risk models;

             (f)  strengthened internal controls for the consolidated
organization that are designed to effectively manage risks; and

             (g)  training for appropriate personnel at Fifth Third, the Bank,
and the Subsidiary Banks in all risk management areas.

Accounting, Financial, and Internal Controls

         4.  Within 90 days of this Agreement, Fifth Third and the Bank shall
jointly submit to the Reserve Bank and the Division acceptable written
accounting policies and procedures for the consolidated organization designed to
enhance the accounting control environment; to strengthen procedures for access
to books and records, including the general ledger; to strengthen internal
account opening processes and charge-off processes and controls; and to provide
a sound accounting framework, with appropriate guidance on accounting matters.
The accounting policies and procedures shall also specifically address account
reconciliation processes and controls and shall, at a minimum, address,
consider, and include:

             (a)  Standardized processes to perform accurate and timely account
reconciliations, consistent with generally accepted accounting principles
("GAAP"), including use of standard reconciliation formats and procedures;

             (b)  timely and independent review and approval of reconciliations;

             (c)  appropriate segregation of duties with respect to the
preparation, review and approval of account reconciliations;

             (d)  appropriate action with respect to identified aged items,
including but not limited to, timely and appropriate charge-offs and timely and
accurate reports to management;

                                        4



             (e)  retention and availability of work papers and other records of
reconciliations for internal and external audit review and regulatory review;
and

             (f)  training of all personnel engaged in the account
reconciliation function to ensure that they have sufficient skills and knowledge
to perform accurate reconciliations consistent with GAAP.

         5.  Fifth Third shall continue to work with the independent firm it
previously retained with the approval of the Reserve Bank and the Division to
complete by March 31, 2003, a full reconciliation of all internal accounts of
Fifth Third, the Bank, the Subsidiary Banks, and all nonbank subsidiaries, as of
December 31, 2002. By April 11, 2003, Fifth Third shall resolve any remaining
unreconciled items in accordance with the applicable charge-off policy.

         6.  Within 90 days of this Agreement, Fifth Third and the Bank shall
submit to the Reserve Bank and the Division acceptable joint written policies
and procedures designed to strengthen internal controls throughout the
consolidated organization. The policies and procedures shall address internal
control criticisms noted in the report of the examination of Fifth Third and the
Bank conducted by the Reserve Bank and the Division, commenced on November 12,
2002 (the "Report of Examination"), including but not limited to, criticisms in
the areas of account reconciliation and treasury operations, and shall also, at
a minimum, address, consider, and include:

             (a)  Management information systems to ensure that appropriate
management personnel receive timely and accurate reports necessary to
effectively manage business risks and correct weaknesses and deficiencies; and

             (b)  appropriate segregation of duties in all areas, including but
not limited to, the funds transfer function, and treasury and trust operations.

Financial Statements and Regulatory Reports

         7.  Fifth Third and the Bank shall take actions designed to ensure that
all general ledger accounts are reconciled on at least a monthly basis to ensure
accurate regulatory reporting and disclosures required under banking and
securities laws. Records of such reconciliations shall be maintained for
internal and external audit review and for subsequent regulatory review.

         8.  Fifth Third and the Bank shall take all actions as are necessary to
ensure that each regulatory report, including Forms Y-9C and Reports of
Condition and Income, accurately reflects Fifth Third's and the Bank's condition
on the date for which it is filed, and that all records indicating how the
report was prepared are maintained for subsequent supervisory review.

Internal Audit

                                        5



         9.  (a)  Within 10 days of this Agreement, Fifth Third shall engage an
independent firm acceptable to the Reserve Bank and the Division to conduct a
review of the enterprise-wide internal audit function and to prepare a written
report that includes findings, conclusions, and descriptions of any managerial
or operational changes recommended as a result of the review. The terms of the
engagement letter shall provide that the independent firm will submit its report
within 60 days of its engagement and will provide a copy of its report to the
Reserve Bank and the Division at the same time that it is provided to Fifth
Third. The review and report shall address, consider, and include, at a minimum:

                  (i)    The independence of the internal audit function;

                  (ii)   the responsibilities and activities of the audit
committee;

                  (iii)  the adequacy of information provided to the audit
committee;

                  (iv)   the adequacy of audit staffing;

                  (v)    the adequacy of audit planning and risk assessments;

                  (vi)   the coverage, frequency and scope of internal audits;

                  (vii)  the adequacy of internal audit work programs; and

                  (viii) the adequacy of formal management responses to audit
findings.

             (b)  Within 30 days after Fifth Third's receipt of the independent
review of the internal audit function, Fifth Third shall submit an acceptable
written plan to the Reserve Bank and the Division describing specific actions
that Fifth Third's board of directors propose to take to fully address the
findings and recommendations of the review.

             (c)  Within 45 days after Fifth Third's receipt of the independent
review of the internal audit function, Fifth Third shall review Fifth Third's
previously adopted 2003 audit plan in consideration of the findings and
recommendations of the internal audit review and shall revise the plan
accordingly. The revised 2003 audit plan shall be approved by Fifth Third's
board of directors, or an appropriate committee thereof. The revised 2003 audit
plan shall require that any deviation from the audit plan be immediately
reported, in writing, to the audit committee and the board of directors.

         10. Fifth Third's internal audit department shall submit a written
audit plan for each year subsequent to the year of this Agreement to Fifth
Third's board of directors, or an appropriate committee thereof, no later than
November 30th of the preceding year. The written audit plan shall detail the
scope, nature, and scheduling of all audit work to be conducted for the
consolidated organization in all areas for the year. The plan shall cover all
operational areas and shall require that any deviation from the audit plan be
immediately reported, in writing, to the audit committee and the board of
directors. All plans required by this paragraph shall be

                                        6



approved by Fifth Third's board of directors, or an appropriate committee
thereof, and retained and made available for subsequent regulatory review.

                                        7



Strategic Plan and Budget

         11. (a)  Within 180 days of this Agreement, Fifth Third shall submit to
the Reserve Bank and the Division a written enterprise-wide strategic plan and
budget concerning Fifth Third's proposed business activities for the three-year
period beginning in 2004. The plan and budget shall, at a minimum, provide for
or describe:

                  (i)   The responsibilities of Fifth Third's board of directors
regarding the definition, approval, implementation and monitoring of the
strategic plan and budget, and the procedures designed to ensure that the board
of directors fulfills such responsibilities;

                  (ii)  development and adoption of policies, procedures,
controls, and processes required to ensure the safe and sound operation of new
activities and products as well as expanded functions;

                  (iii) establishment of protocols designed to ensure that all
areas of operations, including back office, are appropriately funded and that
the organization's infrastructure keeps up with anticipated growth; and

                  (iv)  financial performance objectives, including plans for
asset growth, earnings, liquidity, and capital supported by detailed quarterly
and annual pro forma financial statements, including projected budgets, balance
sheets and income statements.

             (b)  For each year subsequent to the year of this Agreement, Fifth
Third shall prepare a written update to the enterprise-wide strategic plan and
budget. Such updates shall be included in the minutes of the boards of directors
meetings and maintained for subsequent regulatory review.

Information Technology

         12. Within 90 days of this Agreement, Fifth Third and the Bank shall
submit to the Reserve Bank and the Division an acceptable joint written plan
designed to improve the information technology function of the consolidated
organization. The plan shall, at a minimum, address, consider, and include:

             (a)  Performance of an enterprise-wide information security risk
assessment, as required by Appendix D-2 to Part 208 of Regulation H and Appendix
F to Part 225 of Regulation Y of the Board of Governors, designed to enable
Fifth Third and the Bank to meet all applicable requirements for protecting
nonpublic customer information, and to assist Fifth Third and the Bank in making
future adjustments to safeguards as appropriate;

             (b)  enhancements to Fifth Third's and the Bank's existing
policies, procedures and controls that address physical and logical information
security, including but not limited to, physical access to work areas, and user
access to business applications;

                                        8



             (c)  an evaluation of electronic payment platforms to identify and
correct any weaknesses in policies and procedures related to physical and
logical information security; and

             (d)  implementation of procedures and controls to increase the
effectiveness and integrity of the program change processes of the consolidated
organization.

Funds Transfer Activities

         13. (a)  Within 10 days of this Agreement, Fifth Third and the Bank
shall engage an independent firm acceptable to the Reserve Bank and the Division
to conduct a review of funds transfer activities, evaluate improvements in funds
transfer activities, and prepare a report with findings and recommendations to
improve and strengthen, where needed, funds transfer activities.

             (b)  Within 10 days of this Agreement, but prior to the
commencement of the independent firm's review of funds transfer activities, to
the extent not already provided, Fifth Third and the Bank shall submit to the
Reserve Bank and the Division for approval an engagement letter that delineates:
(i) the scope of the review; and (ii) the date of submission of the independent
firm's report, not to exceed 90 days after the date of approval of the
engagement letter by the Reserve Bank and the Division. A copy of the report
shall be provided to the Reserve Bank and the Division at the same time that it
is provided to Fifth Third.

             (c)  Within 30 days after Fifth Third's and the Bank's receipt of
the independent firm's report, Fifth Third and the Bank shall submit an
acceptable joint written plan to the Reserve Bank and the Division that
describes the specific actions that the boards of directors propose to take to
fully address the findings and recommendations of the report.

Treasury and Trust Operations

         14. (a)  Within 90 days of this Agreement, Fifth Third and the Bank
shall complete their revision of the policies, procedures and controls in the
treasury operations area.

             (b)  Upon completion of the revision required by paragraph 14(a),
Fifth Third and the Bank shall engage an independent firm acceptable to the
Reserve Bank and the Division to conduct a review of the treasury operations
area and prepare a written report that includes findings, conclusions and
recommendations to further strengthen, where needed, the policies, procedures
and controls, including but not limited to, management reporting, critical
operating processes, separation of duties, and staff training and expertise. The
terms of the engagement shall provide that the independent firm will submit its
report within 60 days of its engagement and will provide a copy of its report to
the Reserve Bank and the Division at the same time that it is provided to Fifth
Third and the Bank.

             (c)  Within 30 days after Fifth Third's receipt of the third party
report, Fifth Third and the Bank shall submit an acceptable joint written plan
to the Reserve Bank and the Division that describes the specific actions that
the boards of directors propose to take to fully address the findings and
recommendations of the independent firm's report.

                                        9



         15. By June 30, 2003, Fifth Third and the Bank shall complete the
ongoing project to reconstruct treasury transactions conducted from March 1,
2000 through September 30, 2002 (the "Reconstruction Project"). Thereafter,
Fifth Third and the Bank shall take the following steps:

             (a)  Upon completion of the Reconstruction Project, Fifth Third and
the Bank shall engage an independent firm acceptable to the Reserve Bank and the
Division to review and validate the Reconstruction Project. The terms of the
engagement shall provide that the independent firm will prepare a written report
that includes findings, conclusions and written descriptions of any deficiencies
in the Reconstruction Project and recommendations for corrections. The terms of
the engagement shall provide that the independent firm will submit its report
within 30 days of its engagement and will provide a copy of its report to the
Reserve Bank and the Division at the same time that it is provided to Fifth
Third and the Bank.

             (b)  Within 10 days of receipt of the independent third party
review and validation of the Reconstruction Project, the boards of directors
shall ensure that all charge-offs and recoveries identified by the
Reconstruction Project are appropriately reflected in the Bank's Reports of
Condition and Income.

         16. Within 90 days of this Agreement, Fifth Third and the Bank shall
submit to the Reserve Bank and the Division acceptable joint written policies
and procedures designed to strengthen management oversight of trust operations
and improve the accuracy of the books and records of the trust operations area
for the consolidated organization. These procedures shall include, at a minimum,
corrective steps to address criticisms noted in the Report of Examination,
including but not limited to, those in the areas of settlement accounts, system
settlement, system access, and physical security.

Compliance Committee

         17. Within 15 days of this Agreement, the boards of directors of Fifth
Third and the Bank shall establish a joint committee to monitor compliance with
the provisions of this Agreement (the "Compliance Committee"). The Compliance
Committee shall be comprised of three or more outside directors who are not
officers or employees of Fifth Third, the Bank, any of the Subsidiary Banks or
any nonbank subsidiary; who do not directly or indirectly own more than ten
percent of the outstanding shares of Fifth Third; and who do not serve in the
capacity of an executive officer or policy making officer of any entity that
owns more than ten percent of Fifth Third. At a minimum, the Compliance
Committee shall keep detailed minutes of each meeting and shall report its
findings to Fifth Third's and the Bank's boards of directors on a monthly basis.

Effect and Terms of Agreement

         18. The written plans, policies, procedures, and engagement letters
required by paragraphs 1(b), 1(d), 3, 4, 6, 9(b), 12, 13(b), 13(c), 14(c), and
16 of this Agreement shall be submitted to the Reserve Bank and the Division for
review and approval. Acceptable plans,

                                       10



policies, and procedures, and acceptable engagement letters shall be submitted
within the time periods set forth in this Agreement. Fifth Third and the Bank,
as appropriate, shall adopt the approved plans, policies, procedures, and
engagement letters within 10 days of approval by the Reserve Bank and the
Division and then shall fully comply with them. During the term of this
Agreement, the approved plans, policies, procedures, and engagement letters
shall not be amended or rescinded without the prior written approval of the
Reserve Bank and the Division.

         19. Within 30 days after the end of each calendar quarter (June 30,
September 30, December 31, March 31) following the date of this Agreement, Fifth
Third and the Bank shall furnish a joint written progress report detailing the
form and manner of all actions taken to secure compliance with the provision of
this Agreement, and the results thereof, to the Reserve Bank and the Division.

         20. All communications regarding this Agreement shall be sent to:

             (a)  George A. Schaefer, Jr.
                  President and Chief Executive Officer
                  Fifth Third Bancorp
                  38 Fountain Square Plaza
                  Cincinnati, OH 45263

             (b)  Andrew C. Burkle, Jr.
                  Senior Vice President
                  Federal Reserve Bank of Cleveland
                  1455 East 6/th/ Street
                  Cleveland, OH 44114-2566

             (c)  F. Scott O'Donnell
                  Superintendent of Financial Institutions
                  State of Ohio
                  Department of Commerce
                  Division of Financial Institutions
                  77 South High Street - 21/st/ Floor
                  Columbus, Ohio 43215-6120

         21. The provisions of this Agreement shall be binding on Fifth Third,
the Bank, and each of their institution-affiliated parties in their capacities
as such, and their successors and assigns.

         22. Each provision of this Agreement shall remain effective and
enforceable until stayed, modified, terminated, or suspended by the Reserve Bank
and the Division.

         23. Notwithstanding any provision of this Agreement, the Reserve Bank
and the Division may, in their discretion, grant written extensions of time to
Fifth Third and the Bank, as appropriate, to comply with any provision of this
Agreement.

                                       11



         24. The provisions of this Agreement shall not bar, estop or otherwise
prevent the Reserve Bank, the Board of Governors of the Federal Reserve System,
the Division, any other federal or state agency or department from taking any
other action affecting Fifth Third, the Bank, the Subsidiary Banks, any nonbank
subsidiary, or any of their current or former institution-affiliated parties and
their successors and assigns.

         25. This Agreement is a "written agreement" for the purposes of, and is
enforceable by the Board as an order issued under, section 8 of the FDI Act (12
U.S.C. 1818).

         26. This Agreement is a "written agreement" under Section 1121.32(A),
1121.33(A)(1)(a)(iv) and 1121.35(A) of the Ohio Revised Code. Violation of a
written agreement is grounds for the Division to pursue a cease and desist
order, civil money penalties, and/or the removal of any "regulated person" as
defined under Section 1121.01(A) of the Ohio Revised Code.

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the 26/th/ day of March, 2003.


Fifth Third Bancorp                        Federal Reserve Bank of Cleveland



By:  /s/ George A. Schaefer, Jr.           By: /s/ Andrew C. Burkle, Jr.
   -----------------------------              --------------------------
         George A. Schaefer, Jr.                   Andrew C. Burkle, Jr.
                                                   Senior Vice President


Fifth Third Bank                           State of Ohio, Department of Commerce
                                             Division of Financial Institutions


By:  /s/ George A. Schaefer, Jr.           By: /s/ F. Scott O'Donnell
   -----------------------------              -----------------------
         George A. Schaefer, Jr.                   F. Scott O'Donnell
                                                   Superintendent of
                                                   Financial Institutions

                                       12

EX-99.4

                                                                    Exhibit 99.4

                              AFFILIATION AGREEMENT

This Affiliation Agreement (this "Agreement") dated as of July 23, 2002 is
entered into by and among FIFTH THIRD BANCORP, a corporation organized and
existing under the General Corporation Law of the State of Ohio (the "OGCL")
with its principal office located in Cincinnati, Ohio ("Fifth Third"), FIFTH
THIRD FINANCIAL CORPORATION, a corporation organized and existing under the OGCL
and a wholly owned subsidiary of Fifth Third, with its principal office located
in Cincinnati, Ohio ("Fifth Third Financial"), and FRANKLIN FINANCIAL
CORPORATION, a corporation organized and existing under the Tennessee Business
Corporation Act (the "TBCA") with its principal office located in Franklin,
Tennessee ("Franklin").

                              W I T N E S S E T H:

WHEREAS, each of Fifth Third and Franklin is a registered financial services
holding company under the Bank Holding Company Act of 1956, as amended, and
Fifth Third, Fifth Third Financial and Franklin desire to effect a merger under
the authority and provisions of the OGCL and the TBCA pursuant to which at the
Effective Time (as herein defined in Article IX) Franklin will be merged with
and into Fifth Third's wholly owned subsidiary, Fifth Third Financial, with
Fifth Third Financial as the surviving corporation (the "Merger");

WHEREAS, the Board of Directors of Franklin has determined that it is in the
best interests of Franklin and its stockholders to consummate the Merger,
subject to the terms and conditions set forth herein;

WHEREAS, the Executive Committee of the Board of Directors of Fifth Third has
determined that it is in the best interests of Fifth Third and its stockholders
to consummate the Merger, subject to the terms and conditions set forth herein;

WHEREAS, the Board of Directors of Fifth Third Financial has determined that it
is in the best interests of Fifth Third Financial and its stockholder to
consummate the Merger, subject to the terms and conditions set forth herein;

WHEREAS, under the terms of this Agreement each share of Common Stock, no par
value per share, of Franklin (the "Franklin Common Stock"), which is issued and
outstanding (excluding any treasury shares) immediately prior to the Effective
Time will at the Effective Time be canceled and extinguished and converted into
shares of Common Stock, without par value, of Fifth Third ("Fifth Third Common
Stock"), all as more fully provided in this Agreement;

WHEREAS, the parties to this Agreement intend that the Merger qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code");

NOW, THEREFORE, in consideration of the mutual covenants herein contained, Fifth
Third, Fifth Third Financial and Franklin agree together as follows:

   Article I. Mode of Effectuating Conversion of Shares; Effects of the Merger

A. The Merger. Upon the terms and conditions set forth in this Agreement, at the
Effective Time, Franklin shall be merged with and into Fifth Third Financial.

B. Treatment of Fifth Third Stock. At the Effective Time, all of the shares of
Fifth Third and Fifth Third Financial Capital Stock that are issued and
outstanding or held by Fifth Third or Fifth Third Financial as treasury shares
immediately prior to the Effective Time will remain unchanged and will remain
outstanding or as treasury shares, as the case may be, of Fifth Third and the
Surviving Corporation (as hereinafter defined), respectively. Any stock options,
subscription rights, warrants or other securities outstanding immediately prior
to the Effective Time, entitling the holders to subscribe for purchase of any
shares of the capital stock of any class of Fifth Third, and any




securities outstanding at such time that are convertible into shares of the
capital stock of any class of Fifth Third will remain unchanged and will remain
outstanding, with the holders thereof entitled to subscribe for, purchase or
convert their securities into the number of shares of the class of capital stock
of Fifth Third to which they are entitled under the terms of the governing
documents.

C. Treatment of Franklin Stock. 1. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of
Franklin Common Stock, subject to this Section I.C.1 and Section I.F., each
share of Franklin Common Stock (excluding treasury shares) that is issued and
outstanding immediately prior to the Effective Time will be converted into .4039
shares of Fifth Third Common Stock (or cash in lieu thereof for fractional
shares, if any, as described in Section I.E. below) subject to adjustment as
determined in accordance with the following (the "Exchange Ratio"):

            (i)   if the Average Closing Price (as defined in I.D.1 below) is
less than or equal to $63.13, the Exchange Ratio will remain at .4039;

            (ii)  if the Average Closing Price is greater than $63.13 but is
less than $66.55, the Exchange Ratio will be adjusted so that the Exchange Ratio
will equal the quotient obtained by dividing $25.50 by the Average Closing
Price; and

            (iii) if the Average Closing Price is equal to or greater than
$66.55, the Exchange Ratio will be adjusted so that the Exchange Ratio will
equal .3832.

        At the Effective Time, all shares of Franklin Common Stock held as
treasury shares and all shares of Franklin Common Stock owned by Fifth Third or
any of its wholly owned subsidiaries (other than in a fiduciary, custodial or
similar capacity or owned as a result of a debt previously contracted) will be
canceled and terminated and no shares of Fifth Third or other consideration will
be issued in exchange therefor.

         2. At the Effective Time, all of the issued and outstanding shares of
Franklin Common Stock (excluding treasury shares), will be converted as provided
in this Article I, canceled and extinguished and the holders of certificated or
uncertificated shares thereof shall cease to have any rights as shareholders of
Franklin, other than the right to receive any dividend or other distribution
with respect to such Franklin Common Stock with a record date occurring prior to
the Effective Time and the right to receive the consideration provided in this
Article I. After the Effective Time, there shall be no transfers on the stock
transfer books of Franklin of shares of Franklin Common Stock.

D. Treatment of Franklin Options. 1. At the Effective Time, each award, option,
or other right to purchase or acquire shares of Franklin Common Stock pursuant
to stock options ("Franklin Rights") granted by Franklin under any stock option
plan, agreement, or arrangement ("Stock Plans"), which are outstanding at the
Effective Time, whether or not exercisable, shall automatically be converted
into and become options with respect to Fifth Third Common Stock, and Fifth
Third shall assume each Franklin Right, in accordance with the same terms and
conditions of the Stock Plan and stock option agreement by which the Franklin
Right is evidenced, except that, from and after the Effective Time, (i) Fifth
Third and its Compensation Committee shall be substituted for the Committee of
Franklin's Board of Directors (including, if applicable, the entire Board of
Directors of Franklin) administering such Stock Plan, (ii) each Franklin Right
assumed by Fifth Third may be exercised solely for shares of Fifth Third Common
Stock, (iii) the number of whole shares of Fifth Third Common Stock subject to
such Franklin Right shall be equal to the number of shares of Franklin Common
Stock subject to such Franklin Right immediately prior to the Effective Time
multiplied by the Exchange Ratio (subject to adjustment pursuant to Section
1.F); and (iv) the per share exercise price under each such Franklin Right shall
be adjusted by dividing the per share exercise price under each such Franklin
Right by the Exchange Ratio (as so adjusted) and rounding to the nearest four
decimal places. Notwithstanding the provisions of clause (iii) of the preceding
sentence, Fifth Third shall not be obligated to issue any fraction of a share of
Fifth Third Common Stock upon exercise of Franklin Rights and any fraction of a
share of Fifth Third Common Stock that otherwise would be subject to a converted
Franklin Right (after taking into account all Franklin Rights then being
exercised) shall represent the right to receive a cash payment equal to the
product of such fraction and the excess, if any, of the Average Closing Price
over the per share exercise price of such Franklin



Right (as adjusted in accordance with subparagraph (iv) of this Section I.D.1.).
In addition, notwithstanding the foregoing, each Franklin Right which is an
"incentive stock option" shall be adjusted as required by Section 424 of the
Code so as not to constitute a modification, extension or renewal of the option
within the meaning of Section 424 (h) of the Code. Fifth Third agrees to take
all reasonable steps which are necessary to effectuate the foregoing provisions
of this Section. The "Average Closing Price" means the average of the closing
prices for a share of Fifth Third Common Stock on the Nasdaq National Market
(as reported in The Wall Street Journal, or, if not reported thereby, any other
authoritative source) for the ten (10) consecutive trading days ending on the
fifth (5th ) trading day preceding the Effective Time.

         2. At or prior to the Effective Time, Fifth Third shall take all
corporate action necessary to reserve for issuance sufficient shares of Fifth
Third Common Stock for delivery upon exercise of Franklin Rights assumed by
Fifth Third in accordance with this Section.

         3. As soon as practicable after the Effective Time, Fifth Third shall
file with the SEC a registration statement on the appropriate form with respect
to the shares of Fifth Third Common Stock subject to such options and shall use
its best efforts to maintain the effectiveness of such registration statement or
registration statements (and to maintain the current status of the prospectus or
prospectuses with respect thereto) for so long as such options remain
outstanding.

E. Exchange Procedures. 1. After the Effective Time, each holder of a
certificate or certificates for shares of Franklin Common Stock as of the
Effective Time, upon surrender of the same duly transmitted to the Corporate
Trust Department of Fifth Third Bank, an Ohio banking corporation, Cincinnati,
Ohio, as exchange agent (the "Exchange Agent") (or in lieu of surrendering such
certificates, in the case of uncertificated shares or lost, stolen, destroyed or
mislaid certificates, upon execution of such documentation as may be reasonably
required by Fifth Third), shall be entitled to receive in exchange therefor a
certificate or certificates representing the number of whole shares of Fifth
Third Common Stock into which such holder's shares of Franklin Common Stock
shall have been converted by the Merger pursuant to the Exchange Ratio, plus a
cash payment for any fraction of a share to which the holder is entitled (after
taking into account all certificates for shares of Franklin Common Stock
delivered by such holder), in lieu of such fraction of a share, without any
interest thereon, equal in amount to the product resulting from multiplying such
fraction by the Average Closing Price (such certificates and cash being
hereinafter collectively referred to as the "Exchange Fund"). Within fifteen
(15) business days after the Effective Time, the Exchange Agent will send a
notice and transmittal form to each Franklin shareholder of record at the
Effective Time advising such shareholder of the effectiveness of the Merger and
the procedures for surrendering to the Exchange Agent outstanding certificates
formerly evidencing Franklin Common Stock in exchange for new certificates of
Fifth Third Common Stock and cash in lieu of fractional shares, or for receiving
certificates of Fifth Third Common Stock and cash in lieu of fractional shares
with respect to uncertificated shares of Franklin Common Stock. Until so
surrendered, as applicable, each uncertificated share and outstanding
certificate that prior to the Effective Time represented shares of Franklin
Common Stock shall be deemed for all corporate purposes to represent the right
to receive the number of full shares of Fifth Third Common Stock and cash in
lieu of fractional share interests into which the same shall have been
converted; provided, however, that dividends or distributions otherwise payable
with respect to shares of Fifth Third Common Stock into which Franklin Common
Stock shall have been so converted shall be paid with respect to such shares
only when the transmittal form shall have been validly executed and delivered
(and, in the case of certificated shares, the certificate or certificates
evidencing shares of Franklin Common Stock shall have been so surrendered, or in
lieu of surrendering such certificates in the case of lost, stolen, destroyed or
mislaid certificates, upon execution of such documentation as may be reasonably
required by Fifth Third) and thereupon any such dividends and distributions
shall be paid, without interest, to the holder entitled thereto subject,
however, to the operation of any applicable escheat or similar laws relating to
unclaimed funds.

        2. Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Franklin for twelve months after the Effective Time shall be
paid to Fifth Third. Any stockholders of Franklin who have not theretofore
complied with this Section I.E. shall thereafter only look to Fifth Third for
payment of the shares of Fifth Third Common Stock and cash in lieu of any
fractional shares deliverable in respect of each share of Franklin Common Stock
such stockholder holds as determined pursuant to this Agreement, without any
interest thereon. Notwithstanding the foregoing, neither the Exchange Agent nor
any party hereto shall be liable to any former holder of Franklin Common Stock
for any amount or security delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.




F. Adjustments to Exchange Ratio. The Exchange Ratio referred to in Section I.C.
shall be adjusted so as to give the Franklin shareholders the economic benefit
of any stock dividends, reclassifications, recapitalizations, split-ups,
exchanges of shares, mergers, combinations or subdivisions of or affecting Fifth
Third Common Stock (each, a "Share Adjustment") effected between the date of
this Agreement and the Effective Time. In particular, without limiting the
foregoing, if, prior to the Effective Time, Fifth Third should effect a split,
reclassification or combination of the Fifth Third Common Stock, or pay or
declare a stock dividend or other stock distribution in Fifth Third Common
Stock, as of a record date and with a payment date prior to the Effective Time,
or engage in a merger, consolidation, combination or share exchange whereby
Fifth Third Common Stock is exchanged for securities of another entity,
appropriate and proportionate adjustments (rounded to the nearest
one-ten-thousandth of a share) will be made to the Exchange Ratio and the total
number of shares of Fifth Third Common Stock or other securities to be issued in
the transaction so that each shareholder of Franklin shall be entitled to
receive such number of shares of Fifth Third Common Stock or other securities as
such shareholder would have received pursuant to such Share Adjustment had the
record date and the payment date therefor been immediately following the
Effective Time of the Merger. In the event of a Share Adjustment with a record
date between the date of this Agreement and the Effective Time but a payment
date subsequent to the Effective Time, Fifth Third shall take all actions
necessary such that on such payment date, any holder of Franklin Common Stock as
of the Effective Time shall be entitled to receive such number of shares of
Fifth Third Common Stock or other securities as such shareholder would have
received as a result of such Share Adjustment if the record date for such Share
Adjustment had been immediately after the Effective Time.

G. Effectiveness of Merger; Surviving Corporation. After all necessary documents
have been filed and received in accordance with the OGCL and the TBCA, at the
Effective Time, the Merger shall become effective, the separate existence of
Franklin shall cease and Franklin shall be merged into Fifth Third Financial
(which will be the "Surviving Corporation"), which shall continue its corporate
existence under the laws of the State of Ohio under the name "Fifth Third
Financial Corporation".

H. Articles of the Surviving Corporation. The Articles of Incorporation of Fifth
Third Financial of record with the Secretary of State of Ohio as of the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation, until further amended as provided by law.

I. Directors and Officers of the Surviving Corporation. 1. The Directors of
Fifth Third Financial who are in office at the Effective Time shall be the
directors of the Surviving Corporation, each of whom shall continue to serve as
a Director for the term for which he was elected, subject to the Regulations of
the Surviving Corporation and in accordance with applicable law.

         2. The officers of Fifth Third Financial who are in office at the
Effective Time shall continue as officers of the Surviving Corporation, subject
to the Regulations of the Surviving Corporation and in accordance with
applicable law.

J. Regulations of the Surviving Corporation. The Regulations of Fifth Third
Financial at the Effective Time shall be the Regulations of the Surviving
Corporation, until amended as provided therein and in accordance with applicable
law.

K. Effects of the Merger. At the Effective Time, the effects of the Merger shall
be as provided by the applicable provisions of the laws of Ohio and, to the
extent applicable, Tennessee. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time: the separate existence of Franklin
shall cease; Fifth Third Financial as the Surviving Corporation shall possess
and have title to all assets and property (including all real estate) of every
description, and every interest therein, wherever located, without reversion or
impairment, and the rights, privileges, immunities, powers, franchises and
authority, of a public as well as a private nature, of each of Fifth Third
Financial and Franklin, and all obligations owing by or due each of Fifth Third
Financial and Franklin shall be vested in, and become the obligations of, Fifth
Third Financial, without further act or deed; and all rights of




creditors of each of Fifth Third Financial and Franklin shall be preserved
unimpaired, and all liens upon the property of each of Fifth Third Financial and
Franklin shall be preserved unimpaired, on only the property affected by such
liens immediately prior to the Effective Time.

L. Further Actions. From time to time as and when requested by the Surviving
Corporation, or by its successors or assigns, the officers and Directors of
Franklin in office immediately prior to the Effective Time shall execute and
deliver such instruments and shall take or cause to be taken such further or
other action as shall be necessary in order to vest or perfect in the Surviving
Corporation or to confirm of record or otherwise, title to, and possession of,
all the assets, property, interests, rights, privileges, immunities, powers,
franchises and authority of Franklin and otherwise to carry out the purposes of
this Agreement.

M. Filing of Documents. A certificate of merger shall be filed and/or recorded
in accordance with the requirements of each of the laws of the States of Ohio
and Tennessee, as provided in Article IX. Such filing shall not be made until,
but shall be filed promptly after, all of the conditions precedent to
consummating the Merger as contained in Article VI of this Agreement shall have
been fully satisfied or effectively waived at the Closing contemplated by
Article IX hereof.

N. Tax Treatment. The parties intend that the Merger qualify as a
"reorganization" within the meaning of Section 368(a) of the Code. The Agreement
is intended to be a "plan of reorganization" within the meaning of the
regulations promulgated under the Code and for purposes of Section 354 and 361
of the Code.

O. No Dissenters' Rights. No holder of Fifth Third Common Stock, Fifth Third
Financial Capital Stock, or Franklin Common Stock shall be entitled to relief as
a dissenting shareholder pursuant to the TBCA, the OGCL or otherwise.

P. Consolidation of Entities; Changes to Form of Merger. The parties agree to
cooperate and take all reasonable requisite action prior to or following the
Effective Time to merge or otherwise consolidate legal entities (effective at or
after the Effective Time) to the extent desirable in Fifth Third's good faith
judgment for commercial, regulatory or other reasons, and further agree that
Fifth Third may, at any time, change the legal method of effecting the Merger
(including without limitation the provisions of Article I hereof) if and to the
extent Fifth Third reasonably deems such change to be desirable, including,
without limitation, to provide for the merger of Franklin with another
wholly-owned subsidiary of Fifth Third or Fifth Third Financial or the merger of
the Bank Subsidiary (as defined in Section II.B) with a bank subsidiary of Fifth
Third; provided, however, that no such change shall (A) alter or change the
amount or kind of the consideration for the Merger to be received by the
shareholders of Franklin in the Merger, (B) adversely affect the tax treatment
to shareholders of Franklin, or (C) materially impede or delay receipt of any
approvals referred to herein or the consummation of the transactions
contemplated hereby. Franklin shall, if requested by Fifth Third, enter into one
or more amendments to this Agreement prior to the Effective Time in order to
effect such a change.

Q. Plan or Articles of Merger. At the request of Fifth Third, Franklin shall
enter into a separate plan of merger or articles of merger reflecting the terms
hereof (including Section I.P. hereof) for purposes of any filing required by
any applicable law.

R. Disclosure Schedule. Franklin has delivered to Fifth Third a confidential
schedule (the "Disclosure Schedule"), executed by Franklin and Fifth Third
concurrently with the delivery and execution hereof, setting forth, among other
things, in each case with respect to specified sections of this Agreement, items
the disclosure of which shall be necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Article II
hereof. Franklin shall supplement or amend the Disclosure Schedule, and add
additional references to the Disclosure Schedule to its representations and
warranties contained in this Agreement, with respect to any matter arising after
the date hereof or discovered between the date hereof and the date of the
Closing; provided, however, that no such additional information so disclosed to
Fifth Third shall be deemed an exception to any of the representations,
warranties, covenants or agreements of Franklin or the conditions to the
obligations of the parties under this Agreement unless Fifth Third, in its sole
discretion, agrees in writing to accept such exception. A copy of the amended or
supplemented Disclosure Schedule and the additional Disclosure Schedule
references shall be promptly provided to Fifth Third.



             Article II. Representations and Warranties of Franklin

Franklin represents and warrants to Fifth Third and Fifth Third Financial that:

A. Organization; Capitalization; Subsidiaries. 1. Franklin (i) is duly
incorporated, validly existing and in good standing as a corporation under the
TBCA and is a registered financial services holding company under the Bank
Holding Company Act; (ii) is duly authorized, in all material respects, to
conduct the business in which it is engaged in all material respects; (iii) has
an authorized capital stock consisting entirely of 500,000,000 shares of
Franklin Common Stock; (iv) has no outstanding securities of any kind, nor any
outstanding options, warrants or other rights, contracts, understandings or
commitments entitling another person to acquire or to receive consideration
based on the value of any securities of Franklin of any kind, other than (a)
7,906,731 shares of Franklin Common Stock, which are authorized, duly issued and
outstanding as of June 1, 2002, all of which shares are fully paid and
non-assessable, (b) options to purchase a total of not more than 2,278,075
shares of Franklin Common Stock as of June 30, 2002, which were granted to and
are currently held by the present and former employees, officers, Directors and
advisory directors of Franklin or the Franklin Subsidiaries (as defined below),
and (c) a number of shares not to exceed 600 per calendar quarter issuable
pursuant to Franklin's 2000 Stock Purchase Plan. Since the date referred to in
clause (iv) of the preceding sentence to the date hereof, Franklin has not
issued any shares, except in connection with the exercise of the outstanding
options referred to in clause (iv)(b). The Disclosure Schedule sets forth a
correct and complete list of all options referred to in clause (iv)(b), together
with the name of the holder, the date of issuance, the exercise price, and
vesting information.

         2. The Disclosure Schedule sets forth a complete and correct list of
all of Franklin's subsidiaries (the "Franklin Subsidiaries") in addition to (a)
a description of their businesses, (b) their respective states of incorporation,
and (c) the location of the principal office of each Franklin Subsidiary. Except
for the capital stock and securities referred to in the immediately following
sentence, there are no outstanding shares of capital stock or other equity
securities of any such Franklin Subsidiary, options, warrants, stock
appreciation rights, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into,
shares of any capital stock or other equity securities of any such Franklin
Subsidiary, or contracts, commitments, understandings or arrangements by which
any such Franklin Subsidiary may become bound to issue additional shares of its
capital stock or other equity securities, or options, warrants, scrip or rights
to purchase, acquire, subscribe to, calls on or commitments for any shares of
its capital stock or other equity securities. Except as set forth on the
Disclosure Schedule, all of the outstanding shares of capital stock or other
securities evidencing ownership of the Franklin Subsidiaries are validly issued,
fully paid and (except as otherwise required by law) non-assessable and such
shares or other securities are owned by Franklin or its wholly-owned Franklin
Subsidiaries free and clear of any lien, claim, charge, option, encumbrance,
mortgage, pledge or security interest with respect thereto. Other than as set
forth on the Disclosure Schedule, Franklin does not own (other than in a bona
fide fiduciary capacity or in satisfaction of a debt previously contracted)
beneficially, directly or indirectly, shares or equity securities or similar
interests of any person or any interest in a partnership or joint venture of any
kind, other than shares, securities and interests as are not material.

B. Bank Subsidiary. Franklin National Bank ("Bank Subsidiary") is duly
incorporated, validly existing and in good standing as a national banking
association, and has all the requisite power and authority to conduct the
banking business as now conducted by it. Each of the other Franklin Subsidiaries
is duly incorporated, validly existing and in good standing in its jurisdiction
of incorporation, and has all the requisite power and authority to conduct its
business as now conducted.

C. Financial Statements; Regulatory Reports. 1. Franklin has previously
furnished to Fifth Third its audited, consolidated balance sheet, statement of
operations and statement of shareholders' equity and cash flows as of
December 31, 2001, and for the year then ended, together with the opinion of its
independent certified public accountants associated therewith. Franklin has made
available to Fifth Third the Call Reports as filed with the Office of the
Comptroller of the Currency (the "OCC") of the Bank Subsidiary as of December
31, 1999, 2000 and 2001. Franklin has also made available to Fifth Third (i) its
unaudited, consolidated condensed financial statements as of




and for the quarter ended March 31, 2002, and (ii) the Bank Call Report as filed
with the OCC for the quarter ended March 31, 2002. Such audited and unaudited
consolidated financial statements of Franklin fairly present the consolidated
financial condition, results of operations and cash flows of Franklin as of the
date thereof, and for the years or periods covered thereby, in conformity with
generally accepted accounting principles ("GAAP"), consistently applied (except
as stated therein and except for the omission of notes to unaudited statements
and except for normal (in nature and amount) year-end adjustments to interim
results). There are no material liabilities, obligations or indebtedness of
Franklin or any of the Franklin Subsidiaries required to be disclosed in the
financial statements (or in the footnotes to the financial statements) so
furnished other than the liabilities, obligations or indebtedness disclosed in
such financial statements (including footnotes). Since March 31, 2002, Franklin
and the Franklin Subsidiaries have not incurred any liabilities outside the
ordinary course of business consistent with past practice.

         2. The financial statements of Franklin to be provided to Fifth Third
pursuant to Section V.D.3. hereof will fairly present, as applicable, the
consolidated financial condition, results of operations and cash flows of
Franklin as of the dates thereof and for the years or periods covered thereby,
in conformity with GAAP, consistently applied (for quarterly financial
statements only and except as stated therein and except for the omission of
notes to unaudited statements and except for normal (in nature and amount)
year-end adjustments to interim results).

         3. Franklin has made available to Fifth Third an accurate and complete
copy (including all exhibits and all documents incorporated by reference) of
each of the following documents as filed by Franklin with the Securities and
Exchange Commission ("SEC"): (a) each final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 2000 by
Franklin or any Franklin Subsidiary with the SEC, pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of
1934 (the "Exchange Act") (the "Franklin Reports"), and (b) each communication
mailed by Franklin to its stockholders since January 1, 2000. Since January 1,
2000, Franklin has timely filed (and will timely file after the date of this
Agreement) all reports and other documents required to be filed by it under the
Securities Act and the Exchange Act, and, as of their respective dates, all such
reports complied (and, in the case of all reports and other documents filed
after the date of this Agreement, will comply) in all material respects with the
published rules and regulations of the SEC with respect thereto. As of the date
of filing or mailing, as the case may be, no such registration statement,
prospectus, report or proxy statement contained (and no registration statement,
prospectus, report or proxy statement filed or mailed after the date of this
Agreement will contain) any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they were
made, not misleading, except that information as of a later date (but filed
before the date hereof) shall be deemed to modify information as of an earlier
date. No event has occurred subsequent to December 31, 2000 which Franklin is
required to describe in a Current Report on Form 8-K other than the Current
Reports heretofore furnished by Franklin to Fifth Third. None of the Franklin
Subsidiaries has any class of securities registered, or is obligated to register
any class of securities, under Section 12 of the Exchange Act.

         4. Franklin and the Franklin Subsidiaries have filed all material
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since January 1,
1999 with any applicable industry self-regulatory organization or stock exchange
("SRO") and any other federal, state, local or foreign governmental or
regulatory agency or authority (collectively with the SEC and the SROs,
"Regulatory Agencies"), and all material other reports, registrations and
statements required to be filed by them since January 1, 1999, including,
without limitation, any material report or statement required to be filed
pursuant to the laws, rules or regulations of the United States, any state, or
any Regulatory Agency, and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of Franklin and the Franklin
Subsidiaries, or as set forth in the Disclosure Schedule, no Regulatory Agency
has initiated any proceeding or, to the Knowledge of Franklin, investigation
into the business or operations of Franklin or the Franklin Subsidiaries since
January 1, 1999. To the Knowledge of Franklin, there is no unresolved violation,
or material criticism or exception, by any bank Regulatory Agency with respect
to any report, registration or statement relating to any examinations of
Franklin or the Franklin Subsidiaries.

As used herein, the term "Knowledge" as used with respect to an entity
(including references to such entity being aware of a particular matter) shall
mean the actual personal knowledge of each of the executive officers of such




entity and such knowledge as such individual would reasonably be expected to
obtain upon completion of a reasonable investigation of materials pertinent to
such subject matter as would be available to such individual in the ordinary
course of performing his or her duties for such entity.

D. Title to Properties. Franklin and the Franklin Subsidiaries have good and
marketable title to all of the material properties and assets reflected in
Franklin's statement of financial condition as of December 31, 2001, other than
properties and assets sold in the ordinary course of business since that date,
and each has good and marketable title to all material properties and assets
acquired by it after such date (other than properties and assets subsequently
sold in the ordinary course of business), subject to (i) any liens and
encumbrances that do not materially adversely impair the use of the property,
(ii) statutory liens for taxes not yet due and payable, and (iii) minor defects
and irregularities in title that do not materially adversely impair the use of
the property. Notwithstanding the foregoing, certain assets located on
Franklin's premises or currently owned by Franklin as such are listed on the
Disclosure Schedule are and will be deemed to be personal assets of Mr. Gordon
Inman, or will be conveyed to him prior to the Effective Time and shall not be
deemed to be assets of Franklin.

E. No Material Adverse Effect. To the Knowledge of Franklin, since December 31,
2001, no event has occurred and no fact or circumstance has come to exist or
come to be known which, directly or indirectly, individually or taken together
with all other facts, circumstances and events (described in any paragraph of
this Article II or otherwise), has had, or is reasonably likely to have, a
Material Adverse Effect with respect to Franklin. As used in this Agreement, the
term "Material Adverse Effect" means, with respect to Franklin or Fifth Third,
any effect that (i) is, or is reasonably expected to be, material and adverse to
the financial condition, results of operations or business of Franklin and its
subsidiaries taken as a whole, or Fifth Third and its subsidiaries taken as a
whole, respectively, or (ii) would materially impair the ability of either
Franklin or Fifth Third to perform its obligations under this Agreement or would
otherwise materially threaten or materially impede the consummation of the
Merger and other transactions contemplated by this Agreement; provided, however,
that Material Adverse Effect shall not be deemed to include the impact of (a)
changes in banking and similar laws of general applicability or interpretations
thereof by courts or governmental authorities, (b) changes in GAAP or regulatory
accounting requirements applicable to banks and their holding companies
generally, and (c) any modifications or changes to valuation or reserve policies
and practices in connection with or in anticipation of the Merger.

F. Litigation; Regulatory Action. 1. There are no actions, suits, proceedings,
investigations or assessments of any kind pending, or to the Knowledge of
Franklin, threatened, against Franklin or any Franklin Subsidiary which
reasonably can be expected to have a Material Adverse Effect on Franklin. The
Disclosure Schedule lists all pending or, to the Knowledge of Franklin,
threatened claims and proceedings which, in each case, seek, or would be
reasonably likely to result in, damages or other amounts payable by Franklin or
the Franklin Subsidiaries, in excess of $50,000.

         2. Except as set forth in the Disclosure Schedule, there are no
actions, suits, claims, proceedings, investigations or assessments of any kind
pending, or to the Knowledge of Franklin, threatened against any of the
Directors or officers of Franklin or any Franklin Subsidiary in their capacities
as such, and no Director or officer of Franklin or any Franklin Subsidiary
currently is being indemnified or seeking to be indemnified by either Franklin
or any Franklin Subsidiary pursuant to applicable law or applicable articles of
incorporation, bylaws or other constituent documents or any indemnity
agreements.

         3. Except as set forth in the Disclosure Schedule, neither Franklin nor
any of the Franklin Subsidiaries is subject to any cease-and-desist or other
order issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or, since
January 1, 1999, has been a recipient of any supervisory letter from or has
adopted any board resolutions at the request of, any Regulatory Agency or other
governmental entity, that restricts the conduct of its business or has resulted,
or could reasonably be expected to result, in a liability or that in any manner
relates to its capital adequacy, its credit policies, its management or its
business (each a "Franklin Regulatory Agreement"), nor has Franklin or any
Franklin Subsidiary been advised since January 1, 1999 by any Regulatory Agency
or other governmental entity that it is considering issuing or requesting any
such Franklin Regulatory Agreement. To the Knowledge of Franklin, there is no
pending or threatened regulatory investigation that is reasonably likely to
result in a Franklin Regulatory Agreement.



G. Ordinary Course of Business. Except as disclosed in the Franklin Reports
filed prior to the date hereof, since December 31, 2001, Franklin and the
Franklin Subsidiaries have each been operated in the ordinary course of
business, have not made any changes in their respective capital or corporate
structures, nor any material changes in their methods of business operations and
have not provided any increases in employee salaries or benefits other than
increases in the ordinary course of business consistent with past practice, and
have not instituted or made any announcements to institute or amend any existing
employee benefit plan, policy or arrangement or any employment contract or
policy. Except as disclosed in the Franklin Reports filed prior to the date
hereof, since December 31, 2001 to the date hereof, Franklin has not declared or
paid any dividends nor made any distributions of any other kind to its
shareholders except for its regular quarterly cash dividends of $0.055 per
share, which have been paid consistent with its past practice.

H. Taxes. 1. Franklin and each Franklin Subsidiary have timely filed all
federal, state and local tax returns required to be filed (after giving effect
to all extensions) by them, respectively, and have paid or provided for all tax
liabilities shown to be due thereon or which have been assessed against them,
respectively. All tax returns filed by Franklin or any Franklin Subsidiary
through the date hereof are complete and accurate in all material respects.
Except as set forth on the Disclosure Schedule, none of Franklin, Bank
Subsidiary, nor any of the other Franklin Subsidiaries is currently under audit
nor have any of them been contacted for an audit by any taxing authority. None
of Franklin, Bank Subsidiary, nor any of the Non-Bank Subsidiaries is engaged in
any appeal proceeding in connection with any tax return.

         2. Franklin has no reason to believe that any conditions exist that
might prevent or impede the Merger from qualifying as a "reorganization" within
the meaning of Section 368(a) of the Code.

         3. Since December 31, 2001, except insofar as required by a change in
GAAP, there has been no material change in any accounting methods, principles or
practices of Franklin or the Bank Subsidiary.

I. Contracts. Except as set forth on the Disclosure Schedule, neither Franklin
nor any of the Franklin Subsidiaries is a party to or bound by any contract,
arrangement, commitment or understanding (a) as of the date hereof, with respect
to the employment, termination or compensation of any directors, executive
officers, employees or material consultants (other than oral contracts of
employment at will or engagement of consultants which may be terminated without
material penalty), (b) which is a "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K of the SEC) that has not been filed with or
incorporated by reference in the Franklin Reports, (c) which contains any
material non-compete or exclusivity provisions with respect to any business or
geographic area in which business is conducted by Franklin or any of the
Franklin Subsidiaries or which restricts the conduct of any business by Franklin
or any of the Franklin Subsidiaries or any geographic area in which Franklin or
any of the Franklin Subsidiaries may conduct business or requires exclusive
referrals of any business, (d) except as contemplated by Article I or Section
V.E.5., or as required by any Benefit Plan, any of the benefits of which will be
increased, or the funding, vesting or payment of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement (either alone or together with any other event), or the value of any
of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement or (e) which would prohibit or
materially delay the consummation of the Merger. Franklin has previously made
available to Fifth Third true and correct copies of all employment, termination,
compensation, change of control, and similar agreements (including deferred
compensation) with executive officers, key employees or material consultants
which are in writing and to which Franklin or any of the Franklin Subsidiaries
is a party. Each contract, arrangement, commitment or understanding of the type
described in this Section II.I., whether or not set forth in the Disclosure
Schedule, is referred to herein as a "Franklin Contract", and neither Franklin
nor any of the Franklin Subsidiaries has Knowledge of, or has received notice
of, any violation of any Franklin Contract by it or any of the other parties
thereto.

J. Loan Losses. Since December 31, 2001, to the date hereof, except as disclosed
in Franklin Reports filed prior to the date hereof, none of the Franklin
Subsidiaries has incurred any unusual or extraordinary loan losses which could
reasonably be expected to have a Material Adverse Effect on Franklin. To the
Knowledge of Franklin and in light of each of the Bank Subsidiaries' historical
loan loss experience and its management's analysis of the quality and
performance of its loan portfolio, as December 31, 2001, its reserve for loan
losses was, in the opinion of Franklin, adequate to absorb potential loan losses
determined on the basis of management's continuing review and evaluation of the
loan portfolio and judgment as to the impact of economic conditions on the
portfolio.





K. Broker. Other than Trident Securities, a division of McDonald Investments,
Inc., neither Franklin nor any of the Franklin Subsidiaries has a direct or
indirect commitment to any investment banker, broker, or finder in connection
with this transaction and neither has incurred or will incur any obligation for
any investment banker's, broker's or finder's fee or commission in connection
with the transactions provided for in this Agreement.

L. Board Approval; Corporate Authority; No Breach. 1. The Directors of Franklin,
by resolution adopted by the unanimous vote of all Directors present at a
meeting duly called and held in accordance with applicable law, have duly
approved this Agreement. The Directors of Franklin have recommended the
Agreement to the shareholders of Franklin and have directed that the Agreement
be submitted to a vote of Franklin's shareholders at the annual or a special
meeting of the shareholders to be called for that purpose.

         2. Franklin has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder subject to required
regulatory approvals and, in the case of consummation of the Merger, subject to
approval by the holders of a majority of the outstanding shares of Franklin
Common Stock, which is the only approval of shareholders required. This
Agreement has been duly authorized and constitutes the valid and binding
obligation of Franklin, enforceable in accordance with its terms, except to the
extent that (i) enforceability thereof may be limited by insolvency,
reorganization, liquidation, bankruptcy, readjustment of debt or other laws of
general application relating to or affecting the enforcement of creditors'
rights generally and (ii) the availability of certain remedies may be precluded
by general principles of equity.

         3. Neither the execution of this Agreement, nor the consummation of the
transactions contemplated hereby (either alone or together with any other
event), (i) conflicts with, results in a breach of, violates or constitutes a
default under, (x) Franklin's Charter or By-laws or, to the Knowledge of
Franklin, any federal, state or local law, statute, ordinance, rule, regulation
or court or administrative order, or (y) any material agreement, arrangement, or
commitment, to which Franklin or the Franklin Subsidiaries is subject or bound;
(ii) to the Knowledge of Franklin, results in the creation of or gives any
person the right to create any material lien, charge, encumbrance, or security
agreement or any other material rights of others or other material adverse
interest upon any material right, property or asset belonging to Franklin or any
Franklin Subsidiary; (iii) terminates or gives any person the right to
terminate, amend, abandon, or refuse to perform any material agreement,
arrangement or commitment to which Franklin or any Franklin Subsidiary is a
party or by which Franklin's or any Franklin Subsidiary's material rights,
properties or assets are subject or bound; or (iv) to the Knowledge of Franklin,
accelerates or modifies, or gives any party thereto the right to accelerate or
modify, the time within which, or the terms according to which, Franklin or any
Franklin Subsidiary is to perform any duties or obligations or receive any
rights or benefits under any material agreements, arrangements or commitments.
For purposes of clauses (iii) and (iv) immediately preceding, material
agreements, arrangements or commitments exclude (without limitation) agreements,
arrangements or commitments having a term expiring less than twelve (12) months
from the date of this Agreement or which do not require the expenditure of more
than $50,000 over the term of the agreement, arrangement or commitment (but
shall include all agreements, arrangements or commitments pursuant to which
credit has been extended by any Bank Subsidiary).

         4. As of the date hereof, Franklin is not aware of the existence of any
factor that would materially delay or materially hinder issuance of any of the
required regulatory approvals necessary to consummate the Merger or the other
transactions contemplated hereby.

M. Articles and By-laws. Complete and accurate copies of the (i) Charter and
By-laws of Franklin and (ii) the charter and bylaws of each Franklin Subsidiary
in force as of the date hereof have been delivered to Fifth Third.

N. Compliance with Law. To the Knowledge of Franklin, neither Franklin nor any
of the Franklin Subsidiaries nor any employee, officer or Director of any of
them acting in such capacity has engaged in any activity or omitted to take any
action which, in any material way, has resulted or could reasonably be expected
to result in the violation of, or material failure to comply with the regulatory
requirements of (i) any local, state or federal law (including without
limitation the Bank Secrecy Act, the Community Reinvestment Act, applicable
consumer protection and disclosure



laws and regulations, including without limitation, Truth in Lending, Truth in
Savings and similar disclosure laws and regulations, and equal employment and
employment discrimination laws and regulations) or (ii) any regulation, order,
injunction or decree of any court or governmental body, the violation of either
of which could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate, on Franklin, and neither Franklin nor any of
the Franklin Subsidiaries has received notice of any violation of any of the
above that is reasonably likely to have a Material Adverse Effect on Franklin.
To the Knowledge of Franklin, Franklin and the Franklin Subsidiaries possess all
material licenses, franchises, permits and other authorizations necessary to
continue to conduct such businesses as they are presently conducted following
the Effective Time without material interference or interruption.

O. Environmental Matters. 1. Franklin has no Knowledge of any actions,
proceedings or investigations pending before any environmental regulatory body,
with respect to or threatened against or affecting Franklin or any Franklin
Subsidiary in respect of, any "facility" owned, leased or operated by any of
them (but excluding any "facility" as to which the sole interest of Franklin or
any Franklin Subsidiary is that of a lienholder or mortgagee, but including any
"facility" to which title has been taken pursuant to mortgage foreclosure or
similar proceedings and including any "facility" in which Franklin or any
Franklin Subsidiary ever participated in the financial management to a degree
sufficient to influence, or have the ability to influence, the facility's
treatment of hazardous waste) under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or under any
Federal, state, local or municipal statute, ordinance or regulation in respect
thereof, in connection with any release of any toxic or "hazardous substance",
pollutant or contaminant into the "environment", nor, to the Knowledge of
Franklin, is there any reasonable basis for the institution of any such actions
or proceedings or investigations which is probable of assertion, nor are there
any such actions or proceedings or investigations in which Franklin or any
Franklin Subsidiary is a plaintiff or complainant. Neither Franklin nor any
Franklin Subsidiary has been determined by any court or Regulatory Agency to be,
nor to the Knowledge of Franklin does there exist any facts or circumstances
which could reasonably lead to Franklin or a Franklin Subsidiary being held,
liable in any material respect under any applicable law for any release by any
of them or for any release by any other "person" of a hazardous substance caused
by the spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing of hazardous wastes or other
chemical substances, pollutants or contaminants into the environment, nor has
Franklin or any Franklin Subsidiary been determined by any court or Regulatory
Agency to be, nor to the Knowledge of Franklin does there exist any facts or
circumstances which could reasonably lead to Franklin or a Franklin Subsidiary
being held, liable for any material costs (as a result of the acts or omissions
of Franklin or any Franklin Subsidiary or, to the Knowledge of Franklin, as a
result of the acts or omissions of any other "person") of any remedial action
including, without limitation, costs arising out of security fencing,
alternative water supplies, temporary evacuation and housing and other emergency
assistance undertaken by any environmental regulatory body having jurisdiction
over Franklin or any Franklin Subsidiary to prevent or minimize any actual or
threatened release by Franklin or any Franklin Subsidiary of any hazardous
wastes or other chemical substances, pollutants and contaminants into the
environment which would endanger the public health or the environment. All terms
contained in quotation marks in this paragraph and the paragraph immediately
following shall have the meaning ascribed to such terms, and defined in, CERCLA.

         2. To the Knowledge of Franklin, each "facility" owned, leased or
operated by Franklin or any Franklin Subsidiary (but excluding any "facility" as
to which the sole interest of Franklin or the Franklin Subsidiary is that of a
lienholder or mortgagee, but including any "facility" to which title has been
taken pursuant to mortgage foreclosure or similar proceedings and including any
"facility" in which Franklin or any Franklin Subsidiary ever participated in the
financial management to a degree sufficient to influence, or have the ability to
influence, the facility's treatment of hazardous waste) is, in all material
respects, in compliance with all applicable Federal, state, local or municipal
statutes, ordinances, laws and regulations and all orders, rulings or other
decisions of any court, administrative agency or other governmental authority
relating to the protection of the environment, except to the extent a failure to
comply would not have a Material Adverse Effect on Franklin and the Franklin
Subsidiaries taken as a whole.

P. Employment Matters. 1. Benefit Plans. The Disclosure Schedule lists the name
of each Benefit Plan (as herein defined), together with an indication of the
type of plan (i.e., defined benefit, defined contribution, health and welfare,
etc.) and funding status (e.g., funded trust, unfunded obligation or insurance
policy). For purposes hereof, the term "Benefit Plan" shall mean any plan,
program, policy, practice, arrangement, agreement or system, whether written or
unwritten for the benefit of employees, former employees, directors or former
directors, or independent




contractors or former independent contractors which is or was contributed to or
maintained presently or at any time in the last four (4) years by Franklin or
any of the Franklin Subsidiaries in respect of which Franklin, or any of the
Franklin Subsidiaries, are a party or have any liability(contingent or
otherwise) and shall include, without limitation, (a) any retirement plan such
as a pension, profit sharing, stock bonus plan or employee stock ownership plan
("ESOP"), (b) any plan, program or arrangement providing deferred compensation,
bonus deferral, stock option or other equity based compensation, change in
control payments or benefits or incentive benefits, whether funded or unfunded,
and (c) any welfare plan, program or policy providing vacation, severance,
salary continuation, supplemental unemployment, disability, life, health
coverage, retiree health, Voluntary Employees' Beneficiary Association, medical
expense reimbursement or dependent care assistance benefits, in any such
foregoing case without regard to whether the Benefit Plan constitutes an
employee benefit plan under Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the number of employees covered
under such Benefit Plan. The term "Benefit Plan" for all purposes of this
Agreement shall include each Predecessor Plan (as hereinafter defined). For
purposes hereof, "Predecessor Plan" shall mean any plan, program, policy,
practice, arrangement, agreement or system as otherwise described herein which
was maintained, contributed to or resulted in liability to any predecessor
employer of Franklin or any Franklin Subsidiary since January 1, 1998. For
purposes hereof, "predecessor employer" shall mean any employer, entity, or
business operation acquired by Franklin or any Franklin Subsidiary in any type
of acquisition (including without limitation, mergers, stock acquisitions and
asset acquisitions). Through the date of this Agreement, neither Franklin nor
any of the Franklin Subsidiaries have made or have committed to make any
contributions to any Benefit Plan outside the ordinary course of business and
inconsistent with past practice with regard to amounts. None of the Benefit
Plans is a "multiemployer plan" within the meaning of Section 3(37) of ERISA.

         2. Plan Documents, Reports and Filings. Either Franklin or a Franklin
Subsidiary has provided to Fifth Third true, complete and correct copies of all
plan documents comprising each Benefit Plan, or, if no plan document exists, a
description of such Benefit Plan, together with, when applicable, (a) the most
recent summary plan description and any material modifications thereto, (b) the
trust agreement insurance contract or other documentation of any related funding
arrangement, (c) the most recent actuarial and financial reports and the most
recent annual reports filed with any governmental agency, including without
limitation all Forms 5500 and all schedules thereto, and (d) all Internal
Revenue Service ("IRS") or other governmental agency rulings and determination
letters or any open requests for IRS rulings or letters with respect to Benefit
Plans issued within five years of the date of this Agreement and any material
communications to or from any governmental agency with respect to such Benefit
Plans.

         3. Qualified Retirement Plan Compliance. With respect to each Benefit
Plan which is an employee pension benefit plan (as defined in Section 3(2) of
ERISA) other than any such plan that meets the "top-hat" exception under Section
201(1) of ERISA (a "Qualified Benefit Plan"): (a) the IRS has issued a
determination letter which determined that such Qualified Benefit Plan (as
amended by any and all amendments other than the GUST amendment referred to
below) satisfies the requirements of Section 401(a) of the Code, as amended by
all the laws referred to in Section 1 of Revenue Procedure 93-39, such
determination letter has not been revoked or threatened to be revoked by the
IRS, and the scope of such determination letter is complete and does not exclude
consideration of any of the requirements or matters referred to in Sections 4.02
through 4.04 of Revenue Procedure 93-39; (b) such Qualified Benefit Plan has
been timely amended and submitted to the IRS with a timely application for
determination letter to meet the requirements of "GUST" (i.e., all the
legislation referred to in IRS Announcement 2001-77), and Franklin has taken or
will take all actions necessary to obtain the favorable IRS determination
letter; (c) except as listed in the Disclosure Schedule, such Qualified Benefit
Plan has been maintained in accordance with and continues to be in material
compliance with all qualification requirements of Section 401(a) of the Code;
(d) such Qualified Benefit Plan has been maintained in accordance with and
continues to be in substantial compliance with all notice, reporting and
disclosure requirements of ERISA and the Code; (e) any Qualified Benefit Plan
which is an ESOP as defined in Section 4975(e)(7) of the Code (an "ESOP
Qualified Benefit Plan") is in material compliance with the applicable
qualification requirements of Section 409 of the Code; (f) any Qualified Benefit
Plan terminated within the last five years was terminated in material compliance
with the requirements of ERISA and the Code, has received a favorable
determination letter therefor, and the liabilities of such Qualified Benefit
Plan and the requirements of the Pension Benefit Guaranty Corporation ("PBGC")
were fully satisfied; and (g) any and all plan documents and amendments to the
Qualified Benefit Plans not covered by an IRS determination letter should not
adversely affect the qualified and tax exempt status of such plans and there are
no amendments that are required to continue such tax exempt status.



         4. General Plan Compliance. With respect to each Benefit Plan, except
as noted on the Disclosure Schedule: (a) such Benefit Plan, if it is intended to
provide favorable tax benefits to plan participants, has been maintained and
continues to be in material compliance with applicable Code provisions; and (b)
such Benefit Plan has been and continues to be operated in substantial
compliance with its terms and all applicable laws, including, without
limitation, ERISA and the Code, and to the extent such Benefit Plan is a group
health plan subject to the requirements of Section 4980B of the Code ("COBRA")
and/or the Health Insurance Portability and Accountability Act of 1996, as
amended ("HIPAA"), has been and continues to be operated in substantial
compliance with such COBRA and HIPAA requirements and (c) all payments due from
Franklin or any of the Franklin Subsidiaries to date with respect to each
Benefit Plan have been timely made.

         5. Prohibited Transactions. No prohibited transaction under Section 406
of ERISA or 4975 of the Code and not exempt under Section 408 of ERISA or 4975
of the Code has occurred with respect to any Benefit Plan which would result,
with respect to any person, in (a) the imposition, directly or indirectly, of a
material excise tax under Section 4975 of the Code or (b) material fiduciary or
other liability under Section 409 or 502(i) of ERISA.

         6. Lawsuits or Claims. No actions, suits or claims that would
reasonably be expected to have a Material Adverse Effect on Franklin are pending
or, to the Knowledge of Franklin, threatened against any Benefit Plan or against
Franklin or any of the Franklin Subsidiaries with respect to any Benefit Plan.

         7. Disclosure of Unfunded Liabilities. All material Unfunded
Liabilities (as defined below) with respect to each Benefit Plan have been
recorded and disclosed on the most recent financial statement of Franklin and
the Franklin Subsidiaries or, if not, in the Disclosure Schedule. For purposes
hereof, the term "Unfunded Liabilities" shall mean any amounts properly accrued
to date under GAAP in effect as of the date of this Agreement, or amounts not
yet accrued for GAAP purposes but for which an obligation exists for payment in
the future which is attributable to any Benefit Plan, including but not limited
to (a) severance pay benefits, (b) deferred compensation or unpaid bonuses, (c)
any liabilities on account of the change in control which will result from this
Agreement, including any potential liabilities relating to excess parachute
payments under Section 280G of the Code, (d) any unpaid pension contributions
for the current plan year, owed by Controlled Group Members (as defined below),
(e) any authorized but unpaid profit sharing contributions or contributions
under Section 401(k) and Section 401(m) of the Code, (f) retiree health benefit
coverage, (g) unpaid premiums for contributions required under any group health
plan to maintain such plan's coverage through the Effective Time, (h) bonuses,
(i) variable compensation, (j) contractual payments, (k) accruals and (l) any
other off balance sheet items relating to payments to employees, former
employees or directors.

        8. Defined Benefit Pension Plan Liabilities. Franklin, the Franklin
Subsidiaries and any entity treated as a single employer with Franklin and any
of the Franklin Subsidiaries in accordance with Section 414(b), (c), (m) and (o)
of the Code (hereinafter a "Controlled Group Member") (or any pension plan
maintained by any of them) have not incurred any material liability to the PBGC
or the IRS with respect to any employee pension plan which is a defined benefit
pension plan, except for the payment of PBGC premiums pursuant to Section 4007
of ERISA, all of which if due prior to the date of this Agreement have been
fully paid, and no PBGC reportable event under Section 4043 of ERISA has
occurred with respect to any such pension plan. Except as otherwise disclosed in
the Disclosure Schedule, the benefit liabilities, as defined in Section
4001(a)(16) of ERISA, of each such employee pension plan subject to Title IV of
ERISA, using the actuarial assumptions that would be used by the PBGC in the
event of termination of such plan, do not exceed the fair market value of the
assets of such plan and no such plan which is subject to section 302 of ERISA or
section 412 of the Code has incurred any "accumulated funding deficiency" (as
defined in section 302 of ERISA and section 412 of the Code, respectively),
whether or not waived. Neither Franklin, any of the Franklin Subsidiaries nor
any Controlled Group Member participates in, or has incurred any liability under
Sections 4201, 4063 or 4064 of ERISA for a complete or partial withdrawal from a
multiple employer plan or a multi-employer plan (as defined in Section 3(37) of
ERISA). No employee, former employee, plan participant or any other party (other
than Franklin or the Franklin Subsidiaries) has any entitlement (under the terms
of any plan document or otherwise) to any surplus assets in any Qualified
Benefit Plan which is a defined benefit plan as defined in Section 414(j) of the
Code.



         9. Third Party Plans. Franklin and the Franklin Subsidiaries (a) have
not breached any duties assumed in connection with acting as an independent
trustee, custodian, agent, investment manager, investment advisor or otherwise
with respect to any employee benefit plan (as defined in Section 3(3) of ERISA)
and have complied in all material respects with all applicable law, except for
any breach or non-compliance that could not give rise to any material liability,
(b) have not incurred any asserted or, to the Knowledge of Franklin, unasserted
material liability for breach of duties assumed in connection with acting as an
independent trustee, custodian, agent, investment manager, investment advisor or
otherwise with respect to any employee benefit plan (as defined in Section 3(3)
of ERISA), (c) have not authorized nor knowingly participated in a material
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
not exempt under Section 408 of ERISA and (d) have not received notice of any
material actions, suits or claims (other than routine claims for benefits)
pending or threatened against the sponsor or any other fiduciary of any such
plan or against Franklin or the Franklin Subsidiaries.

         10. Retiree Benefits. Except as listed on the Disclosure Schedule and
identified as "Retiree Liability", Franklin and the Franklin Subsidiaries have
no obligation to provide health benefits, or life insurance benefits to or with
respect to retirees, former employees, individuals on disability or any of their
relatives, except for any continuation coverage provided in accordance with
COBRA.

         11. Right to Amend and Terminate. Either Franklin or a Franklin
Subsidiary has all power and authority necessary to amend or terminate each
Benefit Plan without incurring any penalty or liability provided that, in the
case of an employee pension benefit plan (as defined in Section 3(2) of ERISA),
benefits accrued as of the date of amendment or termination are not reduced.

         12. Consummation of Transactions. Except as set forth in the Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
(alone or together with any other event which, standing alone, would not by
itself trigger such entitlement or acceleration) will not (i) entitle any person
to any benefit under any Benefit Plan, (ii) accelerate the time of payment or
vesting, or increase the amount, of any compensation due to any person under any
Plan or (iii) result in the payment of any "excess parachute payment" under
Section 280G of the Code or any other payment that is not deductible for any
reason by the Franklin or any of the Franklin Subsidiaries or their successors.

         13. Labor. Neither Franklin nor any Franklin Subsidiary is a party to
any collective bargaining agreements. There are no labor unions or other
organizations representing, purporting to represent or attempting to
represent, any employee of Franklin or the Franklin Subsidiaries.

         14. Independent Contractors. Neither Franklin nor any Franklin
Subsidiary has any material liability, whether absolute or contingent, including
any obligation under any employee benefit plans with respect to any
misclassification of a person as an independent contractor rather than as an
employee and no individual has been treated by the Company or any subsidiary of
the Company as a "leased employee" (within the meaning of Section 414(n) of the
Code).

Q. Investment Portfolio. The investment portfolios of Franklin and the Franklin
Subsidiaries consist in all material respects of securities in marketable form.
Since December 31, 2001 to the date hereof neither Franklin nor any Franklin
Subsidiary has incurred any material and unusual or extraordinary losses in its
investment portfolio, and, except for matters of general application to the
banking industry (including, but not limited to, changes in laws or regulations
or GAAP) or for events relating to the business environment in general,
including market fluctuations and changes in interest rates, Franklin is not
aware of any events which are reasonably certain to occur in the future and
which reasonably can be expected to result in any material adverse change in the
quality or performance of Franklin's and the Franklin Subsidiaries' investment
portfolio on a consolidated basis.

R. Derivative Instruments. All swaps, caps, floors, futures, forward contracts,
option agreements, and any other derivative financial instruments, contracts or
arrangements, whether entered into for Franklin's own account, or by Franklin
for the account of one or more of the Franklin Subsidiaries or for their
respective customers, were entered into (i) in the ordinary course of business,
(ii) in accordance with prudent banking practices and all applicable laws,
rules, regulations and regulatory policies and (iii) with counter-parties
reasonably believed by



Franklin to be financially responsible at the time; and each of them constitutes
the valid and legally binding obligation of Franklin or one of the Franklin
Subsidiaries, enforceable in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and are in full force and effect (except to the extent that they
have been fully performed or terminated) in all respects material to Franklin.
Franklin and each of the Franklin Subsidiaries have duly performed in all
material respects all of their obligations thereunder to the extent that such
obligations to perform have accrued, and, to Franklin's Knowledge, there are no
material breaches, violations or defaults or allegations or assertions of such
by any party thereunder.

S. Fairness Opinion. On or before the date hereof, Trident Securities, a
division of McDonald Investments, Inc., has delivered its opinion to Franklin's
Board of Directors that the consideration to be received by the shareholders of
Franklin pursuant to this Agreement is fair, from a financial point of view, to
the holders of the Franklin Common Stock, a true and correct form of which has
been delivered to Fifth Third.

T. Transactions with Affiliates. Except as disclosed in the Franklin Reports
filed prior to the date hereof, from January 1, 2001 through the date hereof
there have been no transactions, agreements, arrangements or understandings
between Franklin or any of the Franklin Subsidiaries, on the one hand, and
Franklin's affiliates (other than wholly-owned subsidiaries of Franklin) or
other persons, on the other hand, that would be required to be disclosed under
Item 404 of Regulation S-K under the Securities Act.

U. Expiration of Representations and Warranties. All representations and
warranties contained in this Article II shall expire at the Effective Time, and,
thereafter, Franklin shall have no further liability or obligations with respect
thereto.

V. Anti-Takeover Provisions. No dissenters' rights, control share acquisition or
similar anti-takeover statute enacted under the laws of the State of Tennessee
applies to the Merger or the transactions contemplated by this Agreement.

W. No Untrue Statements. Neither this Agreement nor any report, statement, list,
certificate or other information furnished by Franklin or the Franklin
Subsidiaries to Fifth Third or its agents in connection with this Agreement or
any of the transactions contemplated hereby contains or shall contain an untrue
statement of material fact or omits or shall omit to state a material fact
required to be stated therein and necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading.

X. Employment, Severance and Change in Control Agreements. The Disclosure
Schedule sets forth (i) each employment or severance agreement to which Franklin
or any Franklin Subsidiary is party and (ii) each other agreement pursuant to
which Franklin, a Franklin Subsidiary or Fifth Third will be obligated to make
any payment as a result of the change of control of Franklin effected by the
Merger.

                 Article III. Representations and Warranties of
                     Fifth Third and Fifth Third Financial

Fifth Third and Fifth Third Financial, each jointly and severally, represents
and warrants to Franklin that as of the date hereof or as of the indicated date,
as appropriate:

A. Organization. Each of Fifth Third and Fifth Third Financial is duly
incorporated, validly existing and in good standing as a corporation under the
OGCL, is a registered financial services holding company under the Bank Holding
Company Act of 1956, as amended, and is duly authorized to conduct the business
in which it is engaged.

B. Capitalization. 1. Pursuant to Fifth Third's Second Amended Articles of
Incorporation, as amended, the total number of shares of capital stock Fifth
Third is authorized to have outstanding is 1,300,500,000, of which



1,300,000,000 shares are classified as Common Stock, without par value, and
500,000 shares are classified as Preferred Stock, without par value, of which
7,250 shares are designated, issued and outstanding as Series D Perpetual
Preferred Stock $1,000 stated value per share, and 2000 shares are designated,
issued and outstanding as Series E Perpetual Preferred Stock, $1,000 stated
value per share. As of the close of business on June 30, 2002, 580,985,828
shares of Fifth Third Common Stock were issued and outstanding and 2,441,276
shares were held in its treasury. Fifth Third does not have outstanding any
stock options, subscription rights, warrants or other securities entitling the
holders to subscribe for or purchase any shares of its capital stock other than
options granted and to be granted to employees and Directors under its stock
option plans or shares to be issued or purchased by employees or shareholders
under its deferred compensation, dividend reinvestment, and stock purchase
plans. At June 30, 2002, 40,225,173 shares of Fifth Third Common Stock were
reserved for issuance in connection with outstanding options granted under its
stock option plans and 10,013,255 shares were reserved for issuance under
options to be granted in the future.

         2. The authorized capital stock of Fifth Third Financial consists of
800 shares of common stock, of which, as of the date of this Agreement, 100
shares were issued and outstanding and all such 100 shares were beneficially
owned by Fifth Third.

C. Due Issuance. All shares of Fifth Third Common Stock to be received by the
shareholders of Franklin as a result of the Merger pursuant to the terms of this
Agreement shall be, upon transfer or issuance, duly and validly issued, fully
paid and non-assessable, and will not, upon such transfer or issuance, be
subject to the preemptive rights of any shareholder of Fifth Third.

D. Financial Statements. 1. Fifth Third has previously furnished to Franklin its
audited, consolidated balance sheet, statement of operations and statement of
shareholders' equity and cash flows as of and at December 31, 2001, and for the
year then ended, together with the opinion of its independent certified public
accountants associated therewith. Fifth Third has also furnished to Franklin its
unaudited, consolidated condensed financial statements as at March 31, 2002 and
June 30, 2002, and for the periods then ended. Such audited and unaudited
consolidated financial statements of Fifth Third fairly present the consolidated
financial condition, results of operations and cash flows of Fifth Third as of
the date thereof and for the year covered thereby, in conformity with GAAP,
consistently applied (except as stated therein and except for the omission of
notes to unaudited statements and except for normal (in nature and amount)
year-end adjustments to interim results). There are no material liabilities,
obligations or indebtedness of Fifth Third or any of its subsidiaries required
to be disclosed in the financial statements (or in the footnotes to the
financial statements) so furnished other than the liabilities, obligations or
indebtedness disclosed in such financial statements (including footnotes). Since
June 30, 2002, Fifth Third and its subsidiaries have not incurred any
liabilities outside the ordinary course of business consistent with past
practice.

         2. The financial statements of Fifth Third to be provided to Franklin
pursuant to Section V.D.4. hereof will fairly present, as applicable, the
consolidated financial condition, results of operations and cash flows of Fifth
Third as of the dates thereof, and for the periods covered thereby, in
conformity with GAAP, consistently applied (except as stated therein and except
for the omission of notes to unaudited statements and except for normal (in
nature and amount) year-end adjustments to interim results).

E. No Material Adverse Effect. Since June 30, 2002, no event has occurred and no
fact or circumstance shall have come to exist or come to be known which,
directly or indirectly, individually or taken together with all other facts,
circumstances and events (described in any paragraph of this Article III or
otherwise), has had, or is reasonably likely to have, a Material Adverse Effect
with respect to Fifth Third.

F. Board Approval; Corporate Authority; No Breach. 1. The Executive Committee of
the Board of Directors of Fifth Third, by resolution adopted by the members
present at a meeting duly called and held, at which meeting a quorum was at all
times present and acting, has approved this Agreement, including reserving for
issuance to Franklin shareholders in accordance with this Agreement, a
sufficient number of shares of Fifth Third Common Stock. The Executive Committee
of the Board of Directors of Fifth Third is empowered to act in these matters
for the full Board of Directors of Fifth Third under Ohio law and the Articles
of Incorporation and Code of Regulations of Fifth Third. Approval and adoption
of this Agreement by the shareholders of Fifth Third is not required under Ohio
law or under the Articles of Incorporation or Code of Regulations of Fifth
Third. Approval and adoption of



this Agreement by the shareholder of Fifth Third Financial is not required
under Ohio law or under the Articles of Incorporation or Code of Regulations of
Fifth Third Financial. The directors of Fifth Third Financial have duly and
validly approved and adopted this Agreement.

         2. Each of Fifth Third and Fifth Third Financial has corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder subject to certain required regulatory approvals. This Agreement has
been duly executed and delivered and constitutes the valid and binding
obligation of each of Fifth Third and Fifth Third Financial, enforceable in
accordance with its terms, except to the extent that (i) enforceability hereof
may be limited by insolvency, reorganization, liquidation, bankruptcy,
readjustment of debt or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and (ii) the
availability of certain remedies may be precluded by general principles of
equity.

         3. Neither the execution of this Agreement, nor the consummation of the
transactions contemplated hereby, does or will (i) conflict with, result in a
breach of, violate or constitute a default under, either Fifth Third's or Fifth
Third Financial's Articles of Incorporation, or Code of Regulations or, to the
Knowledge of Fifth Third, any federal, foreign, state or local law, statute,
ordinance, rule, regulation or court or administrative order, or any agreement,
arrangement, or commitment to which Fifth Third or Fifth Third Financial is
subject or bound; (ii) to the Knowledge of Fifth Third, result in the creation
of or give any person the right to create any material lien, charge,
encumbrance, security agreement or any other material rights of others or other
material adverse interest upon any material right, property or asset belonging
to Fifth Third or any of its subsidiaries; (iii) terminate or give any person
the right to terminate, amend, abandon, or refuse to perform any material
agreement, arrangement or commitment to which Fifth Third or Fifth Third
Financial is a party or by which Fifth Third's or Fifth Third Financial's
rights, properties or assets are subject or bound; or (iv) accelerate or modify,
or give any party thereto the right to accelerate or modify, the time within
which, or the terms according to which, Fifth Third or Fifth Third Financial is
to perform any duties or obligations or receive any rights or benefits under any
material agreement, arrangements or commitments.

         4. As of the date hereof, Fifth Third is not aware of the existence of
any factor that would materially delay or materially hinder issuance of any of
the required regulatory approvals necessary to consummate the Merger or the
other transactions contemplated hereby.

G. Articles and Regulations. Complete and accurate copies of (i) the Articles of
Incorporation, and (ii) the Code of Regulations of each of Fifth Third and Fifth
Third Financial in force as of the date hereof have been delivered to Franklin.

H. Compliance with Law. To the Knowledge of Fifth Third and except as disclosed
by Fifth Third to Franklin, neither Fifth Third nor any of its subsidiaries has
knowingly engaged in any activity or omitted to take any action which, in any
material way, has resulted or could result in the violation of (i) any local,
state or federal law (including without limitation the Bank Secrecy Act, the
Community Reinvestment Act, applicable consumer protection and disclosure laws
and regulations, including without limitation, Truth in Lending, Truth in
Savings and similar disclosure laws and regulations, and equal employment and
employment discrimination laws and regulations) or (ii) any regulation, order,
injunction or decree of any court or governmental body, the violation of either
of which could reasonably be expected to have a Material Adverse Effect on Fifth
Third. To the Knowledge of Fifth Third, Fifth Third and its subsidiaries possess
all licenses, franchises, permits and other governmental authorizations
necessary for the continued conduct of their businesses without material
interference or interruption.

I. SEC Filings; Regulatory Reports. 1. Fifth Third has made available to
Franklin an accurate and complete copy (including all exhibits and all documents
incorporated by reference) of each of the following documents as filed by Fifth
Third with the SEC: (a) each final registration statement, prospectus, report,
schedule and definitive proxy statement filed since January 1, 2000 by Fifth
Third with the SEC, pursuant to the Securities Act or the Exchange Act, and (b)
each communication mailed by Fifth Third to its stockholders since January 1,
2000. Since January 1, 2000, Fifth Third has timely filed (and will timely file
after the date of this Agreement) all reports and other documents required to be
filed by it under the Securities Act and the Exchange Act, and, as of their
respective dates, all such reports complied (and, in the case of all reports and
other documents filed after the date of this Agreement,



will comply) in all material respects with the published rules and regulations
of the SEC. As of the date of filing or mailing, as the case may be, no such
registration statement, prospectus, report, schedule, proxy statement or
communication contained (and no registration statement, prospectus, report,
schedule, proxy statement or communication filed or mailed after the date of
this Agreement will contain) any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances in which they were
made, not misleading, except that information as of a later date (but filed
before the date hereof) shall be deemed to modify information as of an earlier
date, or omitted any material exhibit required to be filed therewith. No event
has occurred subsequent to June 30, 2002 which Fifth Third is required to
describe in a Current Report on Form 8-K other than the Current Reports
heretofore furnished by Fifth Third to Franklin.

         2. Fifth Third and its subsidiaries have filed all material reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since January 1, 2000 with
any SRO and any other Regulatory Agencies, and all other material reports,
registrations and statements required to be filed by them since January 1, 2000,
including, without limitation, any material report or statement required to be
filed pursuant to the laws, rules or regulations of the United States, any
state, or any Regulatory Agency, and have paid all fees and assessments due and
payable in connection therewith. Except for normal examinations conducted by a
Regulatory Agency in the regular course of the business of Fifth Third and its
subsidiaries, and except as disclosed by Fifth Third to Franklin, no Regulatory
Agency has initiated any proceeding or, to the Knowledge of Fifth Third,
investigation into the business or operations of Fifth Third or its subsidiaries
since January 1, 2000. To the Knowledge of Fifth Third and except as disclosed
by Fifth Third to Franklin, there is no unresolved violation, or material
criticism or exception, by any bank Regulatory Agency with respect to any
report, registration or statement relating to any examinations of Fifth Third or
its subsidiaries.

J. Litigation. There are no actions, suits, proceedings, investigations or
assessments of any kind pending or, to the Knowledge of Fifth Third, threatened
against Fifth Third or any Fifth Third subsidiary, which reasonably can be
expected to result in any material adverse change in the consolidated financial
condition, operations or business of Fifth Third, or reasonably likely to
prevent or delay the consummation of the transactions contemplated by this
Agreement.

K. Loan Losses. Since June 30, 2002 to the date hereof, none of Fifth Third's
banking subsidiaries has incurred any unusual or extraordinary loan losses which
would be material to Fifth Third on a consolidated basis; and to the Knowledge
of Fifth Third, and in the light of any banking subsidiary's historical loan
loss experience and their managements' analysis of the quality and performance
of their respective loan portfolios, as of June 30, 2002, their consolidated
reserves for loan losses are adequate to absorb potential loan losses determined
on the basis of management's continuing review and evaluation of the loan
portfolio and its judgment as to the impact of economic conditions on the
portfolio.

L. Tax Returns. Fifth Third and its subsidiaries have timely filed all federal,
state and local tax returns required to be filed (after giving effect to all
extensions) by them, respectively, and have paid or provided for all tax
liabilities shown to be due thereon or which have been assessed against them,
respectively. All tax returns filed by Fifth Third and its subsidiaries are
complete and accurate in all material respects.

M. Broker. Fifth Third has no direct or indirect commitment to any investment
banker, broker or finder in connection with this transaction and has not
incurred and will not incur any obligation for any investment banker's, broker's
or finder's fee or commission in connection with the transactions provided for
in this Agreement.

N. Investment Portfolio. The investment portfolios of Fifth Third and its
subsidiaries and affiliates consist in all material respects of securities in
marketable form. Since June 30, 2002 to the date hereof Fifth Third and its
subsidiaries, on a consolidated basis, have not incurred any material and
unusual or extraordinary losses in their respective investment portfolios, and,
except for matters of general application to the banking industry (including,
but not limited to, changes in laws or regulations or GAAP) or for events
relating to the business environment in general, including market fluctuations
and changes in interest rates, the management of Fifth Third is not aware of any
events which are reasonably certain to occur in the future and which reasonably
can be expected to result in any material adverse change in the quality or
performance of the investment portfolios of Fifth Third and its subsidiaries on
a consolidated basis.



O. Taxes. Fifth Third has no reason to believe that any conditions exist that
might prevent or impede the Merger from qualifying as a "reorganization" within
the meaning of Section 368(a) of the Code.

P. Expiration of Representations and Warranties. All representations and
warranties contained in this Article III shall expire at the Effective Time, and
thereafter, neither Fifth Third nor Fifth Third Financial shall have any further
liability or obligation with respect thereto.

Q. No Untrue Statements. Neither this Agreement nor any report, statement, list,
certificate or other information furnished by Fifth Third or its subsidiaries to
Franklin or its agents in connection with this Agreement or any of the
transactions contemplated hereby contains or shall contain an untrue statement
of material fact or omits or shall omit to state a material fact required to be
stated therein and necessary to make the statements contained herein or therein,
in light of the circumstances in which they are made, not misleading.


     Article IV. Obligations of Franklin Between the Date of this Agreement
                             and the Effective Time.

A. Shareholders' Meeting. Franklin, in consultation with Fifth Third, will take
all actions necessary to call and hold an annual or a special meeting of
Franklin's shareholders as soon as practicable after the Fifth Third
registration statement relating to the shares of Fifth Third Common Stock to be
issued in the Merger has been declared effective by the SEC and under all
applicable state securities laws for the purpose of approving the Merger (and
any other documents or actions necessary to the consummation of the Merger)
pursuant to law. Franklin shall state in the proxy materials relating to the
annual or special meeting that all Directors of Franklin have indicated their
intent to vote all shares of Franklin Common Stock which they own of record in
favor of approving this Agreement and any such other necessary documents or
actions, and shall include the recommendation of the Board of Directors of
Franklin that the Franklin shareholders vote in favor of approving this
Agreement and any other necessary documents or actions, except as provided in
the next sentence. The Board of Directors of Franklin shall be permitted to
withdraw or modify in a manner adverse to Fifth Third (or not to continue to
make) its recommendation to its shareholders if, but only if, (a) in the
reasonable opinion of the Board of Directors of Franklin upon the advice of its
outside counsel, such action is required in order for the Board of Directors of
Franklin to comply with duties applicable to directors under applicable law,
(b) Franklin has given Fifth Third five business days' prior notice of its
intention to withdraw or modify such recommendation and Franklin's Board of
Directors has considered any proposed changes to this Agreement (if any)
proposed by Fifth Third prior to the end of such five day period, and (c)
Franklin has fully and completely complied with Section IV.B. Without limiting
the generality of the foregoing, Franklin agrees that its obligations pursuant
to the first sentence of this Section IV.A. shall not be altered by the
commencement, public proposal, public disclosure or communication to Franklin
of any Acquisition Proposal (as defined below) or a decision by the Board of
Directors of Franklin to withdraw or modify in a manner adverse to Fifth Third
(or not to continue to make) its recommendation to its stockholders to approve
the Merger and the plan of merger contained in this Agreement.

B. No Solicitation. Franklin and its subsidiaries, and the officers, directors,
financial or legal advisors of Franklin and its subsidiaries, will not, directly
or indirectly, (a) take any action to solicit, initiate or encourage any
Acquisition Proposal or (b) engage in negotiations with, or disclose any
nonpublic information relating to Franklin or any of its subsidiaries or afford
access to the properties, books or records of Franklin or any of its
subsidiaries to, any person that may be considering making, or has made, an
Acquisition Proposal; provided that Franklin may receive and, only to the extent
necessary to become adequately informed of the terms thereof, engage in
discussions (but not disclose information or engage in negotiations) regarding
an unsolicited written proposal from a third party with respect to an
Acquisition Proposal if (i) in the reasonable opinion of the Board of Directors
of Franklin upon the advice of its outside counsel, such action is required for
the Board of Directors of Franklin to comply with the duties applicable to
directors under applicable law and (ii) Franklin has received from such third
party an executed confidentiality agreement with terms not materially less
favorable to Franklin than those contained in the confidentiality agreement
entered into between Franklin and Fifth Third dated June 15, 2002. Franklin will



immediately notify Fifth Third orally and will promptly (and in no event later
than 24 hours after the relevant event) notify Fifth Third in writing (which
oral and written notices shall identify the person making the Acquisition
Proposal or request for information and set forth the material terms thereof)
after having received any Acquisition Proposal or request or inquiry relating to
a prospective Acquisition Proposal. Franklin will keep Fifth Third fully and
currently informed of the status and details of any such Acquisition Proposal,
request or inquiry and any related discussions or negotiations. Franklin shall,
and shall cause the Franklin Subsidiaries and its and their directors, officers
and financial and legal advisors to, cease immediately and cause to be
terminated all activities, discussions or negotiations, if any, with any persons
conducted heretofore with respect to any Acquisition Proposal. Nothing in this
Section IV.B. shall prohibit Franklin or its Board of Directors from taking and
disclosing to the stockholders of Franklin a position with respect to an
Acquisition Proposal by a third party to the extent required under the Exchange
Act or from making such disclosure to the stockholders of Franklin which, in the
reasonable opinion of the Board of Directors of Franklin upon the advice of its
outside counsel, is required under applicable law; provided that nothing in this
sentence shall affect the obligations of Franklin and its Board of Directors
under any other provision of this Agreement. For purposes of this Agreement,
"Acquisition Proposal" means any offer or proposal for, or any indication of
interest in (a) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of beneficial ownership (the term
"beneficial ownership" for purposes of this Agreement having the meaning
assigned thereto in Section 13(d) of the Exchange Act, and the rules and
regulations thereunder) of securities representing 10% or more of the voting
power of Franklin or more than 25% of any Significant Subsidiary of Franklin,
(b) a purchase, lease or other acquisition or assumption of all or a substantial
portion of the assets or deposits of Franklin or all or a substantial portion of
the assets or deposits of any Significant Subsidiary of Franklin, (c) a merger
or consolidation, or any similar transaction, involving Franklin or any
Significant Subsidiary of Franklin, or (d) any substantially similar
transaction.

C. Valuation Reserve Adjustment. Consistent with GAAP, Franklin agrees that on
or before the Effective Time based on a review of the Franklin Subsidiaries'
loan losses, current classified assets and commercial, multi-family and
residential mortgage loans and investment portfolio, Franklin will work with
Fifth Third with the goal of establishing collection procedures, internal
valuation reviews, credit policies and practices and general valuation
allowances which are consistent with the guidelines used within the Fifth Third
holding company system, provided that no adjustment to general valuation
allowances or reserves shall be made until immediately prior to the Effective
Time and all conditions precedent to the obligations of the parties hereto have
either been satisfied or waived as confirmed by such parties in writing. Fifth
Third shall provide such assistance and direction to Franklin as is necessary in
conforming to such policies, practices, procedures and asset dispositions which
are mutually agreeable between the date of this Agreement until the Effective
Time.

D. Operations in the Ordinary Course; Forbearances. From the date of this
Agreement until the Effective Time, Franklin and the Franklin Subsidiaries will
be operated in the ordinary course of business, and none of them will, without
the prior written consent of Fifth Third, which consent shall not be
unreasonably withheld or unreasonably delayed: make any changes in its Charter,
By-laws, or corporate structures; issue any additional shares of Franklin Common
Stock, share appreciation rights, restricted stock, options or other equity
securities other than pursuant to the exercise of options granted prior to June
30, 2002, in the form of permissible stock dividends (as described below) or as
set forth in Section II.A.1. with respect to Franklin's 2000 Stock Purchase
Plan; or issue as borrower any long term debt or convertible or other securities
of any kind, or right to acquire any of its securities; repurchase any equity
securities, other than (subject to Section VII.H.) the repurchase of shares of
Franklin Common Stock in accordance with past practice (as to timing and amount)
and in compliance with applicable law and the safe harbor requirements of Rule
10b-18 of the Exchange Act; make any material changes in its method of business
operations; make, enter into any agreement to make, or become obligated to make,
any capital expenditures in excess of $50,000 (except as set forth in the
Disclosure Schedule); make, enter into or renew any agreement for services to be
provided to Franklin or the Franklin Subsidiaries or permit the automatic
renewal of any such agreement, other than the agreements identified in the
Disclosure Schedule which are specifically identified on such Schedule as
agreements which Franklin intends to renew, except any agreement for services
having a term of not more than twelve months and requiring the expenditure of
not more than $50,000 (for this purpose the phrase "permit the automatic
renewal" includes the failure to send a notice of termination of such contract
if such failure would constitute a renewal); acquire, become obligated to
acquire, or enter into any agreement to acquire, any banking or non-banking
company or any branch offices of any such companies or any material assets or
liabilities outside the ordinary course of business, other than such agreements
existing on the date hereof and previously publicly



announced or disclosed in the Disclosure Schedule; make, declare, pay or set
aside for payment any cash dividends on its own stock other than normal and
customary cash dividends per quarter paid in such amounts and at such times as
Franklin historically has done on its Common Stock and which shall not exceed
$0.055 per share, or be paid more frequently than once per calendar quarter,
provided this covenant shall only apply to Franklin; make any other
distributions on its stock; except as set forth in the Disclosure Schedule,
change or otherwise amend any Benefit Plans other than as required by law or as
contemplated herein (including but not limited to Section V.E.5. hereof);
provide any increases in employee salaries or benefits other than in the
ordinary course of business or as set forth in the Disclosure Schedule; or take
any intentional action that is intended or may reasonably be expected to result
in any of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time prior to the Effective
Time, or in any of the conditions to the Merger set forth in Article VI not
being satisfied or in a violation of any provision of this Agreement; or engage
in any transaction with any employee or shareholder, except, in every case, as
required by applicable law, regulation or safe and sound banking practices.
Franklin agrees that it will not sell, transfer, mortgage or otherwise dispose
of or encumber any of the shares of the capital stock of the Franklin
Subsidiaries which are now owned by it, and neither Franklin nor any of the
Franklin Subsidiaries shall sell, transfer, mortgage or otherwise dispose of or
encumber any other assets, except in the ordinary course of business consistent
with past practice. Franklin agrees that neither it nor the Franklin
Subsidiaries will agree to, or make any commitment to, take any of the actions
prohibited by this Section IV.D.

E. Filings. Franklin will timely file after the date of this Agreement all
reports and other documents required to be filed by it under the Securities Act
and the Exchange Act, and, as of their respective dates, all such reports will
comply in all material respects with the published rules and regulations of the
SEC with respect thereto. As of the date of filing or mailing, as the case may
be, no such registration statement, prospectus, report, schedule, proxy
statement or communication filed or mailed after the date of this Agreement will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
except that information as of a later date shall be deemed to modify information
as of an earlier date, or omitted any material exhibit required to be filed
therewith. Franklin shall furnish Fifth Third in a timely manner with copies of
all reports filed by Franklin with the SEC subsequent to the date of this
Agreement and until the Closing Date.

        Article V. Cooperation and Other Obligations and Other Covenants

A. Registration Statement and Proxy Statement. 1. Each of Fifth Third, Fifth
Third Financial and Franklin agree to cooperate in the preparation of a
registration statement on Form S-4 (the "Registration Statement") to be filed by
Fifth Third with the SEC in connection with the issuance of Fifth Third Common
Stock in the Merger (including the proxy statement and prospectus and other
proxy solicitation materials of Franklin constituting a part thereof (the "Proxy
Statement") and all related documents). The Registration Statement and the Proxy
Statement shall comply as to form in all material respects with the applicable
provisions of the Securities Act and the Exchange Act and the rules and
regulations thereunder. Fifth Third, Fifth Third Financial and Franklin agree to
each use their best efforts to enable Fifth Third to file the Registration
Statement with the SEC within sixty (60) days of the date hereof and Fifth Third
and Fifth Third Financial agree to furnish the Registration Statement in draft
form for comments to Franklin at least ten calendar days prior to the
anticipated filing. Each party hereto shall, as promptly as practicable after
receipt thereof, provide copies of any written comments received from the SEC
with respect to the Registration Statement to the other party hereto, and advise
the other party hereto of any oral comments with respect to the Registration
Statement received from the SEC. Each of Fifth Third, Fifth Third Financial and
Franklin agrees to use reasonable best efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
reasonably practicable after filing thereof. As promptly as possible after the
Registration Statement is declared effective, Franklin agrees to mail the Proxy
Statement to its shareholders in accordance with the directions and under the
supervision of Fifth Third. Fifth Third also agrees to use reasonable best
efforts to obtain all necessary state securities law or "Blue Sky" permits and
approvals required to carry out the transactions contemplated by the Agreement.
Franklin agrees to furnish to Fifth Third all information concerning Franklin,
its Subsidiaries, officers, directors and stockholders as may be reasonably
requested in connection with the foregoing.

         2. Each of Fifth Third, Fifth Third Financial and Franklin agrees, as
to itself and its subsidiaries, that none of the information supplied or to be
supplied by it for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement and each
amendment or supplement thereto, if



any, becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and (ii) the Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to shareholders and at the time of the Franklin shareholder meeting to approve
the Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading.

         3. Fifth Third agrees to advise Franklin, promptly after Fifth Third
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of the Fifth Third Common
Stock for offering or sale in any jurisdiction, of the initiation or threat of
any proceeding for any such purpose, or of any request by the SEC for the
amendment or supplement of the Registration Statement or for additional
information. Franklin agrees to advise Fifth Third of any request by the SEC for
the amendment or supplement of the Proxy Statement or for additional
information.

B. Regulatory Approvals. 1. Fifth Third will prepare and cause to be filed, at
the expense of Fifth Third, such notices, applications and other documents with
the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the Ohio Division of Financial Institutions, the OCC, and
any other Regulatory Agencies or stock exchanges as are required to secure the
requisite approvals for the consummation of the transactions provided for in
this Agreement. Fifth Third shall use its reasonable best efforts to file all
such applications within sixty (60) days of the date of this Agreement and to
use all reasonable efforts to secure all such approvals. Franklin agrees that it
will cooperate with Fifth Third and, as promptly as practicable after request
and at its own expense, provide Fifth Third with all information and documents
concerning Franklin and the Franklin Subsidiaries, as shall be required in
connection with preparing such notices, applications and other documents and in
connection with securing such approvals.

         2. Fifth Third and Franklin shall promptly advise each other upon
receiving any communication from any governmental entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement.

C. Reasonable Best Efforts. Each of the parties hereto agrees to use its
reasonable best efforts and to cooperate with the other party in all reasonable
respects in order to carry out and consummate the transactions contemplated by
this Agreement at the earliest practicable time including, without limitation,
the filing of applications, notices and other documents with, and obtaining
approval from, appropriate governmental regulatory agencies; provided that
nothing in this Agreement shall obligate Fifth Third or Fifth Third Financial to
agree to any conditions, restraints or requirements that would materially
adversely reduce the anticipated economic or business benefits of the Merger to
Fifth Third or Fifth Third Financial or could reasonably be expected to have a
Material Adverse Effect on Franklin (a "Burdensome Condition").

D. Access to Information. 1. Franklin agrees to permit Fifth Third, Fifth Third
Financial, and each of their officers, employees, accountants, agents and
attorneys, and Fifth Third agrees to permit Franklin, its officers, employees,
accountants, agents and attorneys, to have reasonable access during business
hours to their respective books, records and properties, and those of its
respective subsidiaries as well, for the purpose of making a detailed
examination, or updating and amplifying prior examinations, of the financial
condition, assets, liabilities, legal compliance, affairs and the conduct of the
business of Franklin and the Franklin Subsidiaries or Fifth Third and its
subsidiaries, as the case may be, prior to the Effective Time, and also to
permit the monitoring of the foregoing on an ongoing basis (such rights of
examination and monitoring to be subject to the confidentiality obligations set
forth in Section V.D.2. hereof); provided, however, no investigation by any of
the parties or their respective representatives shall affect the representations
and warranties of the other party set forth herein.

         2. Fifth Third will not disclose to others, shall not use in respect of
its (or any of its subsidiaries') business operations, and will hold in
confidence any non-public, confidential information disclosed to it by Franklin
concerning Franklin or the Franklin Subsidiaries. Franklin will not disclose to
others, shall not use in respect of its (or any of its subsidiaries') business
operations, and will hold in confidence any non-public, confidential information



disclosed to it concerning Fifth Third or any of its affiliates. In the event
the Merger is not completed, all non-public financial statements, documents and
materials, and all copies thereof, shall be returned to Franklin or Fifth Third,
as the case may be, and shall not be used by Fifth Third or Franklin, as the
case may be, in any way detrimental to Franklin or Fifth Third.

         3. As soon as they are available, Franklin will provide to Fifth Third
Franklin's unaudited, consolidated balance sheets, statements of operations and
statements of stockholders' equity and cash flows for monthly and quarterly
periods until the Closing Date.

         4. As soon as they are available, Fifth Third will provide to Franklin
Fifth Third's unaudited, consolidated balance sheets, statements of operations
and statements of stockholders' equity and cash flows for monthly and quarterly
periods until the Closing Date. Fifth Third timely shall furnish Franklin with
copies of all reports filed by Fifth Third with the SEC subsequent to the date
of this Agreement and until the Closing Date.

E. Employee Benefit Matters. 1. If Fifth Third so requests, Franklin or the
Franklin Subsidiaries shall develop a plan and timetable for terminating any or
all of the Qualified Benefit Plans, and, with the advance written approval of
Fifth Third, shall proceed with the implementation of said termination plan and
timetable; provided that such terminations of any Qualified Benefit Plans will
not adversely affect qualification of such Qualified Benefit Plans under the
Code.

         2. Franklin or the Franklin Subsidiaries shall provide to Fifth Third
at least sixty (60) days prior to the Effective Time, documentation
reasonably satisfactory to Fifth Third demonstrating that the requirements
of Sections 401(a)(4), 404, 410(b), 411, 412, 415, 416, 401(k) and (m) of
the Code have been satisfied by all of its Qualified Benefit Plans for the 1998,
1999, 2000 and 2001 plan years.

         3. Franklin or the Franklin Subsidiaries shall provide to Fifth Third
at least sixty (60) days prior to the Effective Time, documentation reasonably
satisfactory to Fifth Third with respect to any Benefit Plan (including any
Predecessor Plan) that was merged, terminated or frozen since January 1, 1998,
demonstrating that all legal requirements pertaining to such merger, termination
or freeze have been satisfied.

         4. If Fifth Third so requests, Franklin or the Franklin Subsidiaries
shall take all actions necessary to file an application for determination letter
with the Internal Revenue Service prior to the Effective Time, for any Qualified
Benefit Plan requested by Fifth Third.

         5. With respect to any Benefit Plan that provides for vesting of
benefits, there shall be no discretionary acceleration of vesting without Fifth
Third's consent whether or not such discretionary acceleration of vesting is
provided under the terms of the Benefit Plan; provided, however, that
notwithstanding anything to the contrary in this Agreement, Franklin may in its
sole discretion accelerate the exercisability of any or all options to acquire
Franklin Common Stock issued and outstanding as of June 1, 2002, with such
acceleration to be effective, if at all, immediately prior to the Effective
Time.

         6. If Fifth Third so requests, Franklin or any of the Franklin
Subsidiaries shall take all actions necessary to freeze any or all Qualified
Benefit Plans as of a date not earlier than one day prior to the Effective Time
such that no further contributions (including employee 401(k) contributions)
shall be made and no further benefits shall accrue under such Qualified Benefit
Plans after such freeze date.

         7. Except as provided otherwise pursuant hereto, Franklin and any of
the Franklin Subsidiaries, without the advance written consent of Fifth Third,
which shall not be unreasonably withheld or delayed, shall not (a) adopt any
amendments to the Qualified Benefit Plans after the date of this Agreement; or
(b) make any distributions from the Qualified Benefit Plans after the date of
this Agreement other than in the ordinary course of operations of such Qualified
Benefit Plans; or (c) make any contributions to the defined benefit plans
maintained by Franklin or discretionary contributions to any of the Qualified
Benefit Plans after the date of this Agreement; or (d) take any action which
would reduce or restrict the availability of surplus (excess of plan assets over
plan liabilities) under any defined benefit plan as defined in Section 414(j) of
the Code.



         8. Franklin shall provide to Fifth Third at least sixty (60) days prior
to the Effective Time, documentation reasonably satisfactory to Fifth Third
demonstrating that it has all power and authority necessary to amend and/or
terminate any plan providing retiree medical or life insurance coverage, thereby
reducing or eliminating future liability.

F. State Takeover Statutes. Franklin will take all steps within its reasonable
control necessary to exempt (or continue the exemption of) the Merger, this
Agreement and the transactions contemplated hereby) from any applicable state
takeover law, as now or hereafter in effect.

G. Affiliates. Not later than the 15th day prior to the mailing of Franklin's
Proxy Statement with respect to the Merger, Franklin shall deliver to Fifth
Third a list of each person that, to Franklin's Knowledge, is or is reasonably
likely to be, as of the date of the annual or special meeting called to approve
the Merger, deemed an "affiliate" of it as that term is used in Rule 145 under
the Securities Act, or SEC Accounting Series Releases 130 and 135 (the "Franklin
Affiliates"). Franklin shall use its best efforts to cause each Franklin
Affiliate to execute and deliver to Fifth Third on or before the mailing of such
Proxy Statement an agreement in the form of Appendix A hereto.

H. Forbearances of Fifth Third. From the date of this Agreement until the
Effective Time, Fifth Third will not, without the prior written consent of
Franklin, which consent shall not be unreasonably withheld or unreasonably
delayed: make any changes in its Second Amended Articles of Incorporation or
Code of Regulations in a manner adverse to the shareholders of Franklin; make,
declare, pay or set aside for payment any extraordinary cash dividends on its
own stock; or agree to, or make any commitment to, take any of the actions
prohibited by this Section V. H.

I. Coordination of Dividends. Fifth Third and Franklin shall coordinate the
timing of the declaration and payment of dividends payable after the date hereof
so that Fifth Third and Franklin shareholders will receive during each quarter
fair dividends and in no event shall Fifth Third or Franklin shareholders fail
to receive a fair dividend, or receive more than one fair dividend, during any
quarter up to and including the quarter immediately following the quarter during
which the Effective Time occurs.

J. Exemption From Liability Under Section 16(b). Assuming that Franklin delivers
to Fifth Third the Section 16 Information in a timely fashion prior to the
Effective Time, the Board of Directors of Fifth Third, or a committee of
Non-Employee Directors thereof (as such term is defined for purposes of Rule
16b-3(d) under the Exchange Act), shall reasonably promptly thereafter and in
any event prior to the Effective Time adopt a resolution, expressly relying on
Franklin's representation that any such options or other grants were upon their
issuance exempt from liability pursuant to Section 16(b) under the Exchange Act,
providing that the receipt by the Franklin Insiders of Fifth Third Common Stock
in exchange for shares of Franklin Common Stock, and of options to purchase
shares of Fifth Third Common Stock upon conversion of options to purchase shares
of Franklin Common Stock, in each case pursuant to the transactions contemplated
hereby and to the extent such securities are listed in the Section 16
Information, are intended to be exempt from liability pursuant to Section 16(b)
under the Exchange Act; provided, however, that the Board of Directors of Fifth
Third will be under no obligation to adopt such a resolution unless it may
expressly rely on a written representation by Franklin that any such options or
other grants were, upon their issuance, exempt from liability pursuant to
Section 16(b) under the Exchange Act. "Section 16 Information" shall mean
information accurate in all respects regarding the Franklin Insiders, the number
of shares of Franklin Common Stock held by each such Franklin Insider and
expected to be exchanged for Fifth Third Common Stock in the Merger, and the
number and description of the options to purchase shares of Franklin Common
Stock held by each such Franklin Insider and expected to be converted into
options to purchase shares of Fifth Third Common Stock in connection with the
Merger. " Franklin Insiders" shall mean those officers and directors of Franklin
who are subject to the reporting requirements of Section 16(a) of the Exchange
Act and who are listed in the Section 16 Information.

K. Directors of Bank Subsidiary. Prior to the Effective Time, Fifth Third shall
determine and communicate to Franklin those individuals who shall be appointed
to serve as Directors of the Bank Subsidiary following the Effective Time, each
of whom shall serve as a Director for the term for which he was appointed,
subject to the Charter and Bylaws of Bank Subsidiary and in accordance with
applicable law.



                   Article VI. Conditions Precedent to Closing

A.       Conditions to the Obligations of Each of the Parties.

The obligation of each of the parties hereto to consummate the transactions
provided for herein is subject to the fulfillment on or prior to the Effective
Time of each of the following conditions:

         1. The shareholders of Franklin shall have duly approved the Merger and
the plan of merger contained within this Agreement in accordance with and as
required by law and in accordance with Franklin's Charter and Bylaws.

         2. All necessary governmental and regulatory orders, consents,
clearances and approvals and requirements shall have been secured and satisfied
for the consummation of such transactions, including without limitation, those
of the Federal Reserve System, the Ohio Division of Financial Institutions, the
OCC and the Federal Deposit Insurance Corporation to the extent required and, in
the case of Fifth Third's obligation, none of such orders, consents, clearances
and approvals and requirements shall be subject to a Burdensome Condition.

         3. Any waiting period mandated by law in respect of the final requisite
approval by any applicable Regulatory Agency of the transaction contemplated
herein shall have expired.

         4. No order or injunction of any federal or state agency or court shall
be in effect preventing, prohibiting or enjoining the transactions contemplated
by this Agreement.

         5. Fifth Third shall have registered its shares of Fifth Third Common
Stock to be issued to the Franklin shareholders hereunder with the SEC pursuant
to the Securities Act, and with all applicable state securities authorities. The
registration statement with respect thereto shall have been declared effective
by the SEC and all applicable state securities authorities and no stop order
shall have been issued and be continuing. The shares of Fifth Third Common Stock
to be issued to the Franklin shareholders hereunder shall have been authorized
for trading on the Nasdaq National Market upon official notice of issuance.

B.      Additional Conditions to the Obligations of Fifth Third and Fifth Third
        Financial.

The obligation of Fifth Third and Fifth Third Financial to consummate the
transactions provided for herein is subject to the fulfillment at or prior to
the Effective Time of each of the following additional conditions unless waived
by Fifth Third in a writing delivered to Franklin which specifically refers to
the condition or conditions being waived:

         1. The representations and warranties of Franklin contained herein
shall be true and correct both as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date) as
of the Closing Date.

          2. Franklin shall have performed all of the obligations required of it
under the terms of this Agreement in all material respects.

          3. Fifth Third shall have received a certificate from Franklin,
executed by its chief executive officer and chief financial officer, dated
the Closing Date, certifying to each of such officers' best knowledge and
belief that the conditions set forth in Section VI.B.1. and VI.B.2. have
been satisfied.

         4. No investigation or action by any state or federal agency shall have
been threatened in writing or instituted seeking to enjoin or prohibit or unwind
the transactions contemplated hereby and no governmental action or proceeding
shall have been threatened or instituted before any court or governmental body
or authority, seeking to enjoin or prohibit or unwind, the transactions
contemplated hereby or seeking to impose material sanctions or penalties as a
result thereof (other than investigations, actions and proceedings which have
been withdrawn prior to the Closing without a Material Adverse Effect on Fifth
Third or Franklin, and other than regularly scheduled regulatory examinations).



          5. At or prior to the Effective Time, Fifth Third shall have entered
into written employment, severance and/or non-competition agreements with
each of (a) Gordon Inman, (b) Myers Jones, (c) Richard Herrington, (d)
George J. Regg, Jr., and (e) Lisa Musgrove on terms satisfactory to Fifth
Third and each of the foregoing individuals.

         6. (a) In consideration of the consummation of the Merger, each of the
Directors of Franklin and Bank Subsidiary (except those persons who enter into
an agreement as required by VI.B.5 above) shall receive a cash payment from
Fifth Third in the amount of $5,000, and each Director of Franklin (except those
persons who enter into an agreement as required by VI.B.5 above) shall have
executed and delivered to Fifth Third an agreement by which the Directors shall
agree for a period of three years after the Effective Time to refrain from
directly or indirectly, whether for his or her own account or for the account of
any other person, firm, corporation, or other business organization, (i) in the
states of Kentucky or Tennessee, engage in providing Banking Services (as
defined below) as an employee, officer, director, or consultant on behalf of any
other business organization who is a competitor of Fifth Third, (ii) provide
Banking Services to any Client (as defined below), (iii) make any statement or
take any actions that may interfere with Fifth Third's or any Affiliate's
business relationships with any Client, (iv) contact either directly or
indirectly any Client or otherwise induce or attempt to induce any Client to
enter into any business relationship with any person or firm other than Fifth
Third or an Affiliate relating to Banking Services of any type, (v) endeavor or
entice away from Franklin or Fifth Third any person who the Director has actual
knowledge that such person is, or was at any time during the period the Director
was employed by Franklin or Fifth Third or during the Restricted Period,
employed by or associated with Fifth Third or Franklin as an executive, officer,
employee, manager, salesperson, consultant, independent contractor,
representative or other agent, or (vi) take any actions that may interfere with
Fifth Third's property rights in lists of Clients or otherwise diminish the
value of such lists to Fifth Third. Notwithstanding any provision contained in
this Section 6, the restrictions contained herein shall not be applicable to any
activity of the Director or any activity of his or her spouse which existed at
the time of this Agreement and which was disclosed by the Director to Fifth
Third, and may be waived by Fifth Third with respect to one or more Directors in
writing at any time and from time to time in Fifth Third's sole discretion after
receipt of a written request from any Director.

         (b) The term "Restricted Period" shall mean the period beginning on the
Effective Time and ending three years thereafter.

         (c) The term "Banking Services" shall mean retail or commercial deposit
or lending business, including mortgage lending, trust services, securities
brokerage, asset management, data processing, merchant processing and all other
services which are customarily provided by banks or which are otherwise provided
by Fifth Third or its affiliates.

         (d) For all purposes of this Agreement, the term "Client" shall mean
all persons or entities who are or were clients of Franklin or Fifth Third at
the Effective Time or at any time during the three-year period ending at the
Effective Time, and any potential clients who to the Director's actual
knowledge, have been identified and contacted by a representative of Fifth
Third. The term "Client" shall not include any member of the Employee's
immediate family, as defined under Rule 16a-1 of the Exchange Act or any trust
of which the Director or any member of his immediate family (as defined in Rule
16a-1 of the Exchange Act) is a trustee or beneficiary.

         7. The aggregate amount of consolidated shareholders' equity (including
Common Stock, Additional Paid-In Capital and Retained Earnings and excluding
Treasury Stock) of Franklin immediately prior to the Effective Time, as shown by
and reflected in its books and records of accounts on a consolidated basis in
accordance with GAAP, consistently applied, shall not be less than $37,000,000.
For purposes of this subparagraph, (A) any expenses or accruals after the date
hereof relating to (i) the adjustments contemplated by Section IV.C. (i) herein,
(ii) termination or funding of any of Benefit Plans of Franklin, and the
Franklin Subsidiaries as contemplated herein, (iii) expenses associated with
this Agreement and the transactions contemplated herein, and (iv) expenses and
losses associated with valuing of Franklin's or any of the Franklin
Subsidiaries' investments at current market value as required by GAAP (including
SFAS 115) shall be excluded for purposes of calculation of Franklin's
shareholders' equity as contemplated herein prior to the Effective Time.

         8. Fifth Third's independent certified public accountants shall have
reviewed the unaudited consolidated financial statements of Franklin as at the
end of the month immediately preceding the Effective Time (the "Preceding
Month") if such Preceding Month ended at least six days before the Effective
Time or as at the end of the month



immediately preceding the Preceding Month if the Preceding Month ended less than
six days before the Effective Time, as well as the unaudited separate financial
statements of Franklin and the Franklin Subsidiaries as of the same date,
performed such other auditing procedures as may be requested by Fifth Third and
reported in good faith that they are not aware of any material modifications
which would have a Material Adverse Effect on Franklin that should be made in
order for such financial statements to (i) be in conformity with GAAP,
consistently applied, excluding the presentation of footnotes, and (ii)
accurately state the financial condition and results of operations of Franklin
and the Franklin Subsidiaries.

         9. The total number of issued and outstanding shares of Franklin Common
Stock and shares of Franklin Common Stock issuable upon the exercise of
outstanding options shall not exceed the sum of 10,184,806 and the number of
shares issued between the date hereof and the Closing Date pursuant to the
Franklin 2000 Stock Purchase Plan (which shall not exceed 600 shares per
calendar quarter).

        10. George J. Regg, Jr., Executive Vice President, Secretary and
General Counsel for Franklin, shall have delivered an opinion addressed to
Fifth Third and Fifth Third Financial in substantially the form attached
hereto as Appendix C.

         11. Either (i) Fifth Third shall have entered into an assumption of
lease agreement with Gordon Inman covering all of the buildings presently leased
by Gordon Inman to Franklin that are located in downtown Franklin, Tennessee
(collectively, the "Headquarters"), or (ii) Gordon Inman and Bank Subsidiary
shall have entered into a real estate lease agreement concerning the
Headquarters for a 10-year term with two 5-year options to renew, at lease rates
acceptable to Fifth Third and Gordon Inman.

         12. At or prior to the Effective Time, any and all liens, claims,
charges, options, encumbrances, mortgages, pledges or security interests on any
capital stock or other securities evidencing ownership of any Franklin
Subsidiary shall have been satisfied and removed and Franklin or a Franklin
Subsidiary shall own all of the outstanding capital stock or other securities
evidencing ownership of the Franklin Subsidiaries in each case free and clear of
any lien, claim, charge, option, encumbrance, mortgage, pledge or security
interest.

         13. Fifth Third shall have received an opinion of Graydon Head &
Ritchey LLP, counsel to Fifth Third, dated the Closing Date, to the effect that,
on the basis of facts, representations and assumptions set forth in such
opinion, the Merger constitutes a "reorganization" within the meaning of Section
368 of the Code. In rendering its opinion, counsel to Fifth Third may require
and rely upon representations contained in letters from Franklin and Fifth
Third.

         14. On the date of the execution of this Agreement, Gordon Inman shall
have executed and delivered to Fifth Third a Shareholder Support Agreement in
the form of Appendix F Attached hereto, which Shareholder Support Agreement
shall be in full force and effect and which all parties thereto shall be in
compliance at and as of the Closing Date.

C.       Additional Conditions to the Obligations of Franklin.

The obligation of Franklin to consummate the transactions provided for herein is
subject to the fulfillment at or prior to the Effective Time of each of the
following additional conditions unless waived by Franklin in a writing delivered
to Fifth Third which specifically refers to the condition or conditions being
waived:

         1. The representations and warranties of Fifth Third and Fifth Third
Financial contained herein shall be true and correct both as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of an earlier date) as of the Closing Date.

         2. Fifth Third and Fifth Third Financial shall have each performed all
of the obligations required of it under the terms of this Agreement in all
material respects.

         3. Franklin shall have received a certificate from each of Fifth Third
and Fifth Third Financial, executed by its respective chief executive officer
and chief financial officer, dated the Closing Date, certifying to each of such
officers' best knowledge and belief that the conditions set forth in Section
VI.C.1. and VI.C.2. have been satisfied.



          4. Paul L. Reynolds, General Counsel for Fifth Third shall have
delivered an opinion addressed to Franklin in substantially the form
attached hereto as Appendix D.

         5. Franklin shall have received an opinion of Smith, Gambrell &
Russell, LLP, counsel to Franklin, dated the Closing Date, to the effect that,
on the basis of facts, representations and assumptions set forth in such
opinion, (i) the Merger constitutes a "reorganization" within the meaning of
Section 368 of the Code and (ii) the exchange in the Merger of Franklin Common
Stock for Fifth Third Common Stock will not give rise to gain or loss to the
shareholders of Franklin with respect to such exchange (except to the extent of
any cash received). In rendering its opinion, counsel to Franklin may require
and rely upon representations contained in letters from Franklin and Fifth
Third.

                        Article VII. Additional Covenants

         A. Employment Arrangements. 1. Fifth Third shall consider employing at
Fifth Third Financial or other Fifth Third subsidiaries or affiliates as many of
the employees of Franklin and all of the Franklin Subsidiaries who desire
employment within the Fifth Third holding company system as possible, to the
extent of available positions and consistent with Fifth Third's standard
staffing levels and personnel policies. As promptly as practicable following the
Effective Time as Fifth Third shall reasonably determine, Fifth Third shall
provide the full-time employees (in the aggregate and not individually) of
Franklin and all subsidiaries of Franklin ("Transferred Employees") who become
employees of Fifth Third or any of its subsidiaries or affiliates at or
immediately subsequent to the Merger as a group with employee benefit plans that
in the aggregate are of comparable value to the benefit plans provided to
similarly situated employees of Fifth Third (excluding from consideration the
Fifth Third Master Retirement Plan which has been frozen to new participants).
Under each employee benefit plan sponsored or maintained by Fifth Third or its
subsidiaries or affiliates in which Transferred Employees participate, prior
service with Franklin and any of the subsidiaries of Franklin (including service
prior to acquisition by Franklin to the extent Franklin takes such service into
account) shall be treated as prior service with Fifth Third for purposes of
eligibility and vesting. Notwithstanding the preceding sentence, with respect to
any payroll practice (such as accrued vacation) where service is utilized to
determine the amount of benefit under such practice, prior service with Franklin
and any subsidiaries of Franklin (including service prior to acquisition by
Franklin to the extent Franklin takes such service into account) shall be
treated as prior service with Fifth Third.

         2. Those employees of Franklin and the Franklin Subsidiaries (other
than temporary and/or co-operative employees) who do not have an employment,
change in control or severance agreements and who are not employed by Fifth
Third or who are terminated or voluntarily resign after being notified that, as
a condition of employment, such employee must work at a location more than
thirty (30) miles from such employee's former location of employment or that
such employee's salary will be materially decreased, in any case and in both
cases, within ninety (90) days after the Effective Time, and who sign and
deliver a termination and release agreement in a form attached hereto as
Appendix E, shall be entitled to severance pay equal to, in the case of Franklin
or subsidiaries of Franklin, two (2) weeks of pay for each completed year of
service up to a maximum of twenty-six (26) weeks of pay, plus any earned but not
paid vacation pay. The severance payment referred to above shall be under
Franklin's current severance pay plan, if any, or a new severance pay plan but
in no event shall there be any duplication of severance pay. Fifth Third shall
provide sufficient notification to Franklin of those employees it will not be
hiring in order that such employees terminated by Franklin can be given
appropriate notice of termination in advance of the effectiveness thereof.
Franklin shall cooperate with Fifth Third to effectuate the foregoing and to
comply with, and provide notices regarding, the Workers Adjustment and
Retraining Act or any similar state or local law, including without limitation,
providing notices to employees and government representatives. Nothing contained
in this Section VII.A.2. shall be construed or interpreted to limit or modify in
any way Fifth Third's at will employment policy. In no event shall severance pay
or any severance period be taken into account in determining the amount of any
other benefit (including but not limited to, an individual's benefit under any
pension plan). If, by reason of the controlling plan document, controlling law
or otherwise, severance pay or any severance period is taken into account in
determining any other benefit, the severance pay otherwise payable shall be
reduced by the present value of the additional benefit determined under other
benefit plans attributable to the severance pay or period.



3. Notwithstanding anything herein to the contrary, in lieu of any severance
benefits provided in Section VII.A.2. above, Fifth Third shall acknowledge and
assume, upon consummation of the Merger, the obligations of Franklin under all
existing change in control, severance and employment agreements. Franklin has
specifically identified such agreements in Section II.X of the Disclosure
Schedule.

B. Director, Officer and Employee Indemnification. 1. From and after the
Effective Time, Fifth Third shall assume the obligations of Franklin and the
Franklin Subsidiaries arising under applicable law in existence as of the date
hereof or as amended prior to the Effective Time and under Franklin's Charter
and By-laws or the Franklin Subsidiaries' respective charters and bylaws as in
effect on the date hereof, to indemnify, defend and hold harmless each person
who is now, or has been at any time prior to the date hereof or who becomes,
prior to the Effective Time, an officer or director of Franklin, any Franklin
Subsidiary, or any of their predecessors (the "Indemnified Parties") against
losses, claims, damages, costs, expenses (including reasonable attorneys' fees),
liabilities or judgments or amounts that are paid in settlement (which
settlement shall require the prior written consent of Fifth Third) of or in
connection with any claim, action, suit, proceeding or investigation (a "Claim")
in which an Indemnified Party is, or is threatened to be made, a party or a
witness based in whole or in part on or arising in whole or in part out of the
fact that such person is or was a director or officer of Franklin or any
Franklin Subsidiary if such Claim pertains to any matter or fact arising,
existing or occurring prior to the Effective Time (including, without
limitation, the Merger and the transactions contemplated by this Agreement),
regardless of whether such Claim is asserted or claimed prior to, at or after
the Effective Time. Fifth Third shall pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
full extent permitted by law and under Franklin's Charter or By-laws or the
Franklin Subsidiaries' respective charters or bylaws. Any Indemnified Party
wishing to claim indemnification under this provision, upon learning of any
Claim shall notify Fifth Third (but the failure to so notify Fifth Third shall
not relieve Fifth Third from any liability which Fifth Third may have under this
Section VII.B. except to the extent Fifth Third is materially prejudiced
thereby). Notwithstanding the foregoing, the Indemnified Parties as a group may
retain only one law firm to represent them with respect to each matter under
this Section VII.B. unless there is, under applicable standards of professional
conduct, a conflict on any one significant issue between the positions of any
two or more Indemnified Parties.

         2. From and after the Effective Time, the directors, officers and
employees of Franklin and its subsidiaries who become directors, officers or
employees of Fifth Third or any of its subsidiaries, except for the
indemnification rights set forth in Section VII.B.1., shall have indemnification
rights with prospective application only. The prospective indemnification rights
shall consist of such rights to which directors, officers or employees of Fifth
Third or the subsidiary by which such person is employed are entitled under the
provisions of the Articles of Incorporation of Fifth Third or similar governing
documents of Fifth Third or its applicable subsidiaries, as in effect from time
to time after the Effective Time, as applicable, and provisions of applicable
law as in effect from time to time after the Effective Time.

         3. The obligations of Fifth Third provided under this Section VII.B.
are intended to benefit, and be enforceable against Fifth Third directly
by, the Indemnified Parties, and shall be binding on all respective
successors of Fifth Third.

         4. Fifth Third shall also purchase and keep in force for a three-year
period, a policy of directors' and officers' liability insurance to provide
coverage for acts or omissions of the type currently covered by Franklin's
existing directors' and officers' liability insurance for acts or omissions
occurring on or prior to the Effective Time, but only to the extent such
insurance may be purchased or kept in full force on commercially reasonable
terms taking into account the cost thereof and the benefits provided thereby. It
is agreed that such costs shall be commercially reasonable so long as they do
not exceed 150% per annum of the costs currently paid per annum for such
coverage by Franklin.

         5. The rights set forth in this Section VII.B. are in addition to and
not in substitution of other indemnification and related rights that such
Indemnified Parties may otherwise be entitled to receive under Franklin's
Charter and By-laws or applicable law.




         6. Notwithstanding anything in this Section VII.B to the contrary,
Fifth Third shall not be required to provide any indemnity hereunder or may make
or agree to make any indemnification payment unless that payment is reasonable
and all of the following conditions are met: (1) Fifth Third's Board of
Directors determines in writing that the Indemnified Party acted in good faith
and the best interests of Franklin or the Franklin Subsidiary as the case may
be; (2) the Fifth Third Board of Directors determines that the payment will not
materially affect Fifth Third's or any subsidiary of Fifth Third's safety and
soundness; (3) the payment does not fall within the definition of a "prohibited
indemnification payment"; and (4) the Indemnified Party agrees in writing to
reimburse Fifth Third, to the extent not covered by permissible insurance, for
payments made in the event that an administrative action results in a final
order or settlement in which the Indemnified Party is assessed a civil money
penalty, is removed or prohibited from banking, or is required, under a final
order, to cease an action or take any affirmative action. For purposes hereof, a
"prohibited indemnification payment" is defined to include any payment or
agreement to make a payment by a bank or a bank holding company to an
institution-affiliated party to pay or reimburse such person for any liability
or legal expense in any administrative proceeding brought by the appropriate
federal banking agency that results in a final order or settlement in which the
institution-affiliated party is assessed a civil money penalty, is removed or
prohibited from banking, or is required to cease an action or take any
affirmative action, including making restitution, with respect to the bank or
bank holding company.

C. Notices. All notices, requests, consents, and demands under this Agreement
shall be in writing and shall be sufficient in all respects if delivered in
person or mailed by certified mail, return receipt requested, with postage
prepaid, or by confirmed air courier, and addressed, if to Franklin to Franklin
Financial Corporation, 230 Public Square, Franklin, Tennessee 37064 with a copy
of Robert C. Schwartz, Esq., Smith, Gambrell & Russell, LLP, Suite 3100,
Promenade II, 1230 Peachtree Street, N.E., Atlanta, Georgia 30309-3592 and if to
Fifth Third and Fifth Third Financial to Fifth Third Bancorp, 38 Fountain Square
Plaza, Cincinnati, Ohio 45263, Attention: George A. Schaefer, Jr., with a copy
to Fifth Third Bancorp, 38 Fountain Square Plaza, Cincinnati, Ohio 45263,
Attention: Paul, L. Reynolds, Executive Vice President and General Counsel Such
notices shall be deemed to be received when delivered in person or when
deposited in the mail by certified mail, return receipt requested with postage
prepaid. If sent by confirmed air courier, such notice shall be deemed to be
given upon the earlier to occur of the date upon which it is actually received
by the addressee or the business day upon which delivery is made at such address
as confirmed by the air courier (or if the date of such confirmed delivery is
not a business day, the next succeeding business day). If mailed, such notice
shall be sent by certified mail, postage pre-paid, return receipt requested.

D. Entire Agreement. This Agreement, together with the written instruments
specifically referred to herein and such other written agreements delivered by
Fifth Third, Fifth Third Financial or Franklin to each other pursuant hereto,
constitute the entire agreement between the parties with regard to the
transactions contemplated herein and supersede any prior agreements, whether
oral or in writing. This Agreement may be hereafter amended only by a written
instrument executed by each of the parties pursuant to Article X hereof.

E. Press Releases. Fifth Third and Franklin shall agree with each other as to
the form and substance of any press release related to this Agreement or the
transactions contemplated hereby and thereby, and shall consult with each other
as to the form and substance of other public disclosures related thereto;
provided, however, that nothing contained herein shall prohibit either party
from making any disclosure which its outside counsel deems required by law; and
provided, further, however, that Fifth Third shall not be required to
incorporate any comments from Franklin into such releases or public filings
unless determined to be appropriate by Fifth Third in good faith.

F. Expenses. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
that printing and mailing expenses for the Proxy Statement shall be shared
equally between Fifth Third and Franklin and the SEC filing and registration
fees for the Registration Statement shall be paid by Fifth Third.

G. Advice of Changes. 1. Between the date hereof and the Closing Date, Franklin
shall promptly advise Fifth Third in writing of any fact that, if existing or
known at the date hereof, would have been required to be set forth or disclosed
in or pursuant to this Agreement or of any fact that, if existing or known at
the date hereof, would have made any of the representations contained herein
untrue to any material extent; provided, that no such disclosure shall affect or
modify any representation or warranty of Franklin contained herein or made
pursuant hereto.





         2. Between the date hereof and the Closing Date, each of Fifth Third
and Fifth Third Financial shall promptly advise Franklin in writing of any fact
that, if existing or known at the date hereof, would have been required to be
set forth or disclosed in or pursuant to this Agreement or of any fact that, if
existing or known at the date hereof, would have made any of the representations
contained herein untrue to any material extent; provided, that no such
disclosure shall affect or modify any representation or warranty of Fifth Third
and Fifth Third Financial contained herein or made pursuant hereto.

         3. Each party hereto will promptly notify the other party in writing of
the occurrence of any event which will or may result in the failure to satisfy
any material condition precedent set forth in this Agreement. Between the date
of this Agreement and the Closing Date, each party hereto will notify the other
of the satisfaction of such material conditions precedent as they occur.

H. Tax Treatment. Neither Fifth Third nor Franklin will take any action while
knowing that such action would, or is reasonably likely to, prevent or impede
the Merger from qualifying as a "reorganization" within the meaning of Section
368(a) of the Code.

I. Enforcement of this Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, such remedy being in addition to any other
remedy to which any party is entitled at law or in equity.

J. MPS. Upon the request of Fifth Third and at the sole option of Fifth Third,
Franklin and Bank Subsidiary shall execute and deliver to Midwest Payment
Systems, Inc. ("MPS") an agreement to convert all electronic funds transfer
("EFT") related services to MPS and the Jeanie(R) system. Such Agreement shall
provide that MPS will be the exclusive provider of such services to Franklin and
Bank Subsidiary for a period of five (5) years from the date such agreements are
executed. Fifth Third agrees that the cost of the conversion of Franklin and
Bank Subsidiary to EFT provided by MPS and conversion to the Jeanie(R) system
(including, without limitation, the cost of all card reissue, signage and
penalties relating to terminating its current EFT relationships) will be paid by
Fifth Third. Fifth Third further agrees that the costs and fees to Franklin and
Bank Subsidiary for the Jeanie(R) service shall not exceed those charged by the
current EFT service provider of Franklin and Bank Subsidiary, subject to any
increases in such costs and fees which would otherwise be permitted under their
current EFT processing agreements. In the event this Agreement is terminated
pursuant to Article VIII hereof for any reason except a material breach or
default by Franklin, and if, in such instance, Franklin desires to convert to
another provider of EFT services, Fifth Third shall pay all costs and expenses
associated with such conversion, provided, however, such costs and expenses are
reasonable when compared to costs and expenses ordinarily charged in the EFT
services industry. In no event shall Franklin or Bank Subsidiary be required to
take any actions pursuant to this Paragraph J or otherwise under this Agreement
or the Agreement of merger that are contrary to any applicable law, regulation,
rule or order or which constitute a breach of the fiduciary duties of the
directors of Franklin or Bank Subsidiary.

                            Article VIII. Termination

A. Basis for Termination. This Agreement may be terminated at any time prior to
the Effective Time by written notice delivered by Fifth Third to Franklin, or by
Franklin to Fifth Third in the following instances:

         1. By Fifth Third or Franklin, if there has been to the extent
contemplated in Section VI.B.1. or VI.B.2. or Section VI.C.1. or VI.C.2. herein,
as the case may be, a breach of a representation or warranty (subject to the
standard in Section I.R.) or a material breach of any covenant on the part of
the other party with respect to the representations, warranties, and covenants
set forth herein and such breach has not been cured within thirty (30) days
after receipt of written notice or is not capable of being cured; provided, the
party in breach or default shall have no right to terminate for its own breach
or default. For purposes hereof, a breach of Sections IV.A. or IV.B. will be
deemed not capable of being cured.



         2. By Fifth Third or Franklin, if the merger transaction
contemplated herein has not been consummated by January 31, 2003, provided the
terminating party is not in material breach or default of any representation,
warranty or covenant contained herein on the date of such termination.

         3. By Fifth Third or Franklin, if the business or assets or
financial condition of the other party, in each case taken as a whole, shall
have materially and adversely changed from that in existence December 31, 2001,
other than any such change attributable to or resulting from any change in law
or regulation or GAAP, changes in interest rates, economic, financial or market
conditions affecting the banking industry generally or changes that occur as a
consequence of actions or inactions that either party hereto is expressly
obligated to take under this Agreement.

         4. By the mutual written consent of Fifth Third, Fifth Third Financial
and Franklin.

         5. By Fifth Third if any event occurs which renders impossible of
satisfaction one or more of the conditions to the obligations of Fifth
Third and Fifth Third Financial to effect the Merger set forth in Sections
VI.A. and VI.B. herein and non-compliance is not waived by Fifth Third and
Fifth Third Financial.

         6. By Franklin if any event occurs which renders impossible of
satisfaction one or more of the conditions of the obligations of Franklin to
effect the Merger as set forth in Sections VI.A. and VI.C. herein and
non-compliance is not waived by Franklin.

         7. By Fifth Third if the Board of Directors of Franklin shall have
publicly announced its withdrawal or modification in a manner adverse to Fifth
Third and Fifth Third Financial of its favorable recommendation of the Merger.

         8. By Fifth Third or Franklin if Franklin shareholders, acting at a
meeting held for the purpose of voting upon the Merger, vote not to approve the
Merger in the manner required by law.

B. Effect of Termination. Upon termination as provided in this Article VIII,
this Agreement, except for the provisions of Sections V.D.2., VII.F. or VII.J.
hereof, shall be void and of no further force or effect, and no party hereto
(nor any of their respective officers, directors or subsidiaries) shall have any
liability of any kind to any other party including but not limited to liability
for expenses incurred by the other party in connection with this transaction;
provided that no such termination shall relieve a breaching party from liability
for any uncured willful breach of a covenant, undertaking, representation or
warranty giving rise to such termination, but in no event shall any party be
liable for punitive or exemplary damages.


                     Article IX. Closing and Effective Time

The consummation of the transactions contemplated by this Agreement shall take
place at a closing (the "Closing") to be held at the offices of Fifth Third in
Cincinnati, Ohio on a Friday selected by Fifth Third which is not more than 15
days after the satisfaction or waiver of all of the conditions precedent to
consummation of the Merger set forth in Article VI hereof (other than those
conditions which by their nature cannot be satisfied until the Closing),
including the expiration of all regulatory waiting periods, have been fully met
or effectively waived (the "Closing Date"). Pursuant to the filing of a
certificate of merger (which shall be prepared by Fifth Third and reasonably
satisfactory to Franklin) with the Secretary of State of each of the State of
Ohio and the State of Tennessee, respectively, in accordance with law and this
Agreement, the Merger provided for herein shall become effective at the close of
business on said day (the "Effective Time"). By mutual agreement of the parties,
the Closing may be held at any other time or place or on any other date and the
effectiveness of the Merger (and the Effective Time) may be changed by such
mutual agreement. None of the representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for agreements of the parties which by their
terms are intended to be performed after the Effective Time.



                              Article X. Amendment

This Agreement may be amended, modified or supplemented by the written agreement
of Franklin and Fifth Third Financial and Fifth Third upon the authorization of
each company's respective Board of Directors at any time before or after
approval of the Merger and this Agreement by the shareholders of Franklin, but
after any such approval by the shareholders of Franklin no amendment shall be
made (without further shareholder approval) which changes in any manner adverse
to such shareholders the consideration to be provided to such shareholders
pursuant to this Agreement.

                               Article XI. General

Except to the extent that provisions of the TBCA are applicable to the Merger,
this Agreement was made in the State of Ohio and shall be interpreted under the
laws of the United States and the State of Ohio. Each of the parties hereto
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby. This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns but, with the exception of Section I.C., Section I.D. and
Section VII.B., none of the provisions hereof shall be binding upon and inure to
the benefit of any other person, firm or corporation whomsoever. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned or transferred by operation of law or otherwise by any party hereto
without the prior written consent of the other party hereto; provided, however,
that the merger or consolidation of Fifth Third or Fifth Third Financial shall
not be deemed an assignment hereunder as long as the provisions of Section I.F.
are complied with. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

                            Article XII. Counterparts

This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original for all purposes but such counterparts taken
together shall constitute one and the same instrument.



IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date hereinabove set forth.

                                 FIFTH THIRD BANCORP

(SEAL)                           By:     /s/ GERALD WISSEL
                                         ---------------------------------------
                                 Name:   Gerald Wissel
                                         ---------------------------------------
                                 Title:  Executive Vice President
                                         ---------------------------------------

                                 Attest: /s/ PAUL L. REYNOLDS
                                         ---------------------------------------
                                 Name:   Paul L. Reynolds
                                         ---------------------------------------
                                 Title:  Executive Vice President and Secretary
                                         ---------------------------------------

                                 FIFTH THIRD FINANCIAL CORPORATION

(SEAL)                           By:     /s/ GERALD WISSEL
                                         ---------------------------------------
                                 Name:   Gerald Wissel
                                         ---------------------------------------
                                 Title:  Executive Vice President
                                         ---------------------------------------

                                 Attest: /s/ PAUL L. REYNOLDS
                                         ---------------------------------------
                                 Name:   Paul L. Reynolds
                                         ---------------------------------------
                                 Title:  Executive Vice President and Secretary
                                         ---------------------------------------

                                 FRANKLIN FINANCIAL CORPORATION

(SEAL)                           By:     /s/ GORDON E. INMAN
                                         ---------------------------------------
                                 Name:   Gordon E. Inman
                                         ---------------------------------------
                                 Title:  Chairman
                                         ---------------------------------------

                                 Attest: /s/ GEORGE J. REGG, JR.
                                         ---------------------------------------
                                 Name:   George J. Regg, Jr.
                                         ---------------------------------------
                                 Title:  Secretary
                                         ---------------------------------------

EX-99.5

                                                                    Exhibit 99.5

                                 AMENDMENT NO. 1

                                       TO

                              AFFILIATION AGREEMENT
                                  by and among
                         FRANKLIN FINANCIAL CORPORATION,
                               FIFTH THIRD BANCORP
                                       and
                        FIFTH THIRD FINANCIAL CORPORATION

         This AMENDMENT NO. 1 dated as of this 9th day of September, 2002 to
that certain Affiliation Agreement dated as of July 23, 2002 (the "Agreement")
by and among Franklin Financial Corporation ("Franklin"), Fifth Third Bancorp
("Fifth Third") and Fifth Third Financial Corporation ("Fifth Third Financial").

                                   WITNESSETH:

         WHEREAS, each of Franklin, Fifth Third and Fifth Third Financial agree
that it is in their mutual best interests to enter into this Amendment No. 1 to
facilitate the orderly consummation of the transactions contemplated by the
Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties agree as
follows:

         1. Defined Terms. Except for capitalized terms, which are expressly
defined in this Amendment No.1, all capitalized terms shall have the meanings
set forth in the Agreement.

         2. Amendment to Sections V.A.1 and V.B.1. The parties hereby agree that
each of the third sentence of Section V.A.1 and the second sentence of Section
V.B.1 of the Agreement are hereby amended to replace the words "sixty (60) days"
with the words "one hundred and twenty (120) days".

         3. Amendment to Section VIII.A.2. The parties hereby agree that Section
VIII.A.2 of the Agreement is hereby amended to replace the date "January 31,
2003" with the date "April 1, 2003".

         4. Reaffirmation. Except as expressly modified by this Amendment No. 1,
the parties hereby ratify and confirm each and every provision of the Agreement.
The parties further agree that neither the extensions of the time periods as set
forth above nor any fact or circumstance which may have necessitated such
extensions constitute any breach or default of any provision of the Agreement.

         5. Entire Agreement. The terms and provisions of the Agreement
(including the documents and instruments referred to therein), together with
this Amendment No. 1, constitute the entire agreement among the parties and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.

         6. Counterparts. This Amendment No. 1 may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that the parties need not
sign the same counterpart.



         7. Governing Law. This Amendment No. 1 shall be governed and construed
in accordance with the laws of the State of Ohio, without regard to any
applicable conflicts of law principles (except to the extent that mandatory
provisions of federal or state law apply).

         IN WITNESS WHEREOF, Franklin Financial Corporation, Fifth Third Bancorp
and Fifth Third Financial Corporation have caused this Amendment No. 1 to be
executed by their respective officers thereunto duly authorized as of the date
first above written.

                                 FRANKLIN FINANCIAL CORPORATION

                                 By: /s/ GORDON E. INMAN
                                     ------------------------------------------
                                           Name:  Gordon E. Inman
                                                  ---------------------------
                                           Title: Chairman
                                                  ---------------------------


                                 FIFTH THIRD BANCORP

                                 By: GERALD WISSEL
                                     ----------------------------------
                                           Name:  Gerald Wissel
                                                  ---------------------------
                                           Title: Executive Vice President
                                                  ---------------------------


                                 FIFTH THIRD FINANCIAL CORPORATION

                                 By: GERALD WISSEL
                                     ----------------------------------------
                                           Name:  Gerald Wissel
                                                  ---------------------------
                                           Title: Executive Vice President
                                                  ---------------------------

EX-99.6

                                                                    Exhibit 99.6

                                 AMENDMENT NO. 2

                                       TO

                              AFFILIATION AGREEMENT
                                  by and among
                         FRANKLIN FINANCIAL CORPORATION,
                               FIFTH THIRD BANCORP
                                       and
                        FIFTH THIRD FINANCIAL CORPORATION

         This AMENDMENT NO. 2 dated as of this 10th day of December, 2002 to
that certain Affiliation Agreement dated as of July 23, 2002, as amended by
Amendment No. 1 dated as of September 9, 2002 (the "Agreement") by and among
Franklin Financial Corporation ("Franklin"), Fifth Third Bancorp ("Fifth Third")
and Fifth Third Financial Corporation ("Fifth Third Financial").

                                   WITNESSETH:

         WHEREAS, each of Franklin, Fifth Third and Fifth Third Financial agree
that it is in their mutual best interests to enter into this Amendment No. 2 to
further facilitate the orderly consummation of the transactions contemplated by
the Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties agree as
follows:

         1. Defined Terms. Except for capitalized terms, which are expressly
defined in this Amendment No. 2, all capitalized terms shall have the meanings
set forth in the Agreement.

         2. Amendment to Sections V.A.1 and V.B.1. The parties hereby agree that
each of the third sentence of Section V.A.1 and the second sentence of Section
V.B.1 of the Agreement are hereby further amended to replace the words "within
sixty (60) days of the date" which were amended in Amendment No. 1 to read
"within one hundred and twenty (120) days of the date" with the words "in a
timely fashion in order to consummate the Merger within the time frame required
by Section VIII.A.2".

         3. Reaffirmation. Except as expressly modified by this Amendment No. 2,
the parties hereby ratify and confirm each and every provision of the Agreement.
The parties further agree that neither the extensions of the time periods as set
forth above nor any fact or circumstance which may have necessitated such
extensions constitute any breach or default of any provision of the Agreement.

         4. Entire Agreement. The terms and provisions of the Agreement
(including the documents and instruments referred to therein), together with
this Amendment No. 2, constitute the entire agreement among the parties and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.

         5. Counterparts. This Amendment No. 2 may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that the parties need not
sign the same counterpart.

         6. Governing Law. This Amendment No. 2 shall be governed and construed
in accordance with the laws of the State of Ohio, without regard to any
applicable conflicts of law principles (except to the extent that mandatory
provisions of federal or state law apply).


         IN WITNESS WHEREOF, Franklin Financial Corporation, Fifth Third Bancorp
and Fifth Third Financial Corporation have caused this Amendment No. 2 to be
executed by their respective officers thereunto duly authorized as of the date
first above written.

                                           FRANKLIN FINANCIAL CORPORATION



                 By:  /s/ GORDON E. INMAN
                      ----------------------
                          Name:  Gordon E. Inman
                                 ----------------------------
                          Title: Chairman
                                 ----------------------------


                 FIFTH THIRD BANCORP

                 By: /s/ PAUL L. REYNOLDS
                     ----------------------------------------
                          Name:  Paul L. Reynolds
                                 ----------------------------
                          Title: Executive Vice President, General Counsel
                                 -----------------------------------------
                                  & Secretary
                                  -----------

                 FIFTH THIRD FINANCIAL CORPORATION

                 By: /s/ PAUL L. REYNOLDS
                     ----------------------------------------
                          Name:  Paul L. Reynolds
                                 ----------------------------
                          Title: Executive Vice President, General Counsel
                                 -----------------------------------------
                                  & Secretary
                                  -----------

EX-99.7

                                                                    EXHIBIT 99.7

                                 AMENDMENT NO. 3

                                       TO

                              AFFILIATION AGREEMENT
                                  by and among
                         FRANKLIN FINANCIAL CORPORATION,
                               FIFTH THIRD BANCORP
                                       and
                        FIFTH THIRD FINANCIAL CORPORATION

     This AMENDMENT NO. 3 dated as of this 27/th/ day of March, 2003 to that
certain Affiliation Agreement dated as of July 23, 2002, as amended by Amendment
No. 1 dated as of September 9, 2002 and Amendment No. 2 dated as of December 10,
2002 (the "Agreement") by and among Franklin Financial Corporation ("Franklin"),
Fifth Third Bancorp ("Fifth Third") and Fifth Third Financial Corporation
("Fifth Third Financial").

                                   WITNESSETH:

     WHEREAS, each of Franklin, Fifth Third and Fifth Third Financial agree that
it is in their mutual best interests to enter into this Amendment No. 3 to
further facilitate the orderly consummation of the transactions contemplated by
the Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties agree as follows:

     1. Defined Terms. Except for capitalized terms, which are expressly defined
in this Amendment No. 3, all capitalized terms shall have the meanings set forth
in the Agreement.

     2. Amendment to Section I.C.1. The parties hereby agree that Section I.C.1
of the Agreement is hereby deleted in its entirety and the following new Section
I.C.1 is hereby inserted in place thereof:

     "C. Treatment of Franklin Stock. 1. At the Effective Time, by virtue of the
     Merger and without any action on the part of the holder of any shares of
     Franklin Common Stock, subject to this Section I.C.1 and Section I.F., each
     share of Franklin Common Stock (excluding treasury shares) that is issued
     and outstanding immediately prior to the Effective Time will be converted
     into that number of shares of Fifth Third Common Stock (or cash in lieu
     thereof for fractional shares, if any, as described in Section I.E. below)
     (the "Exchange Ratio") equal to (i) the sum of $31.00 plus the Franklin
     Book Value Per Share Adjustment (as defined



     below in this Section I.C.1), divided by (ii) the Average Closing Price (as
     defined in Section I.D.1 below).

          "Franklin Book Value Per Share Adjustment" shall be calculated as the
     amount equal to (i) the Franklin Book Value as of the end of the fiscal
     quarter preceding the Effective Time divided by the number of shares of
     Franklin Common Stock outstanding as of the end of such fiscal quarter
     minus (ii) the Franklin Book Value as of March 31, 2003 divided by the
     number of shares of Franklin Common Stock outstanding as of March 31, 2003.
     "Franklin Book Value" shall be calculated as the aggregate amount of
     consolidated shareholders' equity (including common stock, additional
     paid-in capital and retained earnings and excluding treasury stock) of
     Franklin as of the relevant fiscal quarter end, as shown by and reflected
     in its books and records of accounts on a consolidated basis in accordance
     with GAAP, consistently applied, but excluding any expenses or accruals
     after March 31, 2003 relating to (i) the adjustments contemplated by
     Section IV.C. herein, (ii) termination or funding of any Benefit Plans of
     Franklin and the Franklin Subsidiaries as contemplated herein, (iii)
     expenses associated with this Agreement and the transactions contemplated
     herein, and (iv) expenses and gains or losses associated with the mark to
     market value of Franklin's or any of the Franklin Subsidiaries' investments
     as required by GAAP (including SFAS 115).

          The parties agree that Deloitte & Touche LLP, or such other firm of
     independent certified public accountants as the parties may mutually agree
     upon, shall review and confirm the calculation of the Franklin Book Value
     as of each of the relevant calculation dates and the calculation of the
     Franklin Book Value Per Share Adjustment, including the conformity of such
     calculations with GAAP, consistently applied. The parties further agree
     that they shall act in good faith to promptly resolve any disagreements as
     to such calculations so as not to delay the Closing.

          At the Effective Time, all shares of Franklin Common Stock held as
     treasury shares and all shares of Franklin Common Stock owned by Fifth
     Third or any of its wholly owned subsidiaries (other than in a fiduciary,
     custodial or similar capacity or owned as a result of a debt previously
     contracted) will be canceled and terminated and no shares of Fifth Third or
     other consideration will be issued in exchange therefor."

     4. Amendment to Section VIII.A.2. The parties hereby agree that Section
VIII.A.2 is hereby amended to replace the date "April 1, 2003" with the date
"June 30, 2004".

     5. Amendment to Section VIII.A.5. The parties hereby agree that Section
VIII.A.5 of the Agreement is hereby deleted in its entirety and the following
new Section VIII.A.5 is hereby inserted in place thereof:

     "5. By Fifth Third if any event occurs which renders impossible of
     satisfaction one or more of the conditions to the obligations of Fifth
     Third and Fifth Third Financial to effect the Merger set forth in Sections
     VI.A and VI.B

                                       2



     herein and non-compliance is not waived by Fifth Third and Fifth Third
     Financial, provided, however, that neither Fifth Third nor Fifth Third
     Financial may terminate this Agreement on or before May 31, 2004 based upon
     any alleged impossibility of satisfying the condition that all approvals
     required to be obtained from the Board of Governors of the Federal Reserve
     System as are necessary to consummate the Merger have been obtained."

     6. Insertion of New Section VIII.A.9. The parties hereby agree that the
following new Section VIII.A.9 shall be, and hereby is, added to the Agreement
immediately following Section VIII.A.8.:

     "9. By Franklin, if the Board of Governors of the Federal Reserve System
     has not granted, on or before May 31, 2004, to Fifth Third and Franklin all
     approvals required to be obtained from such Board of Governors as are
     necessary to consummate the Merger, provided that Franklin shall not be in
     material breach or default of any representation, warranty or covenant
     contained herein on the date of such termination."

     7. Amendment to Section VIII.B. The parties hereby agree that Section
VIII.B. is hereby deleted in its entirety and the following new Section VIII.B.
is hereby inserted in place thereof:

     "B.  Effect of Termination. Upon termination as provided in this Article
     VIII, this Agreement, except for the provisions of Sections V.D.2., VII.F.,
     VII.J. or VIII.C. hereof, shall be void and of no further force or effect,
     and except as set forth in Section VIII.C. below, no party hereto (nor any
     of their respective officers, directors or subsidiaries) shall have any
     liability of any kind to any other party including but not limited to
     liability for expenses incurred by the other party in connection with this
     transaction; provided that no such termination shall relieve a breaching
     party from liability for any uncured willful breach of a covenant,
     undertaking, representation or warranty giving rise to such termination,
     but in no event shall any party be liable for punitive or exemplary
     damages."

     8. Insertion of New Section VIII.C. The parties hereby agree that the
following new Section VIII.C. shall be, and hereby is, added to the Agreement
immediately following Section VIII.B.:

     "C.  Termination Fee. In the event that Franklin validly terminates the
     Agreement pursuant to Section VIII.A.9, then Fifth Third shall pay Franklin
     the amount of Twenty Seven Million Dollars ($27,000,000) (the "Termination
     Fee") by wire transfer of immediately available funds within five business
     days following Fifth Third's receipt of written notice of such termination.
     The payment by Fifth Third of the Termination Fee pursuant to the preceding
     sentence shall be Franklin's exclusive remedy against Fifth Third and Fifth
     Third Financial upon such termination event. The parties further agree that
     simultaneously with the payment and receipt of the Termination Fee they
     shall execute a full release and waiver of all claims that they may have
     against each other."

                                       3



     9.  Reaffirmation. Except as expressly modified by this Amendment No. 3,
the parties hereby ratify and confirm each and every provision of the Agreement.
The parties further agree that neither the extensions of the time periods as set
forth above nor any fact or circumstance which may have necessitated such
extensions constitute any breach or default of any provision of the Agreement.

     10. Entire Agreement. The terms and provisions of the Agreement (including
the documents and instruments referred to therein and Amendments No. 1 and
Amendment No. 2), together with this Amendment No. 3, constitute the entire
agreement among the parties and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.

     11. Counterparts. This Amendment No. 3 may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that the parties need not
sign the same counterpart.

     12. Governing Law. This Amendment No. 3 shall be governed and construed in
accordance with the laws of the State of Ohio, without regard to any applicable
conflicts of law principles (except to the extent that mandatory provisions of
federal or state law apply).

     IN WITNESS WHEREOF, Franklin Financial Corporation, Fifth Third Bancorp and
Fifth Third Financial Corporation have caused this Amendment No. 3 to be
executed by their respective officers thereunto duly authorized as of the date
first above written.

                                        FRANKLIN FINANCIAL CORPORATION

                                        By: /s/ Gordon E. Inman
                                           -----------------------------------
                                                Name: Gordon E. Inman
                                                Title: Chairman


                                        FIFTH THIRD BANCORP

                                        By: /s/ Paul L. Reynolds
                                           -----------------------------------
                                                Paul L. Reynolds
                                                Executive Vice President


                                        FIFTH THIRD FINANCIAL CORPORATION

                                        By: /s/ Paul L. Reynolds
                                           -----------------------------------
                                                Paul L. Reynolds
                                                Executive Vice President

                                       4

EX-99.8

[LOGO]  Fifth Third Bancorp

                                                                    EXHIBIT 99.8

                                                                    News Release

CONTACT: Neal E. Arnold (Analysts)                    FOR IMMEDIATE RELEASE
         (513) 579-4356                               March 27, 2003
         Bradley S. Adams (Analysts)
         (513) 534-0983
         Roberta R. Jennings (Media)
         (513) 579-4153

               FIFTH THIRD SIGNS AGREEMENT WITH BANKING REGULATORS

     Fifth Third Bancorp announced today that it has entered into a Written
Agreement with the Federal Reserve Bank of Cleveland and the Ohio Department of
Commerce, Division of Financial Institutions arising out of the previously
disclosed regulatory review of the Company.

     The agreement outlines a series of steps to address and strengthen Fifth
Third's risk management processes and internal controls. These steps include
independent third-party reviews and the submission of written plans in a number
of areas. These areas include Fifth Third's management, corporate governance,
internal audit, account reconciliation procedures and policies, information
technology, and strategic planning. Fifth Third is continuing to work in
cooperation with the Federal Reserve Bank and the State of Ohio and is devoting
its full attention to strengthening the areas identified during the recently
completed regulatory review.

     Fifth Third President & CEO George A. Schaefer, Jr. said, "Fifth Third is
extremely serious about risk management and internal controls and we are working
hard to take the necessary steps to strengthen our processes in order to fully
cooperate with the respective regulatory agencies. I believe that these efforts,
many of which have already begun, will result in Fifth Third emerging from this
process as an even stronger company." He continued, "I want to thank our
customers, employees and shareholders for their patience and outstanding support
over the past several months. I would also like to offer that Fifth Third will
continue to focus on maintaining a strong, flexible balance sheet, striving to
provide a personalized level of service delivered through our affiliate banking
network and making the necessary investments in people and technologies to grow
and maintain the highest quality banking franchises possible."

     The full text of the agreement is being filed by Fifth Third with the SEC
as an exhibit to the Annual Report on Form 10-K which describes in more detail
the agreement and its impact on the Company. The agreement is currently
available at www.federalreserve.gov.

     On March 26, 2003, Franklin Financial Corporation (NASDAQ: FNFN), Fifth
Third Bancorp and Fifth Third Financial Corporation entered into Amendment No. 3
to the Affiliation Agreement dated July 23, 2002 in which Fifth Third will
acquire Franklin Financial Corporation and its subsidiary, Franklin National
Bank, headquartered in Franklin, Tennessee. Pursuant to the Amendment, certain
terms of the Affiliation Agreement, Amendment No. 1 and Amendment No. 2 have
been replaced and dates extended. The complete



text of the Amendment will be filed by Fifth Third with the SEC as an exhibit to
the Annual Report on Form 10-K.

     Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. The Company has $81 billion in assets,
operates 17 affiliates with 939 full-service Banking Centers, including 132 Bank
Mart(R) locations open seven days a week inside select grocery stores and 1,864
Jeanie(R) ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, West
Virginia and Tennessee. The financial strength of Fifth Third's affiliate banks
continues to be recognized by rating agencies with deposit ratings of AA- and
Aa1 from Standard & Poor's and Moody's, respectively. Additionally, Fifth Third
Bancorp continues to maintain the highest short-term ratings available at A-1+
and Prime-1, and was recently recognized by Moody's with one of the highest
senior debt ratings for any U.S. bank holding company of Aa2. Fifth Third
operates four main businesses: Retail, Commercial, Investment Advisors and
Processing Solutions, the Bank's electronic payment processing subsidiary.
Investor information and press releases can be viewed at www.53.com. The
company's common stock is traded through the NASDAQ National Market System under
the symbol "FITB."

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 or actions adversely affect
the businesses in which Fifth Third is engaged; (6) changes in the securities
markets; (7) a delayed or incomplete resolution of regulatory issues (8) the
impact of reputational risk created by these developments on such matters as
business generation and retention, funding and liquidity; and (9) the outcome of
legal proceedings. 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.

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